DOWNLOAD THE Test Bank for Modern Advanced Accounting in Canada 9th Editio
p p p p p p p p p p p
n Herauf p
Chapterp02p-pInvestmentspinpEquitypSecurities
Chapter 02 Inves p p
tments in Equity Securities
p p p
MultiplepChoicepQuestions
1. WhichpofpthepfollowingptypespofpsharepinvestmentpdoespNOTpqualifypaspapstrategicpi
nvestment?
A. Significantpinfluencepinvestments.
B. JointpControlpinvestments.
C. Investmentspwithoutpsignificantpinfluence.
D. Controlledpinvestments.
Accessibility:pKeyboardpNavigationp Bloo
ms:pRemember
Difficulty:pEasy
LearningpObjective:p02-
01pDescribepthepmainpchangespinpthepreportingpofpequitypinvestmentspoverptheppastp15pyears.p Topic:p02-
01pEquitypInvestments-ThepBigpPicture
2. Apsignificantpinfluencepinvestmentpisponepthat:
A. allowspthepinvestorptopexercisepsignificantpinfluencepoverpthepstrategicpoperatingpandpf
inancingppoliciespofpthepAssociate.
B. allowspthepinvestorptopexercisepsignificantpinfluencepoverponlypthepfinancingppoliciespofpthep
Associate.
C. allowspthepinvestorptopexercisepsignificantpinfluencepoverponlypthepoperatingppoliciespofpthep
Associate.
D. allowspthepinvestorptopexercisepsignificantpinfluencepoverpthepstrategicpandpoperatingp
policiespofpthepAssociate.
Accessibility:pKeyboardpNavigationp Bloo
ms:pRemember
Difficulty:pMedium
LearningpObjective:p02-
04pEvaluateprelevantpfactorsptopdeterminepwhetherpanpinvestorphaspsignificantpinfluencepoverpanpinvestee.p Topic:p02-
06pEquitypMethodpofpReportingpandpInvestmentpinpAssociate
2-1
mynursytest.store
,DOWNLOAD THE Test Bank for Modern Advanced Accounting in Canada 9th Editio
p p p p p p p p p p p
n Herauf p
Chapterp02p-pInvestmentspinpEquitypSecurities
3. Whatpispthepdominantpfactorpusedptopdistinguishpnon-
strategicpinvestmentspfrompsignificantpinfluencepinvestments?
A. Usepofpthepcostpmethodptopaccountpforpandpreportpthepinvestment.
B. Usepofpthepequitypmethodptopaccountpforpandpreportpthepinvestment.
C. Thepinvestor'spintentionptopestablishporpmaintainpaplong-
termpoperatingprelationshippwithpthepinvestee.
D. Theppercentagepofpequitypheldpbypthepinvestor.
Accessibility:pKeyboardpNavigationp Bloo
ms:pRemember
Difficulty:pEasy
LearningpObjective:p02-
01pDescribepthepmainpchangespinpthepreportingpofpequitypinvestmentspoverptheppastp15pyears.p Topic:p02-
01pEquitypInvestments-ThepBigpPicture
4. WhichpofpthepfollowingpstatementspispTRUEpunderpIFRSp9?
A. Allpunrealizedpgainspandplossesponpequitypinvestmentspflowpthroughpotherpcomprehensivepi
ncomep(OCI).
B. Unrealizedpgainspandplossesponpfairpvaluepthroughpprofitpandplossp(FVTPL)psecuritiesparepi
ncludedpinpOtherpComprehensivepIncome.
C. Unrealizedpgainspandplossesponpequitypinvestmentspmaypbepincludedpinpotherpcomprehe
nsivepincomep(OCI)ponlypifpapdecisionptopdopsopispmadepwhenpthepinvestmentpispacquired.
