Question 1

Post-acquisition earnings of the subsidiary are included in the economic entity's earnings.

Accepted Answer

A) True 
 B)False

Question 2

AASB 12 Disclosure of Interests in Other Entities requires an entity to disclose for each of its subsidiaries that have non-controlling interests that are material to the reporting entity:

Accepted Answer

A)  summarised financial information about the subsidiary 
B)  the profit or loss allocated to non-controlling interests of the subsidiary during the reporting period. 
C)  accumulated non-controlling interests of the subsidiary at the end of the reporting period. 
D)  All of the given answers are required to be disclosed. 
A)  summarised financial information about the subsidiary 
B)  the profit or loss allocated to non-controlling interests of the subsidiary during the reporting period. 
C)  accumulated non-controlling interests of the subsidiary at the end of the reporting period. 
D)  All of the given answers are required to be disclosed.

Question 3

The consolidation concept adopted in AASB 10 is to include all the assets and liabilities of the parent entity and subsidiaries in the consolidation and to treat non-controlling interests as part of the equity of the group.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following consolidation concepts are described correctly?

Accepted Answer

A)  The entity concept requires the inclusion of all the parent entity assets and the proportionate share of the assets and liabilities of the subsidiaries where the proportion is based on the direct ownership of the capital of the subsidiary by parent companies within the group. 
B)  The proprietary concept includes all the assets and liabilities of the parent company and subsidiaries as assets and liabilities of the group. Non-controlling interest is treated as a liability of the group. 
C)  The parent-entity concept includes all assets and liabilities of the parent and its subsidiaries in the consolidated accounts. The non-controlling interest is treated as a liability of the group. 
D)  The proprietary concept includes all the assets and liabilities of the parent company and subsidiaries as assets and liabilities of the group. Non-controlling interest is treated as a liability of the group; the parent-entity concept includes all assets and liabilities of the parent and its subsidiaries in the consolidated accounts. The non-controlling interest is treated as a liability of the group. 
A)  The entity concept requires the inclusion of all the parent entity assets and the proportionate share of the assets and liabilities of the subsidiaries where the proportion is based on the direct ownership of the capital of the subsidiary by parent companies within the group. 
B)  The proprietary concept includes all the assets and liabilities of the parent company and subsidiaries as assets and liabilities of the group. Non-controlling interest is treated as a liability of the group. 
C)  The parent-entity concept includes all assets and liabilities of the parent and its subsidiaries in the consolidated accounts. The non-controlling interest is treated as a liability of the group. 
D)  The proprietary concept includes all the assets and liabilities of the parent company and subsidiaries as assets and liabilities of the group. Non-controlling interest is treated as a liability of the group; the parent-entity concept includes all assets and liabilities of the parent and its subsidiaries in the consolidated accounts. The non-controlling interest is treated as a liability of the group.

Question 5

AASB 10 Consolidated Financial Statements permits the reporting periods of entities in the group to be dissimilar as long as adjustments are made on consolidation to remove the effects of different reporting periods.

Accepted Answer

A) True 
 B)False

Question 6

Sullivan (1985)argued that the preparation of group accounts can proceed to the fulfilment of the true and fair notion only when partitioning is fully enforced.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements accurately describes the elimination entry to eliminate pre-acquisition shareholders' funds?

Accepted Answer

A)  It is made once at the time of the first consolidation of the economic entity's accounts in order to eliminate the parent entity's investment in the subsidiary against the non-monetary assets of the controlled entity. 
B)  It is made each time the consolidation is performed in order to adjust the carrying value of the controlled entity's non-current assets to their fair value. 
C)  It is carried out once at the date that control of the subsidiary is achieved in order to create the goodwill or discount and eliminate the parent entity's equity against the controlled entity's investment. 
D)  It is made each time the consolidation is performed in order to eliminate the parent entity's investment in the controlled entity against the equity of the controlled entity. Any adjustments necessary to bring the non-current assets of the controlled entity to fair value are made before the elimination entry and any difference between the consideration paid and the fair value of the net assets of the controlled entity are recognised. 
A)  It is made once at the time of the first consolidation of the economic entity's accounts in order to eliminate the parent entity's investment in the subsidiary against the non-monetary assets of the controlled entity. 
B)  It is made each time the consolidation is performed in order to adjust the carrying value of the controlled entity's non-current assets to their fair value. 
C)  It is carried out once at the date that control of the subsidiary is achieved in order to create the goodwill or discount and eliminate the parent entity's equity against the controlled entity's investment. 
D)  It is made each time the consolidation is performed in order to eliminate the parent entity's investment in the controlled entity against the equity of the controlled entity. Any adjustments necessary to bring the non-current assets of the controlled entity to fair value are made before the elimination entry and any difference between the consideration paid and the fair value of the net assets of the controlled entity are recognised.

Exam 27: Accounting for Group Structures

Post-acquisition earnings of the subsidiary are included in the economic entity's earnings.

AASB 12 Disclosure of Interests in Other Entities requires an entity to disclose for each of its subsidiaries that have non-controlling interests that are material to the reporting entity:

The consolidation concept adopted in AASB 10 is to include all the assets and liabilities of the parent entity and subsidiaries in the consolidation and to treat non-controlling interests as part of the equity of the group.

Which of the following consolidation concepts are described correctly?

AASB 10 Consolidated Financial Statements permits the reporting periods of entities in the group to be dissimilar as long as adjustments are made on consolidation to remove the effects of different reporting periods.

Sullivan (1985)argued that the preparation of group accounts can proceed to the fulfilment of the true and fair notion only when partitioning is fully enforced.

Which of the following statements accurately describes the elimination entry to eliminate pre-acquisition shareholders' funds?

An Overview of the Australian External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

Theories of Accounting

An Overview of Accounting for Assets

Depreciation of Property, plant and Equipment

Revaluations and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

Accounting for Heritage Assets and Biological Assets

An Overview of Accounting for Liabilities

Accounting for Leases

Accounting for Employee Benefits

Share Capital and Reserves

Accounting for Financial Instruments

Revenue Recognition Issues

The Statement of Comprehensive Income and Statement of Changes in Equity

Accounting for Share-Based Payments

Accounting for Income Taxes

The Statement of Cash Flows

Accounting for the Extractive Industries

Accounting for General Insurance Contracts

Accounting for Superannuation Plans

Events Occurring After the End of the Reporting Period

Segment Reporting

Related Party Disclosures

Earnings Per Share

Further Consolidation Issues I: Accounting for Intragroup Transactions

Further Consolidation Issues II: Accounting for Non-Controlling Interests

Further Consolidation Issues IV: Accounting for Changes in the Degree of Ownership of a Subsidiary

Accounting for Equity Investments,including Investments in Associates and Joint Arrangements

Accounting for Foreign Currency Transactions

Translating the Financial Statements of Foreign Operations

Accounting for Corporate Social Responsibility

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