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Which of the following statements is/are incorrect?

1 A Co owns 25% of the ordinary share capital of B Co, which means that B Co is an associate of A Co.

2 C Co can appoint 4 out of 6 directors to the board of D Co, which means that C Co has control over D Co.

3 E Co has the power to govern the financial and operating policies of F Co, which means that F Co is an associate of E Co.

4 G Co owns 19% of the share capital of H Co, but by agreement with the majority shareholder, has control over the financial and operating policies of H Co, so H Co is an associate of G Co.

A

1 and 2 only

B

1, 2 and 3 only

C

3 and 4 only

D

4 only

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Chapter23Introductiontoconsolidatedfinancialstatements

3 and 4 are incorrect.

An investor must have significant influence over the investee in order for the investee to be classified as an

associate. If the investor holds 20% or more of the voting power of the entity, significant influence can be assumed (unless it can clearly be shown that this is not the case). Therefore 1 is true. For an investee to be classified as a subsidiary, the investor (the parent) must have control over the investee (the subsidiary). Control can be demonstrated if the investor has the power to appoint the majority of board members of the investee, so 2 is true.3is incorrect because the power to govern the financial and operating policies of F make F a subsidiary of E.Likewise,4 is incorrect as the power to govern the financial and operating policies of H makes H a subsidiary of G

多做几道

Which accounting concept should be considered if the owner of a business takes goods from inventory for his own personal

use?

A

The fair presentation concept

B

The accruals concept

C

The going concern concept

D

The business entity concept

Which accounting concept should be considered if the owner of a business takes goods from inventory for his own personal

use?

A

The fair presentation concept

B

The accruals concept

C

The going concern concept

D

The business entity concept

According to the IASB's Conceptual Framework for Financial Reporting, which TWO of the following are part of faithful

representation?1 It is neutral2 It is relevant3 It is presented fairly4 It is free from material error

A

1 and 2

B

2 and 3

C

1 and 4

D

3 and4

Which of the following accounting concepts means that similar items should receive a similar accounting treatment?

A

Going concern

B

Accruals

C

Matching

D

Consistency

Listed below are some characteristics of financial information.1 Relevance2 Consistency3 Faithful representation4 Accuracy

Which of these are qualitative characteristics of financial information according to the IASB's Conceptual Framework for

Financial Reporting?

A

1 and 2 only

B

2 and 4 only

C

3 and 4 only

D

1 and 3 only

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