Question 1

Explain the difference between sequential and non- sequential acquisition.

Accepted Answer

In accounting for multiple subsidiary groups,the accounting treatment is determined by the sequence in which the acquisition occurred.Sequential acquisition is where a parent (P)makes an investment in a subsidiary (S1)through the acquisition of shares on or before the subsidiary (S1)makes an investment in its subsidiary (S2).Whereas,non- sequential acquisition is where a parent (P)acquires shares in a subsidiary (S1)after that subsidiary (S1)has acquired shares in its subsidiary (S2).

Question 2

Which of the following statements is correct?

Accepted Answer

A) the DNCI share of operating profit and retained earnings must not be adjusted for unrealised profits/losses caused by intragroup transactions 
B) the DNCI is not given a share of equity of the relevant subsidiary where the DNCI is located 
C) the direct non- controlling interest (DNCI)is given a share of equity of the relevant subsidiary where the DNCI is located 
D) none of the above 
A) the DNCI share of operating profit and retained earnings must not be adjusted for unrealised profits/losses caused by intragroup transactions 
B) the DNCI is not given a share of equity of the relevant subsidiary where the DNCI is located 
C) the direct non- controlling interest (DNCI)is given a share of equity of the relevant subsidiary where the DNCI is located 
D) none of the above C

Question 3

Using the information in question 23,what is the total indirect non- controlling interest in D Ltd?

Accepted Answer

A) 46.4% 
B) 33.6% 
C) 9.6% 
D) 57.6% 
A) 46.4% 
B) 33.6% 
C) 9.6% 
D) 57.6% A

Question 4

A method of consolidating that involves a series of single- stage subconsolidations with the final consolidation of the parent after all the subconsolidations are completed is known as:

Accepted Answer

A) active consolidation 
B) multiple consolidation 
C) sequential consolidation 
D) none of the above 
A) active consolidation 
B) multiple consolidation 
C) sequential consolidation 
D) none of the above

Question 5

P Ltd owns 60% of A Ltd which owns 90% of B Ltd.What is the indirect parent entity interest in B Ltd?

Accepted Answer

A) 6% 
B) 40% 
C) 36% 
D) 54% 
A) 6% 
B) 40% 
C) 36% 
D) 54%

Question 6

Using the information in question 23,what is the indirect parent entity interest in C Ltd?

Accepted Answer

A) 22.4% 
B) 33.6% 
C) 35.7% 
D) 42% 
A) 22.4% 
B) 33.6% 
C) 35.7% 
D) 42%

Question 7

Explain the differences between sequential and multiple consolidation.

Accepted Answer

There are two ways to proceed in account

Question 8

P Ltd owns 75% of A Ltd which owns 60% of B Ltd.What is the direct non- controlling interest in A Ltd?

Accepted Answer

A) 40% 
B) 45% 
C) 25% 
D) 15% 
A) 40% 
B) 45% 
C) 25% 
D) 15%

Question 9

Which of the following statements is incorrect,assuming that the partial goodwill method is used?

Accepted Answer

A) the subsidiary's operating profit and retained earnings are not adjusted for goodwill impairment losses when calculating non- controlling interest 
B) the indirect non- controlling interest (INCI)is not given a share of share capital because it does not own shares in the entity where the INCI is located 
C) the DNCI must only be given a share of pre- acquisition equity 
D) the direct non- controlling interest (DNCI)must be given a share of both pre- and post- acquisition equity 
A) the subsidiary's operating profit and retained earnings are not adjusted for goodwill impairment losses when calculating non- controlling interest 
B) the indirect non- controlling interest (INCI)is not given a share of share capital because it does not own shares in the entity where the INCI is located 
C) the DNCI must only be given a share of pre- acquisition equity 
D) the direct non- controlling interest (DNCI)must be given a share of both pre- and post- acquisition equity

Question 10

A method of consolidating whereby the ultimate parent entity and all of its subsidiaries and their subsidiaries are consolidated simultaneously is referred to as:

Accepted Answer

A) non- sequential consolidation 
B) multiple consolidation 
C) sequential consolidation 
D) indirect consolidation 
A) non- sequential consolidation 
B) multiple consolidation 
C) sequential consolidation 
D) indirect consolidation

Question 11

An acquisition in which a parent (P)acquires shares in a subsidiary (S1)after that subsidiary (S1)has acquired shares in its subsidiary (S2)is referred to as a/an:

Accepted Answer

A) passive acquisition 
B) active acquisition 
C) non- sequential acquisition 
D) sequential acquisition 
A) passive acquisition 
B) active acquisition 
C) non- sequential acquisition 
D) sequential acquisition

Question 12

Which of the following statements is correct?

Accepted Answer

A) a parent entity can hold only direct ownership interests in a subsidiary 
B) a parent entity can hold only indirect ownership interests in a subsidiary 
C) a parent entity cannot control a subsidiary if its shareholding is less than 50% 
D) a parent entity can hold both direct and indirect ownership interests in a subsidiary 
A) a parent entity can hold only direct ownership interests in a subsidiary 
B) a parent entity can hold only indirect ownership interests in a subsidiary 
C) a parent entity cannot control a subsidiary if its shareholding is less than 50% 
D) a parent entity can hold both direct and indirect ownership interests in a subsidiary

Question 13

Where a parent (P)makes an investment in a subsidiary (S1)through the acquisition of shares on or before the subsidiary (S1)makes an investment in its subsidiary (S2),it is known as a/an:

Accepted Answer

A) non- sequential acquisition 
B) sequential acquisition 
C) direct acquisition 
D) none of the above 
A) non- sequential acquisition 
B) sequential acquisition 
C) direct acquisition 
D) none of the above

Question 14

P Ltd owns 80% of A Ltd which owns 75% of B Ltd.What is the indirect non- controlling interest in B Ltd?

Accepted Answer

A) 25% 
B) 60% 
C) 16% 
D) 15% 
A) 25% 
B) 60% 
C) 16% 
D) 15%

Question 15

A non- controlling interest that has an interest in a subsidiary as a result of having an interest in the parent of that subsidiary is referred to as a/an:

Accepted Answer

A) indirect non- controlling interest 
B) passive non- controlling interest 
C) direct non- controlling interest 
D) none of the above 
A) indirect non- controlling interest 
B) passive non- controlling interest 
C) direct non- controlling interest 
D) none of the above

Question 16

Which of the following statements is incorrect?

Accepted Answer

A) in sequential consolidation the direct ownership interest of the immediate parent entity would be used to eliminate pre- acquisition capital and reserves 
B) the most important principle underlying the multiple consolidation method is that indirect ownership interests are relevant only to post- acquisition profits and changes in reserves 
C) the sequential consolidation method is less cumbersome to apply than the multiple consolidation method 
D) sequential consolidation and multiple consolidation both generate exactly the same results 
A) in sequential consolidation the direct ownership interest of the immediate parent entity would be used to eliminate pre- acquisition capital and reserves 
B) the most important principle underlying the multiple consolidation method is that indirect ownership interests are relevant only to post- acquisition profits and changes in reserves 
C) the sequential consolidation method is less cumbersome to apply than the multiple consolidation method 
D) sequential consolidation and multiple consolidation both generate exactly the same results

Question 17

P Ltd owns 60% of A Ltd which owns 70% of B Ltd.B Ltd owns 85% of C Ltd,as well as owning 80% of D Ltd. What is the direct non- controlling interest in B Ltd?

Accepted Answer

A) 15% 
B) 20% 
C) 40% 
D) 30% 
A) 15% 
B) 20% 
C) 40% 
D) 30%

Explain the difference between sequential and non- sequential acquisition.

Which of the following statements is correct?

Using the information in question 23,what is the total indirect non- controlling interest in D Ltd?

A method of consolidating that involves a series of single- stage subconsolidations with the final consolidation of the parent after all the subconsolidations are completed is known as:

P Ltd owns 60% of A Ltd which owns 90% of B Ltd.What is the indirect parent entity interest in B Ltd?

Using the information in question 23,what is the indirect parent entity interest in C Ltd?

Explain the differences between sequential and multiple consolidation.

P Ltd owns 75% of A Ltd which owns 60% of B Ltd.What is the direct non- controlling interest in A Ltd?

Which of the following statements is incorrect,assuming that the partial goodwill method is used?

A method of consolidating whereby the ultimate parent entity and all of its subsidiaries and their subsidiaries are consolidated simultaneously is referred to as:

An acquisition in which a parent (P)acquires shares in a subsidiary (S1)after that subsidiary (S1)has acquired shares in its subsidiary (S2)is referred to as a/an:

Which of the following statements is correct?

Where a parent (P)makes an investment in a subsidiary (S1)through the acquisition of shares on or before the subsidiary (S1)makes an investment in its subsidiary (S2),it is known as a/an:

P Ltd owns 80% of A Ltd which owns 75% of B Ltd.What is the indirect non- controlling interest in B Ltd?

A non- controlling interest that has an interest in a subsidiary as a result of having an interest in the parent of that subsidiary is referred to as a/an:

Which of the following statements is incorrect?

P Ltd owns 60% of A Ltd which owns 70% of B Ltd.B Ltd owns 85% of C Ltd,as well as owning 80% of D Ltd. What is the direct non- controlling interest in B Ltd?

The Nature and Environment of Companies

Company Formation, Share Capital and Debt Securities

Reserves and Profit Distribution

Published Financial Statements

Accounting for Company Income Tax

Property, Plant and Equipment

Leases

Intangible Assets

Business Combinations

Impairment of Assets

Additional Accounting Standards and Disclosures

Principles of Consolidation

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interests

Accounting for Associates

Accounting for Joint Ventures

Accounting for Foreign Currency

Capital Reorganisation

External Administration, Including Liquidation

Key Issues in Australian Corporate Governance

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Exam 15: Consolidation: Indirect Non-Controlling Interests

Explain the difference between sequential and non- sequential acquisition.

Which of the following statements is correct?

Using the information in question 23,what is the total indirect non- controlling interest in D Ltd?

A method of consolidating that involves a series of single- stage subconsolidations with the final consolidation of the parent after all the subconsolidations are completed is known as:

P Ltd owns 60% of A Ltd which owns 90% of B Ltd.What is the indirect parent entity interest in B Ltd?

Using the information in question 23,what is the indirect parent entity interest in C Ltd?

Explain the differences between sequential and multiple consolidation.

P Ltd owns 75% of A Ltd which owns 60% of B Ltd.What is the direct non- controlling interest in A Ltd?

Which of the following statements is incorrect,assuming that the partial goodwill method is used?

A method of consolidating whereby the ultimate parent entity and all of its subsidiaries and their subsidiaries are consolidated simultaneously is referred to as:

An acquisition in which a parent (P)acquires shares in a subsidiary (S1)after that subsidiary (S1)has acquired shares in its subsidiary (S2)is referred to as a/an:

Which of the following statements is correct?

Where a parent (P)makes an investment in a subsidiary (S1)through the acquisition of shares on or before the subsidiary (S1)makes an investment in its subsidiary (S2),it is known as a/an:

P Ltd owns 80% of A Ltd which owns 75% of B Ltd.What is the indirect non- controlling interest in B Ltd?

A non- controlling interest that has an interest in a subsidiary as a result of having an interest in the parent of that subsidiary is referred to as a/an:

Which of the following statements is incorrect?

P Ltd owns 60% of A Ltd which owns 70% of B Ltd.B Ltd owns 85% of C Ltd,as well as owning 80% of D Ltd. What is the direct non- controlling interest in B Ltd?

The Nature and Environment of Companies

Company Formation, Share Capital and Debt Securities

Reserves and Profit Distribution

Published Financial Statements

Accounting for Company Income Tax

Property, Plant and Equipment

Leases

Intangible Assets

Business Combinations

Impairment of Assets

Additional Accounting Standards and Disclosures

Principles of Consolidation

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interests

Accounting for Associates

Accounting for Joint Ventures

Accounting for Foreign Currency

Capital Reorganisation

External Administration, Including Liquidation

Key Issues in Australian Corporate Governance

Filters