Clausen Ltd

question 32

Multiple Choice

Clausen Ltd. has a passive investment in Kaitlin Ltd. Clausen has elected to treat Kaitlin as a fair value through other comprehensive income (OCI) investment under IFRS 9 Financial Instruments. Which of the following statements is TRUE?

• A)Dividends that are a return of capital from Kaitlin are reported as a separate component of Clausen's shareholders' equity.
• B)Year to year changes in the fair value of the Investment in Kaitlin are reported as net income in Clausen's SCI.
• C)Fair value accumulated gains and losses in the Investment in Kaitlin should be reported as a separate component in Clausen's shareholders' equity.
• D)Dividends from Kaitlin are reported as other comprehensive income in Clausen's Statement of Comprehensive Income.

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Definitions:

Basalt

A fine-grained, dark volcanic rock created through the quick cooling of basaltic lava when it is exposed at, or just beneath, the earth's surface.

Felsic

Refers to igneous rocks that are rich in lighter elements like silicon, oxygen, aluminum, sodium, and potassium.

Pyroclastic Flow

A swiftly flowing stream of heated gas and volcanic substances that descends a volcano's slope when there's a violent eruption.

Fluid Lava

Molten rock material expelled by a volcano during an eruption, characterized by its low viscosity which allows it to flow easily.