Question 1

Why is the indirect NCI not entitled to any share of pre acquisition equity under the multiple consolidation method?

Accepted Answer

Indirect NCI not entitled to any share of pre acquisition equity:
- Indirect NCI do not have a direct equity interest in subsidiaries.
- Indirect NCI would therefore not be entitled to a direct distribution of assets on the liquidation of the subsidiary

Question 2

Using the data from Question 4 the total NCI in S1 Ltd is:

Accepted Answer

A)   10%
B)   14%
C)   24%
D)   none of the above C

Question 3

The sequential consolidation method uses a 'top down' approach

Accepted Answer

A) True 
 B)False  False

Question 4

The concept of indirect ownership interests is used in:

Accepted Answer

A)   the multiple consolidation method
B)   the sequential consolidation method
C)   both A and B
D)   in neither method

Question 5

Using the data from Question 2 the Parent Ltd NCI indirect ownership interest in S2 is:

Accepted Answer

A)   10%
B)   40%
C)   6%
D)   none of the above

Question 6

Why does the multiple consolidation method adopt a revaluation approach to the net assets of subsubsidiaries?

Accepted Answer

The answer of Why does the multiple consolidation method adopt...

Question 7

Is the proportionate interest goodwill method consistent with not allocating goodwill impairment losses against the indirect NCI?

Accepted Answer

The answer of Is the proportionate interest goodwill method consistent...

Question 8

Indirect NCI are entitled to a share of the pre acquisition equity of subsubsidiaries.

Accepted Answer

A) True 
 B)False

Question 9

Explain why indirect ownership interests are not relevant to determining control in a tiered corporate group.

Accepted Answer

The answer of Explain why indirect ownership interests are not...

Question 10

When a parent does not have an ownership interest in a subsidiary the NCI is 100%

Accepted Answer

A) True 
 B)False

Question 11

A Ltd owns 80% of B Ltd and B Ltd owns 60% of C Ltd,Using the sequential consolidation method the sequence of consolidation would be:

Accepted Answer

A)   A with B and then consolidated A with C
B)   B with C and then consolidated B with A
C)   A, B and C together
D)   none of the above

Question 12

Circular shareholdings are allowed under the Corporations Act

Accepted Answer

A) True 
 B)False

Question 13

A subsubsidiary provides the following information: The subsubsidiary is owned 60% by its parent which is owned 80% by the ultimate parent
Retained profits at the date of acquisition $400
Profit for the year first $200
The total indirect NCI is:

Accepted Answer

A)   $72
B)   $48
C)   $24
D)   none of the above

Question 14

A subsubsidiary is:

Accepted Answer

A)   a subsidiary of a parent company
B)   a subsidiary of a subsidiary company
C)   either A or B
D)   none of the above

Question 15

The calculation of notional profits of entities with cross holdings is required to:

Accepted Answer

A)   determine the parent ownership interest in the subsidiaries
B)   determine the NCI ownership interest in the subsidiaries
C)   determine both the parent and NCI ownership interests in the subsidiaries
D)   none of the above

Question 16

A owns 80% of B and B owns 60% of C.If C pays a dividend and B distributes the amount received to its own shareholders,the allocation of the dividend will be:

Accepted Answer

A)   parent 48%, NCI 52%
B)   parent 52%, NCI 48%
C)   parent 100%
D)   NCI 100%

Question 17

Discuss the disadvantages of the sequential consolidation method.

Accepted Answer

The answer of Discuss the disadvantages of the sequential consolidation...

Question 18

Circular shareholdings arise where:

Accepted Answer

A)   a subsidiary holds an equity interest in its parent
B)   a subsubsidiary holds an interest in another subsidiary of its parent
C)   a subsidiary holds an interest in a subsubsidiary
D)   none of the above

Question 19

The parent-son-grandson description applies to corporate groups involving indirect ownership interests

Accepted Answer

A) True 
 B)False

Question 20

Direct plus indirect ownership interests must always sum to 100% for a group

Accepted Answer

A) True 
 B)False

Exam 6: Partly-Owned Subsidiaries: Indirect Non-Controlling Interest

Why is the indirect NCI not entitled to any share of pre acquisition equity under the multiple consolidation method?

Using the data from Question 4 the total NCI in S1 Ltd is:

The sequential consolidation method uses a 'top down' approach

The concept of indirect ownership interests is used in:

Using the data from Question 2 the Parent Ltd NCI indirect ownership interest in S2 is:

Why does the multiple consolidation method adopt a revaluation approach to the net assets of subsubsidiaries?

Is the proportionate interest goodwill method consistent with not allocating goodwill impairment losses against the indirect NCI?

Indirect NCI are entitled to a share of the pre acquisition equity of subsubsidiaries.

Explain why indirect ownership interests are not relevant to determining control in a tiered corporate group.

When a parent does not have an ownership interest in a subsidiary the NCI is 100%

A Ltd owns 80% of B Ltd and B Ltd owns 60% of C Ltd,Using the sequential consolidation method the sequence of consolidation would be:

Circular shareholdings are allowed under the Corporations Act

A subsubsidiary provides the following information: The subsubsidiary is owned 60% by its parent which is owned 80% by the ultimate parent Retained profits at the date of acquisition $400 Profit for the year first $200 The total indirect NCI is:

A subsubsidiary is:

The calculation of notional profits of entities with cross holdings is required to:

A owns 80% of B and B owns 60% of C.If C pays a dividend and B distributes the amount received to its own shareholders,the allocation of the dividend will be:

Discuss the disadvantages of the sequential consolidation method.

Circular shareholdings arise where:

The parent-son-grandson description applies to corporate groups involving indirect ownership interests

Direct plus indirect ownership interests must always sum to 100% for a group