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it’s a Q from the mock exam
In the situation where the sole investment of a public company is its 30% interest in another company representing a significant influence in that other company, what is the value of “Investment in Associate” to be shown in the consolidated financial statements? The cost of the investment was $3m and the post-acquisition retained earnings of the associate were $1m. There was no impairment in the value of the investment.
the answer is “nil”. but why? where’s the trap?
Consolidated financial statements are prepared only in the situation where a company has a subsidiary (or more than one subsidiary at P2 level)
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