IFRS for SMEs) IFRS for SMEs Consolidation and Groups

Question 1

When is a parent entity required to present consolidated financial statements under IFRS for SMEs?

Accepted Answer

When it controls one or more subsidiaries, unless specific exemptions apply

Answer

Only when the parent has more than 100 employees

Answer

Only when required by local tax authorities

Answer

Never — consolidation is optional under IFRS for SMEs

Question 2

How should goodwill arising from a business combination be measured under IFRS for SMEs?

Accepted Answer

As the excess of acquisition cost over the acquirer's share of net identifiable assets, amortized over its useful life

Answer

At fair value with annual impairment testing only

Answer

Not recognized — expensed immediately

Answer

Capitalized indefinitely without amortization

Question 3

What method should be used to account for investments in associates under IFRS for SMEs?

Accepted Answer

Cost model, equity method, or fair value model — the entity chooses one policy for all associates

Answer

Only the equity method is permitted

Answer

Associates must always be consolidated

Answer

Only the fair value method is permitted

Question 4

How are intragroup transactions eliminated in consolidated financial statements under IFRS for SMEs?

Accepted Answer

All intragroup balances, transactions, income, and expenses are eliminated in full

Answer

Only transactions exceeding a materiality threshold are eliminated

Answer

Intragroup transactions are disclosed but not eliminated

Answer

Only intragroup loans are eliminated

Question 5

What are the criteria for determining control of a subsidiary under IFRS for SMEs?

Accepted Answer

Power to govern the financial and operating policies of an entity to obtain benefits from its activities

Answer

Owning exactly 50% of voting rights

Answer

Having a management contract only

Answer

Being the largest customer of the entity

Question 6

How should a non-controlling interest be presented in consolidated financial statements?

Accepted Answer

Within equity, separately from the parent's equity

Answer

As a liability on the balance sheet

Answer

As an expense in the income statement

Answer

It does not need to be presented separately