Why is the answer c? And what is consolidation method? All I know is financial assets, equity method, acquisition method, or proportionate consolidation method allowed under ifrs.
Btw if they are anal with the wording in other sections they need to stay consistent.
Strawberry and Glace have significant influence —> Investment in associates (equity method) Cupernico have control & highest ownership —> Business Combination (Consolidation) Answer A was wrong Answer B was wrong because this is not a joint venture (SHARED CONTROL). Therefore answer C was correct.
The 2 other companes are using equity method, so it comes to cupernico. It could be classifies as either a business combination ( acquisition method) or a joint venture (us gaap. Equity or Proportionate consolidation method) the wording in c brings me to a
its C because the passage had stated that Cupernico had significant control of the company due to board of director seats and therefore control. JVs are shared control. In this case, one would have to consolidate using the acq method.
what is consolidation method? Don’t say it means proportionate consolidation because in 41, in the answers it says cupernico must use equity method under gaap.
you need to count that the accounting method changed for both companies from 2009 to 2010, Glace (IFRS)- 2009, significant inf- Equity method -2010, joint control (like joint venture) propotionate consolidation Cupernico (GAAP) - 2009, contol- consolidation - 2010, joint control (like joint venture)- Equity method. so the question 41 is asked if Glace use Equity method (like Cupernico) compared to its IFRS (proportionate consolidation). Welcome to the accounting real world, it does change all the time (IFRS changes every year!) glad they didn’t inc the latest IFRS changes this year in the books.
Yes. Because after the 2009 agreement, in 2010, Glacie acquired Strawberry so the new Glacie and Cup were 50/50 owners in the newly created JV. The new firm was a jointly controlled firm. So if Glacie was using prop cons in the JV (IFRS allows both prop and equity), its sales would be higher than if it had done it under equity method. So Net margin would be higher and ROE is constant under all methods.