Question 1

Entities included in a wholly owned group as defined by AASB 124 include:

Accepted Answer

A)  entities that have an equity ownership of 20 per cent or greater in an entity that is a subsidiary of an entity that is wholly owned by a party related to the reporting entity. 
B)  entities that are an associate or joint venture of the other entity. 
C)  entities that are controlled or have significant influence exercised over them by an entity that is wholly owned by a related party of the reporting entity. 
D)  subsidiary companies that are wholly owned by a parent company. 
A)  entities that have an equity ownership of 20 per cent or greater in an entity that is a subsidiary of an entity that is wholly owned by a party related to the reporting entity. 
B)  entities that are an associate or joint venture of the other entity. 
C)  entities that are controlled or have significant influence exercised over them by an entity that is wholly owned by a related party of the reporting entity. 
D)  subsidiary companies that are wholly owned by a parent company.

Question 2

The most common form of relationship based on significant influence is that between:

Accepted Answer

A)  subsidiary and parent entity. 
B)  associate and parent entity. 
C)  investor and its associate. 
D)  subsidiary and another subsidiary. 
A)  subsidiary and parent entity. 
B)  associate and parent entity. 
C)  investor and its associate. 
D)  subsidiary and another subsidiary.

Question 3

Some business leaders argue that related-party transactions have benefits for the reporting entity.The benefits are said to include:

Accepted Answer

A)  lower legal costs associated with contracts. 
B)  increased profits for the related entity. 
C)  reduced competition among suppliers. 
D)  better, more reliable service and better prices. 
A)  lower legal costs associated with contracts. 
B)  increased profits for the related entity. 
C)  reduced competition among suppliers. 
D)  better, more reliable service and better prices.

Question 4

Which of the following transactions is usually not considered a 'related party' in AASB 124?

Accepted Answer

A)  leasing arrangement with a local government 
B)  sale of inventory to a subsidiary 
C)  write-off of an immaterial loan to a director 
D)  sale of non-current assets to an associate 
A)  leasing arrangement with a local government 
B)  sale of inventory to a subsidiary 
C)  write-off of an immaterial loan to a director 
D)  sale of non-current assets to an associate

Question 5

Which of the following disclosures on key management personnel is/are required in AASB 124 for disclosing entities?

Accepted Answer

A)  name of the person 
B)  position held 
C)  qualification(s) of the person 
D)  name of the person and position held 
A)  name of the person 
B)  position held 
C)  qualification(s) of the person 
D)  name of the person and position held

Question 6

The most common example of a relationship reflecting control is that between an investor and its associate company.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is typically a related-party transaction within the provisions of AASB 124 Related Party Disclosures?

Accepted Answer

A)  transactions between two entities with a common non-executive director 
B)  transactions between two entities that share control over another joint venture 
C)  transactions between an entity and its biggest finance provider 
D)  transactions between entities under common control of another entity 
A)  transactions between two entities with a common non-executive director 
B)  transactions between two entities that share control over another joint venture 
C)  transactions between an entity and its biggest finance provider 
D)  transactions between entities under common control of another entity

Question 8

In AASB 124 Related Party Disclosures,two entities having a director in common are assumed related parties.

Accepted Answer

A) True 
 B)False

Question 9

With respect to loans made to a related party,which of the following statements is correct in accordance with AASB 124?

Accepted Answer

A)  The details of each aggregate of loans made to key management personnel and their related parties must be disclosed. 
B)  The details of each aggregate of loans made to a key management person and their related parties whose loan exceeded $100 000 at any time during the period must be disclosed. 
C)  The details of material loans made to key management personnel and their related parties must be disclosed. 
D)  The details of each aggregate of loans made to key management personnel and their related parties, and the details of each aggregate of loans made to a key management person and their related parties whose loan exceeded $100 000 at any time during the period must be disclosed. 
A)  The details of each aggregate of loans made to key management personnel and their related parties must be disclosed. 
B)  The details of each aggregate of loans made to a key management person and their related parties whose loan exceeded $100 000 at any time during the period must be disclosed. 
C)  The details of material loans made to key management personnel and their related parties must be disclosed. 
D)  The details of each aggregate of loans made to key management personnel and their related parties, and the details of each aggregate of loans made to a key management person and their related parties whose loan exceeded $100 000 at any time during the period must be disclosed.

Question 10

AASB 124 requires a standard,detailed set of disclosure requirements for all related-party transactions.

Accepted Answer

A) True 
 B)False

Question 11

The Business Council of Australia (BCA)is opposed to the extensive disclosure requirements of directors' and executives' remuneration.Discuss the unintended consequences put forward by BCA in their submission to the Parliamentary Joint Committee on Corporations and Financial Services on the CLERP Bill.Comment on the validity of the points raised by BCA.

Accepted Answer

BCA was quite opposed to the extensive d

Question 12

Bartholomeusz writes that the non-binding votes by shareholders on remuneration introduced under the Corporate Law Economic Reform Program (CLERP)9 is described as an 'empty gesture' in response to fierce criticism of excessive remuneration.Discuss.

Accepted Answer

The introduction of non-binding votes by

Question 13

The annual remuneration report of the entity is to be put to a non-binding vote of the shareholders.

Accepted Answer

A) True 
 B)False

Question 14

The following diagram shows five companies and their associated equity ownership percentages.Which of the companies shown would most likely be considered related entities?

Accepted Answer

A)  F and H, G and H, H and I, I and J are related parties. 
B)  G and H, H and I, H and J, J and G are related parties. 
C)  G and H, H and I, H and J, J and G, F and H are related parties. 
D)  G and H, H and I, H and J, J and G, I and J are related parties. 
A)  F and H, G and H, H and I, I and J are related parties. 
B)  G and H, H and I, H and J, J and G are related parties. 
C)  G and H, H and I, H and J, J and G, F and H are related parties. 
D)  G and H, H and I, H and J, J and G, I and J are related parties.

Question 15

The disclosures that AASB 124 requires for other related parties are:

Accepted Answer

A)  limited to the aggregate amount, nature and type of transaction. 
B)  largely the same as the disclosure requirements for directors of the entity. 
C)  fairly consistent with the requirements for the wholly owned group. 
D)  limited to the nature and terms and conditions of each different type of transaction. 
A)  limited to the aggregate amount, nature and type of transaction. 
B)  largely the same as the disclosure requirements for directors of the entity. 
C)  fairly consistent with the requirements for the wholly owned group. 
D)  limited to the nature and terms and conditions of each different type of transaction.

Question 16

The following diagram shows four companies and their associated equity ownership percentages.Which of the companies shown would most likely be considered related entities?

Accepted Answer

A)  F and H, G and H, H and I are related parties. 
B)  F and G, F and H, G and H, H and I are related parties. 
C)  F and G, F and H, G and H, H and I, I and G are related parties. 
D)  F and G, F and H, G and H, H and I, I and G, I and F are related parties. 
A)  F and H, G and H, H and I are related parties. 
B)  F and G, F and H, G and H, H and I are related parties. 
C)  F and G, F and H, G and H, H and I, I and G are related parties. 
D)  F and G, F and H, G and H, H and I, I and G, I and F are related parties.

Question 17

In the following diagram,which entities would be included in a wholly owned group according to the definition in AASB 124?

Accepted Answer

A)  F Ltd, G Ltd, H Ltd, I Ltd 
B)  F Ltd, G Ltd, K Ltd, H Ltd, I Ltd 
C)  G Ltd, K Ltd, H Ltd, I Ltd 
D)  G Ltd, K Ltd, H Ltd, I Ltd, J Ltd 
A)  F Ltd, G Ltd, H Ltd, I Ltd 
B)  F Ltd, G Ltd, K Ltd, H Ltd, I Ltd 
C)  G Ltd, K Ltd, H Ltd, I Ltd 
D)  G Ltd, K Ltd, H Ltd, I Ltd, J Ltd

Question 18

Directors' income is defined in AASB 124 as including only:

