company accounting testbank

1、Testbankto accompany Company Accounting 10ebyKen Leo, Jeffrey Knapp, Sue McGowan & John SweetingPrepared byPeter Baxter John Wiley & Sons Australia, Ltd 2015Chapter 21: Consolidation: non-controlling interestMultiple-choice questions1.Ownership interests in a subsidiary entity that do not belong to

2、the parent entity are known as:a.unowned interests.*b.non-controlling interests.c.external equity interests.d.non-parent interests.Correct answer: bLearning Objective 21.1 discuss the nature of the non-controlling interest.2.According to AASB 10 Consolidated Financial Statements, the term non-contro

3、lling interest is defined as:a.equity in a parent that is owned, directly or indirectly, by a subsidiary.b.the equity in the parent entity other than the portion owned by the subsidiary entity.c.the equity in the economic entity other than that which can be attributed to the subsidiary entity.*d.equ

4、ity in a subsidiary not attributable, directly or indirectly, to a parent.Correct answer: dLearning Objective 21.1 discuss the nature of the non-controlling interest.3.According to AASB 10 Consolidated Financial Statements, a non-controlling interest is classified as:a.part of the parent entitys equ

5、ity.*b.part of the groups equity.c.a liability of the parent entity.d.an asset of the group.Correct answer: bLearning Objective 21.1 discuss the nature of the non-controlling interest.4.A consolidated statement of comprehensive income discloses the non-controlling interest as:a.a separate component

6、of revenue.b.a separate component of profit before tax and a separate component of tax expense.c.a separate component of each line item of revenue and expense.*d.a separate portion of profit or loss attributable to the non-controlling interest.Correct answer: dLearning Objective 21.1 discuss the nat

7、ure of the non-controlling interest.5.If a subsidiary is not wholly owned by the parent there are two ownership interests which are known as the:a.parent and non-parent interest.b.parent and non-group interest.*c.parent and non-controlling interest.d.group and non-group interest.Correct answer: cLea

8、rning Objective 21.1 discuss the nature of the non-controlling interest.6. AASB 12 Disclosure of Interests in Other Entities requires disclosure of which of the following for each subsidiary that has a non-controlling interest?a.Accumulated non-controlling interests of the subsidiary at the end of t

9、he reporting period.b.The proportion of ownership interests held by non-controlling interests.c.The subsidiarys principal place of business.*d.All of the options are correct.Correct answer: dLearning Objective 21.1 discuss the nature of the non-controlling interest.7.A non-controlling interest is en

10、titled to a share of which of the following items?IEquity of the group entity at acquisition dateIICurrent period profit or loss of the subsidiary entityIIIChanges in equity of the subsidiary between acquisition date and the beginning of the financial periodIVEquity of the subsidiary at acquisition

11、datea.I, II and III onlyb.I and II only*c.II, III and IV onlyd.III onlyCorrect answer: cLearning Objective 21.1 discuss the nature of the non-controlling interest.8. When presenting a consolidated statement of financial position, the non-controlling interest is:a. not separately disclosed.b. present

12、ed as a separate component of total assets and total liabilities.*c. presented separately within the equity section.d. shown as a separate portion of net assets.Correct answer: cLearning Objective 21.1 discuss the nature of the non-controlling interest.9. Under the conceptual framework for internati

13、onal financial reporting a non-controlling interest fits the definition of:a. a liability.*b. an equity item.c. an asset.d. an expense.Correct answer: bLearning Objective 21.1 discuss the nature of the non-controlling interest.10. Which of the following statements is incorrect?*a. The calculation of

14、 the NCI is not affected by profits or losses relating to intra-group transactions.b. The NCI is entitled to a share of the groups consolidated equity.c. The NCI is a contributor of equity to the consolidated group.d. The NCI is entitled to a share of the subsidiarys equity adjusted for the effects

15、of profits or losses made on intra-group transactions.Correct answer: aLearning Objective 21.1 discuss the nature of the non-controlling interest.11. When presenting a consolidated statement of comprehensive income, the non-controlling interest is shown as:a. a separate component of each individual

16、line item.*b. a separate portion of profit or loss attributable to the non-controlling interest.c. part of the total revenue of the group.d. part of the total expenses of the group.Correct answer: bLearning Objective 21.1 discuss the nature of the non-controlling interest.12.Wendy Limited paid $120

17、000 for 75% of Yum Limited. At the date of acquisition Yum Limited had equity as follows: share capital of $100000 retained earnings of $50 000 other reserves of $30 000.All of Yum Limiteds assets and liabilities were recorded at fair value. The fair value of identifiable net assets acquired by Wend

18、y Limited amounted to:a.$90 000.b.$120 000.*c.$135 000.d.$180 000.Correct answer: cLearning Objective 21.2 explain the effects of the NCI on the consolidation process.13.King Limited paid $220000 for 70% of Prince Limited. At the date of acquisition Prince Limited had share capital of $200000 and re

19、tained earnings of $100000 and all of Prince Limiteds assets and liabilities were r ecorded at fair value. The fair value of identifiable net assets acquired by King Limited amounted to:a.$154000.*b.$210000.c.$300000.d.$220 000.Correct answer: bLearning Objective 21.2 explain the effects of the NCI

20、on the consolidation process.14.Fisher Limited acquired 75% of the share capital and reserves of Man Limited for $150000. The equity of Man Limited consisted of share capital of $100000 and reserves of $60 000. All assets and liabilities were recorded at fair value except plant and equipment which w

21、ere recorded at $10 000 below fair value. The company tax rate was 30%. The partial goodwill method is adopted by the group. The amount of goodwill acquired by Fisher Limited in this business combination was:a.$17 000.*b.$24 750.c.$30 000.d.$112 500.Correct answer: bLearning Objective 21.2 explain t

22、he effects of the NCI on the consolidation process.15.Jack Limited acquired 80% of the share capital and reserves of Jill Limited for $300000. Share capital was $200000 and reserves amounted to $100000. All assets and liabilities were recorded at fair value except buildings which was recorded at $20

23、000 below fair value. The fair value of the NCI at the date of Jacks acquisition was $70 000 and the full goodwill method is adopted by the group. If the company tax rate was 30%, the total goodwill in relation to this business combination amounts to:a.$44 800.b.$48800.c.$11 200.*d.$56 000.Correct a

24、nswer: dLearning Objective 21.2 explain the effects of the NCI on the consolidation process.16.Mooloolaba Limited owns 90% of the share capital of Maroochydore Limited. Maroochydore Limited paid a dividend of $40000 during the financial period. The adjustment entries in the consolidation worksheet f

25、or the dividend include which of the following?*a.DRDividend revenue$36 000b.DRDividend revenue$40000c.DRDividend payable$36 000d.DRDividend receivable$40000Correct answer: aLearning Objective 21.2 explain the effects of the NCI on the consolidation process.17. The non-controlling interest columns o

26、n a consolidation worksheet are used to:a. adjust the amounts that have been recorded for intragroup revenue transactions.b. adjust the amounts that have been recorded for intragroup services.c. eliminate the recorded amounts of the non-controlling investment in the subsidiary.*d. compile the amount

27、s of non-controlling interest and parent share of particular line items.Correct answer: dLearning Objective 21.2 explain the effects of the NCI on the consolidation process.18. Where the NCI is measured at fair value at acquisition date, which of the following methods is being used?a. Partial goodwi

28、ll methodb. Fair value method*c. Full goodwill methodd. NCI goodwill methodCorrect answer: cLearning Objective 21.2 explain the effects of the NCI on the consolidation process.19. Which of the following statements is incorrect?*a. Under the partial goodwill method, the NCI is measured at fair value

29、at acquisition date.b. Under the partial goodwill method, the NCI is measured as a proportion of the net fair value of the subsidiarys identifiable assets and liabilities at acquisition date.c. Extra columns are added to the consolidation worksheet to divide the groups equity into the NCI share and

30、the parents share.d. The adjustments for intragroup transactions are the same whether the subsidiary is wholly owned or whether there is an NCI in the subsidiary.Correct answer: aLearning Objective 21.2 explain the effects of the NCI on the consolidation process.20.Alexandra Limited acquired 80% of

31、the share capital and reserves of Heads Limited for $300000. Share capital was $200000 and reserves amounted to $100000. All assets and liabilities were recorded at fair value except buildings which was recorded at $20000 below fair value. If the company tax rate was 30%, and the partial goodwill me

32、thod was adopted, the NCI share of equity at the date of acquisition was:a.$48 800.*b.$62 800.c.$64 000.d.$60 000.Correct answer: bLearning Objective 21.3 explain how to calculate the NCI share of equity.21.Beach Limited is a subsidiary of Golden Limited. When Golden acquired its 70% interest in Bea

33、ch, the retained earnings of Beach Limited were $40000. At the beginning of the current period, Beach Limiteds retained earnings had increased to $100000. Beach also earned profit of $20000 during the current period. The NCIs share of the equity of Beach Limited at reporting date is:*a.$36 000.b.$30

34、 000.c.$6000.d.$84 000.Correct answer: aLearning Objective 21.3 explain how to calculate the NCI share of equity.22.During the current year, a partly owned subsidiary has made a transfer from a general reserve to retained earnings. Which of the following lines would appear in the NCI consolidation e

35、ntry relating to the current year transfer?a.CR NCIb.CR Retained earningsc.DR General reserve*d.DR Transfer from general reserveCorrect answer: dLearning Objective 21.3 explain how to calculate the NCI share of equity.23. Which of the following is not one of the 3 steps in calculating the NCIs share

36、 of the recorded equity of the subsidiary?a. Determine NCI share of the changes in equity in the current period.b. Determine the NCI share of equity of the subsidiary at acquisition date.c. Determine the NCI share of the subsidiarys equity between the date of acquisition and the beginning of the cur

37、rent period.*d. Determine the NCI share of the subsidiarys equity prior to the date of acquisition.Correct answer: dLearning Objective 21.3 explain how to calculate the NCI share of equity.24. A non-controlling interest in the net assets of a subsidiary consists of the non-controlling interests shar

38、e at the date of the business combination:a. less 100% of any post-acquisition dividends paid.b. less the parents share of any post-acquisition dividends paid or declared.*c. plus a share of the changes in the subsidiarys equity since the business combination.d. less the non-controlling proportionat

39、e share of changes since the combination.Correct answer: cLearning Objective 21.3 explain how to calculate the NCI share of equity.25. Which of the following statements is correct?a. The entry to reflect the NCI share of equity at acquisition date changes every year that consolidated financial state

40、ments are prepared.*b. The NCI is entitled to a share of consolidated equity.c. To calculate the NCI share of equity, the subsidiarys equity at the end of the reporting period is divided into five parts.d. The NCI is not entitled to a share of consolidated equity.Correct answer: bLearning Objective

41、21.3 explain how to calculate the NCI share of equity.26.Moffatt Ltd holds a 60% interest in Beach Ltd. Beach Ltd sells inventory to Moffatt Ltd during the year for $20000. The inventory originally cost $14 000. At the end of the year 80% of the inventory is still on hand. The tax rate is 30%. The N

42、CI adjustment required in relation to this transaction includes which of the following?*a.DR NCI $1344b.DR NCI share of profit/(loss) $1344c.DR NCI $1920d.CR NCI $1344Correct answer: aLearning Objective 21.4 explain how the calculation of the NCI is affected by the existence of intragroup transactio

43、ns.27.Currimundi Ltd holds a 60% interest in Beach Ltd. Beach Ltd purchases inventory from Currimundi Ltd during the year for $30000. The inventory originally cost $21 000. At the end of the year 80% of the inventory is still on hand. The tax rate is 30%. The NCI adjustment required in relation to t

44、his transaction includes a debit of which of the following?*a.Nilb.$2016c.$504d.$5040Correct answer: aLearning Objective 21.4 explain how the calculation of the NCI is affected by the existence of intragroup transactions.28.Happy Ltd holds a 60% interest in Valley Ltd. On 1 July 2018 Valley Ltd sold

45、 a depreciable non-current asset to Happy Ltd at a profit before tax of $10 000. The remaining useful life of the asset at the date of sale was 4 years and the tax rate is 30%. The impact of the above on the NCI share of profit for the year ended 30 June 2019 is:a.debit $2800.b.credit $2800.c.debit

46、$2100.*d.credit $2100.Correct answer: dLearning Objective 21.4 explain how the calculation of the NCI is affected by the existence of intragroup transactions.29.When preparing consolidated financial statements, any profit or loss that arises in relation to the intragroup transfer of services is rega

47、rded as:a.immaterial and does not get adjusted on a consolidation worksheet.*b.immediately realised.c.unrealised.d.having no impact on the non-controlling interest, and so ignored for consolidation reporting.Correct answer: bLearning Objective 21.4 explain how the calculation of the NCI is affected

48、by the existence of intragroup transactions.30.Which of the following statements is incorrect?a.The NCI is unaffected by the existence of any gain on bargain purchase.*b.The NCI share of equity at acquisition date is adjusted for its share of any gain on bargain purchase.c.Any gain on bargain purcha

49、se is recognised in the pre-acquisition entry.d.The pre-acquisition entry only adjusts for the parents share of the pre-acquisition equity.Correct answer: bLearning Objective 21.5 explain how the NCI is affected by the existence of a gain on bargain purchase.True/false questions 31.The NCI is a cont

50、ributor of equity to the group.The statement is true. There are two equity holders in the group the parent shareholders and the NCI.Learning Objective 21.1 discuss the nature of the non-controlling interest.32.The NCI is entitled to a share of the consolidated equity of the group.The statement is tr

51、ue. The NCI is entitled to a share of the equity of the subsidiary adjusted for the effects of profits and losses made on intragroup transactions this is referred to as consolidated equity.Learning Objective 21.1 discuss the nature of the non-controlling interest.33.The consolidated statement of com

52、prehensive income must separately disclose the consolidated profit for the period attributable to equity holders of the parent and the NCI.The statement is true. This is required under paragraph 81B of AASB 101 Presentation of Financial Statements.Learning Objective 21.1 discuss the nature of the no

53、n-controlling interest.34.The NCI share of different categories of equity is required to be separately disclosed on the face of the consolidated statement of financial position.The statement is false. Only the total NCI share of equity is required to be disclosed on the face of the statement of fina

54、ncial position, with the different categories shown in the statement of changes in equity.Learning Objective 21.1 discuss the nature of the non-controlling interest.35.Where a subsidiary is partly owned by a parent and an NCI, any goodwill arising in the acquisition analysis is required to be alloca

55、ted between that attributable to the parent and that attributable to the NCI.The statement is false. This will be the case where the group elects to use the full goodwill method. If the partial goodwill method is applied, then the only goodwill arising in an acquisition analysis is the goodwill attr

56、ibutable to the parents investment in the subsidiary. Learning Objective 21.2 explain the effects of the NCI on the consolidation process.36.Where a subsidiary is partly owned by a parent and an NCI, both the BCVR entries and the pre-acquisition entries are adjusted to reflect only the parents share of the subsidiarys equity balances.The statement is false. The BCVR entrie