A subsidiary leases its office unit from its parent company. The parent company appropriately classifies this office unit as investment property in its statement of financial position. In the consolidated financial statements, how should this office unit be classified? a. Inventories b. Investment Property c. Property, Plant and Equipment d. Not presented
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A subsidiary leases its office unit from its parent company. The parent company appropriately classifies this office unit as investment property in its
a. Inventories
b. Investment Property
c. Property, Plant and Equipment
d. Not presented
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- A property is classified as investment property if Question options: a it is leased out under a finance lease b the owner-occupied portion of the property is significant. c the entity provides relatively insignificant ancillary services (e.g., security, janitorial services, and the like) to the occupants of the property. d it is rented between a parent entity and a subsidiary and consolidated financial statements are prepared for the groupThis distinguishes a business combination from other types of investment transactions. Obtaining of control Acquisition of stocks Acquisition of assets All of these The entity that obtains control over another business in a business combination called the Controller Acquiree Acquirer Controllee Entity A obtained control of Entity B in a business combination. When computing for goodwill, Entity A would least likely account for which of the following? Entity B’s research and development projects that were already charged as expenses, but have a fair value as at the acquisition date. Entity B’s unrecorded identifiable intangible assets Operating lease between Entity A and Entity B, wherein Entity B is the lessee. Entity A’s expected costs of exiting or terminating some or all of Entity B’s activities after the combination. A contingent liability assumed in a business combination Is not accounted for by the acquirer if the contingent liability has an improbable outflow of economic…which of the following are fixed assets? Financial assets at fair value through profit or loss Interests in and advances to joint ventures, co-venturers and associates Property, plant and equipment Right-of-use assets Investment properties Trademarks, goodwill and other intangible assets Operating lease receivables Finance lease receivables
- Under IFRS, when a company chooses the revaluation model as its accounting policy for measuring property, plant, and equipment, which of the following statements is correct? a. When an asset is revalued, the entire class of property, plant, and equipment to which the asset belongs must be revalued. b. When an asset is revalued, individual assets within a class of property, plant, and equipment to which that asset belongs can be revalued. c. Revaluations of property, plant, and equipment must be made every three years. d. An increase in an asset’s book value as a result of the first revaluation must be recognized as a component of profit and loss.Describe the difference between the economic entity concept and the parent company concept approaches to the reporting of subsidiary assetsand liabilities in the consolidated financial statements on the date of the acquisition.If the entity is using the equity method to account for investment in subsidiary, the entry to recognize dividends received from the subsidiary will: a.Be recognized in profit or loss b.Increase the carrying amount of investment c.Decrease the carrying amount of investment d.Be recognized in other comprehensive income
- In reference to the downstream or upstream sale of depreciable assets, which of the following statements is correct? A. Gains and losses appear in the parent-company accounts in the year of sale and must be eliminated by the parent company determining its investment income under equity method of accounting. B. The initial effect of unrealized gains and losses from downstream sales of depreciable asset is different from the sale of non-depreciable assets. C. Gains, but not losses, appear in the parent-company accounts in the year of sale and must be eliminated by the parent company in determining its investment income under the equity method of accounting. D. Upstream sales from the subsidiary to the parent company always result in unrealized gains or losses.Which of the following would most likely be considered as a separate performance obligation in a franchise agreement? a. initial services required of the franchisor that are in substance activities to setup the contract b. equipment that the franchisee is required to purchase or otherwise obtain from a third-party supplier c. grant of license to use the franchisor's trademark d. activities that the franchisor is required to undertake to support the intellectual property covered in the franchiseChoose the correct. An acquired firm’s financial records sometimes show goodwill from previous business combinations. How does a parent company account for the preexisting goodwill of its newly acquired subsidiary?a. The parent tests the preexisting goodwill for impairment before recording the goodwill as part of the acquisition.b. The parent includes the preexisting goodwill as an identified intangible asset acquired.c. The parent ignores preexisting subsidiary goodwill and allocates the subsidiary’s fair value among the separately identifiable assets acquired and liabilities assumed.d. Preexisting goodwill is excluded from the identifiable assets acquired unless the subsidiary can demonstrate its continuing value.
- Which of the following is NOT a required disclosure for any entity that holds an interest in a VIE? a.The significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement in a VIE b.How the entity's involvement involvement with the VIE is perceived by Wall Street analysts c.The nature of restrictions on a consolidated VIE’s assets and on the settlement of its liabilities reported by an enterprise in its statement of financial position, including the carrying amounts of such assets and liabilities. d. The nature of, and changes in, the risks associated with an enterprise’s involvement with the vieGiven the following information, how is goodwill from a business combinationcomputed under PFRS 3? A = Consideration transferred; B = Non-controllinginterest in net assets of subsidiary; C = Previously held equity interest; D = Fairvalue of net identifiable assets of subsidiary; % = Percentage of ownershipacquired by the parent in the subsidiary A. (A+B) – [(D x %) – B]B. A – (D x %)C. (A+C) – (D x %)D. A+B+C-DEntity A obtained control of Entity B in a business combination. When computing for goodwill, Entity A would least likely account for which of the following? A. Entity B’s research and development projects that were already charged as expenses, but have a fair value as at the acquisition date. B. Entity B’s unrecorded identifiable intangible assets C. Operating lease between Entity A and Entity B, wherein Entity B is the lessee. D. Entity A’s expected costs of exiting or terminating some or all of Entity B’s activities after the combination.