CFAS REVIEWER

When consolidating financial statements of a parent and its subsidiary, which of the following is eliminated?

• Goodwill

• NCI in net assets

• Investment in subsidiary

• All of these

A British parent entity uses the revaluation model to measure its property, but a Philippine subsidiary uses the cost model. The Philippine subsidiary’s directors find the revaluation model too costly to implement. In the consolidated financial statements, is the group allowed to measure the Philippine subsidiary’s property under the cost model?

• Yes, the British parent’s property shall be adjusted to conform to the subsidiary’s accounting policy of cost model

• No, the Philippine subsidiary’s property shall be adjusted to conform to the group’s accounting policy of revaluation model.

• Yes, both models will be reflected in the consolidated financial statements, but this fact must be disclosed in the notes

• None of these, the property is eliminated in the consolidated financial statements.
  

Which of the following is a peculiar characteristic of a joint arrangement?

• significant influence

• control

• joint control

• joint venture

Tech Co. and Robotics Co. are joint operators in the development of Super OS, a mobile phone

operating system. Each joint operator retains control over the assets contributed to the joint

operation and share equally in the profits and losses of the joint operation. During the year, Tech

Co. earns revenue of ₱1,000,000 from its own operations. Sales of Super OS amount to ₱400,000.

How much total revenue shall be reported in Tech Co.’s statement of profit or loss for the year?

• ₱1,000,000

• ₱1,200,000

• ₱1,400,000

• Either a or b

Tech Co. and Robotics Co. are joint venturers of Mecha Co., a producer of high tech machinery.

Tech and Robotics, each have a 50% interest in the net assets of Mecha Co. During the year, Tech

Co. earns revenue of ₱1,000,000 from its own operations while Mecha Co. reports revenue of

₱400,000. How much total revenue shall be reported in Tech Co.’s statement of profit or loss for

the year?

• ₱1,000,000

• ₱1,200,000

• ₱1,400,000

• Either a or b

If an entity’s statement of financial position shows an “investment” account for its interest in a

joint arrangement, a user of the entity’s financial statement would most like find out in the notes

that the nature of the joint arrangement is a(an)

• joint operation

• joint venture

• investment in associate

• either of these

In its financial statements that are not considered separate financial statements, how should a

joint venturer account for its interest in a joint arrangement?

• The joint venturer recognizes its share in the assets, liabilities, income and expenses in the

  joint venture by adding those shares, line by line, to similar accounts.

• The venturer uses the equity method to recognize its share in the profit or loss of the joint

  venture by recognizing its share in the revenues and expenses of the joint venture.

• The venturer uses the equity method to recognize its share in the changes in the net assets of

  the joint venture through one-line consolidation.

• The venturer accounts for the investment at cost, at fair value or using the equity method.

  
  

Read Co. and Learn Co. are national distributors of textbooks. Read and Write enters into a contract to acquire a warehouse in a particular region. Each party will use the warehouse to store its own inventories. The parties agree to share in the costs of acquiring and maintaining the warehouse. The arrangement between Read and Learn is most likely a

• joint operation

• jointly controlled asset
  

• joint venture

• none of these

Read Co. and Learn Co. are publishers of textbooks. Read and Learn enters into a contract to put up a bookstore which shall be named Knowledge Bookstore. Knowledge will have its own assets, incur its own liabilities, and earn and incur its own revenues and expenses. Read and Learn will each have a 50% interest in the net assets and profits of Knowledge. The arrangement between Read and Learn is most likely a

• joint operation

• jointly controlled net assets

• joint venture

• none of these

PFRS 12 prescribes the minimum disclosures for interests in other entities wherein the investor has

• control

• joint control

• significant influence

• any of these