Where there are transactions between the investor and associate that result in an unrealised profit, the investor's share of the associate's profit is:
A) not adjusted at all regardless of whether the transaction is an upstream or downstream one.
B) adjusted only if the transaction is an upstream one.
C) adjusted only if the transaction is a downstream one.
D) adjusted regardless of whether the transaction is an upstream or downstream one.

Question

Quizplus · Accepted Answer

The investor's share of the associate's profit is adjusted regardless of whether the transaction is an upstream or downstream one. This is because any unrealized profit generated from transactions with the associate represents an asset or liability of the investor, and therefore should be reflected in the investor's share of the associate's profit.

Where There Are Transactions Between the Investor and Associate That