preparation of consolidated financial statements
Q: Describe the difference between the economic entity concept and the parent company concept…
A: The concept of economic entity explains that the finances of an entity should be kept separate or…
Q: A company acquires a subsidiary and will prepare consolidated financial statements for external…
A: The correct answer is Option (1).
Q: Which of the following is NOT true with regard to the statutory consolidation form of business…
A: Business combination is a form of arrangement or agreement between two or more than two entities in…
Q: Revenue is recognized when it is earned; therefore revenue earned for a consolidated entity occurs…
A: When one company or its subsidiary company , hold more than 50% share in another company , then…
Q: Under the Conceptual Framework for Financial Reporting 2010, which of the following is a new item…
A: The purpose of Conceptual Framework for financial reporting 2010 is to provide financial information…
Q: The single set of financial statements that combines financial information from the separate…
A: Option (a) is incorrect because equity financial statements or Statement of changes in Equity are…
Q: PFRS 3 must be applied when accounting for business combinations, but does not apply to: i.…
A: Business combination: Business combination refers to the process in which one business obtains…
Q: PFRS 3 must be applied when accounting for business combinations, but does not apply to: i.…
A: PFRS 3 must be applied when accounting for business combination, but does not apply to 1. On joint…
Q: ASB ASC 810-10-45-11 states that in some cases parent-entity financial statements may be needed, in…
A: The consolidation of the financial statements is done when the entity holds more than 50% in the…
Q: s are added to those of the group on a line-by-line basis. (II) The group share of the associate's…
A: Consolidation Statement- Consolidated statement is prepared to assess the financial position of the…
Q: Explain why transactions between members of a consolidated firm should not be reflected in the…
A: Introduction: Consolidated financial statements are the consolidated audited financials of a company…
Q: The purpose of consolidated accounts are as follows except: Show obligations of the group Show…
A: The purpose of consolidated accounts are as follows except to Show obligations of the subsidiary.
Q: Consolidated financial statements: a. Consolidated financial statements provide information about…
A: Consolidated financial statements: When an investor company holds above 50% in the outstanding stock…
Q: In consolidated financial statements: Multiple Choice the parent's and subsidiary's financial…
A: Please see the next step for the solution
Q: Which of the following is NOT true with regard to the statutory consolidation form of business…
A: The statutory consolidated form of business combination has 1. The combining entities cease to 3xist…
Q: What is the primary reason we defer financial statement recognition of gross profits on intra-entity…
A: Intra entity transfer: It refers to the transactions between the subsidiarity company and the parent…
Q: According to PFRS 10 A. A parent entity is required to consolidate its subsidiaries only for…
A: Accounting standards are the rules and regulations provided to business in order to maintain and…
Q: Segment reporting shall apply to A. Both the separate financial statements of an entity and the…
A: SOLUTION- IF AN ENTITY IS REQUIRED TO PRESENT BOTH CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS…
Q: S1: The preparation of consolidated financial statements after acquisition is materially different…
A: Statement 1 is correct as consolidated financial statements are prepared for the parent company who…
Q: Answer with true or false. 1. The non-controlling interest is presented in the statement of…
A: The answer is stated below:
Q: Which of the following pertaining to Consolidated Financial Statements is correct? A. The…
A: As per Accounting standards, when the parent acquires a subsidiary or have controlling entities then…
Q: Discuss how the consolidated financial statements reflect: (a) The distinction between “control” and…
A: Consolidated financial statements are statements that are prepared for combination of parent company…
Q: Discuss how the consolidated financial statements reflect: (a) The “single economic entity” concept.
