Skip to content

ACCA Applied Knowledge · Financial Accounting · Associates

Alpha holds 30% of the equity shares of Beta and has significant influence over it. In Alpha's consolidated statement of profit or loss, how is the investment in Beta reflected?

The group's share of the associate's profit after tax is shown as a single line in the consolidated statement of profit or loss. This is the equity method required by IAS 28, rather than line-by-line combination, which applies to subsidiaries.

  1. AAlpha's share of Beta's profit after tax is shown as a single line itemCorrect
  2. BBeta's revenue and expenses are added line by line to Alpha's
  3. COnly dividends received from Beta are included in revenue
  4. D30% of Beta's revenue and costs are included line by line

Explanation

Under IAS 28 the equity method is used for associates. The group statement of profit or loss includes one line showing the group's share of the associate's profit after tax. Line-by-line addition, whether full or proportionate, is not used for associates.

Did you get it right without looking?

One question tells you little. A timed set on Associates shows your real accuracy, how long you take and where you lose marks.

Practise AssociatesFree diagnostic mock

More Associates questions