Question 1

AASB 10 Consolidated Financial Statements requires that control be non-shared.

Accepted Answer

A) True 
 B)False

Question 2

In the context of control,which of the following is correct regarding rights?

Accepted Answer

A) They must be protective rights. 
B) They must arise from a legal contract. 
C) They must arise as a result of future events. 
D) They must be substantive rights. 
A) They must be protective rights. 
B) They must arise from a legal contract. 
C) They must arise as a result of future events. 
D) They must be substantive rights.

Question 3

One of the major problems with control where an investor owns less than a majority of the investee's voting shares is the issue of temporary control.

Accepted Answer

A) True 
 B)False

Question 4

A single set of financial statements that combines the separate sets of financial statements for all entities within an economic entity,is known as:

Accepted Answer

A) a concise financial report. 
B) a condensed financial report. 
C) combined financial statements. 
D) consolidated financial statements. 
A) a concise financial report. 
B) a condensed financial report. 
C) combined financial statements. 
D) consolidated financial statements.

Question 5

The reasons for the preparation of consolidated financial statements include which of the following?

Accepted Answer

A) Reporting of risks and benefits 
B) Comparable information 
C) Supply of relevant information 
D) All of the above 
A) Reporting of risks and benefits 
B) Comparable information 
C) Supply of relevant information 
D) All of the above

Question 6

Which of the following is not one of the three elements of control according to AASB 10 Consolidated Financial Statements?

Accepted Answer

A) The ability to use power over the investee to affect the amount of the investor's returns. 
B) Dominating the decision making of the investee. 
C) Power over the investee. 
D) Exposure,or rights,to variable returns from involvement with the investee. 
A) The ability to use power over the investee to affect the amount of the investor's returns. 
B) Dominating the decision making of the investee. 
C) Power over the investee. 
D) Exposure,or rights,to variable returns from involvement with the investee.

Question 7

At balance date,Company A has 40% of the voting rights in Company B.In addition Company A holds potential voting rights in Company B amounting to 6% that are currently exercisable,and a further 9% of voting rights in Company B that can be exercised in two years' time.Which of the following statements is correct?

Accepted Answer

A) Consolidated financial statements must be prepared for Company A and B in the current year. 
B) Consolidated financial statements need not be prepared for Company A and B for the current year. 
C) Consolidated financial statements must be prepared as Company A controls Company B at balance date. 
D) Consolidated financial statements must be prepared as Company A has more than half of the voting rights in Company B at balance date. 
A) Consolidated financial statements must be prepared for Company A and B in the current year. 
B) Consolidated financial statements need not be prepared for Company A and B for the current year. 
C) Consolidated financial statements must be prepared as Company A controls Company B at balance date. 
D) Consolidated financial statements must be prepared as Company A has more than half of the voting rights in Company B at balance date.

Question 8

Control is defined within AASB 10 Consolidated Financial Statements as the ability to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Accepted Answer

A) True 
 B)False

Question 9

The formation of a new entity to acquire the shares of two (or more)other entities is an example of a business combination in accordance with AASB 3 Business Combinations.

Accepted Answer

A) True 
 B)False

Question 10

The entity that is represented by a single set of consolidated financial statements is:

Accepted Answer

A) an economic entity. 
B) a parent entity. 
C) a subsidiary entity. 
D) a consolidated entity. 
A) an economic entity. 
B) a parent entity. 
C) a subsidiary entity. 
D) a consolidated entity.

Question 11

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

Accepted Answer

A) an investor and its investees. 
B) a parent entity and all its subsidiaries. 
C) an entity that has one or more subsidiaries. 
D) an entity that is controlled by a parent. 
A) an investor and its investees. 
B) a parent entity and all its subsidiaries. 
C) an entity that has one or more subsidiaries. 
D) an entity that is controlled by a parent.

Question 12

Unless the parent trades any debt or equity instruments on a securities exchange,the parent is relieved from the requirement to prepare consolidated financial statements.

Accepted Answer

A) True 
 B)False

Question 13

The equity in a subsidiary not attributable to a parent is known as a/an:

Accepted Answer

A) non-controlling interest. 
B) attributable interest. 
C) non-parent interest. 
D) external interest. 
A) non-controlling interest. 
B) attributable interest. 
C) non-parent interest. 
D) external interest.

Question 14

Typical characteristics of an investment entity in accordance with IFRS 10 Consolidated Financial Statements include that it has more than one investment.

Accepted Answer

A) True 
 B)False

Question 15

A subsidiary is defined in AASB 10 Consolidated Financial Statements as a company that is controlled by another entity.

Accepted Answer

A) True 
 B)False

Question 16

When a business combination is formed by the creation of a parent-subsidiary relationship,the parent will always be identified as the acquirer.

Accepted Answer

A) True 
 B)False

Question 17

Potential voting rights that cannot be exercised or converted until a future date or until the occurrence of a future event are not taken into account when determining an entity's capacity to control another entity.

Accepted Answer

A) True 
 B)False

Question 18

The preparation of consolidated financial statements for a group relieves subsidiaries within the group from preparing individual financial statements.

Accepted Answer

A) True 
 B)False

Question 19

According to AASB 10 Consolidated Financial Statements,all parent entities are required to present consolidated statements unless which of the following conditions apply to them?
I The parent is a wholly owned subsidiary.
II The parent is a partly owned subsidiary and its other 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 20

The financial statements of a group are referred to as consolidated financial statements.

Accepted Answer

A) True 
 B)False

Exam 18: Consolidation: Controlled Entities

AASB 10 Consolidated Financial Statements requires that control be non-shared.

In the context of control,which of the following is correct regarding rights?

One of the major problems with control where an investor owns less than a majority of the investee's voting shares is the issue of temporary control.

A single set of financial statements that combines the separate sets of financial statements for all entities within an economic entity,is known as:

The reasons for the preparation of consolidated financial statements include which of the following?

Which of the following is not one of the three elements of control according to AASB 10 Consolidated Financial Statements?

Control is defined within AASB 10 Consolidated Financial Statements as the ability to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The formation of a new entity to acquire the shares of two (or more)other entities is an example of a business combination in accordance with AASB 3 Business Combinations.

The entity that is represented by a single set of consolidated financial statements is:

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

Unless the parent trades any debt or equity instruments on a securities exchange,the parent is relieved from the requirement to prepare consolidated financial statements.

The equity in a subsidiary not attributable to a parent is known as a/an:

Typical characteristics of an investment entity in accordance with IFRS 10 Consolidated Financial Statements include that it has more than one investment.

A subsidiary is defined in AASB 10 Consolidated Financial Statements as a company that is controlled by another entity.

When a business combination is formed by the creation of a parent-subsidiary relationship,the parent will always be identified as the acquirer.

Potential voting rights that cannot be exercised or converted until a future date or until the occurrence of a future event are not taken into account when determining an entity's capacity to control another entity.

The preparation of consolidated financial statements for a group relieves subsidiaries within the group from preparing individual financial statements.

The financial statements of a group are referred to as consolidated financial statements.

Nature and Regulation of Companies

Financing Company Operations

Company Operations

Fundamental Concepts of Corporate Governance

Fair Value Measurement

Accounting for Company Income Tax

Financial Instruments

Foreign Currency Transactions and Forward Exchange Contracts

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

Disclosure: Translation of Financial Statements Into a Presentation Currency

Consolidation: Wholly Owned Subsidiaries

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interest

Consolidation: Other Issues

Associates and Joint Ventures

Investments in Joint Arrangements

Insolvency and Liquidation

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