1. Group financial statements are
a) Another set of financial statements
b) The subsidiary’s financial statements
c) The parent’s financial statements
d) All of the above
2. Non-controlling interest can be measured by 2 acceptable methods
a) at nominal value or as a proportion of net assets
b) at fair value or as a proportion of net assets
c) at present value and as a proportion of net assets
d) at fair value and full goodwill
3. What method of accounting for goodwill arising on consolidation is required by IFRS 3?
a) Parent’s investment amount
b) Non-controlling interest amount
c) Subsidiary’s net assets
d) All of the above
4. What is impairment?
a) A gain in the value of an asset
b) A loss in the value of an asset
c) Similar assets forming a pair
d) An intangible asset
5. How is the carrying amount of an asset best defined?
a) as the value of an asset before depreciation
b) as the value of an asset after depreciation
c) as the value of an asset after depreciation and impairment loss
d) as the value of an asset before depreciation and impairment loss
6. When should an entity assess for impairment loss?
a) at the end of each reporting period
b) monthly
c) every three years
d) never
7. An impairment loss for Goodwill:
a) can be reversed under certain conditions
b) should not be reversed
c) increases the carrying amount of an intangible non-current asset
d) Increases the carrying amount of a tangible current asset
8. Exercising significant influence for the parent includes
a) control over financial and operating policies
b) no control over financial and operating policies
c) the investor’s share of the profit
d) the process of issuing securities
9. IAS 27 requires a parent to present consolidated financial statements in which
a) the parent presents its statements
b) the subsidiary presents its statements
c) the parent and the subsidiary present their statements individually
d) the parent and the subsidiary combine and present statements as a single entity
10. Investments in associates is a type of investment considered:
a) less than a subsidiary
b) more than a subsidiary
c) less than a simple investment
d) less than 20% of voting power
- The equity method of accounting applies to:
a) Associates and joint ventures financial statements
b) Joint ventures only financial statements
c) Subsidiaries
d) None of the above
12. Inter-company adjustments can apply to all the following except:
a) Receivable account balances
b) Non-current balances
c) Cash and goods in transit
d) Payable account balances
13. When there is trading between the parent and the subsidiary a consolidation adjustment is called:
a) A subsidiary adjustment
b) A group financial adjustment
c) A provision for unrealized profits
d) A parent adjustment
14. When a parent acquires a subsidiary and the consideration given includes a deferred consideration, in other words a consideration that will be paid in the future, it will be recorded as:
a) A liability discounted to its present value
b) Simply as a liability at the date of acquisition
c) Goodwill at the date of acquisition
d) None of the above
15. Non-controlling interest can be measured by two acceptable methods
a) At nominal value or as a proportion of net assets
b) At fair value or as a proportion of net assets
c) At present value and as a proportion of net assets
d) At fair value and full goodwill
16. Fair value of the parent’s investment in a subsidiary can include all of the following except:
a) Cash paid out
b) Shares at nominal value
c) Interest bearing loan
d) Shares at market value at date of acquisition
17. Control will normally be achieved when the parent has the following over a subsidiary except:
a) Owns less than 50% of voting rights but the remainder are widely distributed
b) Owns more than 50% of voting rights
c) Appoints the majority of board of director members
d) Owns a minority of the ordinary shares
18. Group accounts are prepared as if the group was a single entity. This reflects:
a) Substance over form
b) The subsidiary’s financial statements
c) The parent’s financial statements
d) The parent’s investment in the subsidiary
129. According to IFRS 13 an asset is impaired when:
a) The net book value is lower than what the company thinks it will get from its sale
b) The carrying value is lower than the recoverable amount
c) The carrying value is higher than its recoverable amount
d) None of the above
20. A contingent consideration is a type of consideration given when a parent acquires shares from a subsidiary. It is recorded in the parent’s books at:
a) market value
b) fair value
c) nominal value
d) at net present value
21.
The equity method of accounting applies to:
a) Associates and joint venture financial statements
b) Joint ventures only financial statements
c) Subsidiaries
d) None of the above
22.
Inter-company adjustments include all the following statements except:
a) Are applicable to goodwill
b) Are applicable to non-current balances
c) Assume that cash and goods in transit have been received
d) Are done during cross casting
23.
Provision for unrealized profits applies to:
e) Only the parent’s financial statements
f) Only to the subsidiary’s financial statements
g) Both the parent and the subsidiary’s financial statements
h) Only to the group financial statements
24.
A deferred consideration when a parent acquires a subsidiary is measured by:
e) Shares at nominal value
f) Liabilities at present value
g) Liabilities at fair value
h) Cash paid out
25.
Non-controlling interest can be measured by 2 acceptable methods
e) At nominal value or as a proportion of net assets
f) At fair value or as a proportion of net assets
g) At present value and as a proportion of net assets
h) At fair value and full goodwill
26.
Fair value is all of the following except:
e) The price to be received to sell an asset
f) Consideration given for an investment
g) Impairment loss on goodwill
h) Market value of the parent’s shares issued for the investment in the subsidiary
27.
Control exists when the investor has the following except:
e) Less than 50% of voting rights but the remainder are widely distributed
f) More than 50% of voting rights
g) To appoint the majority of board of director members
h) To acquire a subsidiary