Multiple Choice: Theory

1.According to PFRS 10, which of the following statements is true?

a.A parent entity is required to consolidate its subsidiaries.

b.A parent entity is encouraged but not required to consolidate its subsidiaries.

c.A parent entity is required to consolidate its subsidiaries only for internal reporting purposes.

d.A parent need not to consolidate its subsidiaries if the businesses of the subsidiaries are different and not related to the business of the parent.

2.According to PFRS 10, when is a parent exempted from presenting consolidated financial statements?

a, the parent is of itself a subsidiary and all of its owners do not object to, the parent, not presenting consolidated financial statements.

b. The parent is neither a listed entity nor in the process of enlisting.

C. The parents ultimate or intermediate parent produces consolidated general purpose financial statements that can comply with PFRS.

D. All of theses.

3.According to PFRS 10, which of the following is not an element of control?

a.Powerc. major holdings

b.Exposure, or rights, to variable returnsd. ability to affect return

4.This is the basis for preparing consolidated financial statements?

A, existence of controlc. proprietary concept

B.Legal existence as a groupd. maximum efficiency

5.Which the following statements is correct?

a, consolidation begins when control is obtained and ceases when control is lost.

b.Consolidation begins at the earliest comparative period presented if business combination occurred during the current period.

C. Consolidation begins when there is no non-controlling interests left on a subsidiary.

D. None of these.

6.Non-controlling interests shall be presented in the consolidated statement of financial position.

a.As s mezzanine item between liabilities and equity

b.Within equity, separately from the equity of the owners of the parent.

c.Within equity, not distinguished from the equity of the owners of the parent.

d.Any of these as a matter of accounting policy choice.

7.Profit or loss and comprehensive income in the consolidated financial statements

a.Pertains only to the owners of the parent

b.Shall be attributed to the owners of the parent and NCI.

c.Need not be attributed to the owners of the parent and NCI

d.Pertains to the owners of the parent, rather than to the group.

8.If the parent`s ownership interest in a subsidiary changes but does not to loss of control, the change

a.Shall be accounted for as a gain or loss transaction

b.Shall be accounted for retrospectively

c.Shall be accounted for as equity transaction

d.Shall not be accounted for.

9.When a parent losses control over the a subsidiary, the parent shall

a.Derecognize the net identification assets of the former subsidiary from the consolidated financial statement and shall recognize the gain or loss associated with the loss of control attributed to the former controlling interest.

b.Restate the consolidated financial statements presented in previous years.

c.Derecognize the net identifiable assets of the former subsidiary from the consolidated financial statements and shall recognize the gain or loss directly within equity.

d.B and C.

10.If non-controlling interests in the net assets of a subsidiary is measured at the NCI`s proportionate share in the subsidiary`s identifiable net assets, then,

a.There will be goodwill attributable to NCI.

b.There will be no goodwill attributable to NCI

c.There will be an indirect holding adjustment

d.There will be a very complex computation.