ACA Corporate Reporting Practice Questions - ICAEW ACA Advanced Level Corporate Reporting Exam

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An investor holds 30% of the voting shares of an investee and has significant influence but not control. Under IAS 28, how should this investment generally be accounted for in the consolidated financial statements?

Consolidated line by line with recognition of NCI Equity method: initially at cost, then adjusted for the investor's share of post-acquisition profits or losses At fair value through profit or loss only, as a financial asset under IFRS 9 Proportionate consolidation of the investor's share of each asset and liability

Correct Answer:

Equity method: initially at cost, then adjusted for the investor's share of post-acquisition profits or losses

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