Ch23 Tb Picker3e

Topics: Financial statements, International Financial Reporting Standards, Balance sheet Pages: 10 (2617 words) Published: May 8, 2015
Testbank

to accompany

Applying International Financial Reporting Standards 3e

By

Prepared by
Yeny Lukito and Emma Holmes

John Wiley & Sons Australia, Ltd 2013
Chapter 23

Consolidation: Controlled Entities

Learning Objectives

Learning Objective 23.1 Explain the meaning of consolidated financial statements

Learning Objective 23.2 Discuss the meaning and application of the criterion of control

Learning Objective 23.3 Discuss which entities should prepare consolidated financial statements

Learning Objective 23.4 Understand the relationship between a parent and an acquirer in a business combination

Learning Objective 23.5 Explain the differences in disclosure requirements between single entities and consolidated entities.

Multiple Choice Questions

1.The entity that is represented by a single set of consolidated financial statements known as a consolidated financial report, is: Learning Objective 23.1 Explain the meaning of consolidated financial statements. *a.an economic entity;

b.a parent entity;
c.a subsidiary entity;
d.a partnership.

2. When one entity controls the business operations of another entity, the business combination results in the following type of relationship: Learning Objective 23.1 Explain the meaning of consolidated financial statements. *a. parent-subsidiary;

b. partnership;
c. a merger;
d. dual-listed.

3. For the purposes of consolidated financial reporting, a group is: Learning Objective 23.1 Explain the meaning of consolidated financial statements. a. an entity that has no subsidiaries;
*b. a parent entity and all its subsidiaries;
c. an entity that has one or more subsidiaries;
d. a subsidiary entity of another entity.

4.IFRS 10 Consolidated Financial Statements, defines a ‘parent’ and a ‘subsidiary’ as: Learning Objective 23.1 Explain the meaning of consolidated financial statements.

Parent
Subsidiary
a.
An entity which owns more than 50% of the voting shares of another entity. An entity in which another entity owns more than 50% of the voting shares. b.
An entity which owns more than 20% of the voting shares of another entity. An entity which is owned partly by another entity.
c.
An entity that has one or more subsidiaries.
An entity which is controlled by a parent entity.
*d.
An entity that controls another entity.
An entity which is controlled by another entity.

5.A single set of financial statements, that combines the separate sets of financial statements for a number of entities, which are managed as a single economic entity, is known as: Learning Objective 23.1 Explain the meaning of consolidated financial statements. a.a concise financial report;

b.a condensed financial report;
c.new entity financial statements;
*d.consolidated financial statements.

6. The process of preparing the combined financial statements of a group of entities is known as: Learning Objective 23.1 Explain the meaning of consolidated financial statements. a. accrual accounting;

b. condensation;
c. accumulation;
*d. consolidation.

7.A group of entities comprised of A Limited (parent entity), B Limited (subsidiary entity) and C Limited (subsidiary entity) have the following Accounts Receivable balances:

A Limited $12 000
B Limited $15 000
C Limited $10 000

The consolidated financial statements show the following amount as the consolidated Accounts Receivable balance: Learning Objective 23.1 Explain the meaning of consolidated financial statements. a.$12 000;

b.$13 000;
c.$25 000;
*d.$37 000.

8.The process of aggregating individual sets of financial statements to produce consolidated financial statements requires: Learning Objective 23.1 Explain the meaning of consolidated financial statements. *a.that no adjustments be entered into the individual ledger accounts of entities in the group; b....
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