Adjustments made for the purpose of calculating the incremental adjustment to the share of profit of an associate are:
A) recognised in the books of the investor.
B) recognised in the books of the investee.
C) notional adjustments and not included in the books of the investee.
D) relate to realised transactions and so are recognised directly by the investee.

Question

Quizplus · Accepted Answer

The adjustments are notional and are made for the purpose of calculating the investor's share of profit or loss of the associate, but they are not recorded in the books of the investee.

Adjustments Made for the Purpose of Calculating the Incremental Adjustment