UEH LẬP BÁO CÁO TÀI CHÍNH THEO IFRS FILE ĐỀ TIẾNG ANH 1

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1. On 1 July 2019, A Ltd pays £870,000 to acquire the entire share capital of B Ltd. The equity of B Ltd
on that date consists of ordinary share capital of £400,000 and retained earnings of £210,000. The fair
value of the non-current assets of B Ltd on 1 July 2019 exceeds their carrying amount by £35,000. Tax
rate 20%. The amount paid for goodwill by A Ltd is:

a. £232,000 b. £470,000 c. £260,000 d. £225,000

2. On 1 May 20X4, C Ltd paid £430,000 to acquire the entire share capital of D Ltd. The equity of D Ltd
on that date consisted of ordinary share capital of £200,000 and retained earnings of £90,000. All of its
assets and liabilities were carried at fair value. On 30 April 20X6, the retained earnings of C Ltd and D
Ltd are £970,000 and £115,000 respectively. Goodwill arising on consolidation has suffered an
impairment loss of 25% since 1 May 20X4. Group retained earnings at 30 April 20X6 are:

a. £1,085,000 b. £960,000 c.£ 980,000 d. £1,050,000
(The amount paid for goodwill was £140,000 (£430,000 – £290,000). So the impairment loss is £35,000
(25% of £140,000). The retained earnings of D Ltd have increased by £25,000 since acquisition.
Therefore group retained earnings at 30 April 2016 are (£970,000 +£25,000 – £35,000) = £960,000)

3. On 1 January 2009, P Ltd paid £480,000 to acquire 65% of the ordinary share capital of Q Ltd. The
equity of Q Ltd on that date consisted of ordinary share capital of £200,000 and retained earnings of
£150,000. The fair value of the non-current assets of Q Ltd on 1 January 2009 exceeded their carrying
amount by £250,000. Goodwill arising on consolidation has suffered an impairment loss of 40% between
1 January 2009 and 31 December 2016. The goodwill figure which should be shown in the consolidated
statement of financial position at 31 December 2016 is:

a. £151,500 b. £78,000 c. £54,000 d. £36,000
(The amount paid for goodwill by P Ltd was £90,000 (£480,000 – 65 % of (£350,000 + £250,000)). The
impairment loss is £36,000 (40% of £90,000) so the goodwill figure at 31 December 2016 is £54,000.

4. On 1 January 2013, E Ltd paid £560,000 to acquire 80% of the ordinary share capital of F Ltd. The
equity of F Ltd on that date consisted of ordinary share capital of £300,000 and retained earnings of
£150,000. All of its assets and liabilities were carried at fair value. On 31 December 2016, the retained
earnings of E Ltd and F Ltd are £1,870,000 and £65,000 respectively. Goodwill arising on consolidation
has suffered an impairment loss of 70% since 1 January 2013. The retained earnings figure which should
be shown in the consolidated statement of financial position at 31 December 2016 is:
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a. £1,662,000 b. £1,725,000 c. £1,645,000 d. £1,708,000

(The amount paid for goodwill was £200,000 (£560,000 – 80 % of (£300,000 + £150,000)) so the
impairment loss is £140,000 (70 % of £200,000). The retained earnings of F Ltd have decreased by
£85,000 since acquisition. 80 % of this is £68,000. Therefore group retained earnings at 31 December
2016 are (£1,870,000 – £68,000 – £140,000) = £1,662,000.)

5. Which of the following is not an example of an intra-group balance?
a. A loan made by one subsidiary to another
b. A trade receivable owing to a subsidiary by an individual who is one of its customers
c. A loan made by a parent company to a subsidiary
d. A trade payable owing to a subsidiary by its parent company

6. G Ltd owns 90% of the ordinary share capital of H Ltd. The inventories of H Ltd on 30 November 2015
include goods purchased from G Ltd for £300,000. These goods had been sold to H Ltd by G Ltd at a
markup of 50%. The amount of unrealised profit which should be subtracted from group inventories and
from group retained earnings is: a. £90,000 b. £150,000 c. £100,000 d.£135,000

7. During an accounting period, a parent company sells goods to one of its subsidiaries for £10,000. These
goods cost the parent company £6,000. At the end of the accounting period, three-quarters of the goods
have been sold by the subsidiary to customers outside the group but the remaining one-quarter of the

goods are still held in inventories. The adjustments required when preparing the group statement of
comprehensive income are:

a. Subtract £10,000 from group sales revenue and subtract £6,000 from group cost of sales
b. Subtract £10,000 from group sales revenue and subtract £11,000 from group cost of sales
c. Subtract £10,000 from group sales revenue and subtract £9,000 from group cost of sales
d. Subtract £10,000 from group sales revenue and subtract £10,000 from group cost of sales

8. During an accounting period, a parent company sells goods to one of its subsidiaries for £200,000. This
represents cost plus 25%. At the end of the accounting period, one fifth of these goods are still held in
the subsidiary's inventories. The cost of sales figures reported in the parent's and the subsidiary's financial
statements are £890,000 and £530,000 respectively. The parent company has a 60% interest in the

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subsidiary's ordinary shares. The cost of sales figure that should appear in the consolidated statement of
comprehensive income for the year is:
a. £1,228,000 b. £1,260,000 c. £1,212,000 d. £1,096,000

9. A parent company owns 73% of a subsidiary's ordinary shares. The non-controlling interest in the group
statement of financial position is measured at the appropriate proportion of the subsidiary's identifiable
net assets. An impairment loss in relation to goodwill arising on consolidation should be accounted for
in the group statement of comprehensive income as follows:

a. Recognise 100% of the impairment loss as a group expense
b. Recognise 73% of the impairment loss as a group expense and subtract the remaining 27% from the

profit attributable to the non-controlling interest

c. Recognise 73% of the impairment loss as a group expense but make no further adjustments
d. Do nothing

10.The amount of profit attributable to the non-controlling interest in a 90% subsidiary is generally equal

to:

a. 10% of the subsidiary's profit before tax c. 10% of the group profit before tax

b. 10% of the group profit after tax d. 10% of the subsidiary's profit after tax

11.When preparing a set of group financial statements, the correct treatment of dividends paid by a
subsidiary company to its non-controlling shareholders is to:

a. Cancel them against dividends received by the parent company
b. Ignore them completely
c. Add them in the non-controlling interest column in the group statement of changes in equity
d. Deduct them in the non-controlling interest column in the group statement of changes in equity

12. In an accounting period, a parent company has pre-tax profits of £5m. Its 75% subsidiary has pre-tax
profits of £2m. The tax expense for both companies is equal to 30% of profit before tax. The profit
attributable to the non-controlling interest is:

a. £1,750,000 b. £1,225,000 c. £500,000 d. £350,000

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13. (5.1)On 1 July 20X7, Investor Ltd (Investor) acquired all of the ordinary shares in Investee Ltd

(Investee) by paying cash. At that date, the equity of Investee was as follows:

Issued capital (100.000 shares issued) : 100.000 $

Retained earnings: 80.000 $

Total equity: 180.000$

Acquisition – related coast totaled 2.000$

On acquisition, Investor revalued the asset of Investee to fair value, resulting in a revaluation increment

of 20.000$. The revaluation led to the recognition of a deferred tax liability of 6.000$. The amount of

goodwill included in the consolidated statement of financial position was 10.000

What was the amount of the consideration paid by Investor for the shares in Investee?

a. 202.000 $ b. 204.000 $ c. 210.000$ d. 212.000 $

14.(5.2) On the acquisition of a subsidiary by an investor, purchased goodwill should be:
a. Recorded in a consolidation adjusting entry
b. Recognised separately in the financial statements of the investor only
c. Recorded separately in the financial statements of the subsidiary only
d. Recognised in the financial statements of either the subsidiary or investor

15.(5.3) On 8 August 20X3, Alpha Ltd (Alpha) acquired 20.000 shares in the Beta Ltd (Beta) that gave
Alpha control over Beta in return for 10.000 of its own shares. At that date, Alpha’s shares had a market
value of 2,7 $ each, while Beta’s shares had a market value of 1,3 $ each. Fees paid to legal advisers for

the transaction totalled 2.000$. What is the fair value of the consideration transferred?

a. 26.000 $ b. 27.000$ c. 28.000$ d. 29.000$

16.(5.4) In relation to goodwill arising from a business combination, which of the following statements in
accordance with IFRS 3 Business Combination

a. Goodwill should be measured as cost less accumulated amortization
b. Goodwill should be amortised on a straight – line basis over its useful life
c. Goodwill should be measured at cost less accumulated impairment losses
d. Goodwill is only tested for impairment if circumstances indicate it may be impaired

17.(5.5) Which of the following statements is not a key feature of the acquisition method?
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a. An acquirer being identified for each business combination
b. The acquired identifiable net assets being measured at the fair value
c. The cost of business combination being measured at fair value of the net assets received from the

acquiree
d. The goodwill being measured as the consideration transferred plus the amount of any NCI interest plus

the fair value of any previously held equity intersest in the acquire less the fair value of the identifiable
net assets acquired.

18.(5.6) On 1 july 20X7, Big Ltd (Big) agreed to purchase the assets and liabilities of Smal Ltd (Small) for

400.000$ cash, plus 1 million shares in Big. At this date, the fair value of each share in Big was 1.2$.

Costs directly attributable to the business combination totaled 5.000$

The statement of financial position of Small as at the date of purchase is presented bellow:

Small Ltd: Statement of financial position as at 1 July 20X7

Assets 1.000 $ Liabilities 1.000 $

Trade receivables 250 Bank overdraft 50

Inventory 520 Creditors 300

Land & Buildingd (net book value) 800 Equity (Capital & retained earnings) 1.220

Total 1.570 Total 1.570

In the negotiation process, Big has determined the following fair value for Small’s assets and liabilities

(assume that no deferred tax asset or liabilities arose from the business combination)

1.000 $ 1.000 $

Trade receivables 240 Bank overdraft 50

Inventory 500 Creditors 300

Land & Buildingd (net book value) 1.000

What is the amount of goodwill purchased by Big on 1 July 20X7:

a. 160.000 $ b. 165.000 $ c. 380.000$ d. 385.000$

19.(5.7) On 1 August 20X2, Parent Ltd (parent) acquired a 70% interest in Sub Ltd (Sub). At the date the
entity section of Sub’s statement of financial position revealed the following (1.000 $): Issued capital:
500; general reserve: 100; retained earnings: 50.
At acquisition date, Sub revalued its non-current, non-depreciable assets to fair value (an increase of
200.000$ over the carrying amounts). Assume a tax rate of 30%.
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Parent determined that it had paid 100.000$ for goodwill. Non-controlling interest is measured at the

proportionate share of the fair value of the identifiable net asset of Sub.

Which of the following proforma entries would be processed in the consolidation worksheet for the year

ended 30 June 20X3.

A. Dr- Share capital : 350 B. Dr- Share capital : 350

Dr- General reserve : 70 Dr- Genaral reserve : 70

Dr- Retained earnings : 35 Dr- Retained earnings : 98

Dr- Asset revaluation surplus: 98 Dr- Business combination reserve: 98

Dr- Goodwil : 100 Dr- Goodwil : 100

Cr- Investment in Sub : 653 Cr- Investment in Sub : 653

C. Dr- Share capital : 350 D. Dr- Share capital : 500
Dr- Genaral reserve : 70 Dr- Genaral reserve : 100
Dr- Retained earnings : 35 Dr- Retained earnings : 140
Dr- Goodwil : 100 Dr- Goodwil : 100
Cr- Investment in Sub Cr- Investment in Sub
: 555 : 890

20.(5.8) Small Ltd (Smal) is a wholly owned subsidiary of Large Ltd (Large). During the fiannacial year

ended 30 June 20X3, Small declared and paid an interim dividend of 10.000$ and declared a final

dividend of 20.000$ (which remains payable at year end). Large recognizes dividends as revenue when

they are declared by Small.

Which of the following proforma entries would be processed in the consolidation worksheet for the

financial year ended 30 June 20X3 in relation to the dividends provided by Small.

A. A. Dr- Dividend income : 30 B. B. Dr- Final dividend payable :20

Cr- Interim income :10 Dr- Dividend income :30

Cr- Final dividend (retained earning):20 Cr-Interim dividend (Retained earnings): 10

Cr- Final dividend (retained earnings) :20

Cr- Devidend receivable :20

C. C. Dr- Dividend income :20 D. D. Dr- Final dividend payable :30

Dr- final dividend payable :20 Dr- Dividend income :30

Cr- Final dividend (retained earnings) :20 Cr-Interim dividend (Retained earnings): 10

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Cr- Devidend receivable

Cr- Devidend receivable :30

21.(5.9) In accordance with IFRS 10 – Consolidated financial statements, a consolidated statement of

financial position (or note thereto) would not present information relating to which of the following?

a. Investments in subsidiaries c. goodwill acquired by the group

b. Loans to entities not related to the group d. NCI’share of consolidated net assets

22.(5-10) On 15 August 20X2, Parent Ltd (parent) obtained control of a subsidiary via the acquisition of a

60% shareholding. During the year ended 30 June 20X5, the subsidiary declared and paid an interim

dividend of 10.000$.

On 30 June 20X5, the subsidiary declared a dividend of 20.000$. Parent recognizes dividend as revenue

when they are declared by the subsidiary. Assume that Parent is exempt from income tax on dividends

received from group entities. Tax rate is 30%.

Which of the following proforma entries would be processed in the consolidation worksheet for the year

ended 30 June 20X5.