A: Whenever one company has control over another company by investing in its share capital, then one…
Q: If a financial report contains both the consolidated financial statements of apparent and the…
A: Segment reporting required to present the financial statement for every segment separately based on…
Q: 4. The financial statements of Entity A shows line iteme described as "Other current assets," "Other…
A: Financial statements means the report which is prepared and disclosed by a business in order to…
Q: Why do we need to pass the consolidation elimination entry every time we prepare a consolidated…
A: Consolidation elimination entry that eliminate duplicate revenue, expenses, receivables, and…
Q: Which of the following statements is incorrect concerning the preparation of consolidated financial…
A: For preparation of consolidated financial statements: 1. Uniform accounting policies to be applied…
Q: Which of the following are not related parties? a. A parent and its subsidiary b. Two or more…
A: Related parties are those parties which are having relation with each other. Like the relationship…
Q: Choose the correct. Which of the following is the best theoretical justification for consolidated…
A: Consolidated financial statements: When an investor company holds above 50% in the outstanding…
Q: In connection with the examination of the consolidated financial statements Mott Industries,…
A: Auditor's report should be clear having opening , scope and opinion paragraphs. Opinion of auditor…
Q: Statement 1: The preparation of consolidated financial statements after acquisition is materially…
A: Consolidated financial statements(CFS): The statements in which all the items of balance sheet i.e.,…
Q: Do you think the FASB made the correct decision in requiring consolidated financial statements to…
A: In an open and inclusive process, the FASB develops and publishes financial accounting standards to…
Q: Consolidated financial statements are the financial statements of a group in which the assets,…
A: As per IAS 27, Consolidated Financial Statements are the financial statements of a group in which…
Q: If a company prepares a consolidated income statement, IFRS requires that net income be reported O…
A: Consolidated income statement includes all the expenses and incomes of both parent company and…
Q: Consolidated financial reporting is appropriate when one entity has a controlling financial interest…
A: Financial accounting standards board (FASB): This is the organization which creates, develops, and…
Q: intercompany transactions and debts should be treated for consolidation purposes
A: Intercompany transactions and debts in consolidation means the transactions and mutual dues between…
Q: entity that is represented by a single set of consolidated financial statements
A: Option a is wrong because economic entity is a distinct entity that does not require consolidated…
Q: When we are preparing consolidated financial statements, will the financial statements of the parent…
A: Consolidation is a term used for merging of several companies of an industry. The assets,…
Q: All the financial statements is consolidated on the date of a business combination of a parent…
A: Parent company and subsidiary company are two companies, in which one company acquires shareholding…
Q: According to PFRS (IFRS) 10: a. A parent entity is required to c
A: The Standard: [IFRS 10:1] a parent entity (an entity that controls one or more other entities) is…
Q: Consolidation financial statements are prepared when a parent-subsidiary relationship exists in…
A: Financial statements show the financial performance/position of the business entity. It is prepared…
The preparation of consolidated financial statements:
Select one alternative:
- does not obviate the need for separate entities to prepare and release their own separate financial statements and should be done in accordance with IFRS 10
- will eliminate the result derived from operations with parties external to the group of entities
- highlights income derived as a result of transactions within the group
- obviates the need for separate entities to prepare and release their own separate financial statements
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- 1. PAS 28 defines an ‘associate’ as Choices An entity that controls one or more entities. An entity over which the investor has significant influence. A joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. An entity that is controlled by another entity. 2. In accordance with PAS 1, which of the following gains or losses from reclassification of financial assets need not be presented separately in the profit or loss section or the statement of profit or loss? Choices None of these. Reclassification of financial assets out of the FVTOCI measurement category to FVTPL. Reclassification of financial assets out of the amortized cost measurement category to FVTPL. Reclassification of financial assets out of the FVTPL measurement category.IFRS 10: Consolidated Financial Statements outlines the requirements for the preparation and presentation of consolidated financial statements, requiring entities to consolidate other entities it controls. The control principle in IFRS 10 sets out the following three elements of control: power over the investee; exposure, or rights, to variable returns from involvement with the investee; and. the ability to use power over the investee to affect the amount of those returns. Required:i) What are Consolidated Financial Statements? ii) Identify FOUR (4) circumstances under which a company may gain control over another company but will not be allowed to prepare consolidated financial statements. (c) IFRS 10 Consolidated Financial Statements outlines the requirements for the preparation and presentation of consolidated financial statements, requiring entities to consolidate entities it controls.Required:Explain and justify how IFRS 10 Consolidated Financial Statements determines elements of…PFRS 3 must be applied when accounting for business combinations, but does not apply to:i. Formation of a joint arrangementii. The acquisition of an asset or group of assets that is not a business although general guidance is provided on how such transactions should be accounted foriii. Combination of entities or businesses under common controliv. Acquisitions by an investment entity of a subsidiary that is required to be measured at fair value through profit or loss under PFRS 10 Consolidated Financial Statementsv. Mutual entitiesvi. Not-for-profit organizations a. i, ii, iii, iv, and v b. i, ii, iii, and iv c. i, ii, iii, iv, v, and iv d. i, ii, iii, iv, and vi
- PFRS 3 must be applied when accounting for business combinations, but does not apply to:i. Formation of a joint arrangementii. The acquisition of an asset or group of assets that is not a business although general guidance is provided on how such transactions should be accounted foriii. Combination of entities or businesses under common controliv. Acquisitions by an investment entity of a subsidiary that is required to be measured at fair value through profit or loss under PFRS 10 Consolidated Financial Statementsv. Mutual entitiesvi. Not-for-profit organizations i, ii, iii, iv, v, and iv i, ii, iii, and iv i, ii, iii, iv, and vi i, ii, iii, iv, and vWhich of the following regarding the preparation of Consolidated Financial Statement iscorrect?A. Once the parent company prepares Consolidated Financial Statements, it no longerneeds to prepare financial statements for its own activities.B. Only the subsidiaries are required to prepare Financial Statements.C. Consolidated Financial Statements are required by the Parent Company for reportingpurposes only; each company must continue to prepare its own FinancialStatements.D. Consolidated Financial Statements are required only when both companies arepublicly traded.Which of the following pertaining to Consolidated Financial Statements is correct?A. The preparation of Consolidated Financial Statements means that the companiesinvolved cease to operate as separate legal entities.B. The preparation of Consolidated Financial Statements is at the Parent Company'sdiscretion.C. When one company has control over another, Consolidated Financial Statementsmust be prepared for the combined entity.D. Before preparing Consolidated Financial Statements, a subsidiary's FinancialStatements prior to the date of acquisition must be restated.
- Consolidated financial statements:a. Consolidated financial statements provide information about the assetsliabilities, equity, income, and expenses of both the parent and itssubsidiaries as a single reporting entity.b. Consolidated financial statements provide information about the assetsliabilities, equity, income, and expenses of the parentas a single reporting entity.c. Consolidated financial statements provide information about the assetsliabilities, equity, income, and expenses of the subsidiariesas a single reporting entity.d. None of the aboveWhich consolidation method should be used in preparing consolidated financial statements in accordance with IFRS? A. Proportionate consolidation method.B. Either identifiable net assets or fair value enterprise method.C. New entity method.D. Parent company method.In accordance with PFRS 2, Share-based Payment, how should an entity recognize the change in fair value of the liability in respect of a cash-settled share-based payment transaction? Group of answer choices Do not recognize in the financial statements but disclose in the notes thereto. Recognize in other comprehensive income. Recognize in the statement of changes in entity. Recognize in profit or loss.
- Which of the following statements is not correct in relation to consolidation accounting key terms? Select one alternative: Consolidated financial statements are financial statements of a group of entities presented as if that group was acting as a single economic entity. A parent is an entity that has more than one subsidiary. A subsidiary is an entity that is controlled by another entity. A group comprises a parent and all of its subsidiaries.Which statement is incorrect regarding reclassification of financial assets? An entity shall restate any previously recognized gains, losses (including impairment gains or losses) or interest. Reclassifications are only permitted on the change of an entity's business model and are expected to occur only infrequently. None of these. An entity shall account for transfers between categories prospectively, at the beginning of the period after the change in the business model.Revenue is recognized when it is earned; therefore revenue earned for a consolidated entity occurs when there is a sale to outside entity Select one: True False