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  11. A 50:50 joint operation was commenced between two participants. Participant One contributed cash of $50 000, and Participant Two contributed a Building with a fair value of $50 000 and a carrying amount of $40 000. Using the line-by-line method of accounting, Participant Two would record:   a. DR Building in JO $40 000       CR Building   $40.
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  11. When an entity sells a non-current asset at a profit to another entity within the same group the following adjustment is necessary on consolidation:   a. DR   Asset       CR   Cash b. DR   Cash       CR   Asset c. DR   Gain on sale       CR   Asset d. DR   Asset       CR   Gain on sale.   12. Janus Limited, a subsidiary entity, sold a non-current asset at a profit to its parent entity. The adjustment necessary on consolidation.
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a. in the accounting records of the parent entity b. in the accounting records of the subsidiary c. on a consolidation worksheet d. in the accounting records of the reporting entity. 2. Eeny Limited has two subsidiary entities, Meeny Limited and Miney Limited. Eeny Limited owns 100% of the shares in both entities. Details.
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1. Ownership interests in a subsidiary entity that do not belong to the parent entity are known as: a. unowned interests b. non-controlling interests c. proprietary interests d. pro rata ownership rights. 2. A non-controlling interest is a contributor of: a. equity to a consolidated group; b. debt to a consolidated group; c. assets to a consolidated group; d..
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  21. An example of political costs is: a. higher tax imposed on mining companies. b. cost of implementing sound corporate governance arrangements. c. having a debt covenant. d. excessive consumption of perquisites. 22. Under the debt hypothesis: a. managers prefer to have more remuneration. b. managers’ interests are more aligned with those of lenders than with those.
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  6. One year after acquisition date, the goodwill acquired was regarded as having become impaired by $20 000. The appropriate consolidation adjustment in relation to the impairment will include the following line: a. DR Goodwill $20 000 b. DR Share capital $20 000 c. CR Business combination valuation reserve $20 000 d. CR Accumulated.
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  21. According to AASB 10 Consolidated Financial Statements, the following factors indicate the existence of control:   I. The power to govern the financial policies of an entity so as to obtain benefits. II. Shared power in the governance of financial and operating policies of another entity so as to obtain benefits. III. The power to govern.
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  25. If an associate incurs losses the investor is required to: a. ignore the losses for the purposes of equity accounting adjustments; b. recognise losses only to the point where the carrying amount is equal to the initial investment; c. recognise losses to the point where the carrying amount of the investment is.
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  16. In a business combination the revaluation of non-current assets in the records of the subsidiary means that the subsidiary has effectively adopted the: a. parent-entity model of consolidation b. proprietary model of accounting c. cost model of accounting d. revaluation model of accounting. 17. AASB 10 Consolidated Financial Statements defines a ‘parent entity’ and.
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  11. An example of bonding costs is: a. auditor’s fees. b. cost of implementing a management remuneration plan. c. cost of preparing quarterly financial reports. d. cost of setting up company’s code of conducts. 12. The majority of monitoring and bonding costs will be borne by: a. principals. b. agents. c. shareholders. d. creditors. 13. Which of the following contractual.
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  11. According to AASB 124, related party disclosures are required irrespective of whether there have been related party transactions when: a. significant influence exists; b. control exists; c. economic dependence exists; d. all of the above. 12. The following remuneration categories must be disclosed for key management personnel, except for: a. termination benefits; b. post-employment benefits; c. bonus.
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  26. Which of the following statements is not a market efficiency assumption? a. Share price would adjust more rapidly to information contained in financial statements. b. All information is available free of cost to all market participants. c. There are no differences in the assessment of the implications of new information for the.
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  11. Which of the following journal entries demonstrates the appropriate accounting treatment for share issue costs? a. Dr Deferred asset: Cr Cash; b. Dr Cash: Cr Deferred asset; c. Dr Share capital: Cr: Cash; d. Dr Cash: Cr Share capital. 12. The bonus issue of shares has the following impact on the equity of a.
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  11. If shares are issued as part of the consideration paid, transactions costs such as brokerage fees may be incurred. According to AASB 3 Business Combinations the appropriate accounting treatment for such costs in the records of the acquirer is a debit to: a. share capital b. investments c. cash d. acquisition expenses. 12. The.
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  16. Three joint operators agree to an arrangement in which they have an equal share in an agricultural joint operation. The work undertaken in setting up the joint operation cost $300 000 and each operator contributed in cash. Each operator will need to recognise the following accounting entry:   a. DR Cost of joint.
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  20. When accounting for a business combination a contingent liability is recognised if: a. it is a present obligation that has failed to meet the recognition criteria b. its fair value can be measured reliably c. it is a possible obligation and it is probable that it will occur d. it is probable that.
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  21. Which of the followings are most likely to be considered as key management personnel of an entity?   I. Chief Financial Officer III. Non-executive directors II. Admin Officer IV. General manager   a. I, II, and III; b. II, III, and IV; c. I, III, and IV; d. I, II, III, and IV. 22. VicEd is a government agency that controls Science Limited. Science.
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  6. Gunawan Limited acquired a 20% share in Juliano Limited for $18 000. Gunawan Limited has no other investments. At the date on which it became an associate, Juliano Limited had the following equity: ??Share capital $50 000 ??Retained earnings $40 000 At the end of the financial year following the investment, Juliano.
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  16. Appendix B of AASB 3 requires disclosure of which of the following? I details of contingent consideration II the date of exchange III carrying amounts of assets and liabilities in business combinations where shares are acquired IV a qualitative description of the factors that make up goodwill a. I, II and IV only b. I,.
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  16. The risk aversion problem in shareholder-manager agency relationships arises because: a. managers are more risk-averse than shareholders. b. shareholders prefer less risk than do managers. c. managers have less capital invested in the entity than shareholders. d. shareholders are not able to diversify their risk. 17. The way that lenders charge a higher interest.
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1. AASB 10 Consolidated Financial Statements, requires that intragroup transactions be: a. eliminated on consolidation to the extent of the parent’s interest in the subsidiary. b. adjusted for in the books of the parent and subsidiary to the extent of the parent’s interest in the subsidiary. c. adjusted for in full in the.
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1. For-profit companies may be I Unlimited II Listed III Limited by guarantee IV No-liability a. II and III only b. I, II and III only c. II, III and IV only d. I, II, III and IV 2. Which of the following statements is incorrect? a. Each share in a company carries a right to share in the assets.
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  11. When a dividend is paid by a wholly-owned subsidiary out of pre-acquisition equity, the parent entity recognises: a. a reduction in the investment in the subsidiary b. a decrease in share capital c. an increase in dividend income d. a decrease in dividend revenue. 12. When a parent recognises a pre-acquisition dividend that is.
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  16. Willow Limited and Rupert Limited are the two subsidiaries of Buffy Company. Dan Sanders, one of the directors of Buffy Company, is also a director of Rupert Limited. Dan’s wife, Sandra, has 10% of shareholding in Rupert Limited. Which of the followings are related parties to Willow Limited? a. Buffy.
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  6. The followings are the limitations of inductive reasoning, except: a. it does not attempt to improve current practices. b. it may result in a logically valid, but not sound arguments. c. it does not question the appropriateness of the observed actions. d. it has a tendency of maintaining the existing state of affairs. 7..
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  26. Harry is a non-executive director of Potter Limited and Hogwarts Limited. Harry’s wife, Ginny, is a non-executive director of Weasley Limited. Which of the following statements is correct? a. Harry is not a related party to Potter Limited. b. Potter Limited and Hogwarts Limited are not related parties. c. Ginny is a.
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1. Which of the following statements is not correct? a. Joint arrangements may be entered into to manage risks involved in a project. b. Joint arrangements may be entered into to provide the parties with access to new technology or new markets. c. Joint arrangements require investors to have equal interests in the.
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  11. Adjustments made for the purpose of calculating the incremental adjustment to the share of profit of an associate are: a. recognised in the books of the investor; b. recognised in the books of the investee; c. notional adjustments and not included in the books of the investee; d. relate to realised transactions and.
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  16. A parent entity group sold a depreciable non-current asset to a subsidiary entity for $2800. The asset originally cost $3000 and at the date of sale accumulated depreciation was $500. The amount of the unrealised gain on sale to be eliminated is: a. $2800 b. $500 c. $300 d. $200 17. During the year.
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a. $60 000 b. $90 000 c. $110 000 d. $150 000. 12. When preparing a set of consolidated financial statements, the pre-acquisition entry relates to: a. both the parent and the non-controlling interest in the subsidiary b. only the investment by the parent in the subsidiary c. only the investment by the non-controlling interest in the.
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1. Which of the following statements is correct? a. All joint arrangements are accounted for under AASB 128. b. Joint arrangements classified as joint ventures are accounted for under AASB 11. c. Joint arrangements classified as joint ventures are accounted for under AASB 128. d. Joint arrangements classified as joint operations are accounted for.
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  26. AASB 101 requires that a reconciliation between the carrying amount of each class of contributed equity capital and each reserve at the beginning and end of each period be disclosed in: a. the Statement of Changes in Equity only; b. the notes only; c. either the Statement of Changes in Equity or.
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a. NIL b. $420 c. $630 d. $1050. 22. In respect to the intragroup transfer of services, any profit or loss is regarded as: a. insignificant and so not adjusted on consolidation b. extraordinary and so ignored for consolidation reporting purposes c. immediately realised d. unrealised. 23. A non-controlling interest in the net assets of a subsidiary consists of.
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  21. Accounting for share buy-backs is prescribed by a. an IFRS accounting standard b. an IFRIC interpretation c. an IAS accounting standard d. generally accepted accounting practices 22. Whether a dividend is paid by a company depends on the decisions made by the: a. creditors of the company; b. International Accounting Standards Board; c. auditors of the company; d..
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1. In which of the following contexts would accountants be required to exercise professional judgement? a. Determining depreciation method used for non-current assets. b. Estimating net realisable value of inventories. c. Deciding which model to use to measure value of property, plant and equipment after initial recognition. d. All of the options are correct. 2..
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