Many differences arise between the accounting treatment of an item and its tax treatment because:

		accountants are not obliged to follow any rules when compiling a companys tax return.
		tax treatment follows cash flow principles and the accounting treatment follows accrual principles.
		the tax treatment follows accrual principles and accounting treatment focuses on cash flows.
		The income tax legislation.

The following information relates to Pippa Limited for the year ended 30 June 2019.

Accounting profit before income tax (after all expenses have been included)	$320,000
Fines and penalties (not tax deductible)	20,000
Depreciation of plant (accounting)	40,000
Depreciation of plant (tax)	100,000
Long-service leave expense (not a tax deduction until the leave is paid)	15,000
Income tax rate	30%

No employee has been paid long-service leave in the current year. On the basis of this information the current tax liability is:

		$112,500.
		$88,500.
		$139,500.
		$295,000.

A business combination is defined in AASB3/ IFRS3 Business Combinations as a transaction:

		in which an acquiree obtains control of one or more businesses.
		in which one entity obtains significant influence over one or more other entities.
		or other event in which an acquirer obtains control of one or more businesses.
		or other event in which an entity obtains control of one or more businesses.

Which of the following statements in relation to contingent consideration is incorrect?

		At acquisition date, contingent consideration is measured at fair value.
		Where the contingent consideration is classified as equity, there is no remeasurement required on settlement.
		Subsequent adjustments to contingent consideration affect the goodwill calculated at acquisition date.
		Changes in the amount of an expected cashflow where the contingent consideration represents a liability that is within the scope of AASB 137 are accounted for through profit and loss.

Which of the following is not one of the three elements of control according to AASB10/ IFRS10 Consolidated Financial Statements?

		The ability to use power over the investee to affect the amount of the investors returns.
		Dominating the decision making of the investee.
		Power over the investee.
		Exposure, or rights, to variable returns from involvement with the investee.

At acquisition date, a wholly owned subsidiary had the following equity items:

Retained earnings	$14,000
Share capital	30,000
General reserve	6,000

Immediately after acquisition the subsidiary transferred $12,000 from pre-acquisition Retained earnings, to the General reserve account.

In the financial reporting periods subsequent to acquisition, part of the pre-acquisition consolidation entries would include:

		DR Retained earnings $12,000 CR General reserve $12,000
		DR Transfer to General Reserve $12,000 CR General reserve $12,000
		DR Shares in subsidiary $12,000 CR Retained earnings $12,000
		DR General reserve $12,000 CR Retained earnings $12,000

A consolidation journal entry adjustment will have a tax effect if:

		it adjusts the carrying amount of an asset.
		it adjusts the carrying amount of a liability.
		it recognises assets and liabilities not recorded in accounting records of group companies.
		all of the above.

Allen Ltd provided an advance of $500,000 to its subsidiary Umber Ltd. Interest of $50,000 was charged and paid during the year ended 30 June 2017. On consolidation the following adjustment is needed at 30 June 2017 in relation to the interest charged:

		No adjustment needed.
		DR Interest revenue $50,000 CR Interest expense $50,000
		DR Interest expense $50,000 CR Interest revenue $50,000
		DR Retained earnings $50,000 CR Cash $50,000

Company A owns 40% of Company B and this ownership is deemed to represent control. The non-controlling interest in B is:

		40%.
		60%.
		100%.
		no non-controlling interest.