SAS 11

Name: Leni Ridlibo Class Number: BLOCK 3

Section: BSA 1-COC Schedule: TF 8 AM- 11 AM Date: March 12, 2022

Pretest 11-1
Note: I highlighted all of my answers ma’am.
Instructions: Encircle the letter of the best answer to each questions.
1. These are those presented in addition to consolidated financial statements or the
financial statements of an Entity with an investment in associate or joint venture
that is accounted for using equity method in accordance with PAS 28.
a. Individual financial statements
b. Separate financial statements
c. Consolidate financial statements
d. Equity financial statements
2. Entity A acquired an investment in associate for ₱1M many years ago. At the end
of the current reporting period, the investment has a fair value of ₱2.9M. If the
equity method is used, the investment would have a current carrying amount of
₱2.6M. In Entity A’s separate financial statements, the investment should be
valued at
a. 1,000,000.
b. 2,600,000.
c. 2,900,000.
d. Any of these, as a matter of an accounting policy choice
3. Which of the following best describes the term ‘significant influence’ as used
under PAS 28?
a. holding of 20% interest in an investee.
b. The ability to control an investee’s relevant activities through holding of
significant portion of the investee’s voting rights.
c. The power to participate in the financial and operating policy
decisions of an entity.
d. The contractually agreed sharing of profits and losses in an investee.
4. Entity A owns 25% of the voting rights in Entity B. However, Entity A has no
representation on the board of directors of Entity B. Which of the following
statements is correct?
a. Entity A cannot be presumed to have significant influence over Entity B
because Entity A does not have board representation.
b. Entity A is presumed to have signification influence over Entity B because
it holds 25% or more of the voting rights in Entity B.
 c. Entity A is presumed to have signification influence over Entity B
because it holds 20% or more of the voting rights in Entity B.
d. Representation on an investee’s board of directors is never considered
when determining the existence of significant influence.
5. On January 1, 20x1, Entity A acquires 25% interest in Entity B for ₱800,000.
Entity B reports profit of ₱1,000,000 and declares dividends of ₱100,000 in 20x1.
How much is the carrying amount of the investment in associate on December
31, 20x1?
a. 800,000
b. 1,250,000
c. 1,000,000
d. 1,025,000
6. The Hanwell Company acquired a 30% equity interest in The Northfield
Company for CU400,000 on 1 January 20X6. In the year to 31 December 20X6
Northfield earned profits of CU80,000 and paid no dividend. In the year to 31
December 20X7 Northfield incurred losses of CU32,000 and paid a dividend of
CU10,000. In Hanwell’s consolidated statement of financial position at 31
December 20X7, what should be the carrying amount of its interest in Northfield,
according to PAS 28 Investments in associates?
a. CU438,00
b. CU411,400
c. CU414,400
d. CU400,000

PROBLEM 1 & 2 (309)

PROBLEM 1: MULTIPILE CHOICE
1. According to PAS 27, which of the following is required to present separate
financial statements?
Answer: D. None of these
PROBLEM 2:FOR CLASSROOM DISCUSSION
2. According to PAS 27, investment in subsidiaries, associates or joint ventures are
accounted for in the separate financial statements
Answer: D. any of these, as a matter of accounting policy choice.

PROBLEM 1 No. 1-4 (318-319)

PROBLEM 1: MULTIPLE CHOICE
1. According to PAS 28, significant influence is presumed to exist when the investor
Answer: B. holds 20% or more of the voting power of the investee.
2. PAS 28 requires the use of the equity method. Under this method, an investment
in associate or joint venture is initially and subsequently measured at
Initial measurement Subsequent measurement
Answer: B. Cost cost, adjusted for the investor’s share in the
investee’s changes in equity
3. Under the equity method, which of the following decreases the carry amount of
an investment in associate or joint venture?
Answer: C. share in the dividends declares by the investee
4. Entity A acquired 20% interest in Entity B on March 31, 20x1 for P 500,000.
Entity B reports profit of P 1M in 20x1, which was earned evenly throughout the
period, and declares dividends of P 300,000 at year-end. In 20x2, Entity B
reports loss of. P 200,000 and declares no dividends. What is the carrying
amount of the investment in associate on December 31, 20x1?
Answer: A. 550,000