permit processing or inspection.

20.Which is a required disclosure regarding interest? All of these are required

disclosure

regarding interest.

Chapter 18
1. It is an entity over which the inventor has significant influence. Associate

2. Which statement best describes significant influence? The power to

participate in the
financial and operating policy decisions of an entity.

3. Which statement is true concerning significant influence? All of these are true
about
significance influence.

4. Goodwill arising from an investment in associate is included in the carrying

amount of
the investment and not amortized.

5. When an entity holds between 20% and 50% of the voting power of an
investee, which statement is true? The investor should use the equity
method unless circumstances indicate that it is unable to exercise
 significant influence over the investee.

6. Which statement is incorrect concerning the equity method? Dividends

received from the investee are accounted for as dividend income.

7. If an associate has outstanding cumulative preference shares, the investor

computes share of profit or loss after adjusting for the preference
dividends, whether or not the dividends have been declared.

8. An investor shall discontinue the equity method when the investor ceases to
have significant influence over the associate.

9. When an investment ceases to be an associate, the fair value of the investment

at the date when it ceases to be an associate is regarded as its fair value on
initial recognition as a financial asset.

10.The equity method is not applicable under all of the following circumstances
except the investor is in the process of filing financial statements with SEC for the
purpose of issuing debt and equity instruments in a public market.

11.After the date of acquisition, the investment account using the equity method
would be increased by its share of the earnings of the investee, and decreased
by its share of the losses of the investee.

12.Under the equity method of accounting for investments, an investor recognizes its
share of the earnings in the period in which the earnings are reported by the
investee.

13.When an investor uses the equity method to account for investment in ordinary
shares, cash dividends received by the investor from the investee are recorded as a
deduction from the investment account.

14.When an investor uses the equity method to account for investment in ordinary
shares, the investment account will be increased when the investor recognizes a
proportionate interest in the net income of the investee.