Question 1

Which of the following statements is true about dividends reported in a consolidated Statement of Financial Position?

A. Only intragroup dividends received from subsidiaries would be reported and presented in the consolidated financial statements

B. Only those paid by the parent company to external shareholders would be reported and presented in the consolidated financial statements

C. Dividends paid by both the parent to its shareholders and subsidiaries to the parent would be reported and presented in the consolidated financial statements

D. None of the given options are correct

Question 2

Which one of the following is not required for an acquirer to have dominant control over the acquiree?

A. The ability to use its power over the investee to affect the amount of the investor's returns

B. Direct ownership interest in the investee

C. Power over the investee

D. Rights to variable returns from its involvement with the investee

Question 3

Which of the following is not a factor to consider in determining whether one entity has significant influence over another entity?

A. Representation on the Board of Directors of the investee

B. Interchange of sales personnel

C. Material transactions between the investor and the investee

D. Provision of essential technical information

Question 4

Which of the following is true about intragroup transfer of property, plant and equipment (PPE) as part of consolidation accounting?

A. We have to eliminate consequential depreciation as a result of eliminating any gain on disposal of PPE at group level

B. Intragroup transfer of property, plant and equipment at a profit trigger the reduction of deferred tax liabilities at group level

C. We have to add back consequential depreciation as a result of eliminating any gain on disposal of PPE at group level

D. Intragroup transfer of property, plant and equipment at a loss will trigger additional deferred tax asset adjustments at group level

Question 5

In which situation does a gain on bargain purchase arise and how does AASB 3 requires it to be treated?

A. Gain on bargain purchase arises when the fair value of the identifiable net assets (FVINA) acquired exceeds the fair value of the consideration paid (FVC). AASB 3 requires a reassessment of the FVINA and FVC. If the gain on bargain purchase remains after the reassessment, it must be recognised immediately as income in the profit or loss

B.Gain on bargain purchase arises when the fair value of consideration paid (FVC) exceeds the fair value of the identifiable net assets purchased (FVINA). AASB 3 requires the equity of the acquiree to be proportionately decreased until the excess is eliminated

C. Gain on bargain purchase arises when the fair value of the consideration paid (FVC) is greater than the nominal value of the assets purchased. AASB 3 requires an excess to be eliminated by recognising it as a gain in the period in which the acquiree was purchased

D. Gain on bargain purchase arises when fair value of the consideration paid (FVC) is greater than the fair value of the identifiable net assets (FVINA) acquired. AASB 3 requires a reassessment of the FVINA and FVC. If the gain on bargain purchase remains after the reassessment, it must be recognised immediately as income in the profit or loss

Question 6

If a joint venturer prepares consolidated financial statements and has a subsidiary, then theequity accounting method:

A. will not be applied

B. will be applied in the books of the joint venturer

C. will be applied upon consolidation in the books of the group

D. will be applied for the first financial year only

Question 7

When a Business combination valuation reserve (BCVR) item of a non-depreciable asset recognised at Group level at acquisition date on 3 January 2018 (PY) and is now being derecognised by the subsidiary in the current financial year (CY), the treatment related to that Business combination valuation reserve (BCVR) item includes

A.Debiting to reduce the profit on disposal of the asset after tax and crediting BCVR at group level

B. transferring the amount out from BCVR and showing it as revenue of the group

C.Debiting BCVR and crediting to record the gain on sale of the asset after tax at group level

D. Debiting retained earnings b/f and crediting BCVR at group level