Schweser Practice Exam 1 - Afternoon session #99

CFA Level II FRA
#1

Not going to rehash the question here but basically the question asks you to review three statements and say how many are correct.

Statement 1 is - The applicability of both Equity and Acquisition methods is identical under GAAP and IFRS.

My thinking was that this was not true because of the differences in treatment of Goodwill … you could end up with the same but not necessarily if you go with the Partial Goodwill method.

Can anyone set me straight?

#2

It’s a poorly worded question. I don’t think they meant the actual numbers after applying the two, because you’re right the Goodwill could be different. I think what they’re trying to drive home here is when is it applicable to use either method… control, vs influence, vs ownership holding %, etc.

#3

Applicability as in the conditions to apply either, not the accounting treatments of each.

#4

Ah … I think I see now. Not the most clear wording :slight_smile: Thanks.