Question 1

The process of preparing the combined financial statements of a group of entities is known as:

Accepted Answer

A)  accrual accounting; 
B)  condensation; 
C)  accumulation; 
D)  consolidation. 
A)  accrual accounting; 
B)  condensation; 
C)  accumulation; 
D)  consolidation.

Question 2

All parent entities are required to present consolidated statements unless the following conditions apply to them:
I. The parent is a wholly owned subsidiary.
II. The parent is a partly owned subsidiary and its owners do not object to the non-presentation of consolidated financial statements.
III. The parent's debt or equity securities are traded in a public market.
IV. The parent is not in the process of applying to issue any securities in a public market.

Accepted Answer

A)  I and II only; 
B)  I, II and III only; 
C)  I, II and IV only; 
D)  I, II, III and IV. 
A)  I and II only; 
B)  I, II and III only; 
C)  I, II and IV only; 
D)  I, II, III and IV.

Question 3

Unicorn Trustees has a fiduciary relationship with Amble Limited enabling it to direct certain activities of Amble Limited. As a result of this relationship:

Accepted Answer

A)  Unicorn Trustees is regarded as a parent entity of Amble Limited; 
B)  Amble Limited is regarded as a subsidiary of Unicorn Trustees; 
C)  a parent-subsidiary relationship is not regarded as existing between these two parties; 
D)  a parent-subsidiary relationship is regarded as existing between these two parties as Unicorn is able to direct the activities of Amble Limited. 
A)  Unicorn Trustees is regarded as a parent entity of Amble Limited; 
B)  Amble Limited is regarded as a subsidiary of Unicorn Trustees; 
C)  a parent-subsidiary relationship is not regarded as existing between these two parties; 
D)  a parent-subsidiary relationship is regarded as existing between these two parties as Unicorn is able to direct the activities of Amble Limited.

Question 4

If a parent entity chooses not to prepare consolidated financial statements, IAS 27 Separate Financial Statements requires the following disclosures in the separate financial statements of the parent:
I. The name, country of residence and voting power of the directors of the parent..
II. That the exemption from consolidation has been used.
III. A list of significant investments including the proportion of ownership.
IV. A description of the method used to account for the investments.

Accepted Answer

A)  I, II and IV only; 
B)  II, III and IV only; 
C)  II and III only; 
D)  IV only. 
A)  I, II and IV only; 
B)  II, III and IV only; 
C)  II and III only; 
D)  IV only.

Question 5

When deciding whether or not control exists over one entity by another entity:

Accepted Answer

A)  the controlling entity must have exercised its power to control; 
B)  it is sufficient that the controlling entity has the capacity to control; 
C)  the controlling entity must be actively involved in governing the operations of the other entity; 
D)  it is necessary that the controlling entity has exerted its control over the financing policies of the other entity. 
A)  the controlling entity must have exercised its power to control; 
B)  it is sufficient that the controlling entity has the capacity to control; 
C)  the controlling entity must be actively involved in governing the operations of the other entity; 
D)  it is necessary that the controlling entity has exerted its control over the financing policies of the other entity.

Question 6

Dragon Limited is an entity listed in Hong Kong. Dragon Limited holds a 100% investment in Aussie Pty Ltd, an Australian based company, who in turn holds a 90% interest in Bondi Pty Ltd. Aussie Pty Ltd and the Aussie group (comprising Aussie and Bondi) are both non-reporting entities. Which of the following statements is correct?

Accepted Answer

A)  Aussie Pty Ltd will be required to prepare consolidated financial statements as the ultimate Australian parent. 
B)  Aussie Pty Ltd will not be required to prepare consolidated financial statements as they are a non-reporting entity. 
C)  Aussie Pty Ltd will be required to prepare consolidated financial statements only if directed to do so by ASIC. 
D)  Aussie Pty Ltd will not be required to prepare consolidated financial statements as Dragon is a listed foreign entity. 
A)  Aussie Pty Ltd will be required to prepare consolidated financial statements as the ultimate Australian parent. 
B)  Aussie Pty Ltd will not be required to prepare consolidated financial statements as they are a non-reporting entity. 
C)  Aussie Pty Ltd will be required to prepare consolidated financial statements only if directed to do so by ASIC. 
D)  Aussie Pty Ltd will not be required to prepare consolidated financial statements as Dragon is a listed foreign entity.

