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1. An associate is an entity in which an investor has significant influence over the investeeWhich TWO of the following indicate the presence of significant influence?

1. The investor is able to insist that all of the sales of the investee are made to a subsidiary of the investor.
2. The investor owns 660,000 of the 3,000,000 equity voting shares of the investee.
3. The investor controls the votes of a majority of the board members.
4. The investor has representation on the board of directors of the investee.
2. Filiatra PLC’s only investment is a 40% holding of the equity shares of Kyparissia PLC acquired on 1 May, 2015. The acquisition had cost $850,000 comprised of an issue of 300,000 shares in Filiatra PLC that were worth $1.70 each on the date of acquisition plus a further $340,000 immediate cash payment. At the date of acquisition the retained earnings in Kyparissia PLC were $475,000 and at the year end this had risen to $500,000.In the year to 31 December, 2015 Kyparissia PLC achieved a profit before tax of $45,000 and after tax a profit of $30,000.
At what value will the investment in Kyparissia PLC be shown In the consolidated statement of financial position for Filiatra PLC as at 31 December, 2015? Answer to the nearest $000
3. Sapphire Co owns 30% of Emerald Co and exercises significant influence over it. Emerald Co sold goods to Sapphire Co for $160,000. Emerald Co applies a one-third mark-up on cost. Sapphire Co still had 25% of these goods in inventory at the year end.What amount should be deducted from consolidated retained earnings in respect of this transaction?
4. How should an associate be accounted for in the consolidated statement of profit or loss?
5. Jarvis Co owns 30% of McLintock Co. During the year to 31 December 20X4 McLintock Co sold $2 million of goods to Jarvis Co, of which 40% were still held in inventory by Jarvis at the year end. McLintock Co applies a mark-up of 25% on all goods sold.

What effect would the above transactions have on group inventory at 31 December 20X4?

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