INTERNATIONAL ACCOUNTING LOOSELEAF
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ISBN: 9781264030569
Author: Doupnik
Publisher: MCG
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Chapter 4, Problem 11EP
To determine
Identify the subsidiaries of company S when preparing consolidated financial statements.
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Applying the principles of control in IFRS 10 Consolidated Financial Statements,
you are required to consider whether certain investments in Newcastle plc are subsidiaries:
a) Newcastle plc owns 45% of the voting shares of Hull Ltd
b) Newcastle plc owns 60% of the voting shares of Bradford Ltd and Bradford owns 30% of the voting shares of Reading Ltd. Recently, Newcastle plc purchased 70% of the voting shares of Coventry Ltd. Coventry Ltd owns 30% of the voting shares of Reading Ltd. The accountant of Newcastle plc believes that Dery Ltd. is not a subsidiary of Newcastle, as Newcastle effectively owns only 39% of the shares of Reading - 60% x 30% = 18% through Bradford and 70% x 30% = 21% through Coventry.
c) Recently, Newcastle plc purchased 60% of the ordinary shares of Sunderland plc. Prior to the purchase, Sunderland plc had in issue 6,000,000 ‘A’ shares of £1 each. Each ‘A’ share carries a single vote. These shares were owned equally by each of the directors of Sunderland plc.…
An associate is an entity in which an investor has significant influence over the investee. Which the following indicate the presence of significant influence?
(I) The investor owns 660,000 of the 3,000,000 equity voting shares of the investee.
(II) The investor has representation on the board of directors of the investee.
(Ill) The investor is able to insist that all of the sales of the investee are made to a subsidiary of the investor.
(IV) The investor controls the votes of a majority of the board members.
Choose one of the correct pair. Please provide your explaination
A) (I) , (II)
B) (II), (Ill), (IV)
C) (I), (III), (IV)
D) (I), (II), (III), (IV)
E) None of the above.
Swanson Ltd. holds 15% of the common shares of Virginia Inc. Swanson is able to appoint three members of Virginia’s 12-member board of directors and is a supplier of raw materials to Virginia. The remaining 85% of Virginia’s common shares are widely held. Virginia is a private company. Assuming that Swanson reports under ASPE, what are the reporting options for its investment in Virginia?
Question 4 options:
a)
Swanson must use the fair value method.
b)
Swanson must use the consolidation method.
c)
Swanson can use the cost or fair value method.
d)
Swanson can use the cost or equity method.
Chapter 4 Solutions
INTERNATIONAL ACCOUNTING LOOSELEAF
Ch. 4 - Prob. 1QCh. 4 - How do IFRS and U.S. GAAP differ in their approach...Ch. 4 - Prob. 3QCh. 4 - Prob. 4QCh. 4 - Prob. 5QCh. 4 - Prob. 6QCh. 4 - Prob. 7QCh. 4 - Prob. 8QCh. 4 - Prob. 9QCh. 4 - Where in the food products value chain are...
Ch. 4 - Prob. 11QCh. 4 - Prob. 12QCh. 4 - Prob. 13QCh. 4 - Prob. 14QCh. 4 - Prob. 15QCh. 4 - Prob. 16QCh. 4 - Prob. 17QCh. 4 - Prob. 18QCh. 4 - Prob. 19QCh. 4 - Prob. 20QCh. 4 - Prob. 21QCh. 4 - How does the two-step model traditionally used for...Ch. 4 - How are borrowing costs accounted for under IFRS?Ch. 4 - Prob. 24QCh. 4 - 1. A company incurred the following costs related...Ch. 4 - 2. A company determined the following values for...Ch. 4 - Prob. 3EPCh. 4 - 4. On January 1, Year 1, an entity acquires a new...Ch. 4 - Prob. 5EPCh. 4 - 6. Under IFRS, an entity that acquires an...Ch. 4 - Prob. 7EPCh. 4 - Prob. 8EPCh. 4 - Prob. 9EPCh. 4 - Prob. 10EPCh. 4 - Prob. 11EPCh. 4 - Changsha Corporation purchased an asset during the...Ch. 4 - Prob. 13EPCh. 4 - Prob. 14EPCh. 4 - In the fourth quarter of Year 1, Beech Corporation...Ch. 4 - 16. This is a continuation of problem 15. At...Ch. 4 - 17. Steffen-Zweig Company exchanges two used...Ch. 4 - 18. Stevenson Corporation acquires a one-year-old...Ch. 4 - 19. Quick Company acquired a piece of equipment in...Ch. 4 - Prob. 20EPCh. 4 - 21. Jefferson Company acquired equipment on...Ch. 4 - 22. Madison Company acquired a depreciable asset...Ch. 4 - 29. Stratosphere Company acquires its only...Ch. 4 - QualCore Company began operations on January 1,...Ch. 4 - 26. Buch Corporation purchased Machine Z at the...Ch. 4 - Prob. 26EPCh. 4 - Prob. 27EPCh. 4 - Prob. 28EPCh. 4 - Prob. 29EPCh. 4 - Prob. 31EPCh. 4 - Prob. 33EPCh. 4 - Prob. 34EPCh. 4 - Prob. 35EPCh. 4 - Prob. 36EPCh. 4 - Prob. 37EP
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