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The following statements are based on PAS 28 (Investment in Associate):

Statement I: Generally, Investment in Associate shall be accounted for using the equity method.

Statement II: Cash dividend should not be treated as dividend income in all cases even if the investor loses significant influence over the associate.

Statement III: Impairment loss is recognized as the difference between recoverable amount and the carrying value of the investment in all cases.

3.

4.

a. Only statement I is true

b. Only statement II is true

c. Only statement III is false

d. All of the above statements are false

An entity has 20% investment in ordinary shares and 25% investment in preference shares over the investee. Which of the following is true?

a. Only the cash dividend received related to 20% is treated as dividend income

b. Only the cash dividend received related to 25% is treated as dividend income

c. Cash dividend received for both investments should be treated as dividend income

d. Cash dividend received for both investments should be treated as a deduction from

investment

If an associate has preference share, the proper way of computing the share in net income of an associate for the current year assuming the preference share is cumulative would be

a. Deduct the preference dividend for the current year only, whether declared or not

b. Deduct the preference dividend for the current year, if declared only

c. Deduct the preference dividend for the current year including any previous undeclared

preference dividend

d. Deduct both the preference and ordinary dividend for the current year only, whether

declared or not

Which of the following items should be treated as dividend income?

a. Reverse stock split

5.b. Same class of share dividend

c. Different class of share dividend

d. Cash dividend under equity method

6. Any instrument representing ownership shares and the right to acquire ownership share is

a. Debt security

b. Equity security

c. Shareholders equity

d. Marketable security

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