CAF-6 · Chapter 10 · Question 14 of 15
How is 'Goodwill' related to an associate handled in the financial statements?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) it is included in the carrying amount of the investment and not amortized.
Explanation
For an associate, any goodwill is 'hidden' within the carrying amount of the investment. It is not recognized separately and not amortized, but it is tested for impairment as part of the overall investment.
More Associates (IAS 28) MCQs
- Q1An 'Associate' is an entity over which the investor has:
- Q2Significant influence is generally presumed to exist if the investor holds, directly or indirectly, what percentage of the voting power of…
- Q3Which accounting method is used to account for investments in associates in consolidated financial statements?
- Q4Under the 'Equity Method', the investment is initially recognized at:
- Q5When the associate pays a 'Dividend' to the investor, how is it recorded under the Equity Method?