Certificate in International Financial Reporting Consolidation and Group Accounts 1

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

IFRS 10 defines control through three cumulative elements: power, variable returns, and the link between them.

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

IFRS 3 calculates goodwill as consideration + NCI – fair value of net identifiable assets at the acquisition date.

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

IFRS 3 requires all identifiable assets and liabilities to be remeasured to fair value at the acquisition date.

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

IFRS 10 requires NCI to be classified as equity but disclosed separately from the controlling interest.

Question 5

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

Accepted Answer

Associates and joint ventures

Answer

IAS 28 requires the equity method for investments in associates (significant influence) and joint ventures.

Certificate in International Financial Reporting Practice Test