Consolidation and Group Accounts Flashcards

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

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

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

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

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

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

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

Answer: The date on which the acquirer obtains control

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

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

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

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

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:

Answer: Other comprehensive income (foreign currency translation reserve)

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

Under IAS 27, which method is used to account for investments in subsidiaries in a parent's separate financial statements?

Answer: Either cost method or IFRS 9 fair value method

IAS 27 allows the cost method or IFRS 9 measurement in separate (non-consolidated) financial statements.