MCQ : 5 Question in total, please provide the right answer , for calculation please state the reason /working to ensure it is not a random guess.

Question 1:

According to IFRS 10, which one of the following reasons requires a parent not to present consolidated financial statements.

• a) It is a wholly owned subsidiary or is partially owned subsidiary of another entity and its other owners, including those not otherwise entitled to vote, have been informed about, and do not object to , the parent not presenting consolidated financial statements.
• b) Its debt or equity instruments are not traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets)
• c) It did not file, nor is it in the process of filing, its financial statements with a security commission or other regulatory organization for the purpose of issuing any class of instrument in a public market.
• d) All of the above.

Question 2

The parent has acquired 12,000 $1 shares in the subsidiary by issuing 5 of its own $1 shares for every 4 shares in the subsidiary. The market value of the parent companys share is $6. The cost of investment is:

• a) 90,000
• b) 92,000
• c) 95,000
• d) 99,000

Question 3

Which of the following is not a part of the consolidated process?

• a) Combine like items of assets and labilities of the group
• b) Offset (eliminate) the carrying amount of the parents investment in each subsidiary and the parents portion of equity of each subsidiary
• c) Combine share capital of parents and subsidiary
• d) Show the parents share capital and group reserves

Question 4

Minority interest is also known as:

• a) Controlling interest
• b) Non-controlling interest
• c) Both (A) and (B)
• d) None of the above

Question 5

The consolidated balance sheet of Big Ltd has the following capital structure:

$1 Ordinary shares $000

Retained earnings 55,000

12,000

67,000

6% $1 cumulative redeemable preference share 15,000

8% loan notes 30,000

112,000

The most appropriate measure of the debt/equity ratio for a potential equity investor is:

• a) 67.2%
• b) 81.8%
• c) 59.82%
• d) None of the above