Question 1

Mutual shareholdings exist when:

Accepted Answer

A) a parent owns shares in a subsidiary; 
B) a subsidiary owns shares in a parent only; 
C) a parent owns shares in a subsidiary and in a joint venture; 
D) a parent and a subsidiary own shares in each other. 
A) a parent owns shares in a subsidiary; 
B) a subsidiary owns shares in a parent only; 
C) a parent owns shares in a subsidiary and in a joint venture; 
D) a parent and a subsidiary own shares in each other. D

Question 2

The effect of the interest paid by Bottle Brush to Waratah on the NCI of Bottle Brush for the year ended 30 June 20X7 is:

Accepted Answer

A) NIL 
B) increase in MI of $1,120 
C) increase in MI of $1,600 
D) increase in MI of $2,800 
A) NIL 
B) increase in MI of $1,120 
C) increase in MI of $1,600 
D) increase in MI of $2,800 A

Question 3

Parent Limited has an 80% ownership interest in Subsidiary One Limited.Subsidiary One Limited has a 65% ownership interest in Subsidiary Two Limited.As a result of these ownership interests,there is a direct ownership interest in Subsidiary Two Limited amounting to:

Accepted Answer

A) 52%; 
B) 48%; 
C) 35%; 
D) 13%. 
A) 52%; 
B) 48%; 
C) 35%; 
D) 13%. C

Question 4

In a situation where a parent acquires shares in a subsidiary,and the subsidiary later acquires a controlling interest in another entity,the ownership structure is:

Accepted Answer

A) sequential; 
B) non-sequential; 
C) ordered; 
D) random. 
A) sequential; 
B) non-sequential; 
C) ordered; 
D) random.

Question 5

Consider the following economic entity structure:

80%

70%
 
The direct non-controlling interest (DNCI)and indirect non-controlling interest (INCI)are:

Accepted Answer

The answer of Consider the following economic entity structure:
 
...

Question 6

Klang Limited has a direct ownership interest of 90% in Liao Limited.Liao Limited has a direct ownership interest of 70% in Meng Limited.The indirect non-controlling interest in Meng Limited is:

Accepted Answer

A) 70%; 
B) 63%; 
C) 30%; 
D) 7%. 
A) 70%; 
B) 63%; 
C) 30%; 
D) 7%.

Question 7

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

Accepted Answer

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

Question 8

Outline the difference between a direct non-controlling interest and an indirect non-controlling interest.

Accepted Answer

A direct non-controlling interest occurs

Question 9

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

Accepted Answer

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

Question 10

The INCI in B Ltd is the same group of shareholders as the:

Accepted Answer

A) DNCI in B Ltd; 
B) INCI in A Ltd; 
C) DNCI in A Ltd; 
D) shareholders in P Ltd. 
A) DNCI in B Ltd; 
B) INCI in A Ltd; 
C) DNCI in A Ltd; 
D) shareholders in P Ltd.

Question 11

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

Accepted Answer

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

Question 12

A Limited has a 60% ownership interest in B Limited.B Limited has a 70% ownership interest in C Limited.As a result of these ownership interests,there is an indirect ownership interest in C Limited of:

Accepted Answer

A) 60%; 
B) 42%; 
C) 40%; 
D) 18%. 
A) 60%; 
B) 42%; 
C) 40%; 
D) 18%.

Question 13

How does an indirect non-controlling interest arise?

Accepted Answer

An indirect non-controlling interest is

Question 14

An ownership structure in which Orange Limited acquires shares in Pear Limited before Pear Limited acquires shares in Quince Limited is known as:

Accepted Answer

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

Question 15

Explain how the indirect non-controlling interest is calculated in relation to dividends.

Accepted Answer

The indirect non-controlling interest is

Question 16

Explain how the indirect non-controlling interest share of a subsidiary is calculated.

Accepted Answer

The indirect non-controlling interest re

Question 17

The NCI share of profit in Honeydew for the year ended 30 June 20X7 is:

Accepted Answer

A) $9,800 
B) $10,500 
C) $20,300 
D) $22,330 
A) $9,800 
B) $10,500 
C) $20,300 
D) $22,330

Question 18

The pre-acquisition entry for the Hayward group in order to consolidate a 60% interest in a subsidiary contained the following debits.Retained earnings $3 000,Share capital $6 000,General Reserve $1 200,BCVR $600.The interest in equity attributable to the direct non-controlling interest is:

Accepted Answer

A) $6 800; 
B) $7 200; 
C) $10 800; 
D) $18 000. 
A) $6 800; 
B) $7 200; 
C) $10 800; 
D) $18 000.

Question 19

The NCI share of profit in Bottle Brush for the year ended 30 June 20X6 is:

Accepted Answer

A) $11,600 
B) $13,000 
C) $13,800 
D) $29,800 
A) $11,600 
B) $13,000 
C) $13,800 
D) $29,800

Question 20

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

Accepted Answer

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

Exam 19: Consolidation: Other Issues

Mutual shareholdings exist when:

The effect of the interest paid by Bottle Brush to Waratah on the NCI of Bottle Brush for the year ended 30 June 20X7 is:

Parent Limited has an 80% ownership interest in Subsidiary One Limited.Subsidiary One Limited has a 65% ownership interest in Subsidiary Two Limited.As a result of these ownership interests,there is a direct ownership interest in Subsidiary Two Limited amounting to:

In a situation where a parent acquires shares in a subsidiary,and the subsidiary later acquires a controlling interest in another entity,the ownership structure is:

Consider the following economic entity structure: 80% 70% The direct non-controlling interest (DNCI)and indirect non-controlling interest (INCI)are:

Klang Limited has a direct ownership interest of 90% in Liao Limited.Liao Limited has a direct ownership interest of 70% in Meng Limited.The indirect non-controlling interest in Meng Limited is:

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

Outline the difference between a direct non-controlling interest and an indirect non-controlling interest.

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

The INCI in B Ltd is the same group of shareholders as the:

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

A Limited has a 60% ownership interest in B Limited.B Limited has a 70% ownership interest in C Limited.As a result of these ownership interests,there is an indirect ownership interest in C Limited of:

How does an indirect non-controlling interest arise?

An ownership structure in which Orange Limited acquires shares in Pear Limited before Pear Limited acquires shares in Quince Limited is known as:

Explain how the indirect non-controlling interest is calculated in relation to dividends.

Explain how the indirect non-controlling interest share of a subsidiary is calculated.

The NCI share of profit in Honeydew for the year ended 30 June 20X7 is:

The pre-acquisition entry for the Hayward group in order to consolidate a 60% interest in a subsidiary contained the following debits.Retained earnings $3 000,Share capital $6 000,General Reserve $1 200,BCVR $600.The interest in equity attributable to the direct non-controlling interest is:

The NCI share of profit in Bottle Brush for the year ended 30 June 20X6 is:

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

Nature and Regulation of Companies

Financing Company Operations

Company Operations

Fundamental Concepts of Corporate Governance

Fair Value Measurement

Accounting for Company Income Tax

Property, Plant and Equipment

Leases

Intangible Assets

Business Combinations

Impairment of Assets

Disclosure: Legal Requirements and Accounting Polices

Disclosure: Presentation of Financial Statements

Disclosure: Statement of Cash Flows

Consolidation: Controlled Entities

Consolidation: Wholly Owned Subsidiaries

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interest

Accounting for Investments in Associates

Insolvency and Liquidation

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