When an Investor Reporting Under IFRS Owns More Than 20

question 60

Multiple Choice

When an investor reporting under IFRS owns more than 20% of the common shares of a corporation, it is generally presumed that the investor

• A)has insignificant influence on the investee and that the cost method should be used to account for the investment.
• B)should use the fair value model to account for the investment.
• C)will prepare consolidated financial statements.
• D)has significant influence on the investee and that the equity method should be used to account for the investment.

---

Definitions:

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditures to the appropriate period.

Cash Sales

Transactions where payment is made in cash at the time of sale, without any credit arrangement.

Cash Receipts Journal

A dedicated financial journal that tracks all cash inflows or money received by a business.

Sales Journal

An accounting ledger in which sales of services or goods on credit are recorded, also known as the sales book.