$\begin{array} { l c c c } & \begin{array} { c } \text { Piano Ltd } \\ \text { \$ millions } \end{array} & \begin{array} { c } \text { Billy Ltd } \\ \text { \$ millions } \end{array} & \begin{array} { c } \text { Man Ltd } \\ \text { \$ millions } \end{array} \\ \text { Retained profits } & 2300 & 800 & 500 \\ \text { Paid-up capital } & 2700 & 400 & 300 \\ \text { 1 Jan 20X0 Total } & \mathbf { 5 0 0 0 } & \mathbf { 1 } 200 & \mathbf { 8 0 0 } \\ \text { Retained profits } & 4300 & 1200 & 600 \\ \text { Paid-up capital } & 2700 & 400 & 300 \\ \text { 1 Jan 20X2 Total } & 7 \mathbf { 0 0 0 } & \mathbf { 1 6 0 0 } & \mathbf { 9 0 0 } \end{array}$ -On 1 January 20X0, Billy Ltd acquired 100% of the issued capital of Man Ltd by paying $1 000 million cash.On 1 January 20X2, Piano Ltd acquired 100% of the issued capital of Billy Ltd by paying $1 600 million cash.At these two dates, the fair value of equity of the companies is shown in the above table. How much goodwill was acquired by each company if the partial method is applied?

A) $\begin{array}{llcc} \text { Piano Ltd \$ millions } & 0 \\ \text { Billy Ltd \$ millions } &200\\ \end{array}$ B) $\begin{array}{llcc} \text { Piano Ltd \$ millions } & 400 \\ \text { Billy Ltd \$ millions } &200\\ \end{array}$ C) $\begin{array}{l} \text { Piano Ltd } \$ \text { millions } \quad 200\\ \text { Billy Ltd \$ millions } \quad 400 \end{array}$ D) $\begin{array}{llcc} \text { Piano Ltd \$ millions } & 0 \\ \text { Billy Ltd \$ millions } &100\\ \end{array}$ A) $\begin{array}{llcc} \text { Piano Ltd \$ millions } & 0 \\ \text { Billy Ltd \$ millions } &200\\ \end{array}$ B) $\begin{array}{llcc} \text { Piano Ltd \$ millions } & 400 \\ \text { Billy Ltd \$ millions } &200\\ \end{array}$ C) $\begin{array}{l} \text { Piano Ltd } \$ \text { millions } \quad 200\\ \text { Billy Ltd \$ millions } \quad 400 \end{array}$ D) $\begin{array}{llcc} \text { Piano Ltd \$ millions } & 0 \\ \text { Billy Ltd \$ millions } &100\\ \end{array}$

$\begin{array} { l c c c } & \begin{array} { c } \text { Piano Ltd } \\ \text { \$ millions } \end{array} & \begin{array} { c } \text { Billy Ltd } \\ \text { \$ millions } \end{array} & \begin{array} { c } \text { Man Ltd } \\ \text { \$ millions } \end{array} \\ \text { Retained profits } & 2300 & 800 & 500 \\ \text { Paid-up capital } & 2700 & 400 & 300 \\ \text { 1 Jan 20X0 Total } & \mathbf { 5 0 0 0 } & \mathbf { 1 } 200 & \mathbf { 8 0 0 } \\ \text { Retained profits } & 4300 & 1200 & 600 \\ \text { Paid-up capital } & 2700 & 400 & 300 \\ \text { 1 Jan 20X2 Total } & 7 \mathbf { 0 0 0 } & \mathbf { 1 6 0 0 } & \mathbf { 9 0 0 } \end{array}$ -On 1 January 20X0, Piano Ltd acquired 100% of the issued capital of Billy Ltd by paying $1 600 million cash.On 1 January 20X2, Billy Ltd acquired 100% of the issued capital of Man Ltd by paying $1 000 million cash.At these two dates, the fair values of equity of the companies is shown in the above table. How much goodwill was acquired by each company?

A) $\begin{array}{llcc} \text { Piano Ltd \$ millions } & 0 \\ \text { Billy Ltd \$ millions } &200\\ \end{array}$ B) $\begin{array}{llcc} \text { Piano Ltd \$ millions } & 400\\ \text { Billy Ltd \$ millions } &200\\ \end{array}$ C) $\begin{array}{llcc} \text { Piano Ltd \$ millions } &40 0 \\ \text { Billy Ltd \$ millions } &100\\ \end{array}$ D) $\begin{array}{llcc} \text { Piano Ltd \$ millions } & 0 \\ \text { Billy Ltd \$ millions } &100\\ \end{array}$ A) $\begin{array}{llcc} \text { Piano Ltd \$ millions } & 0 \\ \text { Billy Ltd \$ millions } &200\\ \end{array}$ B) $\begin{array}{llcc} \text { Piano Ltd \$ millions } & 400\\ \text { Billy Ltd \$ millions } &200\\ \end{array}$ C) $\begin{array}{llcc} \text { Piano Ltd \$ millions } &40 0 \\ \text { Billy Ltd \$ millions } &100\\ \end{array}$ D) $\begin{array}{llcc} \text { Piano Ltd \$ millions } & 0 \\ \text { Billy Ltd \$ millions } &100\\ \end{array}$

Thorpe Ltd owns 70% of the issued share capital of Perkins Ltd.Perkins Ltd owns 80% of the issued share capital of Hackett Ltd and 60% of the issued share capital of Klim Ltd.For the year ended 31 December 20X0 each company reported the following profits/(losses): $\begin{array} { l c } & \$ \\ \text { Thorpe Ltd } & ( 800000 ) \\ \text { Perkins Ltd } & ( 600000 ) \\ \text { Hackett Ltd } & 700000 \\ \text { Klim Ltd } & 700000 \end{array}$ -What is the amount of the ultimate parent shareholders' interest in Klim Ltd's profit for this financial year?

A) $280 000 B) $294 000 C) $392 000 D) $420 000 A) $280 000 B) $294 000 C) $392 000 D) $420 000

Thorpe Ltd owns 70% of the issued share capital of Perkins Ltd.Perkins Ltd owns 80% of the issued share capital of Hackett Ltd and 60% of the issued share capital of Klim Ltd.For the year ended 31 December 20X0 each company reported the following profits/(losses): $\begin{array} { l c } & \$ \\ \text { Thorpe Ltd } & ( 800000 ) \\ \text { Perkins Ltd } & ( 600000 ) \\ \text { Hackett Ltd } & 700000 \\ \text { Klim Ltd } & 700000 \end{array}$ -What is the amount of the ultimate parent shareholders' indirect interest in Perkins Ltd's net result for this financial year?

A) $600 000 loss B) $490 000 loss C) $420 000 loss D) Nil A) $600 000 loss B) $490 000 loss C) $420 000 loss D) Nil

Thorpe Ltd owns 70% of the issued share capital of Perkins Ltd.Perkins Ltd owns 80% of the issued share capital of Hackett Ltd and 60% of the issued share capital of Klim Ltd.For the year ended 31 December 20X0 each company reported the following profits/(losses): $\begin{array} { l c } & \$ \\ \text { Thorpe Ltd } & ( 800000 ) \\ \text { Perkins Ltd } & ( 600000 ) \\ \text { Hackett Ltd } & 700000 \\ \text { Klim Ltd } & 700000 \end{array}$ -What are the amounts of the NCI's direct and indirect interest in Hackett Ltd's profit for this financial year?

A) $\begin{array}{ll} \text { Direct (\$) } & \text { Indirect (\$) } \\ 140000 & 168000 \end{array}$ B) $\begin{array} { l l } \text { Direct (\$) } & \text { Indirect (\$) } \\ 140000 & 392000 \end{array}$ C) $\begin{array} { l l } \text { Direct (\$) } & \text { Indirect (\$) } \\ 168000 & 140000 \end{array}$ D) $\begin{array} { l l } \text { Direct (\$) } & \text { Indirect (\$) } \\ 168000 & 392000 \end{array}$ A) $\begin{array}{ll} \text { Direct (\$) } & \text { Indirect (\$) } \\ 140000 & 168000 \end{array}$ B) $\begin{array} { l l } \text { Direct (\$) } & \text { Indirect (\$) } \\ 140000 & 392000 \end{array}$ C) $\begin{array} { l l } \text { Direct (\$) } & \text { Indirect (\$) } \\ 168000 & 140000 \end{array}$ D) $\begin{array} { l l } \text { Direct (\$) } & \text { Indirect (\$) } \\ 168000 & 392000 \end{array}$

Exam 22: Indirect Interest

Mount Ltd owns 60% of the issued share capital of Tom Ltd and 70% of the issued share capital of Price Ltd.Tom Ltd owns 90% of the issued capital of Karatha Ltd and 60% of the issued share capital of Roeburn Ltd. -What is the NCI's indirect interest in Roeburn Ltd?

