1) Which of the following statements is not correct regarding an investor's power and control over an investee?

1. Investor power over an investee exists when the investor has the ability to direct the investee's operations, but excluding financial operations
2. An investor controls an investee if all three of the following apply: the parent has power over the investee, the parent has exposure or rights to variable returns from the investee, and the parent has the ability to affect the amount of the returns it receives from that investee
3. One investor may have power over an investee even though other entities may have significant influence to affect direction of the subsidiary's activities
4. Assessing whether an entity has power over another is straightforward when that power is obtained directly through the voting rights attached to shares

2) Which of the following statements is not correct regarding acquisitions?

1. A contingent liability acquired in a business combination is recognised if a present obligation has arisen from a past event and its fair value can be reliably measured, even if the outflow of resources required to settle the obligation is not probable
2. The key measurement principle is that the acquirer measures the assets acquired and the liabilities assumed at their fair value on acquisition date
3. Sometimes, the acquirer recognises assets or liabilities which were not previously recognised as assets and liabilities in the acquiree's financial statements, such as expenditure relating to brand names, patents or a customer relationship
4. If a loss on a bargain purchase arises, the loss can only be recognised after a review by the acquirer to reassess whether all assets and liabilities acquired have been correctly identified and correct procedures have been used to measure them

3) Which of the following statements is not correct regarding preparing consolidated financial statements?

1. The subsidiary's investment in each parent is offset against the subsidiary's share of the equity held in each parent
2. Intercompany transactions between and parent and subsidiary, and intercompany balances of assets, liabilities, equity, income, expenses and cash flows that exist between the parent and a subsidiary, are eliminated
3. The parent's assets, liabilities, equity, income, expenses and cash flows are combined with those of the subsidiaries via a line-by-line addition of the financial statements of each entity
4. Either goodwill on consolidation or a gain on a bargain purchase is recorded in the first journal entry when consolidating the parent and the subsidiary's (or subsidiaries') financial statements

4) Which of the following statements is not correct regarding the definitions in NZ IFRS 10 Consolidated Financial Statements?

1. Eliminating entries are the journal entries (debits and credits) on a consolidation worksheet to eliminate transactions and balances between companies in the same group
2. Consideration is what is paid or transferred to acquire the subsidiary
3. Consolidated financial statements are the financial statements of a group of companies in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are combined and presented as two single entities
4. Control of an investee exists when an investor is exposed, or has rights, to variable returns from that investee and the ability to affect those returns