Question 1

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 2

Investments in subsidiaries by another partly owned subsidiary where the acquisition is non-sequential require adjustments to be made to the fair value of the investments.

Accepted Answer

A) True 
 B)False

Question 3

The pre-acquisition entry is prepared based on the immediate parent's interest in a subsidiary.

Accepted Answer

A) True 
 B)False

Question 4

Kerri Limited has a 60% ownership interest in Emily Limited.Emily Limited has an 80% ownership interest in Georgia Limited.As a result of these ownership interests,there is an indirect NCI in Georgia Limited of:

Accepted Answer

A) 48%. 
B) 12%. 
C) 8%. 
D) 32%. 
A) 48%. 
B) 12%. 
C) 8%. 
D) 32%.

Question 5

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

Question 6

Realty Group had the following debits in the pre-acquisition entry used to consolidate a 60% direct ownership interest in a subsidiary: Retained earnings $60 000,Share capital $120 000,General Reserve $24 000,BCVR $12 000.The amount attributable to the direct non-controlling interest is:

Accepted Answer

A) $129 600. 
B) $144 000. 
C) $86 400. 
D) $216 000. 
A) $129 600. 
B) $144 000. 
C) $86 400. 
D) $216 000.

Question 7

An indirect NCI arises only where a partly owned subsidiary holds shares in another partly owned subsidiary.

Accepted Answer

A) True 
 B)False

Question 8

Nambour Limited has a direct ownership interest of 70% in Noosa Limited.Liao Limited has a direct ownership interest of 60% in Mudjimba Limited.The indirect non-controlling interest in Mudjimba Limited is:

Accepted Answer

A) 28%. 
B) 40%. 
C) 30%. 
D) 18%. 
A) 28%. 
B) 40%. 
C) 30%. 
D) 18%.

Question 9

The accounting for intragroup transactions is not affected by the existence of multiple subsidiaries.

Accepted Answer

A) True 
 B)False

Question 10

The indirect NCI share of contributed equity is not affected by the payment of a dividend by a subsidiary.

Accepted Answer

A) True 
 B)False

Question 11

The accounting treatment for a group with multiple subsidiaries is not affected by the sequence in which acquisitions of subsidiaries occur.

Accepted Answer

A) True 
 B)False

Question 12

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 13

If A Ltd owns 70% of B Ltd and B Ltd owns 60% of C Ltd,the indirect NCI in C Ltd is 18%.

Accepted Answer

A) True 
 B)False

Question 14

Peter Limited has an ownership interest of 80% in a subsidiary John Limited.John Limited owns 60% of Joseph Limited.At acquisition date the retained earnings of Joseph Limited were $200 000.At consolidation date,the retained earnings of Joseph Limited were $440 000.The indirect non-controlling interest in the retained earnings of Joseph Limited is calculated as:

Accepted Answer

A) $0. 
B) $24 000. 
C) $28 800. 
D) $52 800. 
A) $0. 
B) $24 000. 
C) $28 800. 
D) $52 800.

Question 15

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 recorded at fair value 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 recorded at fair value 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 16

The pre-acquisition entry for the Baxter group in order to consolidate a 60% interest in a subsidiary contained the following debits.Retained earnings $6000,share capital $12 000,general reserve $2400,BCVR $1200.The direct non-controlling interest's share of the subsidiary's equity at the date of acquisition is:

Accepted Answer

A) $8640. 
B) $14 400. 
C) $12 960. 
D) $21 600. 
A) $8640. 
B) $14 400. 
C) $12 960. 
D) $21 600.

Question 17

When preparing consolidation adjustment entries to effect a consolidation of a multiple subsidiary structure,intragroup transactions:

Accepted Answer

A) are not eliminated. 
B) are partially eliminated to the extent of the ownership interest of the parent entity to each transaction. 
C) are ignored as it is impractical to attempt to determine the size of the ownership interest relating to each transaction. 
D) are eliminated in full. 
A) are not eliminated. 
B) are partially eliminated to the extent of the ownership interest of the parent entity to each transaction. 
C) are ignored as it is impractical to attempt to determine the size of the ownership interest relating to each transaction. 
D) are eliminated in full.

Question 18

Waratah Ltd acquired a 60% ownership interest in Bottle Brush Ltd on 30 June 20X5.On the same day,Bottle Brush Ltd acquired a 70% ownership interest in Honeydew Ltd.
The following interentity transactions have taken place between the entities in the group during the years ended 30 June 20X6 and 30 June 20X7.
On 1 July 20X5 Bottle Brush sold an item of plant to Honeydew for a profit of $20 000.The remaining useful life of the plant at the date of transfer was 4 years.
$\bullet$On 1 September 20X5,Honeydew paid a dividend of $70 000 from profits earned since 30 June 20X5.
$\bullet$Waratah lent $50 000 to Bottle Brush on 1 January 20X6.Interest charged on the loan for the year ended 30 June 20X6 was $2000 and for the year ended 30 June 20X7 was $4000.
On 31 May 20X6 Waratah sold inventory to Honeydew for $15 000.Profit earned on the sale was $5000.Honeydew sold the inventory to external parties on 1 August 20X6.
Details of profits earned by entities within the group for the years ended 30 June 20X6 and 30 June 20X7 are:
 
The tax rate is 30%.
The NCI share of profit in Honeydew for the year ended 30 June 20X7 is:

Accepted Answer

A) $9800. 
B) $10 500. 
C) $20 300. 
D) $22 330. 
A) $9800. 
B) $10 500. 
C) $20 300. 
D) $22 330.

Question 19

Caloundra Limited has an ownership interest of 60% in a subsidiary Aroona Limited.Aroona owns 70% of Bribie Limited.Since acquisition date the retained earnings of Bribie Limited have increased from $100 000 to $150 000.The direct non-controlling interest in the retained earnings of Bribie is:

Accepted Answer

A) $0. 
B) $105 000. 
C) $60 000. 
D) $45 000. 
A) $0. 
B) $105 000. 
C) $60 000. 
D) $45 000.

Question 20

Waratah Ltd acquired a 60% ownership interest in Bottle Brush Ltd on 30 June 20X5.On the same day,Bottle Brush Ltd acquired a 70% ownership interest in Honeydew Ltd.
The following interentity transactions have taken place between the entities in the group during the years ended 30 June 20X6 and 30 June 20X7.
On 1 July 20X5 Bottle Brush sold an item of plant to Honeydew for a profit of $20 000.The remaining useful life of the plant at the date of transfer was 4 years.
$\bullet$On 1 September 20X5,Honeydew paid a dividend of $70 000 from profits earned since 30 June 20X5.
$\bullet$Waratah lent $50 000 to Bottle Brush on 1 January 20X6.Interest charged on the loan for the year ended 30 June 20X6 was $2000 and for the year ended 30 June 20X7 was $4000.
On 31 May 20X6 Waratah sold inventory to Honeydew for $15 000.Profit earned on the sale was $5000.Honeydew sold the inventory to external parties on 1 August 20X6.
Details of profits earned by entities within the group for the years ended 30 June 20X6 and 30 June 20X7 are:
 
The tax rate is 30%.
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) an increase in MI of $1120. 
C) an increase in MI of $1600. 
D) an increase in MI of $2800. 
A) nil. 
B) an increase in MI of $1120. 
C) an increase in MI of $1600. 
D) an increase in MI of $2800.

Exam 22: Consolidation: Other Issues

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

Investments in subsidiaries by another partly owned subsidiary where the acquisition is non-sequential require adjustments to be made to the fair value of the investments.

The pre-acquisition entry is prepared based on the immediate parent's interest in a subsidiary.

Kerri Limited has a 60% ownership interest in Emily Limited.Emily Limited has an 80% ownership interest in Georgia Limited.As a result of these ownership interests,there is an indirect NCI in Georgia Limited of:

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

Realty Group had the following debits in the pre-acquisition entry used to consolidate a 60% direct ownership interest in a subsidiary: Retained earnings $60 000,Share capital $120 000,General Reserve $24 000,BCVR $12 000.The amount attributable to the direct non-controlling interest is:

An indirect NCI arises only where a partly owned subsidiary holds shares in another partly owned subsidiary.

Nambour Limited has a direct ownership interest of 70% in Noosa Limited.Liao Limited has a direct ownership interest of 60% in Mudjimba Limited.The indirect non-controlling interest in Mudjimba Limited is:

The accounting for intragroup transactions is not affected by the existence of multiple subsidiaries.

The indirect NCI share of contributed equity is not affected by the payment of a dividend by a subsidiary.

The accounting treatment for a group with multiple subsidiaries is not affected by the sequence in which acquisitions of subsidiaries occur.

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:

If A Ltd owns 70% of B Ltd and B Ltd owns 60% of C Ltd,the indirect NCI in C Ltd is 18%.

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

When preparing consolidation adjustment entries to effect a consolidation of a multiple subsidiary structure,intragroup transactions:

Caloundra Limited has an ownership interest of 60% in a subsidiary Aroona Limited.Aroona owns 70% of Bribie Limited.Since acquisition date the retained earnings of Bribie Limited have increased from $100 000 to $150 000.The direct non-controlling interest in the retained earnings of Bribie is:

Nature and Regulation of Companies

Financing Company Operations

Company Operations

Fundamental Concepts of Corporate Governance

Fair Value Measurement

Accounting for Company Income Tax

Financial Instruments

Foreign Currency Transactions and Forward Exchange Contracts

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

Disclosure: Translation of Financial Statements Into a Presentation Currency

Consolidation: Controlled Entities

Consolidation: Wholly Owned Subsidiaries

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interest

Associates and Joint Ventures

Investments in Joint Arrangements

Insolvency and Liquidation

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