1. Under IFRS, methods for equity investments reporting are designed primarily based on a:

Ownership percentages

Investment objectives

Information reliability

All of above

2. Which of the following statements is NOT true?

1. The acquisition method is always a better method for consolidation than cost or equity method.
2. The entity theory could be preferred over the parent company extension theory since it takes a full consideration of NCI.
3. The fair value approach is designed to report profits earned from equity investments.
4. Managers theory/method selection for consolidation will not cause any economic impacts on investment decision-making under the market efficiency hypothesis.

3. Which of the following statements is true?

1. Using cash payment for acquisition will result in the same reporting of identifiable net assets as share payment.
2. Using price paid by the Parent to value shares not acquired will always result in a lower debt/equity ratio than using market price.
3. Using the entity theory must result in a reporting of higher NCI than using the parent company extension theory.
4. Using fair value approach will always result in a reporting of higher equity investments than cost method.

4. Which of the following statements is NOT true?

1. Total acquisition differentials could depend on the acquirers bargaining power.
2. Total acquisition differentials could be higher when subsidiaries report goodwill, other things being equal.
3. Total acquisition differential will not be affected by the Parents contingent liabilities or assets resulted from the business combination.
4. Total acquisition differential could represent no impacts on consolidated earnings.

5. Which of the followings is true?

1. Consolidated statements are independent of the subsidiarys ownership structure.
2. Financing policy for acquisition transactions is irrelevant to consolidation.
3. For each business combination, managers need to select among the two allowable theories for consolidation (i.e., entity vs. parent company extension theory).
4. None of above