FR - Consolidated Financial Statements

Which of the following definitions is not included within the definition of control per

IFRS 10 Consolidated Financial Statements?

• Having power over the investee

• Having exposure, or rights, to variable returns from its investment with the investee

• Having the majority of shares in the investee

• Having the ability to use its power over the investee to affect the amount of the

  investor's returns

Pamela acquired 80% of the share capital of Samantha on 1 January 20X1. Part of the

purchase consideration was $200,000 cash to be paid on 1 January 20X4. The applicable cost

of capital is 10%.

What will the deferred consideration liability be at 31 December 20X2?

• $150,262

• $165,288

• $200,000

• $181,818

Philip acquired 85% of the share capital of Stanley on 1 October 20X1. The profit for the year

ended 31 December 20X1 for Stanley was $36,000. Profits are deemed to accrue evenly over

the year. At 31 December 20X1 Stanley's statement of financial position showed:

Equity share capital $200,000

Retained earnings $180,000

What were the net assets of Stanley on acquisition?

$.......................ooo

On 30 June 20X4 GHI acquired 800,000 of JKL's 1 million shares.

GHI issued 3 shares for every 4 shares acquired in JKL. On 30 June 20X4 the market price of a

GHI share was $3.80 and the market price of a JKL share was $3.

GHI agreed to pay $550,000 in cash to the existing shareholders on 30 June 20X5. GHI's

borrowing rate was 10% per annum.

GHI paid professional fees of $100,000 for advice on the acquisition.

What is the cost of investment that will be used in the goodwill calculation in the

consolidated financial statements of GHI?

$.................................,ooo

MNO has a 75% owned subsidiary PQR. During the year MNO sold inventory to PQR for an

invoiced price of $800,000. PQR have since sold 75% of that inventory on to third parties. The

sale was at a mark-up of 25% on cost to MNO. PQR is the only subsidiary of MNO.

What is the adjustment to inventory that would be included in the consolidated statement

of financial position of MNO at the year-end resulting from this sale?

• $120,000

• $40,000

• $160,000

• $50,000

West has a 75% subsidiary Life, and is preparing its consolidated statement of financial

position as at 31 December 20X6. The carrying amount of property, plant and equipment in

the two companies at that date is as follows:

West $300,000

Life $60,000

On 1 January 20X6 Life had transferred some property to West for $40,000. At the date of

transfer the property, which had cost $42,000, had a carrying amount of $30,000 and a

remaining useful life of five years.

What is the carrying amount of property, plant and equipment in the consolidated

statement of financial position of West as at 31 December 20X6?

$..........................,ooo

Which TWO of the following situations are unlikely to represent control over an investee?

• Owning 55% and being able to elect 4 of the 7 directors

• Owning 51%, but the constitution requires that decisions need the unanimous consent

  of shareholders

• Having currently exercisable options which would take the shareholding in the

  investee to 55%

• Owning 40% of the shares but having majority of voting rights within the investee

• Owning 35% of the ordinary shares and 80% of the preference shares of the investee

Peter acquires 80% of the share capital of Paul on 1 August 20X6 and is preparing its group

financial statements for the year ended 31 December 20X6.

How will Paul's results be included in the group statement of profit or loss?

• 80% of Paul's revenue and expenses for the year ended 31 December 20X6

• 100% of Paul's revenue and expenses for the year ended 31 December 20X6

• 80% of Paul's revenue and expenses for the period 1 August 20X6 to 31 December

  20X6

• 100% of Paul's revenue and expenses for the period ended 1 August 20X6 to

  31 December 20X6

Which of the following would result in an unrealised profit within a group scenario?

• A parent sells a building originally costing $800,000 to its subsidiary for $900,000. The

  subsidiary still holds this asset at the date of consolidation.

• A parent sells a building originally costing $800,000 to its subsidiary for $900,000. The

  subsidiary has sold this asset before the date of consolidation

• A parent sells goods which originally cost $14,000 to its subsidiary for $18,000. The

  subsidiary has sold all of these goods at the date of consolidation.

• A parent sells goods which originally cost $14,000 to an associate for $18,000. The

  associate has sold all of these goods at the date of consolidation.

Which of the following is not a condition which must be met for the parent to be exempt

from producing consolidated financial statements?

• The activities of the subsidiary are significantly different to the rest of the group and

  to consolidate them would prejudice the overall group position

• The ultimate parent produces consolidated financial statements that comply with IFRS

  Standards and are publicly available

• The parent's debt or equity instruments are not traded in a public market

• The parent itself is a wholly owned subsidiary or a partially owned subsidiary whose

  owners do not object to the parent not producing consolidated financial statements