Carlon Ltd, a publicly listed company, has a 19.2% shareholding in another entity. The accountant is considering whether or not this investment satisfies the definition of an associate under AASB 128/IAS 28 and the impacts this decision will have on the company’s financial statements.

Required:
Using the table below, compare and contrast the impacts on the Statement of Financial Position and Statement of Profit or Loss and OCI of applying the equity method to an investment with those of applying the cost method to the same investment.                                         (6 marks)

                                                     

	Equity method	Cost method
Statement of Profit or Loss
Statement of Other Comprehensive Income
Statement of Financial Position

Answer rating: 100% (QA)

Equity method Cost method Statement of profit or loss When using the equity method an investor recog... View the full answer