Question 7

If an investor entity owns more than half of the voting or potential voting power of an investee and does not account for the investment as a subsidiary, IFRS 12 Disclosure of Interests in Other Parties requires that the following disclosure be made:

Accepted Answer

A)  the reasons why the ownership of the investee does not constitute control; 
B)  the nature of the relationship between the investor and investee; 
C)  the significant judgements and assumptions it has made in determining the nature of the interest in the other entity; 
D)  the amount of any repayments of borrowings between the investor and investee during the period. 
A)  the reasons why the ownership of the investee does not constitute control; 
B)  the nature of the relationship between the investor and investee; 
C)  the significant judgements and assumptions it has made in determining the nature of the interest in the other entity; 
D)  the amount of any repayments of borrowings between the investor and investee during the period.

Question 8

For the purposes of consolidated financial reporting, a group is:

Accepted Answer

A)  an entity that has no subsidiaries; 
B)  a parent entity and all its subsidiaries; 
C)  an entity that has one or more subsidiaries; 
D)  a subsidiary entity of another entity. 
A)  an entity that has no subsidiaries; 
B)  a parent entity and all its subsidiaries; 
C)  an entity that has one or more subsidiaries; 
D)  a subsidiary entity of another entity.

Question 9

Which of the following statements is not correct?

Accepted Answer

A)  All entities eligible to apply the reduced disclosure requirements under Australian Accounting Standards are exempt from having to prepare consolidated financial statements. 
B)  The AASB has inserted additional Australian specific paragraphs into IFRS 10 to provide relief for certain entities who apply the reduced disclosure requirements from having to prepare consolidated financial statements. 
C)  The AASB has inserted additional Australian specific paragraphs into IFRS 10 to require reporting entities to apply the requirements of IFRS 10. 
D)  All listed entities are required to apply IFRS 10. 
A)  All entities eligible to apply the reduced disclosure requirements under Australian Accounting Standards are exempt from having to prepare consolidated financial statements. 
B)  The AASB has inserted additional Australian specific paragraphs into IFRS 10 to provide relief for certain entities who apply the reduced disclosure requirements from having to prepare consolidated financial statements. 
C)  The AASB has inserted additional Australian specific paragraphs into IFRS 10 to require reporting entities to apply the requirements of IFRS 10. 
D)  All listed entities are required to apply IFRS 10.

The process of preparing the combined financial statements of a group of entities is known as:

Unicorn Trustees has a fiduciary relationship with Amble Limited enabling it to direct certain activities of Amble Limited. As a result of this relationship:

When deciding whether or not control exists over one entity by another entity:

If an investor entity owns more than half of the voting or potential voting power of an investee and does not account for the investment as a subsidiary, IFRS 12 Disclosure of Interests in Other Parties requires that the following disclosure be made:

For the purposes of consolidated financial reporting, a group is:

Which of the following statements is not correct?

The Conceptual Framework of the Iasb

Shareholders Equity: Share Capital and Reserves

Fair Value Measurement

Revenue

Provisions, Contingent Liabilities and Contingent Assets

Income Taxes

Financial Instruments

Share-Based Payments

Inventories

Employee Benefits

Property, Plant and Equipment

Leases

Intangible Assets

Business Combinations

Impairment of Assets

Accounting for Mineral Resources

Agriculture

Financial Statement Presentation

Statement of Cash Flows

Earnings Per Share

Operating Segments

Operating Segments

Consolidation: Wholly Owned Subsidiaries

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interest

Consolidation: Other Issues

Translation of the Financial Statements of Foreign Entities

Associates and Joint Ventures

Joint Arrangements

Filters

Exam 23: Consolidation: Controlled Entities

The process of preparing the combined financial statements of a group of entities is known as:

Unicorn Trustees has a fiduciary relationship with Amble Limited enabling it to direct certain activities of Amble Limited. As a result of this relationship:

When deciding whether or not control exists over one entity by another entity:

If an investor entity owns more than half of the voting or potential voting power of an investee and does not account for the investment as a subsidiary, IFRS 12 Disclosure of Interests in Other Parties requires that the following disclosure be made:

For the purposes of consolidated financial reporting, a group is:

Which of the following statements is not correct?

The Conceptual Framework of the Iasb

Shareholders Equity: Share Capital and Reserves

Fair Value Measurement

Revenue

Provisions, Contingent Liabilities and Contingent Assets

Income Taxes

Financial Instruments

Share-Based Payments

Inventories

Employee Benefits

Property, Plant and Equipment

Leases

Intangible Assets

Business Combinations

Impairment of Assets

Accounting for Mineral Resources

Agriculture

Financial Statement Presentation

Statement of Cash Flows

Earnings Per Share

Operating Segments

Operating Segments

Consolidation: Wholly Owned Subsidiaries

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interest

Consolidation: Other Issues

Translation of the Financial Statements of Foreign Entities

Associates and Joint Ventures

Joint Arrangements

Filters