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(Multiple Choice)

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Question 1

Correct Answer:

Verified

B

Mount Ltd owns 60% of the issued share capital of Tom Ltd and 70% of the issued share capital of Price Ltd.Tom Ltd owns 90% of the issued capital of Karatha Ltd and 60% of the issued share capital of Roeburn Ltd. -What is the ultimate parent shareholders' direct interest in Karatha Ltd?

Free

(Multiple Choice)

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Question 2

Correct Answer:

Verified

A

Mount Ltd owns 60% of the issued share capital of Tom Ltd and 70% of the issued share capital of Price Ltd.Tom Ltd owns 90% of the issued capital of Karatha Ltd and 60% of the issued share capital of Roeburn Ltd. -What is the NCI's indirect interest in Karatha Ltd?

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(Multiple Choice)

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Question 3

Correct Answer:

Verified

B

Thorpe Ltd owns 70% of the issued share capital of Perkins Ltd.Perkins Ltd owns 80% of the issued share capital of Hackett Ltd and 60% of the issued share capital of Klim Ltd.For the year ended 31 December 20X0 each company reported the following profits/(losses): \ Thorpe Ltd (800000) Perkins Ltd (600000) Hackett Ltd 700000 Klim Ltd 700000 -What is the amount of the total NCI in Klim Ltd's net result for this financial year?

(Multiple Choice)

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Question 4

Consolidated statements include post-control reserves and profits of subsidiaries.In general, these are: 1.for a subsidiary, the equities it generates after it is acquired; and 2.for a sub-subsidiary, the equities it generates after it is acquired or its parent is acquired, whichever is the later.

(True/False)

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Question 5

Piano Ltd \ millions Billy Ltd \ millions Man Ltd \ millions Retained profits 2300 800 500 Paid-up capital 2700 400 300 1 Jan 20X0 Total 200 Retained profits 4300 1200 600 Paid-up capital 2700 400 300 1 Jan 20X2 Total 7 -On 1 January 20X0, Billy Ltd acquired 100% of the issued capital of Man Ltd by paying $1 000 million cash.On 1 January 20X2, Piano Ltd acquired 100% of the issued capital of Billy Ltd by paying $1 600 million cash.At these two dates, the fair value of equity of the companies is shown in the above table. How much goodwill was acquired by each company if the partial method is applied?

(Multiple Choice)

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Question 6

Assignment of goodwill and related costs to the ultimate parent is consistent with the synergy explanation for goodwill.

(True/False)

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Question 7

Under AASB 127 all consolidation differences and related costs must be assigned to the ultimate parent in the partial method.

(True/False)

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Question 8

Piano Ltd \ millions Billy Ltd \ millions Man Ltd \ millions Retained profits 2300 800 500 Paid-up capital 2700 400 300 1 Jan 20X0 Total 200 Retained profits 4300 1200 600 Paid-up capital 2700 400 300 1 Jan 20X2 Total 7 -On 1 January 20X0, Piano Ltd acquired 100% of the issued capital of Billy Ltd by paying $1 600 million cash.On 1 January 20X2, Billy Ltd acquired 100% of the issued capital of Man Ltd by paying $1 000 million cash.At these two dates, the fair values of equity of the companies is shown in the above table. How much goodwill was acquired by each company?

(Multiple Choice)

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Question 9

A Ltd acquires 60% of B Ltd in 20X5.B Ltd has held a 70% interest in C Ltd since 20X0.In 20X4 the B group recorded $20 000 of consolidation goodwill impairment expense in respect of the C Ltd acquisition.Which of the following statements is true?

(Multiple Choice)

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Question 10

A parent company can have direct and indirect interests simultaneously in a subsidiary but NCI can not have both direct and indirect interests.

(True/False)

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Question 11

The NCI of a middle-tier subsidiary are NCI as regards the principal group but parent shareholders as regards the nested group.

(True/False)

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Question 12

Mount Ltd owns 60% of the issued share capital of Tom Ltd and 70% of the issued share capital of Price Ltd.Tom Ltd owns 90% of the issued capital of Karatha Ltd and 60% of the issued share capital of Roeburn Ltd. -What is the direct NCI in Roeburn Ltd?

(Multiple Choice)

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Question 13

Thorpe Ltd owns 70% of the issued share capital of Perkins Ltd.Perkins Ltd owns 80% of the issued share capital of Hackett Ltd and 60% of the issued share capital of Klim Ltd.For the year ended 31 December 20X0 each company reported the following profits/(losses): \ Thorpe Ltd (800000) Perkins Ltd (600000) Hackett Ltd 700000 Klim Ltd 700000 -What is the amount of the ultimate parent shareholders' interest in Klim Ltd's profit for this financial year?

(Multiple Choice)

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Question 14

Thorpe Ltd owns 70% of the issued share capital of Perkins Ltd.Perkins Ltd owns 80% of the issued share capital of Hackett Ltd and 60% of the issued share capital of Klim Ltd.For the year ended 31 December 20X0 each company reported the following profits/(losses): \ Thorpe Ltd (800000) Perkins Ltd (600000) Hackett Ltd 700000 Klim Ltd 700000 -What is the amount of the ultimate parent shareholders' indirect interest in Perkins Ltd's net result for this financial year?

(Multiple Choice)

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Question 15

Thorpe Ltd owns 70% of the issued share capital of Perkins Ltd.Perkins Ltd owns 80% of the issued share capital of Hackett Ltd and 60% of the issued share capital of Klim Ltd.For the year ended 31 December 20X0 each company reported the following profits/(losses): \ Thorpe Ltd (800000) Perkins Ltd (600000) Hackett Ltd 700000 Klim Ltd 700000 -What are the amounts of the NCI's direct and indirect interest in Hackett Ltd's profit for this financial year?

(Multiple Choice)

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Question 16

Mount Ltd owns 60% of the issued share capital of Tom Ltd and 70% of the issued share capital of Price Ltd.Tom Ltd owns 90% of the issued capital of Karatha Ltd and 60% of the issued share capital of Roeburn Ltd. -What is the NCI's indirect interest in Roeburn Ltd?

Mount Ltd owns 60% of the issued share capital of Tom Ltd and 70% of the issued share capital of Price Ltd.Tom Ltd owns 90% of the issued capital of Karatha Ltd and 60% of the issued share capital of Roeburn Ltd. -What is the ultimate parent shareholders' direct interest in Karatha Ltd?

Mount Ltd owns 60% of the issued share capital of Tom Ltd and 70% of the issued share capital of Price Ltd.Tom Ltd owns 90% of the issued capital of Karatha Ltd and 60% of the issued share capital of Roeburn Ltd. -What is the NCI's indirect interest in Karatha Ltd?

Consolidated statements include post-control reserves and profits of subsidiaries.In general, these are: 1.for a subsidiary, the equities it generates after it is acquired; and 2.for a sub-subsidiary, the equities it generates after it is acquired or its parent is acquired, whichever is the later.

Assignment of goodwill and related costs to the ultimate parent is consistent with the synergy explanation for goodwill.

Under AASB 127 all consolidation differences and related costs must be assigned to the ultimate parent in the partial method.

A Ltd acquires 60% of B Ltd in 20X5.B Ltd has held a 70% interest in C Ltd since 20X0.In 20X4 the B group recorded $20 000 of consolidation goodwill impairment expense in respect of the C Ltd acquisition.Which of the following statements is true?

A parent company can have direct and indirect interests simultaneously in a subsidiary but NCI can not have both direct and indirect interests.

The NCI of a middle-tier subsidiary are NCI as regards the principal group but parent shareholders as regards the nested group.

Mount Ltd owns 60% of the issued share capital of Tom Ltd and 70% of the issued share capital of Price Ltd.Tom Ltd owns 90% of the issued capital of Karatha Ltd and 60% of the issued share capital of Roeburn Ltd. -What is the direct NCI in Roeburn Ltd?

Companies and Corporate Regulation

Objectives of Company Reporting, Conceptual Elements and Terminology

Forming a Company and Issuing Shares

Profits, Reserve and Distributions to Owners

Reorganisation of Share Capital

Debt Securities

Foreign Currency Transactions and an Introduction to Hedging

Advanced Asset and Liability Issues

Income Tax

Reports and Disclosures I: Overview

Reports and Disclosures Ii: the Financial Statements

Receivership and Voluntary Administration

Liquidations

External Administration Reports and Accounts

Investments in New Assets; Introduction to Business Combinations and Associates

The Corporate Group

Acquisition Method Introduction and Substitution

Acquisition Method Application After Control Date

Intra-Group Transactions

Direct Non-Controlling Interest

Changes to Parent Investment in Subsidiaries

Translation of Foreign Currency Statements

Consolidated Cash Flow Statements

Equity Accounting Expanded and Joint Ventures

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