Further Consolidation Issues Ii: Accounting For Non-controlling Interests

This question bank verified by Studydeets

Questions Bank

An Overview of the International External Reporting Environment
The Conceptual Framework of Accounting and Its Relevance to Financial Reporting
Theories of Financial Accounting
An Overview of Accounting for Assets
Depreciation of Property, Plant and Equipment
Revaluations and Impairment Testing of Non-Current Assets
Inventory
Accounting for Intangibles
An Overview of Accounting for Liabilities
Accounting for Leases
Share Capital, Reserves and Share Options Employee Bonus Schemes
Accounting for Financial Instruments
Revenue Recognition Issues
The Statement of Comprehensive Income and Statement of Changes in Equity
Accounting for Income Taxes
The Statement of Cash Flows
Events Occurring After the Reporting Date
Related-Party Disclosures
Earnings Per Share
Further Consolidation Issues I: Accounting for Intragroup Transactions
Further Consolidation Issues II: Accounting for Non-Controlling Interests
Further Consolidation Issues III: Accounting for Indirect Ownership Interest
Accounting for Foreign Currency Transactions
Translating the Financial Statements of Foreign Operations
Accounting for Corporate Social Responsibility

All Questions

Question 1

Free

True/False

IFRS 10 Consolidated and Separate Financial Statements prescribes that non-controlling interests be presented in the consolidated statement of financial position as a liability.

Choose correct answer/s

True

False

Check answer

Question 2

Free

True/False

IAS 1 Presentation of Financial Statements requires an entity to disclose separately in the statement of comprehensive income,profit or loss for the period attributable to non-controlling interests and owners of the parent.

Choose correct answer/s

True

False

Check answer

Question 3

Free

True/False

One of the steps in preparing consolidated financial statements is working out the amounts to be attributed to non-controlling interests to determine the amount to be eliminated in the consolidation process.

Choose correct answer/s

True

False

Check answer

Question 4

Free

True/False

Using full goodwill method,share of goodwill attributable to the non-controlling interests is recognised in the statement of financial position as part of non-controlling interest in equity.

Choose correct answer/s

True

False

Check answer

Question 5

Free

True/False

In calculating the proportion of a subsidiary's profit that is attributable to owners who are not part of the group,all adjustments to the group's profit should be treated as affecting the calculation for the outside owners.

Choose correct answer/s

True

False

Check answer

Question 6

True/False

In preparing consolidated financial statements non-controlling interests are allocated on a 'line-by-line' basis.

Choose correct answer/s

True

False

To unlock the question

Question 7

True/False

Non-controlling interests are allocated on a 'line-by-line' basis throughout the statement of comprehensive income.

Choose correct answer/s

True

False

To unlock the question

Question 8

True/False

Only dividends payable to the parent entity are eliminated against dividends receivable in the accounts of the parent entity.

Choose correct answer/s

True

False

To unlock the question

Question 9

Multiple Choice

Where the parent entity holds less than 100 per cent interest in a subsidiary,IAS 10 requires the remaining shareholders' interests in what items to be disclosed?

Choose correct answer/s

the subsidiary's share capital and reserves

the subsidiary's profit or loss

the subsidiary's current and non-current assets

the subsidiary's share capital and reserves and the subsidiary's profit or loss

To unlock the question

Question 10

Multiple Choice

On 1 July 2015 Harry Ltd purchased 80 per cent of the issued share capital of Wills Ltd and has control of Wills.The fair value of the net assets of Wills Ltd on that date was represented as follows: Harry Ltd paid cash consideration of $2 500 000 for Wills.Wills Ltd made an operating profit of $350 000,there were no intragroup transactions during the period ended 30 June 2016.Goodwill had been determined to have been impaired during the year by $25 000.What consolidation journal entries are required for the period and what is the non-controlling interest in equity as at 30 June 2016?

Choose correct answer/s

To unlock the question

Question 11

Multiple Choice

Finger Ltd purchased 75 per cent of the issued capital and in the process gained control over Nail Ltd on 1 July 2013.The fair value of the net assets of Nail Ltd at purchase was represented by: Finger Ltd paid cash consideration of $4 000 000 for Nail Ltd.During the period ended 30 June 2015,Nail Ltd paid management fees of $540 000 to Finger Ltd and Nails had an operating profit of $980 000.Nails' opening retained earnings at the beginning of the period were $1 460 000.At the end of the period Nail Ltd declared a dividend of $90 000.There were no other inter-company transactions.Goodwill was determined to have been impaired by $19 000 during the period.Companies in the group accrue dividends when they are declared by subsidiaries. For the period ended 30 June 2015,what consolidation journal entries are required and what is the non-controlling interest?

Choose correct answer/s

To unlock the question

Question 12

Multiple Choice

When a subsidiary company that has a non-controlling interest (NCI)declares a dividend,the treatment in the consolidated statement of financial position of dividends not paid is:

Choose correct answer/s

The non-controlling interest portion of the dividend owing should be eliminated along with the parent entity's share, leaving a zero balance in dividends payable.

The NCI's portion should be deducted from the non-controlling interest's share in equity.There should be no dividend amounts remaining in the consolidated statement of financial position, but the amount owed to the NCI should be disclosed separately.

The amount owing to NCI as a dividend payable should be included in the consolidated statement of financial position as a current liability.

The amount of dividends payable to both the parent entity and the NCI will be reflected in the consolidated statement of financial position.

To unlock the question

Question 13

Multiple Choice

Groucho Ltd purchased 60 per cent of the issued capital and in the process gained control over Marx Ltd on 1 July 2014.The fair value of the net assets of Marx Ltd at purchase was represented by: Groucho Ltd paid cash consideration of $1 850 000 for Marx Ltd.During the period ended 30 June 2015,Marx Ltd paid management fees of $200 000 to Groucho Ltd and Marx had an operating profit of $530 000.Marx Ltd paid a dividend of $100 000 during the period.Groucho purchased inventory from Marx during the period for $80 000.The inventory cost Marx Ltd $56 000 and at the end of the period Groucho had 50 per cent of that inventory still on hand.Goodwill has been determined to have been impaired by $6200 during the period.Companies in the group use perpetual inventory systems and accrue dividends when they are declared by subsidiaries.Ignore tax implications. For the period ended 30 June 2015,what consolidation journal entries are required and what is the non-controlling interest?

Choose correct answer/s

To unlock the question

Question 14

Multiple Choice

Green Ltd purchased 90 per cent of the issued capital and in the process gained control over Maroon Ltd on 1 July 2015.The fair value of the net assets of Maroon Ltd at purchase was represented by: Green Ltd paid cash consideration of $3 700 000 for Maroon Ltd.During the period ended 30 June 2017,Maroon Ltd paid management fees of $100 000 to Green Ltd and Maroon had an operating profit of $405 000.Maroon Ltd declared a dividend of $98 000 during the period.Green purchased inventory from Maroon during the period ended 30 June 2017 for $100 000.The inventory cost Maroon Ltd $85 000 and at the end of the period Green had 35 per cent of that inventory still on hand.Maroon's opening retained earnings for the period ended 30 June 2017 was $810 000.Goodwill has been determined to have been impaired by $13 600.Companies in the group use perpetual inventory systems and accrue dividends when they are declared by subsidiaries.There were no other inter-company transactions.Ignore tax implications. For the period ended 30 June 2017,what consolidation journal entries are required and what is the outside equity interest?

Choose correct answer/s

To unlock the question

Question 15

Multiple Choice

Which of the following is not one of the stages used to determine non-controlling interest?

Choose correct answer/s

the non-controlling interest in the current period's profit or loss

the non-controlling interest in share capital at the date of acquisition of the subsidiary by the parent entity

the non-controlling interest in the goodwill at acquisition

the non-controlling interest in reserves at the date of acquisition of the subsidiary by the parent entity

To unlock the question

Question 16

Multiple Choice

The disclosure of non-controlling interests in the (a)comprehensive income statement; and (b)statement of financial position is as follows:

Choose correct answer/s

(a) profit or loss attributable to non-controlling interest in the notes; (b) non-controlling interest in equity as a separate line item

(a) profit or loss attributable to non-controlling interest on the face; (b) non-controlling interest in equity as part of share capital

(a) profit or loss attributable to non-controlling interest in the notes; (b) non-controlling interest in equity as part of share capital

(a) profit or loss attributable to non-controlling interest on the face; (b) non-controlling interest in equity as a separate line item

To unlock the question

Question 17

Multiple Choice

Which of the following situations,involving eliminations as part of the consolidation process,would not have implications for the calculation of non-controlling interest?

Choose correct answer/s

the sale of a non-current asset by the subsidiary to the parent

the payment of a management fee by the subsidiary to the parent

the sale of inventory by the parent to the subsidiary

the payment of a management fee by the subsidiary to the parent and the sale of inventory by the parent to the subsidiary

To unlock the question

Question 18

Multiple Choice

Acquirer Plc purchased 75 per cent of Subby Plc for €45 000.The fair value of identifiable assets was €95 000,and the fair value of liabilities and contingent liabilities amounted to €47 000.According to IFRS 10,what would be the amount of 'goodwill allocated to non-controlling interests of Subby Plc'?

Choose correct answer/s

€3000

€9000

€12 000

(€3000)

To unlock the question

Question 19

Multiple Choice

Which of the following statements is incorrect with regards to non-controlling interests in subsidiaries?

Choose correct answer/s

The requirement to eliminate the effects of intragroup transactions holds whether or not there are non-controlling interests.

The non-controlling interest's share in the dividends paid or proposed by the subsidiary is eliminated on consolidation.

The non-controlling interest's share of the profits of the subsidiary is calculated after adjustments to eliminate income and expenses of the subsidiary that are unrealised from the economic entity's perspective.

Management fees paid in an intragroup transaction are considered realised when determining non-controlling interests in a subsidiary.

To unlock the question

Question 20

Multiple Choice

As prescribed in IFRS 10,which of the following statements is incorrect with regards to non-controlling interests in subsidiaries?

Choose correct answer/s

Non-controlling interests are presented in the consolidated statement of financial position within equity, separately from the equity of the owners of the parent.

Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests.

Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

All of the given statement are correct.

To unlock the question