THEORIES

1. This is standard prescribes the accounting and disclosure requirements for investments in subsidiaries, associates
and joint ventures when an entity prepares separate financial statements.
a. PAS 12
b. PAS 17
c. PAS 16
d. PAS 27

2. Separate financial statements of investment in subsidiaries, associates or joint ventures are accounted for using:
a. At cost
b. In accordance with PFRS 9 financial instruments
c. Using the equity method under PAS 28 Investments in Associates and Joint Ventures
d. Either a, b, or c

3. When an investment in equity securities is accounted for at cost:

a. The investment is initially measured at the transaction price less transaction costs directly related to the
acquisition and subsequently measured at cost. Changes in fair values subsequent to acquisition date are
ignored.
b. The investment is initially measured at the transaction price plus transaction costs directly related to the
acquisition and subsequently measured at cost. Changes in fair values subsequent to acquisition date are
ignored.
c. The investment is initially measured at the transaction price plus transaction costs directly related to the
acquisition and subsequently measured at cost. Changes in fair values subsequent to acquisition date are
accounted for.
d. The investment is initially measured at the transaction price and subsequently measured at cost. The transaction
costs directly related to the acquisition are expensed outright. Changes in fair values subsequent to acquisition
date are accounted for.

4. When an investment in equity securities is accounted at fair value in accordance with PFRS 9:
a. Dividends from the investment are recognized in profit or loss when the entity's right to receive the dividends is
established.
b. Dividends from the investment are recognized in profit or loss even the entity's right to receive the dividends is not
yet established.
c. Dividends from the investment are recognized in OCI when the entity's right to receive the dividends is
established.
d. Dividends from the investment are not recognized regardless if the entity's right to receive the dividends is
established or not.

5. Investments classified as held for sale (or included in a disposal group classified as held for sale') are accounted for in
accordance with
a. PFRS 9 Investment in Subsidiary, Associates, and Joint Ventures
b. PAS 16 Investment in Subsidiary, Associates, and Joint Ventures
c. PFRS 5 Non-current Assets Held for Sale and Discontinued Operations.
d. PFRS 10 Investment in Subsidiary, Associates, and Joint Ventures

PROBLEMS

6. D
7. D
8. D
9. D
10. D
11. D
12. D
13. D
14. D
15. D
ANSWER KEYS

1. D
PAS 27 prescribes the accounting and disclosure requirements for investments in subsidiaries, associates and joint
ventures when an entity prepares separate financial statements. PAS 27 does not mandate which entities should
produce separate financial statement. PAS 27 is applied when an entity chooses or is required by law to present
separate financial statements that comply with PFRSs.

2. D
Separate financial statements are prepared in accordance with all applicable PFRS, except that, investments in
subsidiaries, associates or joint ventures are accounted for either at cost, in accordance with PFRS 9 financial
instruments, or using the equity method under PAS 28 Investments in Associates and Joint Ventures. The entity
applies the same accounting for each investment category (i.e., subsidiaries, associate, and joint ventures)

3. B
When an investment in equity securities is accounted for at cost:
i. The investment is initially measured at the transaction price plus transaction costs directly related to the
acquisition and subsequently measured at cost. Changes in fair values subsequent to acquisition date are
ignored.
ii. Dividends from the investment are recognized in profit or loss when the entity's right to receive the dividends
is established.
iii. The entity shall not recognize any share from the profit of the investee.

4. A
When an investment in equity securities is accounted at fair value in accordance with PFRS 9:
i. The investment is initially measured at the transaction price plus, the case of FVOCI, transaction costs
directly related to the acquisition. Transaction costs incurred on investments are expensed immediately.
ii. The investment is subsequent measured at fair value. Changes in fair value are recognized in profit or loss for
FVPL and recognized in other comprehensive income for FVOCI.
iii. Dividends from the investment are recognized in profit or loss when the entity's right to receive the dividends
is established.
iv. The entity shall not recognize any share from the profit of the investee

5. C
Investments classified as held for sale (or included in a disposal group classified as held for sale') are accounted for in
accordance with PFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”. The measurement of
investments accounted for in accordance with PFRS 9 is not changed in such circumstances.

If an entity elects, in accordance with PAS 28 “Investments in Associates and Joint Ventures”, to measure its
investments in associates or joint ventures at fair value through profit or loss (FVPL) in accordance with PFRS 9, it
shall also account for those investments in the same way in its separate financial statements.