Question 1

Parent Ltd owns 20% of S1 Ltd and 80% of S2 Ltd.In addition,S2 Ltd owns 70% of S1 Ltd.The total NCI in S1 Ltd is:

Accepted Answer

A)  10%. 
B)  14%. 
C)  24%. 
D)  none of the above. 
A)  10%. 
B)  14%. 
C)  24%. 
D)  none of the above. C

Question 2

In a multiple consolidation,the ownership interests of subsidiaries are determined using:

Accepted Answer

A)  direct ownership interests. 
B)  indirect ownership interests. 
C)  both direct and indirect ownership interests. 
D)  none of the above. 
A)  direct ownership interests. 
B)  indirect ownership interests. 
C)  both direct and indirect ownership interests. 
D)  none of the above. C

Question 3

In a group's consolidated statement of comprehensive income,profit attributable to the non-controlling interest is included in Other comprehensive income.

Accepted Answer

A) True 
 B)False  False

Question 4

A owns 80% of B and B owns 60% of C.If C pays a dividend and B distributes the amount received to its own shareholders,the allocation of the dividend will be:

Accepted Answer

A)  parent 48%, NCI 52%. 
B)  parent 52%, NCI 48%. 
C)  parent 100%. 
D)  NCI 100%. 
A)  parent 48%, NCI 52%. 
B)  parent 52%, NCI 48%. 
C)  parent 100%. 
D)  NCI 100%.

Question 5

A sub-subsidiary is:

Accepted Answer

A)  a subsidiary of a parent company. 
B)  a subsidiary of a subsidiary company. 
C)  either A or B. 
D)  none of the above. 
A)  a subsidiary of a parent company. 
B)  a subsidiary of a subsidiary company. 
C)  either A or B. 
D)  none of the above.

Question 6

A Ltd owns 80% of B Ltd and B Ltd owns 60% of C Ltd.Using the sequential consolidation method,the sequence of consolidation would be:

Accepted Answer

A)  A with B and then consolidated A with C. 
B)  B with C and then consolidated B with A. 
C)  A, B and C together. 
D)  none of the above. 
A)  A with B and then consolidated A with C. 
B)  B with C and then consolidated B with A. 
C)  A, B and C together. 
D)  none of the above.

Question 7

Why does the multiple consolidation method adopt a revaluation approach to the net assets of sub-subsidiaries?

Accepted Answer

Revaluation approach under multiple cons

Question 8

Circular shareholdings are allowed under the Corporations Act.

Accepted Answer

A) True 
 B)False

Question 9

Direct plus indirect ownership interests must always sum to 100% for a group.

Accepted Answer

A) True 
 B)False

Question 10

Parent Ltd owns 90% of S1 Ltd and S1 Ltd owns 60% of S2 Ltd.Parent Ltd's indirect ownership interest in S2 Ltd is:

Accepted Answer

A)  90%. 
B)  60%. 
C)  54%. 
D)  none of the above. 
A)  90%. 
B)  60%. 
C)  54%. 
D)  none of the above.

Question 11

A sub-subsidiary provides the following information: The sub-subsidiary is owned 60% by its parent,which is owned 80% by the ultimate parent.
Retained profits at the date of acquisition are $400.
Profit for the year first is $200.
The total indirect NCI is:

Accepted Answer

A)  $72. 
B)  $48. 
C)  $24. 
D)  none of the above. 
A)  $72. 
B)  $48. 
C)  $24. 
D)  none of the above.

Question 12

Parent Ltd owns 20% of S1 Ltd and controls S2 Ltd without holding any shares in S2 Ltd.In addition,S2 Ltd owns 70% of S1 Ltd.The Parent Ltd indirect interest in S1 Ltd is:

Accepted Answer

A)  100%. 
B)  70%. 
C)  nil. 
D)  none of the above. 
A)  100%. 
B)  70%. 
C)  nil. 
D)  none of the above.

Question 13

The sequence of acquisition dates in a tiered group is irrelevant to the consolidation process for indirect NCI.

Accepted Answer

A) True 
 B)False

Question 14

Is the proportionate interest goodwill method consistent with not allocating goodwill impairment losses against the indirect NCI?

Accepted Answer

Proportionate interest goodwill method:

Question 15

If the parent acquires the child after the child has established a controlling interest in the grandchild,then the acquisitions are referred to as sequential.

Accepted Answer

A) True 
 B)False

Question 16

The concept of indirect ownership interests is used in:

Accepted Answer

A)  the multiple consolidation method. 
B)  the sequential consolidation method. 
C)  both A and B. 
D)  neither method. 
A)  the multiple consolidation method. 
B)  the sequential consolidation method. 
C)  both A and B. 
D)  neither method.

Question 17

Circular shareholdings arise where:

Accepted Answer

A)  a subsidiary holds an equity interest in its parent. 
B)  a sub-subsidiary holds an interest in another subsidiary of its parent. 
C)  a subsidiary holds an interest in a sub-subsidiary. 
D)  none of the above. 
A)  a subsidiary holds an equity interest in its parent. 
B)  a sub-subsidiary holds an interest in another subsidiary of its parent. 
C)  a subsidiary holds an interest in a sub-subsidiary. 
D)  none of the above.

Question 18

When a parent does not have an ownership interest in a subsidiary the NCI is 100%.

Accepted Answer

A) True 
 B)False

Question 19

Cross-shareholdings between subsidiaries are:

Accepted Answer

A)  legal under the Corporations Act. 
B)  illegal under the Corporations Act. 
C)  not covered by the Corporations Act. 
D)  none of the above 
A)  legal under the Corporations Act. 
B)  illegal under the Corporations Act. 
C)  not covered by the Corporations Act. 
D)  none of the above

Question 20

Discuss the current position of the Corporations Act in respect to reciprocal ownership interests.

Accepted Answer

Reciprocal ownership interests:
- Recipr

Parent Ltd owns 20% of S1 Ltd and 80% of S2 Ltd.In addition,S2 Ltd owns 70% of S1 Ltd.The total NCI in S1 Ltd is:

In a multiple consolidation,the ownership interests of subsidiaries are determined using:

In a group's consolidated statement of comprehensive income,profit attributable to the non-controlling interest is included in Other comprehensive income.

A owns 80% of B and B owns 60% of C.If C pays a dividend and B distributes the amount received to its own shareholders,the allocation of the dividend will be:

A sub-subsidiary is:

A Ltd owns 80% of B Ltd and B Ltd owns 60% of C Ltd.Using the sequential consolidation method,the sequence of consolidation would be:

Why does the multiple consolidation method adopt a revaluation approach to the net assets of sub-subsidiaries?

Circular shareholdings are allowed under the Corporations Act.

Direct plus indirect ownership interests must always sum to 100% for a group.

Parent Ltd owns 90% of S1 Ltd and S1 Ltd owns 60% of S2 Ltd.Parent Ltd's indirect ownership interest in S2 Ltd is:

A sub-subsidiary provides the following information: The sub-subsidiary is owned 60% by its parent,which is owned 80% by the ultimate parent. Retained profits at the date of acquisition are $400. Profit for the year first is $200. The total indirect NCI is:

Parent Ltd owns 20% of S1 Ltd and controls S2 Ltd without holding any shares in S2 Ltd.In addition,S2 Ltd owns 70% of S1 Ltd.The Parent Ltd indirect interest in S1 Ltd is:

The sequence of acquisition dates in a tiered group is irrelevant to the consolidation process for indirect NCI.

Is the proportionate interest goodwill method consistent with not allocating goodwill impairment losses against the indirect NCI?

If the parent acquires the child after the child has established a controlling interest in the grandchild,then the acquisitions are referred to as sequential.

The concept of indirect ownership interests is used in:

Circular shareholdings arise where:

When a parent does not have an ownership interest in a subsidiary the NCI is 100%.

Cross-shareholdings between subsidiaries are:

Discuss the current position of the Corporations Act in respect to reciprocal ownership interests.

Text Objectives and Introduction to Consolidation

Principles of Consolidation

Fair Value Adjustments and Tax Effects

Intra-Group Transactions

Non-Controlling Interest

Consolidated Cash Flow Statements

Accounting for Joint Arrangements

Accounting for Associates and Joint Ventures: the Equity Method

Translation and Consolidation of Foreign Currency Financial Statements

Segment Reporting by Diversified Entities

Filters

Exam 6: Partly-Owned Subsidiaries: Indirect Non-Controlling Interest

Parent Ltd owns 20% of S1 Ltd and 80% of S2 Ltd.In addition,S2 Ltd owns 70% of S1 Ltd.The total NCI in S1 Ltd is:

In a multiple consolidation,the ownership interests of subsidiaries are determined using:

In a group's consolidated statement of comprehensive income,profit attributable to the non-controlling interest is included in Other comprehensive income.

A owns 80% of B and B owns 60% of C.If C pays a dividend and B distributes the amount received to its own shareholders,the allocation of the dividend will be:

A sub-subsidiary is:

A Ltd owns 80% of B Ltd and B Ltd owns 60% of C Ltd.Using the sequential consolidation method,the sequence of consolidation would be:

Why does the multiple consolidation method adopt a revaluation approach to the net assets of sub-subsidiaries?

Circular shareholdings are allowed under the Corporations Act.

Direct plus indirect ownership interests must always sum to 100% for a group.

Parent Ltd owns 90% of S1 Ltd and S1 Ltd owns 60% of S2 Ltd.Parent Ltd's indirect ownership interest in S2 Ltd is:

A sub-subsidiary provides the following information: The sub-subsidiary is owned 60% by its parent,which is owned 80% by the ultimate parent. Retained profits at the date of acquisition are $400. Profit for the year first is $200. The total indirect NCI is:

Parent Ltd owns 20% of S1 Ltd and controls S2 Ltd without holding any shares in S2 Ltd.In addition,S2 Ltd owns 70% of S1 Ltd.The Parent Ltd indirect interest in S1 Ltd is:

The sequence of acquisition dates in a tiered group is irrelevant to the consolidation process for indirect NCI.

Is the proportionate interest goodwill method consistent with not allocating goodwill impairment losses against the indirect NCI?

If the parent acquires the child after the child has established a controlling interest in the grandchild,then the acquisitions are referred to as sequential.

The concept of indirect ownership interests is used in:

Circular shareholdings arise where:

When a parent does not have an ownership interest in a subsidiary the NCI is 100%.

Cross-shareholdings between subsidiaries are:

Discuss the current position of the Corporations Act in respect to reciprocal ownership interests.

Text Objectives and Introduction to Consolidation

Principles of Consolidation

Fair Value Adjustments and Tax Effects

Intra-Group Transactions

Non-Controlling Interest

Consolidated Cash Flow Statements

Accounting for Joint Arrangements

Accounting for Associates and Joint Ventures: the Equity Method

Translation and Consolidation of Foreign Currency Financial Statements

Segment Reporting by Diversified Entities

Filters