Certificate in International Financial Reporting Consolidation and Group Accounts

Question 1

Under IFRS 10, when does an investor control an investee?

Accepted Answer

When it has power over the investee, exposure to variable returns, and ability to use power to affect those returns

Answer

When it owns more than 50% of voting shares

Answer

When it can appoint the majority of the board

Answer

When it finances more than half the investee's operations

Question 2

Under IFRS 3, goodwill arising on a business combination is measured as:

Accepted Answer

Consideration transferred plus non-controlling interest less fair value of net identifiable assets acquired

Answer

Purchase price less book value of net assets acquired

Answer

Fair value of the acquiree less par value of shares issued

Answer

Premium paid over market capitalisation

Question 3

Under IFRS 3, identifiable assets acquired and liabilities assumed in a business combination are recognised at:

Accepted Answer

Fair value at the acquisition date

Answer

Carrying amount in the acquiree's books

Answer

Historical cost

Answer

Value in use

Question 4

Under IFRS 10, non-controlling interests (NCI) in a subsidiary are presented:

Accepted Answer

Within equity, separately from the parent's equity

Answer

As a liability on the consolidated balance sheet

Answer

Outside equity as a mezzanine item

Answer

As deferred income

Question 5

Under IAS 28, the equity method is used to account for investments in:

Accepted Answer

Associates and joint ventures

Answer

Subsidiaries only

Answer

All equity investments

Answer

Strategic investments regardless of influence

Question 6

Under IAS 28, significant influence is presumed when an investor holds:

Accepted Answer

20% to 50% of voting power

Answer

More than 50% of voting power

Answer

More than 10% of ordinary shares

Answer

Any voting rights in the investee