alleryStart learning →When must an investor stop using the equity method?
AOnce significant influence ends
BAfter five years of holding
CWhen associate pays no dividend
DWhen profit turns negative
Answer & Solution
Correct answer: A. Once significant influence ends
The method stops from the date the investor ceases to have significant influence but still holds shares.
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Related questions
An enterprise controlled by another enterprise is called a what?Consolidated financial statements present a group as what?An enterprise is NOT an associate if it is what?A 40% held associate revalues assets with a surplus of Rs 2,00,000. Adjustment to carryingA 30% associate sold goods to the investor at Rs 50,000 profit, still unsold. Elimination?A Rs 4,00,000 investment has an equity carrying amount of Rs 4,50,000 when influence ends.Unrecognised loss share is Rs 30,000. The investor's share of the next profit is Rs 50,000Rs 8,00,000 buys 40% of an associate with net assets of Rs 15,00,000. What is the goodwill