Which of the following should be accounted for in the consolidated financial statements of Company
A、using equity accounting? 1 An investment in 51% of the ordinary shares of W Co 2 An investment in 20% of the preference (non-voting) shares of X Co 3 An investment in 33% of the ordinary shares of Y Co 4 An investment in 20% of the ordinary shares of Z Co, and an agreement with other shareholders to appoint the majority of the directors to the board of Z Co
A、1 and 4 only
B、2 only
C、3 only
D、3 and 4 only
A、using equity accounting? 1 An investment in 51% of the ordinary shares of W Co 2 An investment in 20% of the preference (non-voting) shares of X Co 3 An investment in 33% of the ordinary shares of Y Co 4 An investment in 20% of the ordinary shares of Z Co, and an agreement with other shareholders to appoint the majority of the directors to the board of Z Co
A、1 and 4 only
B、2 only
C、3 only
D、3 and 4 only
【参考答案及解析】
Investments in associates are accounted for using equity accounting. An investment is an associate if the investor has significant influence over the investee. Significant influence is presumed if the investor owns at least 20% of the voting equity of the investee. Therefore 2 is not an associate. 1 and 4 are subsidiaries as Company A investor has control over them.
Investments in associates are accounted for using equity accounting. An investment is an associate if the investor has significant influence over the investee. Significant influence is presumed if the investor owns at least 20% of the voting equity of the investee. Therefore 2 is not an associate. 1 and 4 are subsidiaries as Company A investor has control over them.