IFRS Consolidation and Group Accounting 1

Question 1

Under IFRS 10, an investor controls an investee when it has which THREE elements simultaneously?

Accepted Answer

Power over the investee, exposure to variable returns, and ability to use power to affect those returns

Answer

IFRS 10 defines control as requiring all three elements: power over the investee, exposure or rights to variable returns, and the ability to use that power to affect the investor's returns.

Question 2

Under IFRS 3 Business Combinations, how must an acquirer measure the identifiable assets acquired and liabilities assumed at the acquisition date?

Accepted Answer

At fair value

Answer

IFRS 3 requires identifiable assets acquired and liabilities assumed in a business combination to be measured at their fair values at the acquisition date.

Question 3

How is goodwill calculated under IFRS 3 when using the full goodwill method?

Accepted Answer

Fair value of consideration transferred plus fair value of any NCI plus fair value of previously held interest, minus the fair value of net identifiable assets acquired

Answer

Under the full goodwill method in IFRS 3, goodwill equals the aggregate of consideration transferred, NCI at fair value, and any previously held equity interest, minus the net fair value of identifiable assets and liabilities.

Question 4

Under IFRS 10, how should intragroup balances, transactions, income, and expenses be treated when preparing consolidated financial statements?

Accepted Answer

Eliminated in full

Answer

IFRS 10 requires that intragroup balances, transactions, income, and expenses be eliminated in full when preparing consolidated financial statements to avoid double counting.

Question 5

Under IFRS 11 Joint Arrangements, what are the two types of joint arrangements?

Accepted Answer

Joint ventures and joint operations

Answer

IFRS 11 classifies joint arrangements as either joint ventures (where parties have rights to the net assets) or joint operations (where parties have rights to assets and obligations for liabilities).

(IFRS) International Financial Reporting Standards Practice Test

(IFRS) International Financial Reporting Standards Practice Test

IFRS Consolidation and Group Accounting 1