D. Otherpcomprehensivepincomep(OCI)pispincludedpinpnetpincome.
Accessibility:pKeyboardpNavigationp Bloo
ms:pRemember
Difficulty:pEasy
LearningpObjective:p02-
02pDistinguishpbetweenpthepvariousptypespofpequitypinvestmentspmeasuredpatpfairpvalue.p Topic:p02-
02pInvestmentspMeasuredpatpFairpValue
Topic:p02-03pIllustration
2-2
mynursytest.store
,DOWNLOAD THE Test Bank for Modern Advanced Accounting in Canada 9th Editio
p p p p p p p p p p p
n Herauf p
Chapterp02p-pInvestmentspinpEquitypSecurities
5. Gainspandplossesponpfairpvaluepthroughpprofitporplossp(FVTPL)psecurities:
A. arepincludedpinpnetpincome,pregardlesspofpwhetherptheypareprealizedporpnot.
B. arepincludedpinpnetpincomeponlypwhenpthepinvestmentphaspbecomeppermanentlypimpaired.
C. arepincludedpinpnetpincomeponlypwhenprealized.
D. arepneverprecordedpuntilpthepsecuritiesparepsold.
Accessibility:pKeyboardpNavigationp Bloo
ms:pRemember
Difficulty:pEasy
LearningpObjective:p02-
02pDistinguishpbetweenpthepvariousptypespofpequitypinvestmentspmeasuredpatpfairpvalue.p Topic:p02-
02pInvestmentspMeasuredpatpFairpValue
Topic:p02-03pIllustration
6. Howpareprealizedpgainspfrompthepsalepofpfairpvaluepthroughpotherpcomprehensivepincomep(
FVTOCI)pinvestmentspaccountedpforpunderpIFRSp9?
A. Theypareptransferredptopnetpincomepinpthepperiodpofpthepsale.
B. Theypremainpinpaccumulatedpotherpcomprehensivepincome.
C. Theypareptransferredpfrompaccumulatedpotherpcomprehensivepincomeptopretainedpearningsp
withoutpgoingpthroughpnetpincome.
D. Theypareptransferredptopcontributedpsurplus.
Accessibility:pKeyboardpNavigationp Bloo
ms:pRemember
Difficulty:pEasy
LearningpObjective:p02-
02pDistinguishpbetweenpthepvariousptypespofpequitypinvestmentspmeasuredpatpfairpvalue.p Topic:p02-
02pInvestmentspMeasuredpatpFairpValue
Topic:p02-03pIllustration
7. WhichpofpthepfollowingpstatementspispTRUEpregardingpthepequitypmethod?
A. Thepequitypmethodpispusedpforpreportingpgainsporplossespforpnon-strategicpinvestments.
B. Thepinvestor'spsharepofpthepassociate'spdividendspdeclaredpispreportedpasprevenue.
C. Thepinvestor'spinvestmentpinpthepassociatepchangespinpdirectprelationptopthepchangesptakingpp
lacepinpthepassociate'spequitypaccounts.
D. Thepequitypmethodpreportspunrealizedpgainspandplossesponprevaluationsptopfairpvaluepinpnetpi
ncome.
Accessibility:pKeyboardpNavigationp Bloo
ms:pRemember
Difficulty:pEasy
LearningpObjective:p02-
03pPreparepjournalpentriesptopaccountpforpinvestmentspunderpthepcostpandpequitypmethods.p Topic:p02-
07pIllustrationpofpEquitypMethodpBasics
Topic:p02-08pComplexitiespAssociatedpwithpthepEquitypMethod
2-3
mynursytest.store
, DOWNLOAD THE Test Bank for Modern Advanced Accounting in Canada 9th Editio
p p p p p p p p p p p
n Herauf p
Chapterp02p-pInvestmentspinpEquitypSecurities
8. Whatppercentagepofpownershippispusedpaspapguidelineptopdeterminepthatpsignificantpinfluencepe
xistspunderpIASp28pInvestmentspinpAssociatespandpJointpVentures?
A. 20%porpmore.
B. Lesspthanp20%.
C. Betweenp20%pandp50%.
D. 25%porpmore.
Accessibility:pKeyboardpNavigationp Bloo
ms:pRemember
Difficulty:pEasy
LearningpObjective:p02-
04pEvaluateprelevantpfactorsptopdeterminepwhetherpanpinvestorphaspsignificantpinfluencepoverpanpinvestee.p Topic:p02-
06pEquitypMethodpofpReportingpandpInvestmentpinpAssociate
9. Whichpofpthepfollowingpmethodspusespprocedurespclosestptopthosepusedpinppreparingpc
onsolidatedpfinancialpstatements?
A. Thepfairpvaluepthroughpprofitporplossp(FVTPL)papproach
B. Thepcostpmethod
C. Thepfairpvaluepthroughpotherpcomprehensivepincomep(FVTOCI)papproach
D. Thepequitypmethod
Accessibility:pKeyboardpNavigationp Bloo
ms:pRemember
Difficulty:pEasy
LearningpObjective:p02-
03pPreparepjournalpentriesptopaccountpforpinvestmentspunderpthepcostpandpequitypmethods.p Topic:p02-10pExample
10. WhichpofpthepfollowingpispNOTpappossiblepindicatorpofpsignificantpinfluence?
A. ThepinvestorphaspthepabilityptopelectpmembersptopthepBoardpofpDirectors.
B. Thepinvestorphasptheprightptopparticipatepinptheppolicy-makingpprocess.
C. ThepinvestorphaspengagedpinpnumerouspintercompanyptransactionspwithpthepAssociate.
D. ThepAssociate'spnewpCEOpwasppreviouslypCEOpofpthepinvestorpcompany.
Accessibility:pKeyboardpNavigationp Bloo
ms:pRemember
Difficulty:pEasy
LearningpObjective:p02-
04pEvaluateprelevantpfactorsptopdeterminepwhetherpanpinvestorphaspsignificantpinfluencepoverpanpinvestee.p Topic:p02-
06pEquitypMethodpofpReportingpandpInvestmentpinpAssociate
2-4
mynursytest.store
p p p p p p p p p p p
n Herauf p
Chapterp02p-pInvestmentspinpEquitypSecurities
Chapter 02 Inves p p
tments in Equity Securities
p p p
MultiplepChoicepQuestions
1. WhichpofpthepfollowingptypespofpsharepinvestmentpdoespNOTpqualifypaspapstrategicpi
nvestment?
A. Significantpinfluencepinvestments.
B. JointpControlpinvestments.
C. Investmentspwithoutpsignificantpinfluence.
D. Controlledpinvestments.
Accessibility:pKeyboardpNavigationp Bloo
ms:pRemember
Difficulty:pEasy
LearningpObjective:p02-
01pDescribepthepmainpchangespinpthepreportingpofpequitypinvestmentspoverptheppastp15pyears.p Topic:p02-
01pEquitypInvestments-ThepBigpPicture
2. Apsignificantpinfluencepinvestmentpisponepthat:
A. allowspthepinvestorptopexercisepsignificantpinfluencepoverpthepstrategicpoperatingpandpf
inancingppoliciespofpthepAssociate.
B. allowspthepinvestorptopexercisepsignificantpinfluencepoverponlypthepfinancingppoliciespofpthep
Associate.
C. allowspthepinvestorptopexercisepsignificantpinfluencepoverponlypthepoperatingppoliciespofpthep
Associate.
D. allowspthepinvestorptopexercisepsignificantpinfluencepoverpthepstrategicpandpoperatingp
policiespofpthepAssociate.
Accessibility:pKeyboardpNavigationp Bloo
ms:pRemember
Difficulty:pMedium
LearningpObjective:p02-
04pEvaluateprelevantpfactorsptopdeterminepwhetherpanpinvestorphaspsignificantpinfluencepoverpanpinvestee.p Topic:p02-
06pEquitypMethodpofpReportingpandpInvestmentpinpAssociate
2-1
mynursytest.store
,DOWNLOAD THE Test Bank for Modern Advanced Accounting in Canada 9th Editio
p p p p p p p p p p p
n Herauf p
Chapterp02p-pInvestmentspinpEquitypSecurities
3. Whatpispthepdominantpfactorpusedptopdistinguishpnon-
strategicpinvestmentspfrompsignificantpinfluencepinvestments?
A. Usepofpthepcostpmethodptopaccountpforpandpreportpthepinvestment.
B. Usepofpthepequitypmethodptopaccountpforpandpreportpthepinvestment.
C. Thepinvestor'spintentionptopestablishporpmaintainpaplong-
termpoperatingprelationshippwithpthepinvestee.
D. Theppercentagepofpequitypheldpbypthepinvestor.
Accessibility:pKeyboardpNavigationp Bloo
ms:pRemember
Difficulty:pEasy
LearningpObjective:p02-
01pDescribepthepmainpchangespinpthepreportingpofpequitypinvestmentspoverptheppastp15pyears.p Topic:p02-
01pEquitypInvestments-ThepBigpPicture
4. WhichpofpthepfollowingpstatementspispTRUEpunderpIFRSp9?
A. Allpunrealizedpgainspandplossesponpequitypinvestmentspflowpthroughpotherpcomprehensivepi
ncomep(OCI).
B. Unrealizedpgainspandplossesponpfairpvaluepthroughpprofitpandplossp(FVTPL)psecuritiesparepi
ncludedpinpOtherpComprehensivepIncome.
C. Unrealizedpgainspandplossesponpequitypinvestmentspmaypbepincludedpinpotherpcomprehe
nsivepincomep(OCI)ponlypifpapdecisionptopdopsopispmadepwhenpthepinvestmentpispacquired.
D. Otherpcomprehensivepincomep(OCI)pispincludedpinpnetpincome.
Accessibility:pKeyboardpNavigationp Bloo
ms:pRemember
Difficulty:pEasy
LearningpObjective:p02-
02pDistinguishpbetweenpthepvariousptypespofpequitypinvestmentspmeasuredpatpfairpvalue.p Topic:p02-
02pInvestmentspMeasuredpatpFairpValue
Topic:p02-03pIllustration
2-2
mynursytest.store
,DOWNLOAD THE Test Bank for Modern Advanced Accounting in Canada 9th Editio
p p p p p p p p p p p
n Herauf p
Chapterp02p-pInvestmentspinpEquitypSecurities
5. Gainspandplossesponpfairpvaluepthroughpprofitporplossp(FVTPL)psecurities:
A. arepincludedpinpnetpincome,pregardlesspofpwhetherptheypareprealizedporpnot.
B. arepincludedpinpnetpincomeponlypwhenpthepinvestmentphaspbecomeppermanentlypimpaired.
C. arepincludedpinpnetpincomeponlypwhenprealized.
D. arepneverprecordedpuntilpthepsecuritiesparepsold.
Accessibility:pKeyboardpNavigationp Bloo
ms:pRemember
Difficulty:pEasy
LearningpObjective:p02-
02pDistinguishpbetweenpthepvariousptypespofpequitypinvestmentspmeasuredpatpfairpvalue.p Topic:p02-
02pInvestmentspMeasuredpatpFairpValue
Topic:p02-03pIllustration
6. Howpareprealizedpgainspfrompthepsalepofpfairpvaluepthroughpotherpcomprehensivepincomep(
FVTOCI)pinvestmentspaccountedpforpunderpIFRSp9?
A. Theypareptransferredptopnetpincomepinpthepperiodpofpthepsale.
B. Theypremainpinpaccumulatedpotherpcomprehensivepincome.
C. Theypareptransferredpfrompaccumulatedpotherpcomprehensivepincomeptopretainedpearningsp
withoutpgoingpthroughpnetpincome.
