Exam 9: Consolidation: Controlled Entities

Juliet Ltd is a listed public company and has a 60% controlling interest in Marley Pty Ltd. Marley Pty Ltd is the parent of Butterscotch Pty Ltd. In which of the following situations will Marley Pty Ltd not be required to prepare consolidated financial statements?

Where an entity controls another entity but holds less than half of the other entity's voting rights, AASB 12/IFRS 12 Disclosure of Interests in Other Entities, requires which of the following disclosures be made?

Where there is a substantial non-controlling interest and the non-controlling shareholders do not object, AASB 10/IFRS 10 Consolidated Financial Statements allows such subsidiaries to be excluded from consolidation.

Unless the parent trades any debt or equity instruments on a securities exchange, the parent is relieved from the requirement to prepare consolidated financial statements.

For the purposes of consolidated financial reporting, a group is:

According to AASB 10/IFRS 10 Consolidated Financial Statements, which of the following factors indicate the existence of control? I. Possessing existing rights that give the current ability to direct the relevant activities. II) Shared power in the governance of financial and operating policies of another entity so as to obtain benefits. III) The power to have significant influence over the operating policies of an entity so as to obtain benefits. IV) Ownership of more than 50% of the voting rights in the subsidiary.

Which of the following is not one of the three elements of control according to AASB 10/IFRS 10 Consolidated Financial Statements?

When deciding whether or not one entity controls another entity:

One of the major problems with control where an investor owns less than a majority of the investee's voting shares is the issue of temporary control.

Kowloon Limited is an entity listed in Hong Kong. Kowloon Limited holds a 100% investment in Aussie Pty Ltd, an Australian based company, who in turn holds a 90% interest in Skippy Pty Ltd. Aussie Pty Ltd and the Aussie group (comprising Aussie and Skippy) are both non-reporting entities. Which of the following statements is correct?

Control is defined within AASB 10/IFRS 10 Consolidated Financial Statements as the ability to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Which of the following is not included in the definition of an investment entity as per IFRS 10 Consolidated Financial Statements?

Potential voting rights that cannot be exercised or converted until a future date or until the occurrence of a future event are not taken into account when determining an entity's capacity to control another entity.

Where an entity directly holds more than 50% of the voting rights of another entity, they are presumed to have power in accordance with AASB 10/IFRS 10 Consolidated Financial Statements.

The reasons for the preparation of consolidated financial statements include which of the following?

Which of the following statements is correct?

A single set of financial statements that combines the separate sets of financial statements for all entities within an economic entity, is known as:

There are no disclosures specified by AASB 10/IFRS 10 Consolidated Financial Statements.

Which of the following is not one of the factors in AASB 3/IFRS 3 Business Combinations that guide the identification of the acquirer where 2 companies combine to form a new company?

According to AASB 10/IFRS 10 Consolidated Financial Statements, all parent entities are required to present consolidated statements unless which of the following conditions apply to them? I The parent is a wholly owned subsidiary. II The parent is a partly owned subsidiary and its other owners do not object to the non-presentation of consolidated financial statements. III The parent's debt or equity securities are traded in a public market. IV The parent is not in the process of applying to issue any securities in a public market.