Exam 24: Consolidation: Wholly Owned Subsidiaries

If the end of a subsidiary's reporting period does not coincide with the end of the parent entity's reporting period, adjustments must be made for the effects of significant events that occur between these dates as long as the difference between the ends reporting periods differs by no more than:

On 1 July 20X6, P Limited acquired all the issued shares of S Limited for $50 000 when the equity of S Limited consisted of:

The effect of the pre-acquisition entry is to eliminate the asset, 'Shares in subsidiary' and replace it with the:

The key principle relating to the disclosure of information about business combinations is to disclose information that:

When a parent entity has previously held an investment in a subsidiary prior to gaining control the effect on the consolidation process is as follows:

Entity A and Entity B agree to merge. The capital structure of each entity is: Entity A - 100 ordinary shares Entity B - 60 ordinary shares Entity A issues 2.5 shares in exchange for each ordinary share of Entity B. All of Entity B's shareholders exchange their shares for Entity A shares. Which of the following statement is correct?

On 1 January 20X2 A Ltd acquired all the issued shares in B Ltd. At that date the inventory of B Ltd had a carrying amount of $5000 less than its fair value. The inventory was all sold by 30 June 20X4. At 30 June 20X5 the consolidation adjustment against inventory in relation to the transaction will be:

A Limited acquired B Limited for $110 000. At acquisition date the fair value of the B Limited's Land asset was $40 000 and the book value was $30 000. If the company tax rate is 30%, which of the following is the appropriate adjustment to recognise the tax effect of the business combination revaluation of land?

Eeny Limited has two subsidiary entities, Meeny Limited and Miney Limited. Eeny Limited owns 100% of the shares in both entities. Details of issued share capital are:

A typical pre-acquisition consolidation worksheet entry to eliminate a parent entity's investment in a subsidiary would include the following entry:

Consolidated financial statements are prepared using the following presentation method:

Which of the following items cannot be revalued in the books of the subsidiary?

Excelsior Limited acquired 100% of the shares in Arthur Limited on a cum.div. basis for $100 000. At acquisition date the subsidiary had a declared dividend of $5000. The pre-acquisition entry must include the following line:

Where a parent entity acquires an investment in a subsidiary for less than the fair value of the identifiable net assets and contingent liabilities acquired, it is necessary to recognise the item in the consolidation worksheet as a gain in bargain purchase and then to:

In a business combination the revaluation of non-current assets in the records of the subsidiary means that the subsidiary has effectively adopted the:

When preparing consolidated financial statements, adjustments for pre-acquisition equity and inter-entity transactions are recorded:

In relation to pre-acquisition of a subsidiary entity, which of the following events can cause a change in the pre-acquisition entry subsequent to acquisition date? I Transfers from post-acquisition retained earnings II Bonus dividends paid from pre-acquisition equity III Transfers from pre-acquisition retained earnings IV Impairment of goodwill

Leader Limited acquired 100% of the share capital of Follower Limited. Follower had issued share capital of $100 000. The book values of Follower Limited's assets were: Land $50 000, Equipment $60 000. The fair values of these assets were: Land $90 000, Equipment $70 000. The tax rate is 30%. The fair value of the identifiable net assets is:

A reverse acquisition occurs where a:

One year after acquisition date, the goodwill acquired was regarded as having become impaired by $20 000. The appropriate consolidation adjustment in relation to the impairment will include the following line: