CAF-6 · Chapter 10 · Question 8 of 15
If an investor's share of 'Losses' of an associate equals or exceeds its interest in the associate, the investor:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Discontinues recognizing its share of further losses.
Explanation
Once the investment's carrying amount is reduced to zero, additional losses are generally not recognized unless the investor has incurred legal or constructive obligations on behalf of the associate.
More Associates (IAS 28) MCQs
- Q10In the Statement of Financial Position, an investment in an associate is classified as a:
- Q11The 'Carrying Amount' of an associate at the reporting date is calculated as:
- Q12Which of the following is NOT required for the application of the equity method?
- Q13If an investment in an associate becomes a subsidiary (investor obtains control), the equity method is:
- Q14How is 'Goodwill' related to an associate handled in the financial statements?