WorksheetsF7 Consolidated Financial Statement
Total questions: 10
Worksheet time: 20mins
Which of the following definitions is not included within the definition of control per
IFRS 10 Consolidated Financial Statements?
A Having power over the investee
B Having exposure, or rights, to variable returns from its investment with the investee
C Having the majority of shares in the investee
D 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?
A $150,262
B $165,288
C $200,000
D $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?
(a)
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?
(a)
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?
A $120,000
B $40,000
C $160,000
D $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?
(a)
Which TWO of the following situations are unlikely to represent control over an investee?
A Owning 55% and being able to elect 4 of the 7 directors
B Owning 51%, but the constitution requires that decisions need the unanimous
consent of shareholders
C Having currently exercisable options which would take the shareholding in the
investee to 55%
D Owning 40% of the shares but having majority of voting rights within the investee
E 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?
A 80% of Paul’s revenue and expenses for the year ended 31 December 20X6
B 100% of Paul’s revenue and expenses for the year ended 31 December 20X6
C 80% of Paul’s revenue and expenses for the period 1 August 20X6 to 31 December
20X6
D 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 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.
B 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.
C 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.
D 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?
A The activities of the subsidiary are significantly different to the rest of the group and
to consolidate them would prejudice the overall group position
B The ultimate parent produces consolidated financial statements that comply with
IFRS Standards and are publicly available
C The parent’s debt or equity instruments are not traded in a public market
D 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
