Exam 9: Consolidation: Controlled Entities

Control is the criterion for determining whether a parent-subsidiary relationship exists.

In a consolidated group of entities, control over the subsidiaries in the group:

AASB 10/IFRS 10 Consolidated Financial Statements defines a 'parent' and a 'subsidiary' as which of the following? Parent Subsidiary An entity which is controlled by another entity. An entity that controls one or more entities. An entity which owns more than 20\% of the voting shares of another entity. An entity which is owned partly by another entity. An entity that has one or more subsidiaries. An entity which is controlled by a parent entity. An entity that controls one or more entities. An entity which is controlled by another entity.

Typical characteristics of an investment entity in accordance with IFRS 10 Consolidated Financial Statements include that it has more than one investment.

Where a non-controlling interest exists in a subsidiary, AASB 12 /IFRS 12 Disclosure of Interests in Other Parties requires parent entities to disclose which of the following for each such subsidiary? I Summarised financial information about each subsidiary. II The proportion of ownership interests held by non-controlling interests. III If the subsidiary is not wholly owned, the names of all other members. IV The country of incorporation of subsidiaries.

When a business combination is formed by the creation of a parent-subsidiary relationship, the parent will always be identified as the acquirer.

When one entity controls another entity, the business combination results in which of the following types of relationship?

An entity can control another entity with an ownership interest of less than 50%, but only if there is a legally-binding contract in place between all investors that passes control to the entity.

Two entities A Limited and B Limited together form a third entity, C Limited. C Limited acquires A Limited and B Limited. In this situation, AASB 3/IFRS 3 Business Combinations, adjudges that:

The process of preparing consolidated financial statements requires that:

The financial statements of a group are referred to as consolidated financial statements.

A subsidiary is defined in AASB 10/IFRS 10 Consolidated Financial Statements as a company that is controlled by another entity.

The equity in a subsidiary not attributable to a parent is known as a/an:

In the context of control, which of the following is correct regarding rights?

The entity that is represented by a single set of consolidated financial statements is:

Power is defined in AASB 10/IFRS 10 Consolidated Financial Statements as the current ability to direct the relevant activities of an investee.

The formation of a new entity to acquire the shares of two (or more) other entities is an example of a business combination in accordance with AASB 3/IFRS 3 Business Combinations.

The preparation of consolidated financial statements for a group relieves subsidiaries within the group from preparing individual financial statements.

The process of preparing the combined financial statements of a group of entities is known as:

Eastpac Bank has lent Alexandra Ltd $500 000. Part of the loan contract prevents Alexandra from borrowing money in the future from other banks without the permission of Eastpac. As a result of this relationship: