Deck 25: Consolidated Cash Flow Statements

Question 1

When there is an acquisition of a subsidiary, which of the following items is not expressly required to be disclosed under AASB 107?

A)the total purchase consideration
B)the amount of cash and cash equivalents of the subsidiary acquired
C)the functional currency of the subsidiary
D)the proportion of the purchase consideration discharged by means of cash and cash equivalents

Answer 1

C

Question 2

In the consolidated cash flow statement, dividends paid by a subsidiary to a parent are:

A)not included
B)are classified as investing
C)are classified as financing
D)are classified as investing by the parent and financing by the subsidiary

Answer 2

A

Question 3

Costello Ltd is a finance company, and it is controlled by Howard Ltd, a diversified manufacturer and retailer.In the consolidated cash flow statement prepared by Howard Ltd:

A)the interest paid by, and received by, Costello Ltd will be reclassified as an operating cash flow
B)the interest paid by, and received by, Costello Ltd will always be classified in the same way as other interest payments and receipts by other group members
C)the interest paid by, and received by, Costello Ltd will be classified in the same way as in Costello's cash flow statement
D)the cash flows relating to financial institutions are presented in a separate consolidated cash flow statement

Answer 3

C

Question 4

The concepts of cash and cash equivalents are central to the preparation of consolidated cash flow statement.Consider the following:
Icurrency held by a foreign operation that is not denominated in its functional currency
IIcurrency held by the parent entity that is not denominated in its functional currency
IIcurrency held by the parent entity denominated in its presentation currency
IVcurrency held by a foreign operation denominated in its presentation currency
Which of the above items may not always satisfy the definition of cash and cash equivalents assuming an entity's presentation currency is its functional currency?

A)all of I, II, 111 and IV
B)I and II only
C)III and IV only
D)II only

Question 5

Which of the following most accurately reflects the position in relation to including liabilities as cash and cash equivalents?

A)they are only included if they are monetary liabilities
B)the can only be included if they are integral to the entity's cash management practices
C)they can only be included if they are denominated in the entity's presentation currency
D)they cannot be included under any circumstances

Question 6

The redemption of redeemable preference shares out of retained profits:

A)involves cash outflow for an investing activity
B)does not involve a cash flow, so does not affect the amounts in the cash flow statement
C)involves cash inflow for an investing activity
D)involves cash inflow for an a financing activity

Question 7

In preparing the consolidated cash flow statement for an entity with a foreign subsidiary, which of the following statements is most likely to be correct?

A)the cash flow statement of the subsidiary will be prepared in the functional currency of the parent
B)the cash flow statement of the subsidiary will be translated directly into the presentation currency used in the consolidated financial statements
C)the cash flow statement of the subsidiary will not require translation as it will be prepared in the presentation currency used in the consolidated financial statements.
D)there will be not translation since the subsidiary will not itself have to prepare a cash flow statement.

Question 8

In making disclosures about cash flow for the group, AASB 107:

A)prohibits the including of cash flow information in relation to segments
B)requires cash flow information to be provided for each segment
C)encourages but does not require the including of cash flow information about segments
D)makes no mention of segment reporting

Question 9

Information must be presented in relation to a consolidated cash flow statement that is not presented in relation to single-company cash flow statement.

Question 10

An item that qualifies as a cash equivalent in the cash flow statement of a subsidiary will always qualify as a cash equivalent in the consolidated cash flow statement.

Question 11

The effect of a pro-rata share issue for cash by a subsidiary on the consolidated cash flow statement:

A)is always totally eliminated
B)is always included
C)is only included to the extent the shares are taken up by shareholders who are not members of the group (they are non-controlling interest shareholders)
D)is only included to the extent the shares are taken up by the parent

Question 12

When there is an acquisition or disposal of subsidiaries and business units:

A)the associated cash flows are classified as non-operating
B)the associated cash flows are allocated between operating, financing and investing activities
C)the resulting cash flows are classified as relating to investing activities
D)the associated cash flows are presented separately from those cash flows relating to investing, financing and operating activities.

Question 13

The distinction between parent entity interest and non-controlling interest (NCI) is irrelevant to the preparation of a consolidated cash flow statement.

Question 14

The preparation of a consolidated cash flow statement is straight-forward as it is merely an aggregation of amounts in the cash flow statements of group members.

Question 15

If an entity provides a consolidated cash flow statement it does not have to provide an individual cash flow statement.