A. Dr- Dividend income : 30.000 B. Dr- Deferred tax asset :9.000

Dr- dividend payable : 20.000 Dr- Dividend income :30.000

Cr- Interim dividend (RE) :10.000 Dr- Dividend payble: 20.000

Cr- Final dividend (RE) :20.000 Cr-Income tax expense :9.000

Cr- Dividend receivable : 20.000 Cr- Interim dividend (RE) :10.000

Cr- Final dividend (RE) :20.000

Cr- Devidend receivable :20.000

C. Dr- Dividend income :18.000 D. Dr- Deferred tax asset :5.400

Dr- Dividend payable :12.000 Dr- Dividend income :18.000

Cr- RE(Interim dividend) :6.000 Dr- Dividend payblae: 12.000

Cr-RE (final dividend) :12.000 Cr-Income tax expense :5.400

Cr- Dividend receivable :12.000 Cr- Interim dividend (RE) :6.000

Cr- Final dividend (RE) :12.000

Cr- Devidend receivable :12.000

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23. (5.11) IFRS 10- Consolidated financial statement sets out how to determine whether one entity has
control over another entity. Which of the following statements is in accordance with either IFRS 10
definition control or with the guidance prescribed to help identify whether control exists over another
entity?

a. The investor must be the only party that receives variable returns from the other entity.
b. The investor must be have greater than 50% of the voting rights in the other entity.
c. The investor must be represented on the board of directors or governing body of the other entity.
d. The investor must have existing rights that give the current ability to direct relevant activities of the other

entity.

24.(5-12) On 1 July 20X2, Holding Ltd (Holding) purchased all the issued capital of Subsidiary Ltd

(Subsidiary) for 400.000$ cash. At the acquisition date, the entity section in the statement of financial

position of Subsidiary contained the following information (1.000 $): Issued capital: 200; retained

earnings: 110. In addition, Holding determined that Subsidiary held equipment with a fair value of

60.000$, which was recorded in the statement of financial position of Subsidiary at a cost of 80.000$

and accumulated depreciation of 40.000$. Subsidiary decided not to revalue the equipment in tits own

accounts. The tax rate: 30% Which of the following consolidation adjusting entries would be processed

on acquisition date?

A. Dr- Share capital : 200 B. Dr- Share capital : 200

Dr- Retained earnings : 110 Dr- Retained earnings : 110

Dr- Deferred tax Asset : 6 Dr- Accumulated depreciation: 40

Dr- Accumulated depreciation: 40 Dr- Goodwil : 76

Dr- Goodwil : 64 Cr- Equipment : 20

Cr- Equipment : 20 Cr- Deferred tax liability : 6

Cr- Investment in Sub : 400 Cr- Investment in Sub : 400

C. Dr- Share capital : 200 D. Dr- Share capital : 200

Dr- Retained earnings : 110 Dr- Retained earnings : 110

Dr- Accumulated depreciation: 40 Dr- Goodwil : 90

Dr- Goodwil : 70 Cr- Investment in Sub : 400

Cr- Equipment : 20

Cr- Investment in Sub : 400

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25.(5.13) Which of the following statements is consistent with the principle of control as defined by IFRS

10 Consolidated Financial Statements?

a. The investor must be exposed to a return from the investee

b. The investor has the ability to use its power over the investee to affect the amount of the returns from

the investee.

c. An investor’s power over investee relates to its ability to determine the amount of variable returns

received from investee.

d. If two or more investors have existing rights to direct different relevant activities, no investors can have

control over the investee.

26.(5.19) Parent Ltd (Parent) acquired 70% interest in Subsidiary Ltd (Subsidiary) on 1July 20X0. During

the financial year ended 30 June 20X1, Subsidiary sold inventory to Parent for 8.000 $. The original cost

to Subsidiary was 6000$. Half of the inventory was still on hand with Parent at 30 June 20X1

Assume a tax rate of 30%

Which of the following proforma journal entries would be processed in the consolidated worksheet for

the financial year ended 30 june 20X1?

a. A. Dr- Sale : 8.000 b. B. Dr- Sale : 8.000

Dr- Income tax expense : 300 Dr- Income tax asset : 600

Cr- COGS : 7.000 Cr- COGS : 6.000

Cr- Inventory : 1.000 Cr- Inventory : 2.000

Cr- Deferred Tax liability : 300 Cr- Income Tax Expense : 600

c. C. Dr- Sale : 8.000 d. D. Dr- Sale : 8.000

Dr- Deferred tax asset : 300 Dr- Income tax expense: 600

Cr- COGS : 7.000 Cr- COGS : 6.000
: 2.000
Cr- Inventory : 1.000 Cr- Inventory : 600

Cr-Income tax expense : 300 Cr- Deferred Tax liability

27.(5.20) Parent Ltd (Parent) acquired 70% interest in Subsidiary Ltd (Subsidiary) on 1July 20X0. During
the financial year ended 30 June 20X1, Subsidiary sold inventory to Parent for 8.000 $. The original cost

to Subsidiary was 6000$. Half of the inventory was still on hand with Parent at 30 June 20X1. During
the year ended 20 June 20X2, the remainder of the inventory was sold to parties external to the group.
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Assume a tax rate of 30%. Which of the following proforma journal entries would be processed in the
consolidated worksheet for the financial year ended 30 june 20X2?

a. Dr- Retained earnings : 700 : 1.000 b. Dr- Retained earnings : 1.000 : 1.000
Dr- Income tax expense: 300 Dr- Income tax expense : 300 : 300
Cr- COGS Cr- COGS
Cr- Deferred Tax asset

c. Dr- Retained earnings : 1.400 d. Dr- Sale : 8.000
Dr- Income tax expense : 600 Cr- COGS : 8.000
Cr- COGS
: 2.000

28.(5.21) Big Ltd (Big) owns 80% of Little Ltd (Little). On 1 July 20X3, Litle sold equipment to Big for

40.000$. At the time of the sale, the carrying amount of the equipment in the books of Little was 30.000$.

The profit on this transaction was taxable. The tax rate was 30%. Both entities depreciate equipment at

10% on cost. The equipment is still on hand with Big at 30 June 20X5.

The consolidation worksheet for the financial year ended 30 june 20X5 contains the following:

Big ($) Little ($)

Profit for year 80.000 20.000

Retained earning (closing balance) 225.000 40.000

Note: the tax rate was 30%

Which of the following proforma journal entries would be processed in the consolidated worksheet for

the financial year ended 30 june 20X5 in regard to the equipment sold on 1 july 20X3?

a. A. Dr- Accumulated depreciation: 1.000 b. B. Dr- Accumulated depreciation: 2.000

Dr- Income tax expense : 300 Dr- Income tax expense : 300

Dr- Retained earnings : 10.000 Dr- Deferred tax asset : 2.400

Cr- Depreciation expense : 1.000 Dr- Retained earnings : 6.300

Cr- Deferred tax asset : 300 Cr- Depreciation expense : 1.000

Cr- Equipment : 10.000 Cr- Equipment : 10.000

c. C. Dr- Accumulated depreciation: 1.000 d. D. Dr- Accumulated depreciation: 2.000

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Dr- Income tax expense : 300 Dr- Income tax expense : 600

Dr- Deferred tax asset: 2.700 Dr- Deferred tax asset: 2.400

Dr- Retained earnings : 7.000 Dr- Retained earnings :7.000

Cr- Depreciation expense: 1.000 Cr- Depreciation expense: 2.000

Cr- Equipment : 10.000 Cr- Equipment : 10.000

29.IFRS 3:
a. Allows either the unitings of interest method, or the acquisition method.
b. Allows only the unitings of interest method.
c. Allows only the acquisition method.
d. Allows only the acquisition method or merger method

30. Under IFRS 3, acquired contingent liabilities are:
a. Always included in the cost of combination.
b. Included in the cost of combination, only if they can be reliably measured.
c. Included in goodwill.
d. Included in NCI

31. Goodwill should be: b.Tested for impairment annually, or more frequently, if required.
a. Tested annually for impairment d.Tested annually for impairment or amortised
c. Amortised

32. Negative goodwill should be: C. Allocated to non-current assets.
a. Matched to future losses. D. Ignore
b. Recorded in the income statement.

34. A combination may involve:

(i) The purchase of the equity of another undertaking.
(ii) The purchase of all the net assets of another undertaking.
(iii) The assumption of the liabilities of another undertaking.
(iv) The purchase of some of the net assets of another undertaking, that together form one or more

businesses.
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(v) The purchase of assets from a firm in liquidation.
a. i – v
b. i – iii c. ii – iii d. i – iv

35. Applying the acquisition method involves the following steps: (i)Identifying an acquirer;
(ii)Measuring the cost of the combination. (iii)Allocating, at the acquisition date, the cost of the
combination to the assets acquired and liabilities and contingent liabilities assumed. (iv)Amortising the
goodwill.
a. i – ii b. i – iii c. ii – iii d. i – iv

36. Control is the power:
a. To govern the financial and operating policies of an undertaking.
b. To control more than 40% of the ordinary shares.
c. Appoint board members in proportion to your shareholding.
d. To control more than 50% of net assets.

37. The cost of a combination includes: (i)Liabilities incurred or assumed by the acquirer.;
(ii)Professional fees paid to accountants. (iii)Legal advisers’ fees. (iv)Valuers’ fees. (v)General
administrative costs: a. I b. ii – iii c. i – iv d.i – v

38. For an adjustment to the cost of the combination contingent on future events, the acquirer must

include the amount of that adjustment in the cost of the combination at the acquisition date, if the

adjustment is:

a. Probable and can be measured reliably. C. Certain and exactly measurable.

b. Payable within one year. D. Receivable within one year

39. A building has a cost in the books of the acquiree of $200m. It is being depreciated over 20 years,
the length of the lease. After 15 years, you buy the company and fair value the property at $400m. In the
consolidated books of account, annual depreciation will be recorded as:
a. $10m. b. $20m c. $27m d. $80m

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40.Which of the following companies would qualify to be regarded as subsidiaries of Alpha?

i) Beta in which Alpha has 15% votes and a place on the board of directors

ii) Delta in which Alpha has 52% votes but no place on the board of directors

iii) Gamma in which Alpha has 25% shares and two places on the board of directors

iv) Theta in which Alpha holds 100% votes and all places on the board of directors

a. (ii) & (i) b. ii&iii c.ii&iv d. i&iii

41. Which of the following would qualify a company to be regarded as a parent of another?
a. A parent and the subsidiary should both have the same persons as their directors
b. A parent should own majority shares in the subsidiary
c. A parent it and its subsidiary must both be in the same line of business
d. A parent should control the majority of the votes at subsidiary’s shareholders’ meetings

42. Which of the following statement(s) is / are correct with regard to preparation of consolidated
financial Statement?

i) To be a subsidiary a parent should hold 100% of its equity shares
ii) Consolidation merely addition together of two Statements of financial position
iii) In consolidation a subsidiary and an associate are treated identically
iv) Consolidated balance sheet excludes assets not owned by the group
a. None b. i&ii c. ii&iii d.ii&iv

43. Which of the following statement(s) apply when consolidating statements of financial position
i) All inter-company balances should be cancelled
ii) The group share of the whole of subsidiary’s profit is included within group profit

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iii) Inter company profit should be eliminated unless it is realised by sale to an outsider
iv) Subsidiary’s asset values need to be updated at the end of each accounting period
a. i & iii b. i & ii c. ii & iv d. ii & iii

45. With regard to preparing consolidated statements of financial position which of the following
statements is / are correct?
i) the consolidated statement of financial position reports only parent’s goodwill

ii) Any unrealized profit made by a subsidiary should be eliminated from its profit
iii) An amount owed to each other within the group needs to be cancelled
iv) Only the group portion of any unrealised profit need be eliminated.
a. i & iii b. i & ii c. ii & iii d. iii & iv

46. When preparing a consolidated statement of financial position the identifiable non monetary assets
of the subsidiary need to be fair valued for which of the following reason / reasons?
i) To inform the acquired company what its assets are worth in the market
ii) To comply with the practice followed over the years
iii) To report each of the subsidiary’s assets at what it cost the group to acquire
iv) To identify the amount paid for goodwill as the residual not attributed to other assets
a. ii & iii; b. ii & iv; c. iii & iv d. i & iii

47. When preparing a consolidated Statement of financial position the identifiable non monetary assets
of the subsidiary need to be fair valued. Which of the following assets of the subsidiary need to be fair
valued?
i) Land and building appearing in the books of the subsidiary
ii) Trade receivables reported on the subsidiary’s balance sheet
iii) Brand name the cost relating to which the subsidiary has already fully written off
iv) Inventory reported on the subsidiary’s statement of financial position
a. i, iii & iv b. ii & iii & iv c. i, ii & iii d. ii & iii

48. Which of the following statements are incorrect with regard to preparation of a consolidated
statement of financial position?

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a) Gain on fair valuation of a subsidiary’s asset is a pre-acquisition profit
b) Non controlling interest does not deserve any portion of fair valuation gain

c) If an asset is not reported in the subsidiary’s ledger it need not be fair valued
d) Gain on fair valuation of subsidiary’s asset inflates the cost of goodwill
a. ii & iii b. ii, iii & iv c. i & ii & iii d. i & iv

49. When preparing a consolidated statement of financial position any profit made by one member of
the group against another should be eliminated unless it has been realised by disposal to some one
outside the group. Which of the following is / are the reason(s) for this?
i) Because an entity cannot make a profit against its own self
ii) Because it is fashionable to do so
iii) Because subsidiary’s assets needs to be reported at the amount each cost the group
iv) Because the unsold goods may have to be returned to the party purchased from
a. i & ii b. ii & iii c. iii& iv d. i & iii

50.A parent owns two third of the subsidiary’s equity. As at a year end the subsidiary’s inventory
includes goods sent to it by the parent invoiced at £360,000. Parent has purchased these goods for
£300,000. Which of the following are the correct entries for eliminating unrealised profit?
a. Debit the parent’s retained earnings and credit the subsidiary’s inventory with £60,000
b. Debit the parents retained earnings and credit subsidiary’s inventory with £45,000
c. Debit the subsidiary’s retained earnings and credit the subsidiary’s inventory with £45,000
d. Debit the subsidiary’s retained earnings and credit the subsidiary’s inventory with £60,000

51. What is the amount of the unrealised profit to be eliminated if the parent’s year-end inventory
includes at £540,000 goods invoiced to it by its 60% owned subsidiary at cost plus 25%.
a. £135,000 b.£108,000 c. £81,000 d. 64,800

