Question 1

An ownership structure in which Opal Limited acquires shares in Pearl Limited before Pearl Limited acquires shares in Quartz Limited is known as:

Accepted Answer

A)  a sequential acquisition. 
B)  a consequential acquisition. 
C)  an aggregate acquisition. 
D)  a multiple acquisition. 
A)  a sequential acquisition. 
B)  a consequential acquisition. 
C)  an aggregate acquisition. 
D)  a multiple acquisition. A

Question 2

Where a change in ownership interest results in the loss of control of a subsidiary:

Accepted Answer

A)  the gain or loss will be recorded in other comprehensive income. 
B)  the gain or loss in the parent's records will equal the consolidated gain or loss. 
C)  the remaining investment will be recorded at fair value in accordance with AASB 9 Financial Instruments. 
D)  the remaining investment will be accounted for in accordance with AASB 127 Separate Financial Statements. 
A)  the gain or loss will be recorded in other comprehensive income. 
B)  the gain or loss in the parent's records will equal the consolidated gain or loss. 
C)  the remaining investment will be recorded at fair value in accordance with AASB 9 Financial Instruments. 
D)  the remaining investment will be accounted for in accordance with AASB 127 Separate Financial Statements. C

Question 3

Dion Ltd acquired a 60% ownership interest in Sean Ltd on 30 June 2021. On the same day, Sean Ltd acquired a 70% ownership interest in Jayden Ltd. The following inter-entity transactions have taken place between the entities in the group during the years ended 30 June 2022 and 30 June 2023.
i. On 1 July 2021 Sean sold an item of plant to Jayden for a profit of $40 000. The remaining useful life of the plant at the date of transfer was 4 years.
ii. On 1 September 2021, Jayden paid a dividend of $50 000 from profits earned since 30 June 2021.
iii. Dion lent $60 000 to Sean on 1 January 2022. Interest charged on the loan for the year ended 30 June 2022 was $4000 and for the year ended 30 June 2023 was $8000.
iv. On 31 May 2022 Dion sold inventories to Jayden for $30 000. Profit earned on the sale was $4000. Jayden sold the inventories to external parties on 1 August 2022.
Details of profits earned by entities within the group for the years ended 30 June 2022 and 30 June 2023 are:
$\begin{array}{|l|r|r|}
\hline & \text { 30 June 2022 } & \text { 30 June 2023 } \
\hline \text { Dion } & 200000 & 250000 \
\hline \text { Sean } & 170000 & 140000 \
\hline \text { Jayden } & 40000 & 70000 \
\hline
\end{array}$ The tax rate is 30%.
The NCI share of profit in Jayden for the year ended 30 June 2023 is:

Accepted Answer

A)  $23 200. 
B)  $21 000. 
C)  $40 600. 
D)  $28 000. 
A)  $23 200. 
B)  $21 000. 
C)  $40 600. 
D)  $28 000. C

Question 4

When calculating the direct non-controlling interest share of equity, consolidation adjustments are needed to:

Accepted Answer

A)  eliminate intragroup advances. 
B)  recognise profits made on intragroup services. 
C)  partially eliminate profits on intragroup services. 
D)  remove unrealised profits or losses from intragroup transactions. 
A)  eliminate intragroup advances. 
B)  recognise profits made on intragroup services. 
C)  partially eliminate profits on intragroup services. 
D)  remove unrealised profits or losses from intragroup transactions.

Question 5

Koala Limited acquired a 75% ownership interest in Kookaburra Limited on 30 June 2021. On the same day, Kookaburra Limited acquired a 60% ownership interest in Kangaroo Limited. The following inter-entity transactions have taken place between the entities in the group during the years ended 30 June 2022 and 30 June 2023:
-On 1 July 2021 Kangaroo sold an item of plant to Koala for a profit of $40 000. The remaining useful life of the plant at the date of transfer was 2 years.
-On 1 September 2021, Kangaroo paid a dividend of $80 000 from profits earned prior to 30 June 2021.
-Koala lent $200 000 to Kangaroo on 1 January 2022. Interest charged on the loan for the year ended 30 June 2022 was $10 000 and for the year ended 30 June 2023 was $20 000.
-On 31 May 2023 Kookaburra sold inventories to Kangaroo for $10 000. Profit earned on the sale was $2 000. Kangaroo sold the inventories to external parties on 1 August 2023.
Details of profits earned by entities within the group for the years ended 30 June 2022 and 30 June 2023 are:
$\begin{array}{|l|r|r|}
\hline & \text { 30 June 2022 } & \text { 30 June 2023 } \
\hline \text { Koala } & 150000 & 175000 \
\hline \text { Kookaburra } & 95000 & 120000 \
\hline \text { Kangaroo } & 70000 & 85000 \
\hline
\end{array}$ The tax rate is 30%.
For the year ended 30 June 2023, the effect of the inter-entity sale of inventories on the NCI of Kangaroo Limited is:

Accepted Answer

A)  Nil. 
B)  $350 
C)  $210 
D)  $560 
A)  Nil. 
B)  $350 
C)  $210 
D)  $560

Question 6

In a multiple subsidiary structure, the indirect non-controlling interest is entitled to a proportionate share of:

Accepted Answer

A)  pre-acquisition equity. 
B)  post-acquisition equity only. 
C)  both pre- and post-acquisition equity. 
D)  neither pre- nor post-acquisition equity. 
A)  pre-acquisition equity. 
B)  post-acquisition equity only. 
C)  both pre- and post-acquisition equity. 
D)  neither pre- nor post-acquisition equity.

Question 7

In a group that has a multiple subsidiary structure, the indirect non-controlling interest is entitled to:

Accepted Answer

A)  no share of post-acquisition equity. 
B)  a proportionate share of pre-acquisition equity only. 
C)  a proportionate share of post-acquisition equity only. 
D)  no share of either pre-acquisition or post-acquisition equity. 
A)  no share of post-acquisition equity. 
B)  a proportionate share of pre-acquisition equity only. 
C)  a proportionate share of post-acquisition equity only. 
D)  no share of either pre-acquisition or post-acquisition equity.

Question 8

Phillip Limited has an ownership interest of 75% in a subsidiary Jacob Limited. Jacob Limited owns 80% of Baxter Limited. At acquisition date the retained earnings of Baxter Limited were $300 000. At consolidation date, the retained earnings of Baxter Limited were $840 000. The indirect non-controlling interest in the retained earnings of Baxter Limited is:

Accepted Answer

A)  $0 
B)  $108 000 
C)  $168 000 
D)  $324 000 
A)  $0 
B)  $108 000 
C)  $168 000 
D)  $324 000

Question 9

In a group that has a multiple subsidiary structure, the direct non-controlling interest is entitled to:

Accepted Answer

A)  no share of post-acquisition equity. 
B)  a proportionate share of pre-acquisition equity only. 
C)  a proportionate share of post-acquisition equity only. 
D)  a proportionate share of both pre-acquisition and post-acquisition equity. 
A)  no share of post-acquisition equity. 
B)  a proportionate share of pre-acquisition equity only. 
C)  a proportionate share of post-acquisition equity only. 
D)  a proportionate share of both pre-acquisition and post-acquisition equity.

Question 10

Consider the following economic entity structure.   The direct non-controlling interests (DNCI) and indirect non-controlling interests (INCI) are which of the following?
$\begin{array}{lcccc} 
& \text { DNCI in A Itd } & \text { INCI in A Itd } & \text { DNCI in B Itd } & \text { INCI in B Itd } \
\text { I. } & 20 \% & \text { Nil } & 70 \% & 6 \% \
\text { III. } & 20 \% & \text { Nil } & 10 \% & 6 \% \
\text { III. } & 20 \% & 18 \% & 20 \% & 12 \% \
\text { IV } & 20 \% & \text { Nil } & 30 \% & 12 \%
\end{array}$

Accepted Answer

A)  I. 
B)  II. 
C)  III. 
D)  IV. 
A)  I. 
B)  II. 
C)  III. 
D)  IV.

Question 11

Katie Limited has a 90% ownership interest in Max Limited. Max Limited has a 60% ownership interest in Josie Limited. As a result of these ownership interests, there is an indirect NCI in Josie Limited of:

Accepted Answer

A)  6% 
B)  10% 
C)  40% 
D)  54% 
A)  6% 
B)  10% 
C)  40% 
D)  54%

Question 12

Erin Limited acquired shares in James Limited. At the time of this acquisition James Limited already held shares in Cameron Limited. This form of acquisition of an indirect ownership interest, by Erin Limited in Cameron Limited, is known as a/an:

Accepted Answer

A)  unorthodox acquisition. 
B)  indirect acquisition. 
C)  non-sequential acquisition. 
D)  inconsequential acquisition. 
A)  unorthodox acquisition. 
B)  indirect acquisition. 
C)  non-sequential acquisition. 
D)  inconsequential acquisition.

Question 13

An indirect non-controlling interest arises:

Accepted Answer

A)  when a partly owned subsidiary owns shares in the parent entity. 
B)  when a wholly owned subsidiary owns shares in the parent entity. 
C)  only when a partly owned subsidiary holds shares in another subsidiary. 
D)  only when a wholly owned subsidiary owns shares in another subsidiary. 
A)  when a partly owned subsidiary owns shares in the parent entity. 
B)  when a wholly owned subsidiary owns shares in the parent entity. 
C)  only when a partly owned subsidiary holds shares in another subsidiary. 
D)  only when a wholly owned subsidiary owns shares in another subsidiary.

Question 14

In a multiple subsidiary structure, the direct non-controlling interest is entitled to a proportionate share of:

Accepted Answer

A)  pre-acquisition equity only. 
B)  post-acquisition amounts of equity only. 
C)  pre- and post-acquisition amounts of equity. 
D)  post-acquisition balance of retained earnings only. 
A)  pre-acquisition equity only. 
B)  post-acquisition amounts of equity only. 
C)  pre- and post-acquisition amounts of equity. 
D)  post-acquisition balance of retained earnings only.

Question 15

Dion Ltd acquired a 60% ownership interest in Sean Ltd on 30 June 2021. On the same day, Sean Ltd acquired a 70% ownership interest in Jayden Ltd. The following inter-entity transactions have taken place between the entities in the group during the years ended 30 June 2022 and 30 June 2023.
i. On 1 July 2021 Sean sold an item of plant to Jayden for a profit of $40 000. The remaining useful life of the plant at the date of transfer was 4 years.
ii. On 1 September 2021, Jayden paid a dividend of $50 000 from profits earned since 30 June 2021.
iii. Dion lent $60 000 to Sean on 1 January 2022. Interest charged on the loan for the year ended 30 June 2022 was $4000 and for the year ended 30 June 2023 was $8000.
iv. On 31 May 2022 Dion sold inventories to Jayden for $30 000. Profit earned on the sale was $4000. Jayden sold the inventories to external parties on 1 August 2022.
Details of profits earned by entities within the group for the years ended 30 June 2022 and 30 June 2023 are:
$\begin{array}{|l|r|r|}
\hline & \text { 30 June 2022 } & \text { 30 June 2023 } \
\hline \text { Dion } & 200000 & 250000 \
\hline \text { Sean } & 170000 & 140000 \
\hline \text { Jayden } & 40000 & 70000 \
\hline
\end{array}$ The tax rate is 30%.
For the sale of plant on 1 July 2021, what is the net NCI adjustment for the year ending 30 June 2022?

Accepted Answer

A)  $7 000 
B)  $8 400 
C)  $10 000 
D)  $11 200 
A)  $7 000 
B)  $8 400 
C)  $10 000 
D)  $11 200

Question 16

Merrivale Limited has an ownership interest of 80% in a subsidiary Bairnsdale Limited. Bairnsdale owns 60% of Clairmont Limited. Since acquisition date the retained earnings of Clairmont Limited have increased from $100 000 to $250 000. The direct non-controlling interest in the retained earnings of Clairmont is:

Accepted Answer

A)  $0. 
B)  $12 000. 
C)  $60 000. 
D)  $100 000. 
A)  $0. 
B)  $12 000. 
C)  $60 000. 
D)  $100 000.

Question 17

When calculating the direct non-controlling interest share of equity, consolidation adjustments are needed to:

Accepted Answer

A)  eliminate any realised profits or losses from inventory transfers. 
B)  partially eliminate any unrealised profits from inventory transfers. 
C)  recognise any unrealised profits or losses from intragroup service transfers. 
D)  fully eliminate any unrealised profits or losses from intragroup transactions. 
A)  eliminate any realised profits or losses from inventory transfers. 
B)  partially eliminate any unrealised profits from inventory transfers. 
C)  recognise any unrealised profits or losses from intragroup service transfers. 
D)  fully eliminate any unrealised profits or losses from intragroup transactions.

Question 18

Which of the following are other issues to consider in the preparation of the consolidated financial statements?
I. when a parent acquires a subsidiary after that subsidiary has acquired its own subsidiary.
II. when the parent changes its ownership interest in a subsidiary after the consolidation group has been formed.
III. where the parent has control over two subsidiaries but only has an ownership interest in one of those subsidiaries.

Accepted Answer

A)  I, II and III 
B)  I and II only 
C)  II and III only 
D)  I and III only 
A)  I, II and III 
B)  I and II only 
C)  II and III only 
D)  I and III only

Question 19

Dion Ltd acquired a 60% ownership interest in Sean Ltd on 30 June 2021. On the same day, Sean Ltd acquired a 70% ownership interest in Jayden Ltd. The following inter-entity transactions have taken place between the entities in the group during the years ended 30 June 2022 and 30 June 2023.
i. On 1 July 2021 Sean sold an item of plant to Jayden for a profit of $40 000. The remaining useful life of the plant at the date of transfer was 4 years.
ii. On 1 September 2021, Jayden paid a dividend of $50 000 from profits earned since 30 June 2021.
iii. Dion lent $60 000 to Sean on 1 January 2022. Interest charged on the loan for the year ended 30 June 2022 was $4000 and for the year ended 30 June 2023 was $8000.
iv. On 31 May 2022 Dion sold inventories to Jayden for $30 000. Profit earned on the sale was $4000. Jayden sold the inventories to external parties on 1 August 2022.
Details of profits earned by entities within the group for the years ended 30 June 2022 and 30 June 2023 are:
$\begin{array}{|l|r|r|}
\hline & \text { 30 June 2022 } & \text { 30 June 2023 } \
\hline \text { Dion } & 200000 & 250000 \
\hline \text { Sean } & 170000 & 140000 \
\hline \text { Jayden } & 40000 & 70000 \
\hline
\end{array}$ The tax rate is 30%.
The effect of the interest paid by Sean to Jayden on the NCI of Sean for the year ended 30 June 2023 is:

Accepted Answer

A)  an increase in NCI of $2 400 
B)  an increase in NCI of $3 200 
C)  an increase in NCI of $4 640 
D)  nil. 
A)  an increase in NCI of $2 400 
B)  an increase in NCI of $3 200 
C)  an increase in NCI of $4 640 
D)  nil.

Question 20

Consider the following economic entity structure:   The direct non-controlling interest (DNCI) and indirect non-controlling interest (INCI) are which of the following?
$\begin{array}{lcccc} 
& \text { DNCI in A Ltd } & \text { INCI in A Ltd } & \text { DNCI in B Ltd } & \text { INCI in B Ltd } \
\text { I. } & 10 \% & 14 \% & 40 \% & 6 \% \
\text { III. } & 40 \% & \text { Nil } & 10 \% & 6 \% \
\text { III. } & 10 \% & \text { Nil } & 40 \% & 6 \% \
\text { IV } & 40 \% & \text { Nil } & 10 \% & 54 \%
\end{array}$

Accepted Answer

A)  I. 
B)  II. 
C)  III. 
D)  IV. 
A)  I. 
B)  II. 
C)  III. 
D)  IV.

Exam 30: Consolidation: Other Issues

An ownership structure in which Opal Limited acquires shares in Pearl Limited before Pearl Limited acquires shares in Quartz Limited is known as:

Where a change in ownership interest results in the loss of control of a subsidiary:

When calculating the direct non-controlling interest share of equity, consolidation adjustments are needed to:

In a multiple subsidiary structure, the indirect non-controlling interest is entitled to a proportionate share of:

In a group that has a multiple subsidiary structure, the indirect non-controlling interest is entitled to:

In a group that has a multiple subsidiary structure, the direct non-controlling interest is entitled to:

Katie Limited has a 90% ownership interest in Max Limited. Max Limited has a 60% ownership interest in Josie Limited. As a result of these ownership interests, there is an indirect NCI in Josie Limited of:

Erin Limited acquired shares in James Limited. At the time of this acquisition James Limited already held shares in Cameron Limited. This form of acquisition of an indirect ownership interest, by Erin Limited in Cameron Limited, is known as a/an:

An indirect non-controlling interest arises:

In a multiple subsidiary structure, the direct non-controlling interest is entitled to a proportionate share of:

When calculating the direct non-controlling interest share of equity, consolidation adjustments are needed to:

Accounting Regulation and the Conceptual Framework

Application of Accounting Theory

Fair Value Measurement

Inventories

Property, Plant and Equipment

Intangible Assets

Impairment of Assets

Provisions, Contingent Liabilities and Contingent Assets

Employee Benefits

Leases

Financial Instruments

Income Taxes

Share Capital and Reserves

Share Based Payment

Revenue

Presentation of Financial Statements

Statement of Cash Flows

Accounting Policies and Other Disclosures

Earnings Per Share

Operating Segments

Related Party Disclosures

Sustainability and Corporate Social Responsibility Recording

Foreign Currency Transactions and Forward Exchange Contracts

Translation of Foreign Currency Financial Statements

Business Combinations

Consolidation: Controlled Entities

Consolidation: Wholly Owned Entities

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interest

Associates and Joint Ventures

Joint Arrangements

Insolvency and Liquidation

Accounting for Mineral Resources

Agriculture

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