S1: A subsidiary is not excluded from consolidation simply because the investor is a venture capital organization, mutual fund, unit trust or similar entity. S2: Influence is the power to govern the financial and operating polices of an entity so as to obtain benefits from its activities. A. Only S2 is correct B. Both statements are correct C. Both statements are incorrect D. Only S1 is correct

S1: A subsidiary is not excluded from consolidation simply because the investor is a venture capital organization, mutual fund, unit trust or similar entity. S2: Influence is the power to govern the financial and operating polices of an entity so as to obtain benefits from its activities. A. Only S2 is correct B. Both statements are correct C. Both statements are incorrect D. Only S1 is correct

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter18: Comparative Forms Of Doing Business

Section: Chapter Questions

Problem 5P

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Consolidated financial statements are required in which ofthe following situations?a. Only when a company can exert significant influenceover another company.b. Only when a company has a passive investment inanother company.c. Only when a parent company can exercise control overits subsidiary.d. None of the above.
PFRS 3 must be applied when accounting for business combinations, but does not apply to:i. Formation of a joint arrangementii. The acquisition of an asset or group of assets that is not a business although general guidance is provided on how such transactions should be accounted foriii. Combination of entities or businesses under common controliv. Acquisitions by an investment entity of a subsidiary that is required to be measured at fair value through profit or loss under PFRS 10 Consolidated Financial Statementsv. Mutual entitiesvi. Not-for-profit organizations i, ii, iii, iv, v, and iv i, ii, iii, and iv i, ii, iii, iv, and vi i, ii, iii, iv, and v
PFRS 3 must be applied when accounting for business combinations, but does not apply to:i. Formation of a joint arrangementii. The acquisition of an asset or group of assets that is not a business although general guidance is provided on how such transactions should be accounted foriii. Combination of entities or businesses under common controliv. Acquisitions by an investment entity of a subsidiary that is required to be measured at fair value through profit or loss under PFRS 10 Consolidated Financial Statementsv. Mutual entitiesvi. Not-for-profit organizations a. i, ii, iii, iv, and v b. i, ii, iii, and iv c. i, ii, iii, iv, v, and iv d. i, ii, iii, iv, and vi
According to AASb 10/IFRS 10, an investment in a subsidiary is not consolidated and must be measured at fair value through profit or loss if: a. all of the above b. the parent elects to treat the investment in the subsidiary as a short-term investment c. the main purpose of the subsidiary is to provide services that relate to the investment activities of an investment entity. d. the parent determines that it is an investment entity.
Consolidated financial reporting is appropriate when one entity has a controlling financial interest in another entity. The usual condition for a controlling financial interest is ownership of a majority voting interest. But in some circumstances, control does not rest with the majority owner-especially, when noncontrolling owners are contractually provided with approval or veto rights that can restrict the actions of the majority owner. In these cases, the majority owner employs the equity method rather than consolidation. Required Address the following by searching the FASB ASC Topic 810 on consolidation. What are protective noncontrolling rights? What are substantive participating noncontrolling rights? What noncontrolling rights overcome the presumption that all majority-owned investees should be consolidated? Zee Company buys 60 percent of the voting stock of Bee Company with the remaining 40 percent noncontrolling interest held by Bee's former owners, who negotiated the…
1.) When share options issued to employees are exercised, the entity shall: a. recognize a loss for the unamortized balance b. make a transfer among equity components c. recognize a gain for the unamortized balance d. do nothing 2.) A share-based payment transaction with cash alternative whereby the right of choice of settlement is retained by the entity is accounted for as: a. either cash-settled or equity-settled, but not both b. equity-settled c. partly cash-settled and equity-settled d. cash-settled 3.) A share-based payment transaction with cash alternative whereby the right of choice of settlement is given to the employee is accounted for as: a. cash-settled b. either cash-settled or equity-settled, but not both c. partly cash-settled and equity-settled d. equity-settled
Which of the following statements regarding IFRS consolidated financial statements is/are correct: (i) An entity that has equity investments in one or more other entities is required to present consolidated financial statements (ii) A parent whose debt or equity instruments are not traded in a public market is not required to present consolidated financial statements (iii) Consolidated financial statements present the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries as those of a single economic entity
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Which of the following statements is true in relation to a limited liability company? A A limited liability company can incur liabilities in its own name B A limited liability company cannot acquire assets in its own name C A limited liability company cannot incur liabilities in its own name D A limited liability company can be formed on an informal basis by simple agreement between the first sharehoplders
Statement 1: In the financial settlement of a contingent consideration classified as financial liability, the amount shall be remeasured at fair value with any gain or loss included in profit or loss. Statement 2: If a new entity is formed to issue equity interests to effect a business combination one of the combining entitites that existed before the combination shall be identified as the acquirer. Which statement/s is TRUE?
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