Does renault have insignificant influence

Assignment Help Accounting Basics
Reference no: EM13995398

The following are excerpts from the 2008 financial statements of Renault, a large French automobile manufacturer.
Investment in Nissan: Renault holds 44.3% ownership in Nissan. Renault and Nissan have chosen to develop a unique type of alliance between two distinct companies with common interests, uniting forces to achieve optimum performance. The Alliance is organized so as to preserve individual brand identities and respect each company's corporate culture. Consequently:

  • Renault does not hold the majority of Nissan voting rights;
  • The terms of the Renault-Nissan agreements do not entitle Renault to appoint the majority of Nissan directors, nor to hold the majority of voting rights at meetings of Nissan's Board of Directors. . . .
  • Renault can neither use nor influence the use of Nissan's assets in the same way as its own assets.
  • Renault provides no guarantees in respect of Nissan's debt.

In view of this situation, Renault is considered to exercise significant influence in Nissan, and therefore uses the equity method to include its investment in Nissan in the consolidation. . . .
Nissan financial information under IFRS: (When accounting for its investment in Nissan, Renault makes restatements that) include adjustments for harmonization of accounting standards and the adjustments to fair value of assets and liabilities applied by Renault at the time of acquisitions in 1999 and 2002.

Required:

1. Go to Deloitte's IAS Plus website and examine the summary of the IASB's IAS No. 28 (at https://www.iasplus.com/standard/ias28.htm), which governs application of the equity method. Focus on two areas: Identification of Associates and Applying the Equity Method of Accounting.

2. Evaluate Renault's decision to use the equity method to account for its investment in Nissan. Does Renault have insignificant influence, significant influence, or control?

3. Evaluate the fact that, when accounting for its investment in Nissan under the equity method, Renault makes adjustments that take into account the fair value of assets and liabilities at the time Renault invested in Nissan. Give an example of the sorts of adjustments that might be made. Are such adjustments consistent with IFRS? With U.S. GAAP? Explain.

4. Evaluate the fact that, when accounting for its investment in Nissan under the equity method, Renault makes adjustments for harmonization of accounting standards. Are such adjustments consistent with IFRS? With U.S. GAAP? Explain.

 

Reference no: EM13995398

Questions Cloud

Imposition of the death penalty for serious crime : The death penalty is legal in 32 states but recently some states have suspended imposing the sentence due to a shortage of drugs in lethal injection. Do you agree or disagree with the imposition of the death penalty for serious crime
Which equation represents a reaction : Which equation represents a reaction that provides the heat of formation of CHCl3 (l)? a)   C (s)  +  H (g)  +  Cl3 (g)    à        CHCl3  (l) b)   2 C (s)   +   3Cl2 (g)  + 2H(g)         à        2 CHCl3 (l)
What is your reasoning as to why people commit criminal acts : There are many different theories as to why people commit crimes, such as, self interest, social environment, opportunities, and wanting more power to name a few. What is your reasoning as to why people commit criminal acts
Simple linear regression model : 1. For the y and x values listed in file XR15066, obtain the simple linear regression equation, then analyze the residuals by (a) constructing a histogram, (b) using a normal probability plot, (c) plotting the residuals versus the x values, and ..
Does renault have insignificant influence : Evaluate Renault's decision to use the equity method to account for its investment in Nissan. Does Renault have insignificant influence, significant influence, or control?
What is ratio of heat produced in a to that produced in b : Two wires are the same diameter but wire A is three times the length of wire B. What is the ratio of the heat produced in A to that produced in B if the same potential is placed across the ends of the two wires? Show your calculations.
Identify and interpret the slope : At the 0.10 level of significance, could the population slope and the population coefficient of cor- relation be zero? Determine the 90% confidence interval for the population slope.
Find the magnitude and direction of the net magnetic field : The two wires shown in the figure below are separated by d = 8.8 cm and carry currents of I = 4.80 A in opposite directions. Find the magnitude and direction of the net magnetic field at a point midway between the wires.
Prepare a proforma statement of cash flows : Prepare a proforma statement of cash flows for 1992 using the indirect method - what are the main sources and uses of cash revealed by your analysis?

Reviews

Write a Review

 

Accounting Basics Questions & Answers

  Which one of the following statements concerning the

which one of the following statements concerning the required rate of return on stocks is true?what is the yield to

  What is the balance in cash

During February 2008, its first month of operations, the Rutwing Enterprises issued stock in exchange for cash of $25,000. Rutwing had cash revenues of $4,000 and paid expenses of $7,000. Assuming no other transactions impacted the cash account, w..

  Equivalent unit for conversion costs-processing department

The ending inventorty was 75% complete with respect to materials and 20% complete with respect to conversion costs. What are the equivalent units for conversion costs for the month in the first processing department?

  How did the acquisition of internode affect iinet?

How did the acquisition of Internode affect iiNet? You should briefly discuss the impacts in different aspects, e.g., how iiNet's liquidity and solvency was affected. Overall, do you think the acquisition was beneficial to iiNet? Provide your reasons..

  Horton foods bakes and sells 1000 dozen bagels each week to

horton foods bakes and sells 1000 dozen bagels each week to food service operations. among the costs are bakers

  The following questions deal with the application of ifrs

The following questions deal with the application of IFRS in accounting for accounting changes and errors.

  In analyzing legal expense for the boastman bottle company

in analyzing legal expense for the boastman bottle company mary little cpa observes that the company has paid legal

  The canadian instruments company cic uses a decentralized

the canadian instruments company cic uses a decentralized form of organizational structure and considers each of its

  Prepare schedules to compute the ending inventory

The Frate Company was formed on December 1, 2009. The following information is available from Frate's inventory records for Product Ply:

  Dividends declared and paid during the current year

Required: 1. Complete the following: Shares issued _____.  Shares outstanding _____. 2. The balance in Additional Paid-in Capital would be $ _____. 3. Earnings per share is $ _____. Round your answer to two decimal places. 4. Total dividends paid on ..

  The interest at city bank is 6 and the interest at state

jamaal is planning to invest up to 17000 in city bank or state bank. he wants to invest at least 4000 in city bank but

  Users of financial statements rely on the information

users of financial statements rely on the information available to them to decide whether to invest in a company or

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd