Module 5: Business Combinations (Part 2)

Question 1

Intra-group _____ and _________ are eliminated from the consolidated statement of profit or loss

Answer 1

sales; purchases;

Question 2

When a parent company acquires a subsidiary during the a_________ p______ the only accounting entries made at the time will be those recording the c____ of a__________ in the parent company’s books.

Answer 2

accounting period;
cost; acquisition;

Question 3

Retained earnings in the consolidated statement of financial position comprise:
- The whole of the p______’s retained earnings; and
- The g____’s share of p___-a__________ retained earnings in the subsidiary

Answer 3

parent’s;
group’s; post-acquisition;

Question 4

Q11 Acquisition P342 Study Guide

Answer 4

See textbook;

Question 5

Q12 Non-controlling interest P343 Study Guide

Answer 5

see textbook;

Question 6

QRQ3 Q1 P346 Study Guide

Answer 6

$75,000 debit;

Question 7

Q2 P346 Study Guide

Answer 7

see textbook;

Question 8

Q3 & 4 P346 Study Guide

Answer 8

see textbook;

Question 9

Q5 P346 Study Guide

Answer 9

$10.75mil;

Question 10

Q8 P347 Study Guide;

Answer 10

see textbook;

Question 11

Q9 P347 Study Guide;

Answer 11

See textbook;

Question 12

Significant influence is the p_____ to participate in the f_______ and o_______ policy decisions of the investee but is not control or joint control of those policies

Answer 12

power; financial; operating;

Question 13

IAS 28 requires all investments in a_________ to be accounted for in the consolidated accounts using the e_____ method, unless the investment is classified as ‘h___ f__ s___’ in accordance with IFRS5

Answer 13

associates; equity; held for sale;

Question 14

The use of the equity method is discontinued from the date that the investor ceases to be an a________.

Answer 14

associate;

Question 15

An investment in an associate is recorded in the investor’s separate financial statements either:
- At c___; or
- At f___ v____ (in accordance with IFRS _ )
This applies regardless of whether the financial statements are produced or not.

Answer 15

cost;
fair value; 9;

Question 16

Using the equity method, i_____-g____ u_______ p_____ must be excluded

Answer 16

intra-group unrealised profits;

Question 17

A figure for investment in associates is shown in non-current assets. At acquisition it is stated at cost, and is recorded by:
Dr. I________ in a________
Cr. C___/c__________

Answer 17

Investment; associates;
Cash/consideration;

Question 18

WEx: Associate P349 Study Guide;

Answer 18

see textbook;

Question 19

In the consolidated statement of profit or loss, the i_______ group includes its s_____ of the a_____-t__ p______ of associates whether or not they are distributed as dividends.

Answer 19

investing; share; after-tax profits;

Question 20

In the consolidated statement of financial position the investment in associates is recognised at an amount of:
- Cost of the i________ in the a_______; +
- Group share of p___-a__________ profits; -
- Amounts paid as d________ by the a________ to the p______; -
- I__________

Answer 20

investment; associate;
post-acquisition;
dividends; associate; parent;
Impairments;

Question 21

The non-current asset ‘Investment in associates’ is:
- Original cost, +
- Group’s share of any profits earned since a_________ which have not been distributed as d________; -
- I________ l______

Answer 21

acquisition; dividends;
Impairment losses;

Question 22

WEx: Consolidated statement of financial position, P351 Study Guide

Answer 22

See textbook;

Question 23

Q13: Associate P352 Study Guide

Answer 23

See textbook;

Question 24

Q14: Associate, P353 Study Guide

Answer 24

See textbook;

Question 25

Accounting for associates is covered by IAS _ _: I________ in A________ and J_____ V________

Answer 25

28; Investments; Associates; Joint Ventures;

Question 26

The g____ s_____ of u________ p____ made on transactions between g_____ companies and the a________ is eliminated.

Answer 26

group share; unrealised profit; group; associate;

Question 27

An investment in an associate is initially reflected in the consolidated statement of financial position at its ____

Answer 27

cost;

Question 28

Q3 P357 Study Guide;

Answer 28

See textbook; $13.5mil;

Question 29

Q4 P358 Study Guide;

Answer 29

See textbook;

Question 30

- If K controls the operating and financial policies of L, then L ______ be an associate of K. - If L is an associate of K, then any amounts payable by L to K are not e_________ when preparing the consolidated statement of financial position of K.

Answer 30

cannot; eliminated;

Question 31

Q7 P358 Study Guide

Answer 31

See textbook; $90k;