Certificate in International Financial Reporting Consolidation and Group Accounts 3

Question 1

Under IFRS 12, what type of information must be disclosed for subsidiaries with material non-controlling interests?

Accepted Answer

Summarised financial information including assets, liabilities, revenue, and profit or loss of the subsidiary

Answer

IFRS 12 requires summarised financial data for subsidiaries with material NCI to help users assess the impact.

Question 2

Under IFRS 3, a bargain purchase (negative goodwill) arises when:

Accepted Answer

The fair value of net identifiable assets exceeds the consideration transferred plus NCI

Answer

Negative goodwill occurs when the acquiree's net fair value exceeds what was paid, creating a gain.

Question 3

Under IFRS 10, a subsidiary acquired during the year is consolidated from:

Accepted Answer

The date on which the acquirer obtains control

Answer

IFRS 10 requires consolidation from the date control is obtained, not from the year start or signing.

Question 4

Under IAS 21, the functional currency of an entity is:

Accepted Answer

The currency of the primary economic environment in which the entity operates

Answer

IAS 21 defines functional currency by the primary economic environment—typically where cash is generated and spent.

Question 5

Under IAS 21, when a foreign subsidiary is translated into the parent's presentation currency using the closing rate method, exchange differences are recognised in:

Accepted Answer

Other comprehensive income (foreign currency translation reserve)

Answer

Translation differences arising from converting a foreign operation are parked in OCI as a translation reserve.

Certificate in International Financial Reporting Practice Test

Certificate in International Financial Reporting Practice Test

Certificate in International Financial Reporting Consolidation and Group Accounts 3