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Study Resources (Accounting)

Multiple-choice questions 1.The preparation of consolidated financial statements involves: a.adding together the financial statements of the investor and the associate. b.adjusting entries in the accounting records of the subsidiary. c.adding together the financial statements of the parent and the subsidiaries. d.adjusting entries in the accounting records of the parent. 2.If a subsidiary’s reporting date does not.
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41.When a depreciable non-current asset is sold between entities within a group, any gain recognised on the sale is eliminated and realised through the future use of the asset by               the group. This results in reduced depreciation and income tax expenses in future               periods. 42.Where an intragroup sale of.
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Multiple-choice questions 1.Which of the following statements is incorrect? a.The relevant accounting standard applied in translating financial statements into another currency is AASB 121 The Effects of Changes in Foreign Exchange Rates. b.The financial statements of an entity may be recorded in a foreign currency and translated into Australian dollars for the purpose.
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True/false questions 31.The requirements of AASB 101 Presentation of Financial Statements apply to both general purpose financial statements and condensed interim financial statements. 32.According to AASB 101 Presentation of Financial Statements, a complete set of financial statements only comprises a statement of financial position, statement of profit or loss and other.
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Multiple-choice questions 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.external equity interests. d.non-parent interests. 2.According to AASB 10 Consolidated Financial Statements, the term ‘non-controlling interest’ is defined as: a.equity in a parent that is owned, directly or indirectly, by a subsidiary. b.the equity in.
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21. Where the consideration transferred is less than the fair value of the identifiable net assets and contingent liabilities acquired, the item must be recognised in the consolidation worksheet as: a. a transfer to the business combination valuation reserve. b. goodwill. c. an increase in the ‘Shares in subsidiary’ asset. d. a gain on.
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41.The NCI is not allocated a share of any BCVR balances where business combination valuation entries are recorded on consolidation, rather than in the subsidiary’s books. 42.The calculation of the NCI share of equity at a point in time is done in three steps. 43.Consequential depreciation adjustments in relation to assets that.
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21.According to AASB 10 Consolidated Financial Statements, all parent entities are required to present consolidated statements unless which of the following conditions apply to them? IThe parent is a wholly owned subsidiary. IIThe parent is a partly owned subsidiary and its other owners do not object to the non-presentation of consolidated financial.
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21.The smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets is referred to as a/an: a.small-group unit. b.cash-generating unit. c.identifiable unit. d.independent unit. 22.Which of the following is not one of the guidelines in AASB 136 Impairment of Assets for.
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21. Interest and other costs incurred by an entity in connection with borrowing funds are known as: a. extraordinary costs. b. distribution costs. c. borrowing costs. d. repayment costs. 22. Extraordinary items of income and expense: a. must be disclosed in the statement of profit or loss and other comprehensive income. b. were previously disclosed together with.
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Multiple-choice questions 1. Consider the following economic entity structure: 90% 60% The direct non-controlling interest (DNCI) and indirect non-controlling interest (INCI) are as follows. DNCI in A Ltd INCI in A Ltd DNCI in B Ltd INCI in B Ltd a. 10% Nil 40% 6% b. 10% 14% 40% 6% c. 40% Nil 10% 6% d. 40% Nil 10% 54% 2. Kerri Limited has a 60% ownership interest in Emily Limited.  Emily Limited has an 80% ownership interest in.
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11. The following information relating to Equipment was extracted from the records of Bright Skies Limited: Opening balance $360 000 Proceeds from sale of equipment $6000 Closing balance $400 000 Cost of equipment sold $40 000 Cost of new equipment $80 000 Carrying amount of equipment sold $ 10 000 The total cash flows from these investing.
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41.Where equity instruments are issued as part of the consideration in a business combination, any costs associated with issuing such equity instruments are included as part of the cost of the business combination. 42.At the date of acquisition, goodwill is measured as the excess of the consideration transferred over the net.
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21. Caloundra Limited has an ownership interest of 60% in a subsidiary Aroona Limited. Aroona owns 70% of Bribie Limited.  Since acquisition date the retained earnings of Bribie Limited have increased from $100 000 to $150 000. The direct non-controlling interest in the retained earnings of Bribie is: a. $0. b. $105.
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Multiple-choice questions 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.eliminated in the books of the parent and subsidiary to the extent of the parent’s interest in the subsidiary. c.eliminated in full in the books of the parent and.
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21.When translating into the presentation currency, all assets and liabilities are translated using the: a.average exchange rate for the financial period. b.exchange rate applicable when the original transaction was recorded. c.exchange rate current at the date of the statement of financial position. d.exchange rate as at the start of the reporting period. 22.Dividends declared.
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11. When presenting a consolidated statement of comprehensive income, the non-controlling interest is shown as: a. a separate component of each individual line item. b. a separate portion of profit or loss attributable to the non-controlling interest. c. part of the total revenue of the group. d. part of the total expenses of the.
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41.Potential voting rights that cannot be exercised or converted until a future date or until the occurrence of a future event are not taken into account when determining an entity’s capacity to control another entity. 42.Power is defined in AASB 10 Consolidated Financial Statements as the current ability to direct the.
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Multiple-choice questions 1.The requirements of AASB 101 Presentation of Financial Statements apply to which of the following sets of financial statements? a.Condensed interim financial statements b.All purpose financial statements c.General purpose financial statements d.Special purpose financial statements 2.According to AASB 101 Presentation in Financial Statements, there must be consistency of presentation and classification of items in.
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21.The correction of a material error that occurred in a previous period must be accounted for by: a.disclosure in the notes to the financial statements. b.an adjustment in future accounting periods. c.a prospective adjustment to the financial statements. d.a retrospective restatement in the first financial statements issued after the discovery of the error. 22. Errors.
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Multiple-choice questions 1. The statement of cash flows is not used to: a. assess the ability of an entity to generate cash. b. help predict future cash flows. c. check the accuracy of past assessments of future cash flows. d. indicate significant changes in asset, liability and equity accounts for the year. 2. All of the.
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11. Unrealised profit in the opening inventory of a financial period is adjusted in the consolidation worksheet by a: a. debit to retained earnings. b. credit to retained earnings. c. credit to inventory. d. debit to inventory. 12. A subsidiary sold inventory to its parent for $50 000.  The inventory originally cost the subsidiary $38.
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True/false questions 31.The NCI is a contributor of equity to the group. 32.The NCI is entitled to a share of the consolidated equity of the group. 33.The consolidated statement of comprehensive income must separately disclose the consolidated profit for the period attributable to equity holders of the parent and the NCI. 34.The NCI.
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True/false questions 31.Consolidated financial statements must be prepared using uniform accounting policies for like transactions and other events in similar circumstances. 32. In preparing the consolidated financial statements, no adjustments are made in the accounting records of the individual entities that comprise the group. 33.An acquisition analysis is prepared at acquisition.
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True/false questions 31.For a group of assets to constitute a business, they must be capable of providing a return. 32.The acquirer in a business combination is the party that loses control of a business. 33.The acquisition date is the date on which the contract between the acquirer and acquire is signed. 34.The use.
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True/false questions 31.A subsidiary is defined in AASB 10 Consolidated Financial Statements as a company that is controlled by another entity. 32.The financial statements of a group are referred to as consolidated financial statements. 33.The consolidation process involves making adjustments to the individual financial statements and ledger accounts of the entities within the.
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11. Broncos Limited acquired a 30% interest in Bennett Limited for $54 000.  Broncos holds other equity investments but does not prepare consolidated financial statements. Bennett Limited revalued its buildings upwards by $20 000 during the current financial period.  The balance of the investment in associate account at the end.
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Multiple-choice questions 1.The entity that is represented by a single set of consolidated financial statements is: a.an economic entity. b.a parent entity. c.a subsidiary entity. d.a consolidated entity. 2.AASB 10 Consolidated Financial Statements defines a ‘parent’ and a ‘subsidiary’ as which of the following? Parent Subsidiary a. An entity which is controlled by another entity. An entity that controls one or.
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Multiple-choice questions 1. For the purposes of equity accounting, it is presumed that the investor has significant influence over the other entity where the investor holds: a.100% of the voting power of the investee. b.between 5% and 10% of the voting power of the investee. c.20% or more of the voting power of the.
