The Requirements of AASB 128 Relating to the Equity Method

question 42

Multiple Choice

The requirements of AASB 128 relating to the equity method of accounting for investments in associates include:

• A) adjustments for impairment losses recognised by the associate.
• B) the notional adjustment of the carrying amounts of the identifiable assets, liabilities and contingent liabilities of the associate to fair value.
• C) the calculation of a notional goodwill or excess on acquisition that is not required to be separately disclosed.
• D) all of the given answers.

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Definitions:

Weighted Average

A calculation method that takes into account the varying degrees of importance of the numbers in a data set, resulting in a figure that represents the overall effect.

Average Unit Cost

The total cost of goods available for sale divided by the number of units available for sale, used to value inventory.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, giving more weight to some numbers than others.