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Ch16 Controlled Entities Consolidation
Ch16 Controlled Entities Consolidation
to accompany
Applying International
Accounting Standards
by
Alfredson, Leo, Picker, Pacter & Radford
Prepared by
Victoria Wise
Question 1
Question 2
The IASB Framework identifies seven user groups that are considered to be important in
determining the existence of a reporting entity. These users groups include all of the following
except:
A investors;
B preparers;
C lenders;
D suppliers and other trade creditors.
Question 3
All parent entities are required to present consolidation statements unless the following
conditions apply to them:
A I and II only;
B I, II and III only;
C I, II and IV only;
D I, II, III and IV.
Question 4
Two entities A Limited and B Limited together form a third entity, C Limited. C Limited
acquires A Limited and B Limited. In this situation, IAS 27 Consolidated and Separate
Financial Statements, adjudges that:
Question 5
As required by IAS 27 Consolidated and Separate Financial Statements, where there are
transactions between members of the group, the effects of these transactions are:
A adjusted partially in direct proportion to the level of control held by the parent;
B adjusted in full on consolidation;
C adjusted in proportion to the equity held by the minority interests in the subsidiary;
D not adjusted in the consolidation process.
Question 6
Under the parent entity concept of consolidation, the minority interest in the subsidiary is:
Question 7
Question 8
The consolidation concept that results in a group consisting of the assets and liabilities of the
parent and the parent’s proportional share of the assets and liabilities of the subsidiary, is known
as the:
A proprietary concept;
B comprehensive concept;
C entity concept;
D concise concept;
Question 9
The concept of consolidation that requires pro rata consolidation of subsidiaries is known as the:
A entity concept;
B proprietary concept;
C parent concept;
D subsidiary concept.
Question 10
If an investor entity owns more than half of the voting or potential voting power of an investee
and does not account for the investment as a subsidiary, IAS 27 Consolidated and Separate
Financial Statements, requires that the following disclosure be made:
A the reasons why the ownership of the investee does not constitute control;
B the nature of the relationship between the investor and investee;
C the nature of any restriction on the ability of the investor to transfer funds to the
investee;
D the amount of any repayments of borrowings between the investor and investee
during the period.
Question 11
If a parent entity chooses not to prepare consolidated financial statements, IAS 27 Consolidated
and Separate Financial Statements, requires the following disclosures in the separate financial
statements of the parent:
I. The name, country of residence and voting power of the directors of the parent.
II. That the exemption from consolidation has been used.
III. A list of significant investments including the proportion of ownership.
IV. A description of the method used to account for the investments.
A I, II and IV only;
B II, III and IV only;
C II and III only;
D IV only.
Question 12
According to IAS 27 Consolidated and Separate Financial Statements, parent entities are
required to disclose:
A I, II and IV only;
B II, III and IV only;
C I and IV only;
D I, II, III and IV.
ANSWERS
1 A
2 B
3 C
4 D
5 B
6 D
7 C
8 A
9 B
10 A
11 B
12 A