accounting

SECTION -I: TRUE OR FALSE For each of the following statements, write the T or the F to indicate whether the statement is true or false. As Per IFRS 3, the parent company should recognize all contingent consideration as part of the acquisition price paid for the subsidiary 2. A consolidated balance sheet presents the financial position of a group of companies under common control as if they constitute a single entity 3. Intangible assets that can be sold, transferred, licensed, rented or exchanged individually are goodwill Minority interest is the remaining outside owners that need Consolidation values for subsidiary accounts 5. An eliminating entry in the working paper is one needed to eliminate the Investment account and the subsidiary's stockholders' NCI accounts 6. An investment in an associate is accounted for using the equity method from the date on which it becomes an associate. On acquisition of the investment any difference between the cost of the investment and the investor's share of the net book value of the associate's identifiable assets and liabilities 8. goodwill relating to an associate is included in the carrying amount of the investment 19 any excess of the investor's share of the net fair value of the associate's identifiable assets and liabilities over the cost of the investment is included as income in the determination of the investor's share of the associate's profit or loss in the period in which the investment is acquired 10 IFRS 3 uses the term "bargain purchases" instead of positive goodwill Section -III: multiple choice questions select the best answer among the given alternatives and put in the space provided 1. Under the cost model of accounting for an investment, changes to the carrying amount of the investment occur if: A. the investee earns post-acquisition profits or losses; B. goodwill included in the investment is amortized; C. the investment is impaired D. Dividends are received from the investee. 2. The method of accounting that applies to an investor and associate relationship is the: A. B. cost method; C. Equity method D. fair value method E. consolidation method 3. 4. For the purposes of equity accounting an associate is a business entity including: A. B. a joint venture; C. an unincorporated entity; D. a subsidiary; E. Venture capital organization