D. Theypareptransferredptopcontributedpsurplus.
Accessibility:pKeyboardpNavigationp Bloo
ms:pRemember
Difficulty:pEasy
LearningpObjective:p02-
02pDistinguishpbetweenpthepvariousptypespofpequitypinvestmentspmeasuredpatpfairpvalue.p Topic:p02-
02pInvestmentspMeasuredpatpFairpValue
Topic:p02-03pIllustration
7. WhichpofpthepfollowingpstatementspispTRUEpregardingpthepequitypmethod?
A. Thepequitypmethodpispusedpforpreportingpgainsporplossespforpnon-strategicpinvestments.
B. Thepinvestor'spsharepofpthepassociate'spdividendspdeclaredpispreportedpasprevenue.
C. Thepinvestor'spinvestmentpinpthepassociatepchangespinpdirectprelationptopthepchangesptakingpp
lacepinpthepassociate'spequitypaccounts.
D. Thepequitypmethodpreportspunrealizedpgainspandplossesponprevaluationsptopfairpvaluepinpnetpi
ncome.
Accessibility:pKeyboardpNavigationp Bloo
ms:pRemember
Difficulty:pEasy
LearningpObjective:p02-
03pPreparepjournalpentriesptopaccountpforpinvestmentspunderpthepcostpandpequitypmethods.p Topic:p02-
07pIllustrationpofpEquitypMethodpBasics
Topic:p02-08pComplexitiespAssociatedpwithpthepEquitypMethod
2-3
mynursytest.store
, DOWNLOAD THE Test Bank for Modern Advanced Accounting in Canada 9th Editio
p p p p p p p p p p p
n Herauf p
Chapterp02p-pInvestmentspinpEquitypSecurities
8. Whatppercentagepofpownershippispusedpaspapguidelineptopdeterminepthatpsignificantpinfluencepe
xistspunderpIASp28pInvestmentspinpAssociatespandpJointpVentures?
A. 20%porpmore.
B. Lesspthanp20%.
C. Betweenp20%pandp50%.
D. 25%porpmore.
Accessibility:pKeyboardpNavigationp Bloo
ms:pRemember
Difficulty:pEasy
LearningpObjective:p02-
04pEvaluateprelevantpfactorsptopdeterminepwhetherpanpinvestorphaspsignificantpinfluencepoverpanpinvestee.p Topic:p02-
06pEquitypMethodpofpReportingpandpInvestmentpinpAssociate
9. Whichpofpthepfollowingpmethodspusespprocedurespclosestptopthosepusedpinppreparingpc
onsolidatedpfinancialpstatements?
A. Thepfairpvaluepthroughpprofitporplossp(FVTPL)papproach
B. Thepcostpmethod
C. Thepfairpvaluepthroughpotherpcomprehensivepincomep(FVTOCI)papproach
D. Thepequitypmethod
Accessibility:pKeyboardpNavigationp Bloo
ms:pRemember
Difficulty:pEasy
LearningpObjective:p02-
03pPreparepjournalpentriesptopaccountpforpinvestmentspunderpthepcostpandpequitypmethods.p Topic:p02-10pExample
10. WhichpofpthepfollowingpispNOTpappossiblepindicatorpofpsignificantpinfluence?
A. ThepinvestorphaspthepabilityptopelectpmembersptopthepBoardpofpDirectors.
B. Thepinvestorphasptheprightptopparticipatepinptheppolicy-makingpprocess.
C. ThepinvestorphaspengagedpinpnumerouspintercompanyptransactionspwithpthepAssociate.
D. ThepAssociate'spnewpCEOpwasppreviouslypCEOpofpthepinvestorpcompany.
Accessibility:pKeyboardpNavigationp Bloo
ms:pRemember
Difficulty:pEasy
LearningpObjective:p02-
04pEvaluateprelevantpfactorsptopdeterminepwhetherpanpinvestorphaspsignificantpinfluencepoverpanpinvestee.p Topic:p02-
06pEquitypMethodpofpReportingpandpInvestmentpinpAssociate
2-4
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