Chapter 4 : Consolidated Financial Statements (Part 1)

Which of the following is incorrect regarding consolidated financial statements?

• The consolidated profit pertains only to the parent.

• Consolidation involves adding similar assets, liabilities, income and expenses of the parent and its subsidiaries.

• A parent is exempt from consolidation if it is in itself a subsidiary, its securities are not traded, and its parent produces PFRS consolidated Financial Statements.

• The subsidiary's equity is eliminated and replaced with non-controlling interest.

One of the essential elements of control is power. According to PFRS 10, an investor has power if

• The investor has existing rights that give it the current ability to direct the investee's relevant activities.

• The investor's interest in the earnings of the investee is not fixed but rather varies depending on the level of the earnings.

• The investor holds more than half of the outstanding shares of the investee.

• The investor holds the minority of shares of the investee.

The basis for consolidation is

Consolidation starts when power is obtained and ceases when control is lost.

• true

• false

Daisy Co. owns 80% of Tulips Co. Daisy and Tulips reported profits of P200 and P100 respectively, in 2021. There is no Depreciation of fair value adjustment. The profit attributable to the owners of Daisy Co. is:

• P260

• P120

• P180

• P280

According to PFRS 10

• A parent entity is required to consolidate its subsidiaries

• A parent entity is encouraged but not required to consolidate its subsisdiaries

• a parent need not consolidate a subsidiary if the subsidiary's business is different from that of the parent

• a parent entity is required to consolidate its subsidiaries only for internal reporting purposes

Which of the following are the elements of control?

• Ability to affect returns

• Power

• Major holdings

• Exposure, or rights, to variable returns

Entity A acquired 80% interest in Entity B on December 31. How much of Entity B's profit will be included in the consolidated statement of profit or loss on December 31 of the same year?

• None

• 80%

• 100%

• 20%

Goodwill is attributed both to the owners of the parent and non-controlling interests only if the non-controlling interests are measured at fair value.

• True

• False

Entit A acquired 90% interest in entity B on January 1, 2021 when entity B's assets had a fair value of P100. on December 31, 2022, Entity B's net assets increased to P200 after adjustments for acquisition-date fair values, net of depreciation. The NCI on December 31, 2022 is

• P30

• P18

• P20

• P28