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Unity Limited acquired 100% of the share capital of Bellvista Limited. Bellvista had issued share capital of $200 000. The book values of Bellvista Limiteds assets were: buildings $100 000, machinery $120 000. The fair values of these assets were: buildings $180 000, machinery $140 000. The tax rate is 30%.

The fair value of the identifiable net assets is:

Select one:

$320 000

$200 000

$220 000

$270 000

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If a revaluation of the subsidiarys assets is performed on consolidation, the subsidiarys assets are carried into the consolidated statement of financial position at:

Select one:

net present value

fair value

historical cost

current replacement cost

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Koala Ltd acquired 100% of the share capital of Dingo Ltd when the carrying value of Dingo Ltd.s plant and machinery was $200 000. The fair value of the plant on acquisition date was $270 000. The company tax rate was 30%. What is the amount of the business combination valuation reserve that must be recognised on consolidation?

Select one:

$70 000

$21 000

$49 000

$270 000

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Trinity Limited acquired 100% of the share capital of Visa Limited. Visa had issued share capital of $200 000. The book values of Visa Limiteds assets were:

Plant $200 000, Buildings $200 000.

The fair values of these assets were:

Buildings $280 000, plant $340 000. The tax rate is 30%. The fair value of the identifiable net assets is:

Select one:

$354 000

$820 000

$600 000

$420 000

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The pre-acquisition entry is necessary to:

Select one:

avoid understating the equity and net assets of the group

record the Shares in subsidiary account in the parents records

avoid overstating the equity and net assets of the group

avoid overstating the equity and net assets of the parent

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On 1 July 2019, a parent entity sold a depreciable non-current asset to a subsidiary entity for $10000. The assets carrying amount was $6000 at the date of sale with 5 years remaining life.

How much is the deferred tax balance on 30 June 2020 in relation to the above transactions?

Select one:

Deferred tax liability $960

Deferred tax asset $960

Deferred tax asset $1200

Deferred tax liability $1200

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A subsidiary entity sold goods to its parent entity for $125 000. The inventories originally cost the subsidiary $100 000. At reporting date, the parent still held all of the inventories.

Which of the following adjustments must be included as part of the consolidation entry to eliminate this transaction?

Select one:

Cr Inventory $100 000

Dr Inventory $100 000

Cr Inventory $25 000

Dr Inventory $25 000

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During the year ended 30 June 2020, a parent entity rents a warehouse from a subsidiary entity for $40 000. The company tax rate is 30%.

Which of the following is the consolidation adjustment entry needed at reporting date to eliminate the transaction?

Select one:

Dr Rent Income $40 000

Cr Rent Expense $40 000

Dr Rent Expense $40 000

Cr Rent Income $40 000

Dr Rent Income $40 000

Cr Rent Expense $40 000

Dr Deferred tax asset $12 000

Cr Income tax expenses $12 000

Dr Rent Income $40 000

Cr Rent Expense $40 000

Dr Income tax expenses $12 000

Cr Deferred tax liability $12 000

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Unite Ltd provided a loan of $1 000 000 to its subsidiary Inspire Ltd. Interest of $100 000 was each year since 1 July 2018.

Which of the following adjustments is needed at 30 June 2020 in relation to the interest charged?

Select one:

Dr Interest Income $200 000

Cr Interest expense $200 000

Dr Retained earnings $100 000

Dr Interest Income $100 000

Cr Interest expense $200 000

No adjustment is needed

Dr Interest Income $100 000

Cr Interest expense $100 000

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A subsidiary sold some inventories to its parent for $70 000. The goods had originally cost the subsidiary $50 000. At the end of the year all of the inventories were still on hand. The consolidation adjustment entry to eliminate this transaction will include the following line items?

Select one:

Dr Inventory $50 000

Cr Inventory $50 000

Cr Cost of sales $50 000

Dr Cost of sales $50 000