Question 1

Explain why percentage of ownership an investor has in an investee is not the only consideration when determining which entities must create financial statements.

Accepted Answer

The answer of Explain why percentage of ownership an investor...

Question 2

Assume that Scipio Ltd has a controlling interest in Africanus Ltd.As a result of this relationship:

Accepted Answer

A)  the directors of Africanus Ltd have a fiduciary duty to act in the best interests of Scipio Ltd. 
B)  because of its controlling interest in Africanus Ltd, Scipio Ltd will take over the management of Africanus Ltd from the board of that company. 
C)  the board of Africanus Ltd will be dissolved as they no longer have any real power in Africanus Ltd. 
D)  none of the above.

Question 3

One of the advantages of forming a group is the potential for reducing legal liability.

Accepted Answer

A) True 
 B)False

Question 4

What are the major criticisms of the control criterion applied to the definition of the group?

Accepted Answer

The answer of What are the major criticisms of the...

Question 5

A reporting entity is a single entity that meets certain criteria.

Accepted Answer

A) True 
 B)False

Question 6

Company B is bound by contract to sell all its output to Company A.Company A is deemed to control Company B.

Accepted Answer

A) True 
 B)False

Question 7

Joint control can exist where share ownership by investing companies is not equal.

Accepted Answer

A) True 
 B)False

Question 8

If a parent entity is a reporting entity the group must also be a reporting entity.

Accepted Answer

A) True 
 B)False

Question 9

Discuss the requirements for the preparation of separate financial statements under AASB 127.

Accepted Answer

The answer of Discuss the requirements for the preparation of...

Question 10

Discuss the concepts of 'shared control' and 'joint control' in relation to the requirements of Accounting Standard AASB 127.

Accepted Answer

The answer of Discuss the concepts of 'shared control' and...

Question 11

A trust cannot be an entity.

Accepted Answer

A) True 
 B)False

Exam 1: Text Objectives and Introduction to Consolidation

Explain why percentage of ownership an investor has in an investee is not the only consideration when determining which entities must create financial statements.

Assume that Scipio Ltd has a controlling interest in Africanus Ltd.As a result of this relationship:

One of the advantages of forming a group is the potential for reducing legal liability.

What are the major criticisms of the control criterion applied to the definition of the group?

A reporting entity is a single entity that meets certain criteria.

Company B is bound by contract to sell all its output to Company A.Company A is deemed to control Company B.

Joint control can exist where share ownership by investing companies is not equal.

If a parent entity is a reporting entity the group must also be a reporting entity.

Discuss the requirements for the preparation of separate financial statements under AASB 127.

Discuss the concepts of 'shared control' and 'joint control' in relation to the requirements of Accounting Standard AASB 127.

A trust cannot be an entity.