A owns 51 per cent of the voting shares in B and 100 per cent of the voting shares in D. B owns 25 per cent of the voting shares in C and has board representation in that company. All holdings have been held for a number of years. Which of the following statements is correct?

3 Which of the following is a valid reason for excluding a 75 per cent owned company from consolidation under current International Financial Reporting Standards?

Which of the following provide evidence of a parent-subsidiary relationship? I. The parent has representation on the board of directors. II. The parent has power to direct the operating activities of the entity by statute. III. The parent has the power to remove a majority of members of the board of directors. IV. The parent has power over more than 50 per cent of the voting rights through agreement with other investors.

During the last financial year, Orius Co. acquired 44 per cent of the issued share capital of Eerus Co. Under the terms of the acquisition, the finance director of Orius was appointed to the board of directors of Eerus. Which of the following correctly describes how Orius should account for its interest in Eerus in the consolidated financial statements?

Which of the following provides evidence of a situation where the investee should be accounted for using the equity method?

Where a subsidiary does not prepare accounts to the same date as the parent company, which of the following is correct?

Which of the following statements are correct? I. Intra-group transactions must be eliminated on consolidation. II. Where a group comprises a parent company and an investee over which the parent has significant influence, consolidated accounts must be prepared. III. A holding of 10 per cent of ordinary voting shares in another company must be accounted for in accordance with IAS 28 Investments in Associates and Joint Ventures. IV. Where a subsidiary does not adopt the same accounting policies as its parent company, adjustments must be made to bring its accounting policies into line prior to consolidation.

Major Co, which makes up its accounts to 31 December, has an 80 per cent owned subsidiary Minor Co. Minor Co. sells goods to Major Co. at a mark-up on cost of 33.3 per cent. At 31 December 20X8, Major had $12 000 of such goods in its inventory and at 31 December 20X9 had $15 000 of such goods in its inventory. What is the amount by which the consolidated profit attributable to Major Co.'s shareholders should be adjusted in respect of the above? Ignore taxation

Strachey owns 75 per cent of the share capital in Bell. At 31 July 20X2, the inventory of Strachey was valued at $420 000 and included goods costing $60 000 that it had purchased from Bell at cost plus 20 per cent. At 31 July 20X2, inventories were valued at $445 000 in the consolidated statement of financial position of the Strachey group. At 31 July 20X2, what is the inventory figure in the statement of financial position of Bell?

Harrow acquired 270 000 ordinary shares in Slough on 1 January 20X9 at a cost of $400 000. At that date, Slough had 300 000 ordinary $1 shares in issue and its reserves were $50 000. Non-controlling interests are measured at the proportionate share of the net assets acquired. The amount of goodwill arising on consolidation is:

STV owns 75 per cent of the ordinary share capital of its subsidiary TUW. At the group's year end, 28 February 20X7, STV's payables include $3600 in respect of inventories sold to it by TUW. TUW's receivables include $6700 in respect of inventories sold to STV. Two days before the year end STV sent a payment of $3100 to TUW that was not recorded by the latter until two days after the year end. The in-transit item should be dealt with as follows in the consolidated statement of financial position at 28 February 20X7:

XY owns 75 per cent of the issued equity share capital of PQ. At the year end, XY held inventories valued at $160 000 and PQ held inventories valued at $90 000. The inventories held by XY included $20 000 of goods purchased from PQ at a profit margin of 30 per cent. There was also inventories in transit between the two companies; this amounted to a further $10 000 at selling price. At what value should inventories appear in the consolidated statement of financial position?

Ploughshare acquired 80 per cent of the equity share capital of Sword on 30 September 20X1. On 31 December 20X1, the share capital and reserves of Sword were: Ordinary shares 300,000 Retained earnings at 1 January 20X1 80,000 Retained profit for the year ended 31 December 20X1 40,000 Total: 420,000 The profits of Sword have accrued evenly throughout 20X1. Goodwill arising on the acquisition was $20 000. Non-controlling interests are measured at the proportionate share of the net assets acquired. What was the cost of the investment in Sword?

