1. In its financial statements, P Co. uses the fair value method of accounting for its 15% ownership of S Co. At December 31, 2019, P has a receivable from S. How should the receivable be reported in P Company's December 31, 2019 statement of financial position?
   1. The total receivable should be offset against S Co.'s payable to P Co. without separate disclosure.
   2. The total receivable should be included as part of the investment in S Co., without separate disclosure.
   3. The total receivable should be reported separately.
   4. 85% of the receivable should be reported separately, with the balance to offset against S Co.'s payable to P.
2. The retained earnings that appear on the consolidated statement of financial position of a parent company and its 60% owned subsidiary company is
   1. The parent company's retained earnings and 100% of the subsidiary company's retained earnings.
   2. The parent company's retained earnings only.
   3. The parent's retained earnings and 40% of the subsidiary's retained earnings.
   4. 40% of the subsidiary's retained earnings only.
3. An investor buys 25% interest of an investee in 2022 and an additional 55% interest in 2024. The step acquisition will require the original 25% interest to be
   1. Adjusted to fair value at the date of the second acquisition with a resulting gain or loss.
   2. Maintained at its original value.
   3. Adjusted to its equity method balance at the date of the second acquisition
   4. Adjusted to fair value at the date of the second acquisition with a resulting adjustment to Share Premium.

Answer rating: 100% (QA)

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