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CIMAPRA19-F02-1 Exam - Topic 1 Question 24 Discussion

GH acquired3,000,000 of the 12,000,000 equity shares of JK. All shares carried equal voting rights and no other single shareholder of JK held more than 10% of the equity shares. GH has the power to participate in the financial and operating policy decisions but not control them.Based on the information provided above, how would GH's investment in JK be accounted for in its consolidated financial statements?
A) Associate
B) Joint venture
C) Joint arrangement
D) Financial asset

CIMAPRA19-F02-1 Exam - Topic 1 Question 24 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam
Question #: 24
Topic #: 1
[All CIMAPRA19-F02-1 Questions]

GH acquired3,000,000 of the 12,000,000 equity shares of JK. All shares carried equal voting rights and no other single shareholder of JK held more than 10% of the equity shares. GH has the power to participate in the financial and operating policy decisions but not control them.

Based on the information provided above, how would GH's investment in JK be accounted for in its consolidated financial statements?

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Suggested Answer: A

by Helaine at May 07, 2022, 03:20 PM

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Blair
10 months ago
I thought it could be a Financial Asset, but I see the Associate point.
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Bo
10 months ago
Definitely an Associate, given the voting rights and share distribution.
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Marti
11 months ago
Wait, are we sure it’s not a Joint Venture? Seems like a gray area.
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Terrilyn
11 months ago
Totally agree, they have significant influence but not control.
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Chaya
11 months ago
GH's investment would be accounted for as an Associate.
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Stefania
11 months ago
This is a good question to test our understanding of GL account types and how they relate to the transaction details. I'll need to carefully consider the options and make sure I understand the relationship between the main/subtransactions and the GL accounts.
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Brent
11 months ago
I'm not sure I fully understand the purpose of the MimicExplainer. Does it just mimic the original model, or does it actually provide the feature importance calculations? I'll need to do some more research on that.
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Domitila
11 months ago
Always go for the most comprehensive approach. I think option A with written guidelines plus coding instructions gives physicians a clear, reference-able resource they can review anytime.
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Golda
11 months ago
These medical organizational structure questions always trip me up. I'll eliminate options that seem too similar and compare the subtle differences carefully.
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