At the beginning of the year a subsidiary transfers a non-current asset to the parent for $500 000. At that date, its carrying amount was $400 000 and it had four years of useful life left. What adjustment is made to total consolidated profit before tax for the year in respect of the transfer?

AB acquired a 60 per cent holding in CD many years ago. At 31 December 20X3 AB held inventory with a book value of $30 000 purchased from CD at cost plus 20 per cent. The effect on the consolidated statement of profit or loss for the year is:

Hardy has a 90 per cent subsidiary, Lawrence. During the year ended 31 December 20X2 Lawrence sold goods to Hardy for $25 000, which was cost plus 25 per cent. At 31 December 20X2 $10 000 of these goods remained unsold. In the consolidated statement of profit or loss for the year ended 31 December 20X2, revenue will be reduced by:

Hardy has a 90 per cent subsidiary, Lawrence. During the year ended 31 December 20X2 Lawrence sold goods to Hardy for $25 000, which was cost plus 25 per cent. At 31 December 20X2 $10 000 of these goods remained unsold. In the consolidated statement of profit or loss for the year ended 31 December 20X2, gross profit will be reduced by:

Parent owned 80 per cent of the issued equity share capital of Subsidiary. For the year ended 31 December 20X6 Subsidiary reported a profit before tax of $55 million. During 20X6 Subsidiary sold goods to Parent for $15 million at cost plus 20 per cent. At the year end half these goods are still held by Parent. In the consolidated statement of profit or loss for the year ended 31 December 20X6 the non-controlling interest is:

Where the purchase price of an acquisition is less than the aggregate fair value of the net assets acquired, which of the following accounting treatments of the difference is required by IFRS 3 Business Combinations?

GPT regularly sells goods to its subsidiary in which it owns 60 per cent of the ordinary share capital. During the group's financial year ended 31 August 20X7, GPT sold goods to its subsidiary valued at $100 000 (selling price) upon which it makes a margin of 20 per cent. By the group's year end all of the goods had been sold to parties outside the group. What is the correct consolidation adjustment in respect of these sales for the year ended 31 August 20X7?

Lay Co. acquired 90 per cent of the ordinary shares in Hay Co. on 1 August 20X8 at a cost of $450 000. On that date the net assets of Hay Co. amounted to $460 000. In the year ended 30 June 20X9, Lay Co. reported a profit of $189 000 and Hay Co. of $60 000. Trading conditions indicated that the goodwill in Hay Co. may be impaired and a review found that it was indeed impaired by 50 per cent. It is Lay Co. group policy to measure the non-controlling interest as a percentage of net assets. What is the profit for the year ended 30 June 20X9 before allocation to the group owners and the non-controlling interest?

Radio Co. acquired 85 per cent of the ordinary shares in Stereo Co. a number of years ago giving rise to $14 000 of goodwill calculated using the full fair value method. The following is relevant to the year ended 31 December 20X8: – Radio Co. has reported a profit of $90 000. – Stereo Co. has reported a profit of $40 000. – Intercompany sales were made by Radio to Stereo amounting to $20 000 at cost plus 10 per cent. Half of the goods remain in inventory at the year end. – Goodwill is impaired by $6000. What is the non-controlling interest in profit for the year?

Which of the following statements regarding group accounting is/are correct? I. Only the group's share of the assets of a subsidiary is reflected in the consolidated statement of financial position. II. An investment in an associate is initially reflected in the consolidated statement of financial position at its cost. III. The value of share capital in a consolidated statement of financial position will include the share capital of both the investor and the investee.

2 Consul owns the following equity shareholdings in other entities: Admiral 25 per cent Sultan 20 per cent Warrior 30 per cent Consul has a seat on the board of each entity. Consul is the largest shareholding in Admiral (no other shareholdings are larger than 10 per cent). Another entity owns 25 per cent of the share capital in Sultan and also has a seat on its board. No other individual or entity owns more than 5 per cent of the equity share capital of Sultan. Another entity holds 70 per cent of Warrior's equity and has a seat on its board. This entity ignores Consul's opinions most of the time. Which entities are associates of Consul?

Outlook has one subsidiary. On 1 January 20X7 Outlook purchased 30 per cent of the share capital of View for $12 million. The summarised statement of financial position of View at 31 December 20X7 was as follows: Net assets (at book value) 30m Share capital 10m Retained earnings at 1 January 20X7 15m Profit for the year ended 31 December 20X7 5m Total 30m At 1 January 20X7 the fair value of the net assets of View was $5 million greater than their book value. The difference relates to land which is still owned by View at 31 December 20X7. Using the equity method, at what value is the investment in View shown in the consolidated statement of financial position of the Outlook group at 31 December 20X7?

Savoy owns 80 per cent of Spring and 30 per cent of White. Spring also owns 15 per cent of White. Extracts from the statements of comprehensive income for the year ended 31 December 20X7: Savoy GrossProfit; $700,000 Spring Gross Profit: $550,000 & White Gross Profit: $500,000 What is group gross profit for the year ended 31 December 20X7?

The following statements refer to a situation where an investing company (K) seeks to exert control or influence over another company (L). Assume that K is required to prepare consolidated accounts because of other investments. I. If K controls the operating and financial policies of L, then L cannot be an associate of K. II. If K owns more than 20 per cent, but less than 50 per cent of the share capital in L, then L is bound to be an associate of K. III. If L is an associate of K, then any amounts payable by L to K are not eliminated when preparing the consolidated statement of financial position of K. Which of the statements are correct?

As well as a 90 per cent investment in T, S held 25 per cent of the shares of U, and exerts a significant influence over it. U sells goods to S. During the year ending 31 March 20X4, U sells goods to S for $100 000. The cost of the goods to U is $80 000. At the year end, S's inventories include $16 000 of goods purchased from U. What adjustment is required in respect of unrealised profit in the consolidated statement of financial position?

GPX's financial statements included an investment in associate at $6 600 000 in its consolidated statement of financial position at 30 September 20X5. At 30 September 20X6, the investment in associate had increased to $6 750 000. GPX's pre-tax share of profit in the associate was $420 000, with a related tax charge of $180 000. The net amount of $240 000 was included in the consolidated statement of profit or loss for the year ended 30 September 20X6. There were no impairments to the investment in associate, or acquisitions or disposals of shares during the financial year. What dividend is paid to GPX by the associate in the year ended 30 September 20X6?

Tami Co. has investments in a number of subsidiary companies and on 1 August 20X8 acquired a 30 per cent interest in Tiny Co. The investment cost $400 000. In the year ended 31 March 20X9, Tiny Co. reported a profit after tax of $66 000. What amounts are reported in the group financial statements in respect of Tiny Co.?

Dune Group bought a 20 per cent investment in Sand Co. a number of years ago for $420 000. Since acquisition Sand Co. has made $530 000 retained profits, $180 000 of which are made in the year ended 31 December 20X8. At this date, an impairment review was carried out on Sand Co. and Dune's investment was found to be impaired by 5 per cent. What amount is reported as income from the associate in the consolidated statement of profit or loss?

AB owns a controlling interest in another entity, CD, and exerts significant influence over EF, an entity in which it holds 30 per cent of the ordinary share capital. During the financial year ended 30 April 20X5, EF sold goods to AB valued at $80 000. The cost of the goods to EF was $60 000. 25 per cent of the goods remained in AB's inventory at 30 April 20X5. At the period end, AB held $90 000 inventory, CD held $38 000 and EF held $65 000. What inventory figure is reported in the consolidated statement of financial position?