Unrealised profit in the opening inventory of a financial period is adjusted in the consolidation worksheet by a:

Select one or more:

a.debit to retained earnings.

b.credit to retained earnings.

c.credit to inventory.

d.debit to inventory.

Question2

In respect to a business combination, a gain on bargain purchase arises where the acquirer's interest in the net fair value of the identifiable assets and liabilities acquired is greater than the consideration transferred by the acquirer to the acquiree.

Select one or more:

a.TRUE

b.FALSE

Question3

When one entity controls another entity, the business combination results in which of the following types of relationship?

Select one or more:

a.Parent-subsidiary

b.Investor-investee

c.Investor-associate

d.Parent-child

Which of the following statements is incorrect?

Select one or more:

a.The business combination valuation reserve is an account recorded in the subsidiary's records.

b.The acquisition analysis may include the recognition of assets and liabilities not recognised in the subsidiary's records.

c.The acquisition analysis will determine whether any goodwill or gain on bargain purchase has arisen as a part of the business combination.

d.An acquisition analysis is prepared at acquisition date to identify the identifiable assets and liabilities of the subsidiary at fair value.

Question8

Ying Limited acquires the net assets of Yang Limited for a cash consideration of $50 000. One half is to be paid on acquisition date and one half is payable in one year's time. The appropriate discount rate is 5% p.a. The present value of the cash outflow in one year's time is:

Select one or more:

a.$23 810.

b.$25 000.

c.$26 190.

d.$30 000.

Question9

Which of the following is the appropriate journal entry to record the cash collected from applicants for shares before the shares are actually issued?

Select one or more:

a.Increase cash trust account: increase share capital account

b.Increase application account: decrease share capital account

c.Increase share capital account: decrease cash trust account

d.Increase cash trust account: increase application account

In May 2014, a parent sold inventory to a subsidiary entity for $60 000. The inventory had previously cost the parent entity $48 000. The entire inventory is still held by the subsidiary at reporting date, 30 June 2014. Ignoring tax effects, which of the following is the adjustment entry in the consolidation worksheet at reporting date?

Select one or more:

a.Cash Dr 48 000

Sales revenue Cr 48 000

Cost of sales Dr 48 000

Inventory Cr 48 000

b.Sales revenue Dr 48 000

Cash Cr 48 000

Inventory Dr 48 000

Cost of sales Cr 48 000

c.Cost of sales Dr 60 000

Sales revenue Cr 12 000

Inventory Cr 48 000

d.Sales revenue Dr 60 000

Cost of sales Cr 48 000

Inventory Cr 12 000

Question11

When Wayne Ltd acquired 100% of the share capital of Carol Ltd, the carrying amount of Carol Ltd's machinery was $200 000. The fair value of the machinery on acquisition date was $160 000. What is the amount of the business combination valuation reserve that will be recognised on consolidation?

Select one or more:

a.$40 000

b.$12 000

c.$28 000

d.$160 000