The correct answers are:

• An associate is accounted for using the equity method

• Sales to the associate are not removed from group revenue on consolidation.

Intra-group receivables and payables are NOT cancelled for an associate. This has effectively already been done by only bringing in the net assets and after tax profit of the associate.

Non-controlling interests DO NOT include that of the associate. As we only ever bring in our share of the net assets or profit of the associate there is no non-controlling interest. Non-controlling interest applies to a subsidiary because we bring in 100% of its assets and profit and then have to recognise that a percentage of this does not belong to us.

We are still required, however, to make adjustments for any unrealised profits arising from transactions between an associate and the parent company (or any of the parent's subsidiaries).