Accepted Answer

A)  the regularly paid salary of the directors. 
B)  the regularly paid salary, any bonuses paid and retirement benefits. 
C)  bonuses, commissions or salaries, retirement benefits and any brokerage or commission made on the subscription or agreement to subscribe to equity instruments in the entity or any of its related parties. 
D)  none of the given answers. 
A)  the regularly paid salary of the directors. 
B)  the regularly paid salary, any bonuses paid and retirement benefits. 
C)  bonuses, commissions or salaries, retirement benefits and any brokerage or commission made on the subscription or agreement to subscribe to equity instruments in the entity or any of its related parties. 
D)  none of the given answers.

Question 19

AASB 124 requires an entity to disclose total compensation of key management personnel.What items are included in key management personnel's remuneration/compensation?

Accepted Answer

Although the defined term 'compensation'

Question 20

AASB 124 Related Party Disclosures,requires relationships between parents and subsidiaries be disclosed irrespective of whether there have been transactions between those related parties.

Accepted Answer

A) True 
 B)False

Exam 25: Related Party Disclosures

Entities included in a wholly owned group as defined by AASB 124 include:

The most common form of relationship based on significant influence is that between:

Some business leaders argue that related-party transactions have benefits for the reporting entity.The benefits are said to include:

Which of the following transactions is usually not considered a 'related party' in AASB 124?

Which of the following disclosures on key management personnel is/are required in AASB 124 for disclosing entities?

The most common example of a relationship reflecting control is that between an investor and its associate company.

Which of the following is typically a related-party transaction within the provisions of AASB 124 Related Party Disclosures?

In AASB 124 Related Party Disclosures,two entities having a director in common are assumed related parties.

With respect to loans made to a related party,which of the following statements is correct in accordance with AASB 124?

AASB 124 requires a standard,detailed set of disclosure requirements for all related-party transactions.

Bartholomeusz writes that the non-binding votes by shareholders on remuneration introduced under the Corporate Law Economic Reform Program (CLERP)9 is described as an 'empty gesture' in response to fierce criticism of excessive remuneration.Discuss.

The annual remuneration report of the entity is to be put to a non-binding vote of the shareholders.

The following diagram shows five companies and their associated equity ownership percentages.Which of the companies shown would most likely be considered related entities?

The disclosures that AASB 124 requires for other related parties are:

The following diagram shows four companies and their associated equity ownership percentages.Which of the companies shown would most likely be considered related entities?

In the following diagram,which entities would be included in a wholly owned group according to the definition in AASB 124?

Directors' income is defined in AASB 124 as including only:

AASB 124 requires an entity to disclose total compensation of key management personnel.What items are included in key management personnel's remuneration/compensation?

AASB 124 Related Party Disclosures,requires relationships between parents and subsidiaries be disclosed irrespective of whether there have been transactions between those related parties.

An Overview of the Australian External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

Theories of Accounting

An Overview of Accounting for Assets

Depreciation of Property, plant and Equipment

Revaluations and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

Accounting for Heritage Assets and Biological Assets

An Overview of Accounting for Liabilities

Accounting for Leases

Accounting for Employee Benefits

Share Capital and Reserves

Accounting for Financial Instruments

Revenue Recognition Issues

The Statement of Comprehensive Income and Statement of Changes in Equity

Accounting for Share-Based Payments

Accounting for Income Taxes

The Statement of Cash Flows

Accounting for the Extractive Industries

Accounting for General Insurance Contracts

Accounting for Superannuation Plans

Events Occurring After the End of the Reporting Period

Segment Reporting

Earnings Per Share

Accounting for Group Structures

Further Consolidation Issues I: Accounting for Intragroup Transactions

Further Consolidation Issues II: Accounting for Non-Controlling Interests

Further Consolidation Issues IV: Accounting for Changes in the Degree of Ownership of a Subsidiary

Accounting for Equity Investments,including Investments in Associates and Joint Arrangements

Accounting for Foreign Currency Transactions

Translating the Financial Statements of Foreign Operations

Accounting for Corporate Social Responsibility

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