52. Subsidiary’s inventory at the year end included £180,000 purchased from its parent. Further goods
invoiced by the parent at £45,000 were in transit. The parent invoices the subsidiary at cost plus 20%.
The amount of unrealised profit that needs to be eliminated from the parent’s retained earnings would
be: a. £38,333 b £38,333 c. £37,500 d. £36,000

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53. When preparing a consolidated statement of financial position, pre-acquisition portion of
subsidiary’s retained earnings need to be frozen by off setting it from the cost of investments. Which of
the following is / are the reason for this?
a) That portion of profit has been paid for by the parent as part of its investment
b) It is not ethical for the parent to claim profits made before a company became a subsidiary
c) To establish the true cost to the parent of acquiring the subsidiary’ s goodwill
d) Otherwise group profits are inflated by acquiring subsidiary’s with high retained earnings.

a. i & iii b. ii & iii c. iii & iv d. i & iv

54. Any amount owed by one member of a group to another need to be cancelled when preparing the
consolidated statement of financial posiition. As at the year-end the parent’s receivable includes £90
due from the subsidiary; whereas the subsidiary reports that it owes only £60 to the parent. The
difference has arisen because of cash in transit. Which is the correct way of dealing with the situation
when preparing the consolidated statement of financial position.
a. Cancel £90 from receivable and £60 from payable
b. Cancel £60 from both receivable and payable
c. Cancel £90 from parents receivable, £60 from subsidiary’s payable and include £30 with cash
d. Cancel £90 from both receivable and payable

55. As at the year end the parent’s statement of financial position reports rent receivable as an asset at
£600 and this includes £150 due from the subsidiary. Subsidiary reports rent payable as £150. Which
of the following will be included in the consolidated statement of financial position?
a. Rent receivable as an asset at £450 and report nothing within Current liabilities as rent
payable
b. Rent receivable as an asset at £600 and report nothing as current liability
c. Rent receivable as an asset at £600 and rent payable as a current liability at £150

d. Rent receivable as an asset at £450 and rent payable as a current liability at £150

56.The parent paid £480 to acquire 75% of 300 ordinary shares issued by the subsidiary on 1st January
2012 when shares in the subsidiary were quoted at 180p per share and the equity and reserves of the

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subsidiary were reported as £350 and fair valuation of its assets identified a gain of £50. What is the

goodwill of the subsidiary on this date

a.£ 240 b. £ 130 c.£215 d. £ 180

Consideration: 480

FV(NCI): 100 * 1,8 = 180

Total: 615

Fv(NA)= 350+50 =400 -> 215

57. Which of the following statements is / are correct with regard to accounting for goodwill?
a) Goodwill needs to be written off as soon as it is identified.
b) Goodwill is reported continuously as an asset unless it is impaired
c) Goodwill should be amortised over an estimated useful life
d) Goodwill should be amortised over an estimated useful life not exceeding twenty years

58. If the capital and reserves, including fair valuation gain of a subsidiary is £5,400 and the parent

acquires the whole of it for £4,000, the difference of £1,400 would be known as:
a. Goodwill b. Negative goodwill c. Badwill d. Gain on acquisition

59.How is a negative goodwill reported on the consolidated statement of financial position?
a. As a negative asset – i.e. shown on the asset side but as a deduction
b. Included fully in the Consolidated Retained Earnings
c. A tenth of it is included in Consolidated reserves and the remainder reported as a reserve
d. As a reserve, which may preferably be titled a capital reserve

60.With regard to preparing consolidated income statement which of the following statements are
correct?
i) Only the group portion of subsidiary’s sales, cost of sales and expenses are included.
ii) Non controlling interest is identified immediately after consolidating operating profit
iii) Consolidated movement of equity includes only the parent company’s dividend
iv) Only the group portion of the subsidiary’s post acquisition profit in brought forward in the
consolidated movement of equity.
a. iii & iv b. i & ii c. ii & iii d. i & iv

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61. When preparing a Consolidated Income Statement, inter-company transactions are cancelled.
Which one or more of the following would you say is the reason for this step?
i) That is how it is expected to be done.
ii) Otherwise group earnings can be inflated by one within the group earning from another.
iii) Otherwise the same amount is double counted both as an income and expense
iv) Failure to do so would be bad for the group image
a. i & ii b. ii & iii c. iv & iii d. i & iii

62. Though a subsidiary is only partly owned, the whole of the subsidiary’s sales, cost of sale and
expenses are aggregated with those of the parent to report the group’s income and expenses. Which
one or more of the following is/ are the justification for this?
a) That is how it is expected to be done
b) That is a legal requirement
c) Otherwise the group would appear to be doing poorly with adverse effect on share price
d) To report the income generated by and expenses incurred by the group as a whole.

63. For identifying the group profit for the current year at which of the following points is the profit
relating to non controlling interest removed.
a. After identifying the profit for the year after tax
b. After identifying the net profit before tax
c. After identifying the gross profit
d. After identifying the operating profit

64. Alpha paid £300,000 on 1.1.2010 to acquire 80% of Beta. On that date Beta had in issue one
hundred thousand ordinary shares of £1 each issued at 120p each. But quoted on this date at 145p.
Identify the goodwill in Beta in each of the following alternative situations.
i) On 1.1.2010 Beta's retained earnings were £30,000 and the fair value of its identifiable assets the
same as their book value.
a. £179,000 b. £200,000 c. £212,500 d. £170,000
Cosideration (80%): 300.000
NCI: 100.000 *20% *1,45= 29.000 Total: 329.000
FV(NA)= 100.000+20.000+30.000 = 150.000 g/w: 179.000

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65. Alpha paid £300,000 on 1.1.2010 to acquire 80% of Beta. On that date Beta had in issue one

hundred thousand ordinary shares of £1 each issued at 120p each. But quoted on this date at 145p.
Identify the goodwill in Beta in each of the following alternative situations.
ii) On 1.1.2010 Beta's retained earnings were £60,000 and the fair value of their identifiable assets
£80,000 more than their book value.
a. £169,000 b. £69,000 c. £60,000 d. £75,000
Cosideration (80%): 300.000
NCI: 100.000 *20% *1,45= 29.000
Total: 329.000
FV(NA)= 100.000+20.000+60.000+80.000 = 260.000
g/w: 69.000

66. Alpha paid £300,000 on 1.1.2010 to acquire 80% of Beta. On that date Beta had in issue one
hundred thousand ordinary shares of £1 each issued at 120p each. But quoted on this date at 145p.
Identify the goodwill in Beta in each of the following alternative situations.
iii) On 1.1.2010 Beta's earnings were £50,000 and while their non current assets had a fair value
£80,000 more than the book value, the investments held by Beta had a fair value £30,000 less than the
book value. A. £30,000 b. £59,000 c. £37,500 d. £109,000
Cosideration (80%): 300.000
NCI: 100.000 *20% *1,45= 29.000
Total: 329.000
FV(NA)= 100.000+20.000+50.000+80.000-30.000 = 220.000
g/w: 109.000

67. Alpha paid £300,000 on 1.1.2010 to acquire 80% of Beta. On that date Beta had in issue one
hundred thousand ordinary shares of £1 each issued at 120p each. But quoted on this date at 145p.
Identify the goodwill in Beta in each of the following alternative situations.
iv) On 1.1.2010 Beta had an accumulated loss of £40,000, though its non current assets had a fair value
which exceeded the book value by £120,000.
a. £129,000 b. £69,000 c. £96,000 d. £120,000
Consideration: 300.000

Fv(NCI): 100.000*20%*1,45= 29.000

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Total: 329.000 + 120.000 = 200.000
FV(NA): 100.000 (MG) + 20.000 (thang du) -40.000
g/w: 129.000

68. Alpha paid £750,000 to acquire 60% of equity in Beta on 1st January 2010. Beta’s Statement of
financial position as at 31st December 2012 reports its Share capital as £500,000, Share premium as
£50,000, and Retained earnings as £320,000. Identify the non controlling interest to be included in the
consolidated statement of financial position as at 31st December 2012 in each of the following
independent situations: Beta’s shares have a par value of £1 each.
i) On 1st January 2010 Beta’s retained earnings were £200,000 and the fair value of Beta’s identifiable
non monetary assets were equal to the book value. The value of non controlling interest on the date of
acquisition is to be identified on the basis of price paid by Alpha to acquire control
a. £750,000 b. £548,000 c. £848,000 d. £348,000
NCI: £ 750.000 *40/60 = 500.000
Post acq profit: 40% * (320.000- 200.000)): 48.000

548,000

69. Alpha paid £750,000 to acquire 60% of equity in Beta on 1st January 2010. Beta’s Statement of
financial position as at 31st December 2012 reports its Share capital as £500,000, Share premium as
£50,000, and Retained earnings as £320,000. Identify the non controlling interest to be included in the
consolidated statement of financial position as at 31st December 2012 in each of the following
independent situations: Beta’s shares have a par value of £1 each.
ii) On 1st January 2010 Beta’s retained earnings were £160,000 , the fair value of its non current assets

exceeded their book value by £100,000 and Beta’s shares were quoted at 225 p each
a. £978,000 b. £450,000 c. £514,000 d. £528,000
NCI: £ 2,25 * 200.000 = 450.000
Post acq profit: 40% * (320.000- 160.000)): 64.000

514,000

70. Alpha paid £750,000 to acquire 60% of equity in Beta on 1st January 2010. Beta’s Statement of
financial position as at 31st December 2012 reports its Share capital as £500,000, Share premium as
£50,000, and Retained earnings as £320,000. Identify the non controlling interest to be included in the

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