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41.In addition to the annual financial statements, companies have the right to choose to prepare and distribute concise financial reports to members. 42.Disclosing entities must prepare a half year financial report in accordance with AASB 134 Interim Financial Reporting. 43.Companies must always disclose the fact that their financial statements are prepared using.
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11.The key characteristic that determines when consolidated financial statements should be prepared is: a.the existence of transactions between the entities. b.control. c.substance over form. d.significant influence. 12.In a consolidated group of entities, control over the subsidiaries in the group: a.may not be shared control. b.can be shared with other entities. c.requires 100% ownership of the subsidiaries’ shares. d.can exist.
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21.Cockroaches Limited acquired the identifiable assets, liabilities and contingent liabilities of Inglis Limited for $268 000. The items acquired, stated at fair value, are: plant $144 000; inventory $80 000; accounts receivable $36 000; patents $20 000; and accounts payable $32 000. The difference on acquisition is: a.gain on bargain purchase.
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21.Beach Limited is a subsidiary of Golden Limited. When Golden acquired its 70% interest in Beach, the retained earnings of Beach Limited were $40 000. At the beginning of the current period, Beach Limited’s retained earnings had increased to $100 000. Beach also earned profit of $20 000 during the.
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Multiple-choice questions 1.Which type of financial statements is prepared for users who depend on them for information to enable them to make decisions about the allocation of scarce resources? a.Management financial statements b.Short-term financial statements c.Specific purpose financial statements d.General purpose financial statements 2. Information about the financial position of an entity is largely contained in.
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21.A parent entity sold a depreciable non-current asset to a subsidiary entity for $5600. The asset originally cost $6000 and at the date of sale accumulated depreciation was $1000. The amount of the unrealised gain on sale to be eliminated is: a.$5600. b.$1000. c.$600. d.$400. 22. When an entity sells a non-current asset at a.
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Multiple-choice questions 1. The amount by which the carrying amount of an asset or a cash-generating unit exceeds its carrying amount is referred to as a/an: a. depreciation expense. b. amortisation cost. c. impairment loss. d. loss on disposal. 2.Under AASB 136 Impairment of Assets, which of the following assets are subject to impairment testing? I.II.III.IV. Financial assetsNoNoNoNo Biological.
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11.On 1 July 2014, Peter Limited acquired all the issued shares of Kerri Limited for $100 000 when the equity of Kerri Limited consisted of: Share capital$70 000 Retained earnings 30 000 The pre-acquisition entry at 1 July 2014 is: a. Shares in Kerri Limited Dr 100 000 Retained earnings Cr 30 000 Share capital Cr 70 000 *b. Retained earnings Dr 30 000 Share capital Dr 70 000 Shares in Kerri Limited Cr 100 000 c. Retained earnings Dr 70 000 Share capital Dr 30 000 Shares in.
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True/false questions 31.The elimination of the full effects of intragroup transactions is required in the preparation of consolidated financial statements. 32.The effect of an intragroup sale of inventory at a profit where the inventory is still on hand at the end of the reporting period is that both profit and the.
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41.Revenue arises from a company’s ordinary activities. 42.Items of income and expense can be disclosed as extraordinary items in the notes to the financial statements. 43.AASB 101 Presentation of Financial Statements requires a single statement approach be adopted in the preparation of the statement of profit or loss and other comprehensive income. 44.A.
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True/false questions 31.General purpose financial statements are prepared for users who depend on those reports for information to enable them to make decisions about the allocation of scarce resources. 32.The financial position of an entity as at reporting date is presented in a statement of comprehensive income. 33.A complete set of financial.
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True/false questions 31.Deferred tax assets are subject to annual impairment tests. 32.Intangible assets that are not yet available for use are not required to be tested for impairment. 33.A decrease in interest rates is an example of an external source of information that may indicate that an asset is impaired. 34.Higher cash outflows.
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11. The pre-acquisition entry for the Baxter group in order to consolidate a 60% interest in a subsidiary contained the following debits.  Retained earnings $6000, share capital $12 000, general reserve $2400, BCVR $1200.  The direct non-controlling interest’s share of the subsidiary’s equity at the date of acquisition is: a.$8640. b.$14 400. c.$12.
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