If an Investment in an Associate Entity Were to Be

question 44

Multiple Choice

If an investment in an associate entity were to be accounted for using the cost method,the investment is initially recognised at its cost of acquisition and:

• A) All dividends declared in the post-acquisition period are treated as a recovery of the investment.
• B) If the shares in the associate are traded in an active market, market value increments or decrements are recognised as gains or losses at each reporting date.
• C) Dividends declared from pre-acquisition profits are deducted from the carrying amount of the investment, even if these dividends are declared subsequent to acquisition.
• D) None of the above.

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Definitions:

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