Question 1

Explain why there is generally no tax-effect in respect to consolidation adjustments for intragroup dividends.

Accepted Answer

Generally dividends are tax-fr

Question 2

Explain how profits or losses on depreciable asset transfers are realised by a consolidated group.

Accepted Answer

Where transactions occur involving depre

Question 3

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

Accepted Answer

A) the involvement of an external party in the transaction 
B) the generation of profit from the transaction 
C) whether or not an operating profit or loss occurred as a result of the transaction 
D) the presence of only entities within the group as parties to the transaction. 
A) the involvement of an external party in the transaction 
B) the generation of profit from the transaction 
C) whether or not an operating profit or loss occurred as a result of the transaction 
D) the presence of only entities within the group as parties to the transaction.

Question 4

Angelo Limited sold inventory to its parent entity at a profit of $4 000.The inventory cost Angelo Limited $16 000.At balance sheet date 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:

Accepted Answer

A) $2 000 
B) $4 000 
C) $12 000 
D) $16 000 
A) $2 000 
B) $4 000 
C) $12 000 
D) $16 000

Question 5

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:

Accepted Answer

A) CR Cost of sales $28 000 
B) CR Cost of sales $20 000 
C) CR Cost of sales $12 000 
D) CR Cost of sales $8 000. 
A) CR Cost of sales $28 000 
B) CR Cost of sales $20 000 
C) CR Cost of sales $12 000 
D) CR Cost of sales $8 000.

Explain why there is generally no tax-effect in respect to consolidation adjustments for intragroup dividends.

Explain how profits or losses on depreciable asset transfers are realised by a consolidated group.

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

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:

Nature and Regulation of Companies

Financing Company Operations

Company Operations

Fundamental Concepts of Corporate Governance

Fair Value Measurement

Accounting for Company Income Tax

Property, Plant and Equipment

Leases

Intangible Assets

Business Combinations

Impairment of Assets

Disclosure: Legal Requirements and Accounting Polices

Disclosure: Presentation of Financial Statements

Disclosure: Statement of Cash Flows

Consolidation: Controlled Entities

Consolidation: Wholly Owned Subsidiaries

Consolidation: Non-Controlling Interest

Consolidation: Other Issues

Accounting for Investments in Associates

Insolvency and Liquidation

Filters

Exam 17: Consolidation: Intragroup Transactions

Explain why there is generally no tax-effect in respect to consolidation adjustments for intragroup dividends.

Explain how profits or losses on depreciable asset transfers are realised by a consolidated group.

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

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:

Nature and Regulation of Companies

Financing Company Operations

Company Operations

Fundamental Concepts of Corporate Governance

Fair Value Measurement

Accounting for Company Income Tax

Property, Plant and Equipment

Leases

Intangible Assets

Business Combinations

Impairment of Assets

Disclosure: Legal Requirements and Accounting Polices

Disclosure: Presentation of Financial Statements

Disclosure: Statement of Cash Flows

Consolidation: Controlled Entities

Consolidation: Wholly Owned Subsidiaries

Consolidation: Non-Controlling Interest

Consolidation: Other Issues

Accounting for Investments in Associates

Insolvency and Liquidation

Filters