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Exam 30: Consolidation: Other Issues

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Question 21

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Consider the following economic entity structure. The indirect NCI in B Ltd is the same group of shareholders as the:

A) shareholders in P Ltd.
B) direct NCI in B Ltd.
C) indirect NCI in A Ltd.
D) direct NCI in A Ltd.

E) A) and B)
F) A) and C)

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Question 22

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Koala Limited acquired a 75% ownership interest in Kookaburra Limited on 30 June 2021. On the same day, Kookaburra Limited acquired a 60% ownership interest in Kangaroo Limited. The following inter-entity transactions have taken place between the entities in the group during the years ended 30 June 2022 and 30 June 2023: -On 1 July 2021 Kangaroo sold an item of plant to Koala for a profit of $40 000. The remaining useful life of the plant at the date of transfer was 2 years. -On 1 September 2021, Kangaroo paid a dividend of $80 000 from profits earned prior to 30 June 2021. -Koala lent $200 000 to Kangaroo on 1 January 2022. Interest charged on the loan for the year ended 30 June 2022 was $10 000 and for the year ended 30 June 2023 was $20 000. -On 31 May 2023 Kookaburra sold inventories to Kangaroo for $10 000. Profit earned on the sale was $2 000. Kangaroo sold the inventories to external parties on 1 August 2023. Details of profits earned by entities within the group for the years ended 30 June 2022 and 30 June 2023 are: $\begin{array}{|l|r|r|}\hline & \text { 30 June 2022 } & \text { 30 June 2023 } \\\hline \text { Koala } & 150000 & 175000 \\\hline \text { Kookaburra } & 95000 & 120000 \\\hline \text { Kangaroo } & 70000 & 85000 \\\hline\end{array}$ The tax rate is 30%. For the year ended 30 June 2022, the dividend paid by Kangaroo effects the NCI of Kangaroo by:

A) nil.
B) $12 000
C) $20 000
D) $32 000

E) None of the above
F) B) and D)

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Question 23

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In order to consolidate a 60% interest in a subsidiary, the Morgan Group prepared the following pre-acquisition entry: DR Retained earnings $14 000 DR Share capital $25 000 DR General reserve $6 000 CR Investment in subsidiary $45 000 The interest in equity attributable to the direct non-controlling interest is:

In a situation where a parent acquires shares in a subsidiary, and the subsidiary later acquires a controlling interest in another entity, the ownership structure is:

Robinson Group had the following debits in the pre-acquisition entry used to consolidate an 80% direct ownership interest in a subsidiary: Retained earnings $240 000, Share capital $360 000, General Reserve $40 000, BCVR $28 000. The amount attributable to the direct non-controlling interest is:

When preparing consolidation adjustment entries to affect a consolidation of a multiple subsidiary structure, intragroup transactions:

The pre-acquisition entry for the Riley group in order to consolidate a 75% interest in a subsidiary contained the following debits: Retained earnings $16 000, share capital $80 000, general reserve $30 000, BCVR $12 000. The direct non-controlling interest's share of the subsidiary's equity at the date of acquisition is:

Which of the following can result in a loss of control by a parent over a subsidiary? I. The parent sells some of the shares in the subsidiary. II. There is a change in the dispersion in the holding of shares by entities comprising the NCI. III. There may be a change in a contractual arrangement.

Kate Limited has an 80% ownership interest in Harry Limited. Harry Limited has a 60% ownership interest in William Limited. As a result of these ownership interests, there is a direct ownership interest in William Limited amounting to: