Exam 18: Consolidation: Intragroup Transactions

When a subsidiary declares a final dividend payable to a parent who has a 100% interest in the subsidiary the parent recognises a dividend receivable and the subsidiary recognises a dividend payable. In addition to the elimination of these two items on consolidation, the following items must also be eliminated:

If a dividend is paid out of profits that are earned after the acquisition date, it is known as:

Jameson purchased goods from its subsidiary for €10 000. The goods cost the subsidiary €6000. At reporting date, Jameson still held all of the goods. The company rate of tax is 30%. Which of the following consolidation adjustment entries is correct?

JoJo Ltd provided an advance of $500 000 to its subsidiary BoBo Ltd. Interest of $50 000 was charged during the year ended 30 June 20X8. On consolidation the following adjustment is needed at 30 June 20X8 in relation to the interest charged:

During the year ended 30 June 20X7 a subsidiary entity sold inventory to its parent entity at a profit of £8 000. The goods had originally cost the subsidiary £20 000. At the end of 30 June 20X7 all the inventory was still on hand. Ignoring tax effects, the adjustment entry to deal with this transaction on consolidation during the year ended 30 June 20X8 would include the following line item:

The test indicating that an intragroup business transaction has been realised is:

A subsidiary entity sold goods to its parent entity at a profit of £10 000. The goods had originally cost the subsidiary £15 000. At reporting date, the parent still held all of the goods. Which of the following adjustments must be included as part of the consolidation entry to eliminate this transaction?

Andronico Limited provided an advance of $500 000 to its subsidiary Galactico Limited. On consolidation the following adjustment is needed in relation to this intragroup advance:

Angelo Limited sold inventory to its parent entity at a profit of $4 000. The inventory cost Angelo Limited $16 000. At the end of the reporting period the parent had sold 50% of the inventory to an external party. The consolidation adjustment entry (excluding tax effects) will eliminate unrealised profit amounting to:

A consolidation worksheet adjustment to eliminate the effect of interest revenue and interest expense relating to intragroup advances has the following tax effect:

A subsidiary entity sold inventory to its parent entity at a profit of £4 000. The goods had originally cost the subsidiary £10 000. At the end of the year all the inventory was still on hand. The adjustment entry to deal with this transaction on consolidation would include the following line item:

IFRS 10 requires that intragroup transactions be:

A subsidiary sold inventory to a parent entity for €10 000. The inventory originally cost the subsidiary €6000. At the end of the reporting period the parent had sold 50% of the inventory to an external party. The company tax rate is 30%. The deferred tax item that is recognised on consolidation is:

When eliminating an intragroup service which of the following would appear in the consolidation worksheet entry?

A consolidation adjustment entry made to eliminate the intragroup sales of inventory at a profit would take the following form:

A subsidiary entity sold inventory to its parent entity at a profit of £8 000. The goods had originally cost the subsidiary £20 000. At the end of the year all the inventory was still on hand. The adjustment entry to deal with this transaction on consolidation would include the following line item: