Question 1

All groups have the same basic organizational structure.

Accepted Answer

A) True 
 B)False  False

Question 2

In the separate financial statements of a parent entity,investments not classified as held for sale are accounted for:

Accepted Answer

A)  at cost. 
B)  at fair value. 
C)  at either cost or fair value. 
D)  not recorded. 
A)  at cost. 
B)  at fair value. 
C)  at either cost or fair value. 
D)  not recorded. C

Question 3

In substance,investments in equity securities may be classified as:

Accepted Answer

A)  trading investments at fair value, where increments and decrements in the fair value of the investments are recognised in the income statement. 
B)  available-for-sale investments. 
C)  equity investments in subsidiaries, associates and joint venture entities. 
D)  all of the above. 
A)  trading investments at fair value, where increments and decrements in the fair value of the investments are recognised in the income statement. 
B)  available-for-sale investments. 
C)  equity investments in subsidiaries, associates and joint venture entities. 
D)  all of the above. D

Question 4

Equity investments falling within the scope of AASB 139 Financial Instruments: Recognition and Measurement can be measured at fair value.

Accepted Answer

A) True 
 B)False

Question 5

List the potential benefits of group formation.

Accepted Answer

• Reducing commercial risk or maximising

Question 6

What is the application of the reporting entity concept to consolidation accounting?

Accepted Answer

Reporting entity concept:
- Definition:

Question 7

Investments in associates (other than those classified as held for sale)will be measured at cost in the consolidated financial statements.

Accepted Answer

A) True 
 B)False

Question 8

All companies must prepare separate financial statements.

Accepted Answer

A) True 
 B)False

Question 9

Discuss the potential benefits of conducting economic activity through a group structure

Accepted Answer

Potential benefits:
- Diversification-re

Question 10

Cassius Ltd and Brutus Ltd agreed to merge by forming another company,Casca Ltd,which acquired all the issued capital of the two companies in a share exchange.Cassius Ltd was a much larger company than Brutus Ltd,with several large equity stakeholders,so that the board of Cassius Ltd emerged from the business combination with the power to dominate the operating and financial policies of the merged entity.Based on these facts:

Accepted Answer

A)  Casca Ltd must be the acquiring entity because it acquired the issued capital of Cassius Ltd and Brutus Ltd. 
B)  Cassius Ltd is the acquiring entity because its management emerges as the dominant power in the merged entity. 
C)  neither Cassius Ltd nor Brutus Ltd can be the acquiring entity because their equity securities have been acquired by Casca Ltd. 
D)  none of the above. 
A)  Casca Ltd must be the acquiring entity because it acquired the issued capital of Cassius Ltd and Brutus Ltd. 
B)  Cassius Ltd is the acquiring entity because its management emerges as the dominant power in the merged entity. 
C)  neither Cassius Ltd nor Brutus Ltd can be the acquiring entity because their equity securities have been acquired by Casca Ltd. 
D)  none of the above.

Question 11

Accounting Standard AASB 127 applies only to the consolidated financial statements of a group.

Accepted Answer

A) True 
 B)False

Question 12

If a company has control over the financial policies of another entity,it is deemed to have control over the operating policies.

Accepted Answer

A) True 
 B)False

Question 13

For a company to be required to present consolidated financial statements,it must be:

Accepted Answer

A)  a parent entity. 
B)  a reporting entity. 
C)  part of a group that is a reporting entity. 
D)  any of the above. 
A)  a parent entity. 
B)  a reporting entity. 
C)  part of a group that is a reporting entity. 
D)  any of the above.

Question 14

A 'controlled group' includes:

Accepted Answer

A)  controlled entities. 
B)  associates. 
C)  joint ventures. 
D)  all the above. 
A)  controlled entities. 
B)  associates. 
C)  joint ventures. 
D)  all the above.

Question 15

Control of a subsidiary must be actively exercised (i.e.,the capacity to control does not meet the definition of control).

Accepted Answer

A) True 
 B)False

Question 16

A Ltd controls B Ltd who in turn controls C Ltd.B Ltd and the B Ltd group are not reporting entities.A Ltd is a reporting entity.Consolidated financial statements will be required to be prepared for:

Accepted Answer

A)  the A group 
B)  the B group 
C)  both the A group and the B group. 
D)  none of the groups. 
A)  the A group 
B)  the B group 
C)  both the A group and the B group. 
D)  none of the groups.

Question 17

A subsidiary may be:

Accepted Answer

A)  a company. 
B)  a partnership. 
C)  an individual. 
D)  all of the above. 
A)  a company. 
B)  a partnership. 
C)  an individual. 
D)  all of the above.

Question 18

Ownership of more than 50% of the voting power will always represent control.

Accepted Answer

A) True 
 B)False

Question 19

In AASB 3,the indicia of an acquiring entity's power to control the other combining entities in a business combination do not include the power to:

Accepted Answer

A)  exercise more than half of the voting rights in another entity through the site of the voting power or by virtue of an agreement with other investors. 
B)  appoint or remove a majority of the members of the governing body of the acquired entities. 
C)  cast the majority of votes at meetings of the governing body. 
D)  none of the above. 
A)  exercise more than half of the voting rights in another entity through the site of the voting power or by virtue of an agreement with other investors. 
B)  appoint or remove a majority of the members of the governing body of the acquired entities. 
C)  cast the majority of votes at meetings of the governing body. 
D)  none of the above.

Question 20

If a parent loses control of a subsidiary during a financial year,that subsidiary's results are ignored for consolidation purposes.

Accepted Answer

A) True 
 B)False

All groups have the same basic organizational structure.

In the separate financial statements of a parent entity,investments not classified as held for sale are accounted for:

In substance,investments in equity securities may be classified as:

Equity investments falling within the scope of AASB 139 Financial Instruments: Recognition and Measurement can be measured at fair value.

List the potential benefits of group formation.

What is the application of the reporting entity concept to consolidation accounting?

Investments in associates (other than those classified as held for sale)will be measured at cost in the consolidated financial statements.

All companies must prepare separate financial statements.

Discuss the potential benefits of conducting economic activity through a group structure

Accounting Standard AASB 127 applies only to the consolidated financial statements of a group.

If a company has control over the financial policies of another entity,it is deemed to have control over the operating policies.

For a company to be required to present consolidated financial statements,it must be:

A 'controlled group' includes:

Control of a subsidiary must be actively exercised (i.e.,the capacity to control does not meet the definition of control).

A Ltd controls B Ltd who in turn controls C Ltd.B Ltd and the B Ltd group are not reporting entities.A Ltd is a reporting entity.Consolidated financial statements will be required to be prepared for:

A subsidiary may be:

Ownership of more than 50% of the voting power will always represent control.

In AASB 3,the indicia of an acquiring entity's power to control the other combining entities in a business combination do not include the power to:

If a parent loses control of a subsidiary during a financial year,that subsidiary's results are ignored for consolidation purposes.

Principles of 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 1: Text Objectives and Introduction to Consolidation

All groups have the same basic organizational structure.

In the separate financial statements of a parent entity,investments not classified as held for sale are accounted for:

In substance,investments in equity securities may be classified as:

Equity investments falling within the scope of AASB 139 Financial Instruments: Recognition and Measurement can be measured at fair value.

List the potential benefits of group formation.

What is the application of the reporting entity concept to consolidation accounting?

Investments in associates (other than those classified as held for sale)will be measured at cost in the consolidated financial statements.

All companies must prepare separate financial statements.

Discuss the potential benefits of conducting economic activity through a group structure

Accounting Standard AASB 127 applies only to the consolidated financial statements of a group.

If a company has control over the financial policies of another entity,it is deemed to have control over the operating policies.

For a company to be required to present consolidated financial statements,it must be:

A 'controlled group' includes:

Control of a subsidiary must be actively exercised (i.e.,the capacity to control does not meet the definition of control).

A Ltd controls B Ltd who in turn controls C Ltd.B Ltd and the B Ltd group are not reporting entities.A Ltd is a reporting entity.Consolidated financial statements will be required to be prepared for:

A subsidiary may be:

Ownership of more than 50% of the voting power will always represent control.

In AASB 3,the indicia of an acquiring entity's power to control the other combining entities in a business combination do not include the power to:

If a parent loses control of a subsidiary during a financial year,that subsidiary's results are ignored for consolidation purposes.

Principles of 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