Question 1

When an investment in a subsidiary is impaired,any impairment losses will be:

Accepted Answer

A)  apportioned between PI and NCI. 
B)  borne by the PI. 
C)  Ignored. 
D)  none of the above. 
A)  apportioned between PI and NCI. 
B)  borne by the PI. 
C)  Ignored. 
D)  none of the above. A

Question 2

Discuss the effect of intragroup transactions on the calculation of the NCI share of subsidiary profits and retained earnings.

Accepted Answer

Effect of intragroup transactions on NCI share of profit and retained earnings:
- Intragroup eliminations of unrealised profits and losses will result in group profit and retained earnings differing from those in group members' individual accounts.
- The subsidiary's financial statements should be adjusted to remove the effect of these consolidation adjustments prior to calculation of the NCI allocation.

Question 3

The shareholders' interest in a subsidiary that is termed a 'non-controlling interest' derives its name because,in comparison to the interest held be the shareholders of the parent entity,the non-controlling interest:

Accepted Answer

A)  has less equity in the subsidiary. 
B)  has less voting power in the subsidiary. 
C)  has less equity and less voting power in the subsidiary. 
D)  none of the above. 
A)  has less equity in the subsidiary. 
B)  has less voting power in the subsidiary. 
C)  has less equity and less voting power in the subsidiary. 
D)  none of the above. D

Question 4

Under current accounting standards,it is not possible to record a negative NCI in consolidated financial statements.

Accepted Answer

A) True 
 B)False

Question 5

The effect of all intragroup transactions must be adjusted in calculating the NCI share of subsidiary profits.

Accepted Answer

A) True 
 B)False

Question 6

Outline how NCI will be disclosed in the consolidated statement of financial position,
statement of comprehensive income and statement of changes in equity.

Accepted Answer

Disclosure of NCI:
- Statement of financ

Question 7

Company A owns 40% of Company B and this ownership is deemed to represent control.The non-controlling interest in B is:

Accepted Answer

A)  40%. 
B)  60%. 
C)  100%. 
D)  no non-controlling interest. 
A)  40%. 
B)  60%. 
C)  100%. 
D)  no non-controlling interest.

Question 8

The shareholders of the parent entity in a group are entitled to:

Accepted Answer

A)  total profits of all group members. 
B)  parent entity interest in consolidated group profit. 
C)  non-controlling interest in consolidated group profit. 
D)  none of the above. 
A)  total profits of all group members. 
B)  parent entity interest in consolidated group profit. 
C)  non-controlling interest in consolidated group profit. 
D)  none of the above.

Question 9

Preference shares of a subsidiary not owned by the parent company will be included as part of the NCI.

Accepted Answer

A) True 
 B)False

Question 10

A subsidiary's recorded profits and retained earnings must be adjusted for unrealised profits prior to calculation of NCI allocation.The adjustments apply to:

Accepted Answer

A)  upstream transactions. 
B)  downstream transactions. 
C)  both upstream and downstream transactions. 
D)  none of the above. 
A)  upstream transactions. 
B)  downstream transactions. 
C)  both upstream and downstream transactions. 
D)  none of the above.

Question 11

Unrealised intragroup profit in opening inventory of a parent company is:

Accepted Answer

A)  added to subsidiary profit in calculating NCI share of profit. 
B)  subtracted from subsidiary profit in calculating NCI share of profit. 
C)  ignored in calculating NCI share of profit. 
D)  none of the above. 
A)  added to subsidiary profit in calculating NCI share of profit. 
B)  subtracted from subsidiary profit in calculating NCI share of profit. 
C)  ignored in calculating NCI share of profit. 
D)  none of the above.

Question 12

Under full consolidation,only the income,expenses,assets,liabilities and equity of wholly owned subsidiaries are included in the consolidated financial statements.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is correct?

Accepted Answer

A)  The non-controlling interest cannot have the majority of the equity in a subsidiary since it would not then be a non-controlling interest. 
B)  The non-controlling interest cannot have the majority of voting power in a subsidiary since a majority would give that interest the power to control a subsidiary. 
C)  The non-controlling interest may have the majority of the equity and a majority of the voting power in a subsidiary but still remain a non-controlling interest. 
D)  None of the above. 
A)  The non-controlling interest cannot have the majority of the equity in a subsidiary since it would not then be a non-controlling interest. 
B)  The non-controlling interest cannot have the majority of voting power in a subsidiary since a majority would give that interest the power to control a subsidiary. 
C)  The non-controlling interest may have the majority of the equity and a majority of the voting power in a subsidiary but still remain a non-controlling interest. 
D)  None of the above.

Question 14

Why does AASB 3 allow a choice in the measurement of NCI at the date of acquisition?

Accepted Answer

Measurement of NCI at date of acquisitio

Question 15

Accounting Standard AASB 3 Business Combinations allows the choice of measuring NCI using either the fair value method or the proportionate interest method.

Accepted Answer

A) True 
 B)False

Question 16

Consistent with the entity concept,full consolidation requires that:

Accepted Answer

A)  the parent ownership proportion of the subsidiary income, expenses, assets, liabilities and equity are included in the consolidated financial statements. 
B)  the non-controlling ownership interests are included in the consolidated financial statements. 
C)  the full amount of income, expenses, assets, liabilities and equity are included in the consolidated financial statements. 
D)  none of the above. 
A)  the parent ownership proportion of the subsidiary income, expenses, assets, liabilities and equity are included in the consolidated financial statements. 
B)  the non-controlling ownership interests are included in the consolidated financial statements. 
C)  the full amount of income, expenses, assets, liabilities and equity are included in the consolidated financial statements. 
D)  none of the above.

Question 17

The parent interest (PI)in equity will be calculated as follows:

Accepted Answer

A)  consolidated equity less non-controlling interest. 
B)  parent equity plus PI share of subsidiary equity. 
C)  parent equity plus non-controlling interest. 
D)  none of the above. 
A)  consolidated equity less non-controlling interest. 
B)  parent equity plus PI share of subsidiary equity. 
C)  parent equity plus non-controlling interest. 
D)  none of the above.

Question 18

Under the entity concept of consolidation,the NCI is recognised as a liability.

Accepted Answer

A) True 
 B)False

Question 19

Where the shareholder's equity of a subsidiary is negative:

Accepted Answer

A)  the NCI will be included as part of the parent interests. 
B)  the NCI will be shown as a separate amount in the consolidated accounts. 
C)  the NCI is ignored for consolidation purposes. 
D)  none of the above. 
A)  the NCI will be included as part of the parent interests. 
B)  the NCI will be shown as a separate amount in the consolidated accounts. 
C)  the NCI is ignored for consolidation purposes. 
D)  none of the above.

Question 20

The disclosure of the non-controlling interest proportion of each equity balance in the consolidated financial statements provides useful information on:

Accepted Answer

A)  dividend payment capacity. 
B)  business activity results. 
C)  segment activity results. 
D)  all the above. 
A)  dividend payment capacity. 
B)  business activity results. 
C)  segment activity results. 
D)  all the above.

When an investment in a subsidiary is impaired,any impairment losses will be:

Discuss the effect of intragroup transactions on the calculation of the NCI share of subsidiary profits and retained earnings.

The shareholders' interest in a subsidiary that is termed a 'non-controlling interest' derives its name because,in comparison to the interest held be the shareholders of the parent entity,the non-controlling interest:

Under current accounting standards,it is not possible to record a negative NCI in consolidated financial statements.

The effect of all intragroup transactions must be adjusted in calculating the NCI share of subsidiary profits.

Outline how NCI will be disclosed in the consolidated statement of financial position, statement of comprehensive income and statement of changes in equity.

Company A owns 40% of Company B and this ownership is deemed to represent control.The non-controlling interest in B is:

The shareholders of the parent entity in a group are entitled to:

Preference shares of a subsidiary not owned by the parent company will be included as part of the NCI.

A subsidiary's recorded profits and retained earnings must be adjusted for unrealised profits prior to calculation of NCI allocation.The adjustments apply to:

Unrealised intragroup profit in opening inventory of a parent company is:

Under full consolidation,only the income,expenses,assets,liabilities and equity of wholly owned subsidiaries are included in the consolidated financial statements.

Which of the following statements is correct?

Why does AASB 3 allow a choice in the measurement of NCI at the date of acquisition?

Accounting Standard AASB 3 Business Combinations allows the choice of measuring NCI using either the fair value method or the proportionate interest method.

Consistent with the entity concept,full consolidation requires that:

The parent interest (PI)in equity will be calculated as follows:

Under the entity concept of consolidation,the NCI is recognised as a liability.

Where the shareholder's equity of a subsidiary is negative:

The disclosure of the non-controlling interest proportion of each equity balance in the consolidated financial statements provides useful information on:

Text Objectives and Introduction to Consolidation

Principles of Consolidation

Fair Value Adjustments and Tax Effects

Intra-Group Transactions

Partly-Owned Subsidiaries: Indirect 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 5: Non-Controlling Interest

When an investment in a subsidiary is impaired,any impairment losses will be:

Discuss the effect of intragroup transactions on the calculation of the NCI share of subsidiary profits and retained earnings.

The shareholders' interest in a subsidiary that is termed a 'non-controlling interest' derives its name because,in comparison to the interest held be the shareholders of the parent entity,the non-controlling interest:

Under current accounting standards,it is not possible to record a negative NCI in consolidated financial statements.

The effect of all intragroup transactions must be adjusted in calculating the NCI share of subsidiary profits.

Outline how NCI will be disclosed in the consolidated statement of financial position, statement of comprehensive income and statement of changes in equity.

Company A owns 40% of Company B and this ownership is deemed to represent control.The non-controlling interest in B is:

The shareholders of the parent entity in a group are entitled to:

Preference shares of a subsidiary not owned by the parent company will be included as part of the NCI.

A subsidiary's recorded profits and retained earnings must be adjusted for unrealised profits prior to calculation of NCI allocation.The adjustments apply to:

Unrealised intragroup profit in opening inventory of a parent company is:

Under full consolidation,only the income,expenses,assets,liabilities and equity of wholly owned subsidiaries are included in the consolidated financial statements.

Which of the following statements is correct?

Why does AASB 3 allow a choice in the measurement of NCI at the date of acquisition?

Accounting Standard AASB 3 Business Combinations allows the choice of measuring NCI using either the fair value method or the proportionate interest method.

Consistent with the entity concept,full consolidation requires that:

The parent interest (PI)in equity will be calculated as follows:

Under the entity concept of consolidation,the NCI is recognised as a liability.

Where the shareholder's equity of a subsidiary is negative:

The disclosure of the non-controlling interest proportion of each equity balance in the consolidated financial statements provides useful information on:

Text Objectives and Introduction to Consolidation

Principles of Consolidation

Fair Value Adjustments and Tax Effects

Intra-Group Transactions

Partly-Owned Subsidiaries: Indirect 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