Corporate Accounting
Mock Exam
Course Introduction
Corporate Accounting focuses on the financial reporting and analysis specific to corporate entities. The course covers key concepts such as the preparation and presentation of company financial statements in accordance with legal and regulatory requirements, accounting for share capital and debentures, amalgamation, absorption, and reconstruction of companies. Topics include treatment of profits and dividends, valuation of goodwill and shares, consolidated financial statements, and the accounting implications of business combinations. Through practical exercises and case studies, students develop the skills necessary to interpret, analyze, and communicate financial information vital for decision-making in a corporate environment.
Recommended Textbook Accounting for Corporate Combinations and Associations 8th Australian Edition by Neal Arthur
Source URL: https://quizplus.com/study-set/3412 Page 2
Chapter 1: Text Objectives and Introduction to Consolidation
Available Study Resources on Quizplus for this Chatper
31 Verified Questions
31 Flashcards
Source URL: https://quizplus.com/quiz/67752
Sample Questions
Q1) Investments in associates (other than those classified as held for sale)will be measured at cost in the consolidated financial statements.
A)True
B)False
Answer: False
Q2) Discuss the requirements for the preparation of separate financial statements under AASB 127.
Answer: Separate financial statements:
- Definition: financial statements of parent,investor or venturer in which investments are accounted for on the basis of the direct equity interest
- The concept of separate financial statements does not apply to entities that are not parents,investors or venturers.
- In certain circumstances a parent may be exempted from preparing consolidated financial statements and will then present separate financial statements.
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Principles of Consolidation
Available Study Resources on Quizplus for this Chatper
48 Verified Questions
48 Flashcards
Source URL: https://quizplus.com/quiz/67751
Sample Questions
Q1) When testing goodwill for impairment,the original goodwill recognised at the acquisition date is the starting point.
A)True
B)False
Answer: False
Q2) Which items are listed first on a consolidated worksheet?
A) Statement of financial position items
B) Profit or loss items
C) Intra-entity transactions
D) Retained earnings items
Answer: B
Q3) Changes in fair value of contingent consideration in a business combination will affect the calculation of any goodwill or gain on bargain purchase.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Fair Value Adjustments and Tax Effects
Available Study Resources on Quizplus for this Chatper
46 Verified Questions
46 Flashcards
Source URL: https://quizplus.com/quiz/67750
Sample Questions
Q1) Discuss the reasons for ignoring tax effects in respect of goodwill recognised on consolidation in a business combination.
Answer: Tax effects of goodwill:
- Goodwill amortisation or impairment loss is not recognised for tax purposes.
- The reason for this exemption is that goodwill is calculated as a residual,and recognition of a deferred tax liability would give rise to the necessity of a further increase in goodwill,as the deferred tax liability recognition would reduce net assets.This process would then continue through a number of iterations.
Q2) Goodwill recorded by an acquiree in a business combination must be:
A) recognised at fair value on acquisition.
B) recognised at carrying amount on acquisition.
C) not recognised in the business combination.
D) none of the above.
Answer: C
Q3) An acquired entity may realize its brand name.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Intra-Group Transactions
Available Study Resources on Quizplus for this Chatper
38 Verified Questions
38 Flashcards
Source URL: https://quizplus.com/quiz/67749
Sample Questions
Q1) Unrealised gains and losses on intragroup sales of non-depreciable assets can only be realised by sales outside the group.
A)True
B)False
Q2) Using the same facts as Question 14 but assuming that S will depreciate the asset over its remaining estimated useful life of eight years,what is the depreciation expense adjustment required on consolidation one year after the intragroup sale?
A) Cr. $400
B) Dr. $400
C) Cr. $2100
D) Cr. $2500
Q3) Current accounting regulations require the separate disclosures in profit or loss of gains and losses on disposal of non-current assets.
A)True
B)False
Q4) Explain why temporary differences (and therefore deferred tax adjustments)arise when depreciable assets are sold at a profit on an intragroup basis.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Non-Controlling Interest
Available Study Resources on Quizplus for this Chatper
37 Verified Questions
37 Flashcards
Source URL: https://quizplus.com/quiz/67748
Sample Questions
Q1) Company A owns 40% of Company B and this ownership is deemed to represent control.The non-controlling interest in B is:
A) 40%.
B) 60%.
C) 100%.
D) no non-controlling interest.
Q2) Which of the following statements is correct?
A) The non-controlling interest cannot have the majority of the equity in a subsidiary since it would not then be a non-controlling interest.
B) The non-controlling interest cannot have the majority of voting power in a subsidiary since a majority would give that interest the power to control a subsidiary.
C) The non-controlling interest may have the majority of the equity and a majority of the voting power in a subsidiary but still remain a non-controlling interest.
D) None of the above.
Q3) Under the entity concept of consolidation,the NCI is recognised as a liability.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Partly-Owned Subsidiaries: Indirect
Non-Controlling Interest
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/67747
Sample Questions
Q1) Parent Ltd owns 20% of S1 Ltd and controls S2 Ltd without holding any shares in S2 Ltd.In addition,S2 Ltd owns 70% of S1 Ltd.The Parent Ltd indirect interest in S1 Ltd is:
A) 100%.
B) 70%.
C) nil.
D) none of the above.
Q2) Parent Ltd owns 90% of S1 Ltd and S1 Ltd owns 60% of S2 Ltd.Parent Ltd's indirect ownership interest in S2 Ltd is: A) 90%.
B) 60%.
C) 54%.
D) none of the above.
Q3) In a multiple consolidation,the ownership interests of subsidiaries are determined using:
A) direct ownership interests.
B) indirect ownership interests.
C) both direct and indirect ownership interests.
D) none of the above.
Q4) Discuss the disadvantages of the sequential consolidation method.
Page 8
To view all questions and flashcards with answers, click on the resource link above.
Chapter 7: Consolidated Cash Flow Statements
Available Study Resources on Quizplus for this Chatper
27 Verified Questions
27 Flashcards
Source URL: https://quizplus.com/quiz/67746
Sample Questions
Q1) The issue of shares to purchase non-current assets will be disclosed:
A) as a financing activity.
B) as an investment activity.
C) as both a financing and investment activity.
D) in the note disclosure to the statement of cash flows.
Q2) A Ltd acquires 100% of shares of B Ltd for $195 000,financed by an issue of 100 000 x $1.50 shares and $45 000 cash.B Ltd has cash balances of $35 000 at the date of acquisition.Which amount will A Ltd record for cash flow from investing in its consolidated statement of cash flows?
A) ($195 000)
B) ($450 000)
C) ($10 000)
D) ($35 000)
Q3) A reconciliation of profit or loss and cash flows is required using either the direct or indirect method of disclosing cash flows from operations.
A)True
B)False
Q4) Discuss the treatment of subsidiaries acquired and disposed of in the consolidated statement of cash flows.
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Accounting for Joint Arrangements
Available Study Resources on Quizplus for this Chatper
39 Verified Questions
39 Flashcards
Source URL: https://quizplus.com/quiz/67745
Sample Questions
Q1) The one-line method of accounting for joint operations is required by AASB 11.
A)True
B)False
Q2) In a venture in which there are jointly controlled assets,the venturers share the assets as tenants in common; which means that:
A) each venturer has a proportionate interest in each joint controlled asset.
B) each venturer has a distinct but unidentifiable share of each jointly controlled asset. C) each venturer has a distinct and identifiable share of each jointly controlled asset.
D) none of the above.
Q3) The line-by-line method of accounting hides the existence of interests in jointly controlled operations and jointly controlled assets.
A)True
B)False
Q4) Jointly controlled operations and jointly controlled assets result from an unincorporated contractual association.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
10
Chapter 9: Accounting for Associates and Joint Ventures: the Equity Method
Available Study Resources on Quizplus for this Chatper
44 Verified Questions
44 Flashcards
Source URL: https://quizplus.com/quiz/67744
Sample Questions
Q1) Even though an investee may be an associate of an investor,if the shares of that associate are traded in an active market,AASB 128 Investment in Associates and Joint Ventures requires the application of the:
A) market valuation.
B) consolidation method.
C) valuation made by an independent evaluator.
D) equity method.
Q2) When preparing the equity accounting adjustments in the consolidated financial statements,losses on the investment will:
A) be accounted for in the current year only.
B) be accounted for in all prior years.
C) be accounted for in the current year and all prior years.
D) not be accounted for.
Q3) Discuss the different identification and disclosure requirements for goodwill purchased as part of an investment in a subsidiary and an associate.
Q4) An investment in an associate company will initially be recorded at fair value.
A)True
B)False
Q5) Discuss the basis of the equity carrying amount of the investment.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Translation and Consolidation of Foreign Currency Financial Statements
Available Study Resources on Quizplus for this Chatper
31 Verified Questions
31 Flashcards
Source URL: https://quizplus.com/quiz/67743
Sample Questions
Q1) Where the choice of an entity's functional currency is not clear-cut,the choice should be based on currency of largest proportion of export sales.
A)True
B)False
Q2) Cash flows from foreign operations denominated in a foreign currency will normally be translated using:
A) historical rates.
B) average rates.
C) closing rates.
D) none of the above.
Q3) An exchange rate quoted in Australia of AUD1.00 = USD1.05 is an example of:
A) the direct form of exchange rate.
B) the indirect form of exchange rate.
C) neither form.
D) none of the above.
Q4) The translation gain or loss on a foreign operation using the current rate method represents the effect of exchange rate movements on net assets.
A)True
B)False
12
To view all questions and flashcards with answers, click on the resource link above.
Chapter 11: Segment Reporting by Diversified Entities
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/67742
Sample Questions
Q1) The aim of segment reporting is to provide entity stakeholders with the information required to:
A) have a better understanding of the entity's past performance.
B) make a more informed assessment of the entity's risks and returns.
C) make more informed judgments about the performance and position of the entity as a whole.
D) all of the above.
Q2) An immaterial segment is never disclosed despite the 75% rule.
A)True
B)False
Q3) The major argument for the disclosure in segment information concerns financial statement presentation.
A)True
B)False
Q4) On the basis of revenue,asset and results,the reportable business segments are:
A) Piebalds, Pintos and Crillos.
B) Piebalds, Skewbalds, Pintos and Crillos.
C) Piebalds, Skewbalds, Pintos, Crillos and Others.
D) none of the above.
To view all questions and flashcards with answers, click on the resource link above. Page 13