1) Which of the following is incorrect in regard to ordinary shares?

1. If you were a shareholder owning 5,000 shares in Company XYZ Ltd and XYZ Ltd had issued a total of 100,000 shares, you would own 5% of Company XYZ Ltd.
2. Shares are known as 'stock' in the USA and ordinary shares are known as 'common stock'
3. Shareholders in a listed company may only be directors or employees of the company in which they own shares
4. A shareholder is a part-owner of the company in which they have shares

2) Which of the following is not a limitation of consolidated financial statements?

1. Although consolidated financial statements are presented as if the parent and subsidiary are one entity, this is only a legal entity, not an accounting entity
2. When non-controlling interests exist and both parent and associate company relationships exist within the same group, defining control can be a major problem
3. While in appearance the assets, liabilities and equity of a consolidated group of companies appear to be available to the parent company and its shareholders, this is not necessarily the true picture, particularly when non- controlling interests (minority shareholders) exist
4. Aggregating results may distort those results by giving an overall view, where the success of one entity may cover the lack of success of another

3) Which of the following is not a requirement for the acquirer of a business in a business combination, according to NZ IFRS 03 Business Combinations?

1. Determine what information to disclose in financial statements to enable users to evaluate the nature and financial effects of business combinations
2. Recognise and measure the goodwill or a gain from a bargain purchase in the acquisition
3. Recognise and measure the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree
4. Sell off any surplus assets

4) Which of the following is the appropriate journal entry to adjust tax when a consolidation adjustment entry reduces net profit?

1. Debit deferred tax asset (DTA) and Credit tax expense
2. Debit deferred tax equity (DTE) and Credit tax expense
3. Debit tax expense and Credit deferred tax equity (DTE)
4. Debit tax expense and Credit deferred tax asset (DTA)

5) Which of the following statements is not correct regarding a business combination?

1. In a business combination, the acquiree obtains control of the other business (the acquirer)
2. An acquisition is the purchase of another entity
3. The acquisition date is the date on which the acquirer obtains control of the acquiree
4. A bargain purchase occurs when a company purchases another entity for less than the fair market value of its net assets