Question 1

Which items are listed first on a consolidated worksheet?

Accepted Answer

A)  Statement of financial position items 
B)  Profit or loss items 
C)  Intra-entity transactions 
D)  Retained earnings items 
A)  Statement of financial position items 
B)  Profit or loss items 
C)  Intra-entity transactions 
D)  Retained earnings items

Question 2

It is important to distinguish between pre-acquisition and post-acquisition equity of a subsidiary to allow:

Accepted Answer

A)  post-acquisition equity to be eliminated on consolidation. 
B)  goodwill or gain on bargain purchase to be calculated. 
C)  avoidance of double counting of pre-acquisition equity. 
D)  none of the above. 
A)  post-acquisition equity to be eliminated on consolidation. 
B)  goodwill or gain on bargain purchase to be calculated. 
C)  avoidance of double counting of pre-acquisition equity. 
D)  none of the above.

Question 3

A company with a constitution that provides for the declaration of dividends will recognise a liability for dividends payable if:

Accepted Answer

A)  the dividend is recommended before the balance date but not declared. 
B)  the dividend is declared before the balance date. 
C)  the dividend is recommended and declared after the balance date. 
D)  none of the above. 
A)  the dividend is recommended before the balance date but not declared. 
B)  the dividend is declared before the balance date. 
C)  the dividend is recommended and declared after the balance date. 
D)  none of the above.

Question 4

Outline the regulatory basis for the requirement to measure goodwill at cost less accumulated impairment losses.

Accepted Answer

Measurement of goodwill:
- Under current

Question 5

On 1 July 20X5,Helios Ltd acquired all the issued capital of Havers Pty Ltd (100 000 shares)for $10 per share.During the year ended 30 June 20X6,Helios Ltd received a dividend from Havers Ltd of $60 000; a dividend which had been declared by the directors of Havers Ltd in the year ended 30 June 20X5 and was not subject to ratification by the shareholders of Havers Ltd.During the year ended 30 June 20X6,Helios Ltd received an interim dividend of $40 000 from Havers Ltd and the directors of Havers Ltd declared a final dividend of $60 000.At 30 June 20X6,the directors estimated that the fair value of the shares in Havers Ltd was only $9 per share at that date,but the estimated fall in value was considered to be only temporary and the carrying amount of the investment had not been impaired. At the date of acquisition,1 July 20X5,the shareholders' equity of Havers Ltd was (amounts in thousands):
$\begin{array}{ll}
\text { Shareholders' equity }&\
\text { Issued capital}&\$200\
\text {Retained earnings }&400\&---\
\text {Total shareholders' equity}&\$600
\end{array}$
 At the date of acquisition,the carrying amounts of the net assets of Havers Ltd approximated fair value.If a consolidated balance sheet were to be prepared for Helios Ltd and its subsidiaries at the date of acquisition,the consolidation adjustment to eliminate the investment in the subsidiary would be:

Accepted Answer

A)

$\begin{array}{ll}
\text { Issued Capital } & \$ 200,000 \
\text { Retained Earnings } & 400,000 \
\text { Goodwill } & 400,000\
\text { Investment in Subsidiary }&\$1,000,000
\end{array}$ 
B)  
$\begin{array}{ll}
\text { Issued Capital } & \$ 200,000 \
\text { Retained Earnings } & 400,000 \
\text { Dividend Payable } & 60,000 \
\text { Goodwill } & 340,000\
\text { Investment in Subsidiary }&\$1,000,000
\end{array}$ 
C)  
$\begin{array}{ll}\text { Issued Capital }&\$200,000\
\text { Retained Earnings } & 340,000 \
\text { Dividend Payable } & 60,000 \
\text { Goodwill } & 340,000 \
\quad \text { Investment in Subsidiary } &\$940,000
\end{array}$ 
D)  None of the above 
A)

$\begin{array}{ll}
\text { Issued Capital } & \$ 200,000 \
\text { Retained Earnings } & 400,000 \
\text { Goodwill } & 400,000\
\text { Investment in Subsidiary }&\$1,000,000
\end{array}$ 
B)  
$\begin{array}{ll}
\text { Issued Capital } & \$ 200,000 \
\text { Retained Earnings } & 400,000 \
\text { Dividend Payable } & 60,000 \
\text { Goodwill } & 340,000\
\text { Investment in Subsidiary }&\$1,000,000
\end{array}$ 
C)  
$\begin{array}{ll}\text { Issued Capital }&\$200,000\
\text { Retained Earnings } & 340,000 \
\text { Dividend Payable } & 60,000 \
\text { Goodwill } & 340,000 \
\quad \text { Investment in Subsidiary } &\$940,000
\end{array}$ 
D)  None of the above

Question 6

The general purpose financial statements (GPFS)of a parent entity are prepared from the viewpoint of the:

Accepted Answer

A)  group. 
B)  parent entity. 
C)  subsidiary. 
D)  non-controlling interest. 
A)  group. 
B)  parent entity. 
C)  subsidiary. 
D)  non-controlling interest.

Question 7

During August 20X5,Atticus Ltd acquired the issued capital of Finch Pty Ltd in exchange for 1 000 000 shares in Atticus Ltd with a fair value of $10 per share.Share issue costs amounted to $400 000 and an amount of $400 000 was paid to consultants.Atticus Ltd also took over the loans payable to the shareholders of Finch Pty Ltd by that company of $2 000 000.The cost of the investment is:

Accepted Answer

A)  $12 400 000. 
B)  $8 400 000. 
C)  $12 800,000. 
D)  none of the above. 
A)  $12 400 000. 
B)  $8 400 000. 
C)  $12 800,000. 
D)  none of the above.

Question 8

The purpose of consolidated financial statements is to provide information to shareholders of the parent company.

Accepted Answer

A) True 
 B)False

Which items are listed first on a consolidated worksheet?

It is important to distinguish between pre-acquisition and post-acquisition equity of a subsidiary to allow:

A company with a constitution that provides for the declaration of dividends will recognise a liability for dividends payable if:

Outline the regulatory basis for the requirement to measure goodwill at cost less accumulated impairment losses.

The general purpose financial statements (GPFS)of a parent entity are prepared from the viewpoint of the:

The purpose of consolidated financial statements is to provide information to shareholders of the parent company.

Text Objectives and Introduction to Consolidation

Fair Value Adjustments and Tax Effects

Intra-Group Transactions

Non-Controlling Interest

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 2: Principles of Consolidation

Which items are listed first on a consolidated worksheet?

It is important to distinguish between pre-acquisition and post-acquisition equity of a subsidiary to allow:

A company with a constitution that provides for the declaration of dividends will recognise a liability for dividends payable if:

Outline the regulatory basis for the requirement to measure goodwill at cost less accumulated impairment losses.

The general purpose financial statements (GPFS)of a parent entity are prepared from the viewpoint of the:

The purpose of consolidated financial statements is to provide information to shareholders of the parent company.

Text Objectives and Introduction to Consolidation

Fair Value Adjustments and Tax Effects

Intra-Group Transactions

Non-Controlling Interest

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