Exam 28: Accounting for Group Structures

AASB 127 notes that in preparing consolidated financial statements,an entity combines the financial statements of the parent and the subsidiaries line by line by adding together,in proportion to the degree of ownership,like items of assets,liabilities,income and expenses; but not equity balances:

Jasper Ltd acquires all the issued capital of Carrot Ltd for a cash payment of $2,800,000 on 30 June 2004.The balance sheet of both entities at purchase date is: Assuming the assets of Carrot Ltd are recorded at fair value,what is the consolidated balance sheet at the date of purchase?

When an acquirer makes a bargain purchase in a business combination,the excess that remains is recognised in profit or loss of the acquirer on acquisition date.

On 1 July 2012,Goliath Ltd acquires all shares in David Ltd for $800 000.The fair value of net assets acquired is $920 000 comprised of $600,000 in share capital and $320 000 in retained earnings.What is the appropriate elimination entry for this investment that is in accordance with AASB 3 "Business Combinations" and AASB 127 "Consolidated and Separate Financial Statements"?

Minority interests are defined is AASB 127 as:

AASB 127 defines control as:

What are the major consolidation concepts?

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 important aspects of consolidation after the date of acquisition?

In what situation does an excess on acquisition arise and how does AASB 3 require it to be treated?

One important aim of releasing AAS 24 in 1991 and amendments made to The Corporations Law in the same year was to:

Under AASB 127 parent companies may choose whether to present one set of consolidated accounts or to provide two or more sub-sets of the consolidated accounts to cover the whole group:

The purpose of providing consolidated statements is to show the results and financial position of a group as if it were operating with a single source of finance:

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

On consolidation,the investment in subsidiary,shown in the investor's books,shall be eliminated in full against which of the following?

Which of the following statements is an accurate description of the difference between a legal entity and an economic entity?

A former loophole (now closed)that existed under the former s.9 of the Corporations Law:

AASB 127 identifies a number of factors that may indicate the existence of control.These include:

In a situation where the net assets acquired in the controlled entity are not recorded at fair value,approaches that may be taken to account for this include:

The consolidation process does not involve any adjustments to the financial statements of the individual entities making up the group: