AST ACTIVITY
1. IFRS 10 Consolidated and Separate Financial Statements prescribes that non-controlling
interests to be presented in the consolidated statement of financial position as a liability.
2. Total comprehensive income is attributed to the owners of the parent and the non-controlling
interests even if this results to the non-controlling interests having a deficit balance.
3. IFRS for Presentation of Financial Statements requires a separate line item on the face of the
statement of financial position showing the non-controlling interests in equity.
4. IFRS for Presentation of Financial Statements requires an entity to disclose separately in the
statement of comprehensive income, profit or loss for the period attributable to noncontrolling interests and owner of the parent.
5. One of the steps in preparing consolidated financial statements is working out the amounts to
be attributed to non-controlling interests to determine the amount to be eliminated in the
consolidation process.
6. Using full goodwill method, share of goodwill attributable to non-controlling interests is
recognized in the statement of financial position as part of the non-controlling interests in
equity.
7. Partners who are part of the ownership of the parent entity in a group and who own capital in
a company that is a controlled entity in that group are called outside financing interests.
8. In calculating the proportion of a subsidiary’s profit that is attributable to owners who are not
part of the group, all adjustments to the group’s profit should be treated as affecting the
calculation for outside owners.
9. Under the proprietary concept of consolidation, non-controlling interests are shown as a
liability.
10. In preparing consolidated financial statements non-controlling interests are allocated on a
line-by-line basis.
11. Non-controlling interests are ‘identified’ and eliminated as part of the consolidation process.
12. Non-controlling interests are shown as equity, that is, as contributors of equity capital to the
economic entity.
13. Non-controlling interests are allocated on a line-by-line basis throughout the statement of
comprehensive income.
14. Only dividends payable to the parent entity are eliminated against dividends receivable in the
accounts of the parent entity.
15. Where the parent entity holds less than 100 percent interest in a subsidiary, IFRS 10 requires
the remaining shareholders’ interests in what items to be disclosed?
a. the subsidiary’s share capital and reserves
b. the subsidiary’s profit and loss
c. the subsidiary’s current and non-current assets
d. the subsidiary’s share capital and reserves and the subsidiary’s profit and loss
16. Non-controlling interests arise when:
a. The parent entity does not control a subsidiary in the group.
b. The parent entity arises capital through preference shares that have the characteristics
of debt to fund the subsidiary.
c. The subsidiary has owners of entity who are not owners through their ownership
interest in the controlling parent entity.
d. The subsidiary has invented in other entities in which it does not have a controlling
interest.
17. Buster Ltd owns 85 percent of the issued capital of Rhymes Ltd. During the period ended 30
June 2016 the operating profit of Rhymes Ltd was $680,000. Buster Ltd bought goods for
$540,000 from Rhymes. The goods cost Rhymes $400,000 and at the end of the period none
of this inventory was still on hand. Rhymes paid Buster a management fee of $100,000 during
the period. Goodwill on consolidation was impaired by $30,000. Rhymes paid a dividend of
$40,000 at the end of the period. What is the non-controlling interest in the operating profit
of Rhymes Ltd?
a. $87,000
b. $112,500
c. $102,000
d. $101, 969
18. On 1 July 2019 C-GREED Ltd purchased 80 percent of the issued share capital of PIA Ltd and
has control of Wills. The fair value of the net assets of PIA Ltd on that date was represented as
follows:
Accounts
Amounts
Share Capital
P2,000,000
Retained Earnings
500,000
C-GREED Ltd paid cash consideration of P2,500,000 for PIA. PIA Ltd made an operating profit
of P350,000, there were no intragroup transactions during the period ended 30 June 2020.
Goodwill had been determined to have been impaired during the year by P25,000. What
consolidation journal entries are required for the period and what is the non-controlling
interest in equity as at 30 June 2020?
19. ARZEL Ltd purchased 75 percent of the issued capital and in the process to gained control over
JECK on 1 July 2019. The fair value of the net assets of JECK Ltd ta purchase was represented
by:
Share Capital
Retained Earnings
P3, 760, 000
1, 320, 000
P5, 080,000
ARZEL Ltd paid cash consideration of P4,000,000 for JECK Ltd. During the period ended 30 June
2021, JECK Ltd paid management fees of P540,000 to ARZEL Ltd and JECK had an operating
profit of P980,000. JECK’s opening retained earnings at the beginning of the period were P1,
460, 000. At the end of the period JECK Ltd declared a dividend of P90,000. There were no
other inter-company transactions. Goodwill was determined to have been impaired by
P19,000 during the period. Companies in the group accrue dividends when they are declared
by subsidiaries.
For the period ended 30 June 2021, what consolidation journal entries are required and what
is the non-controlling interest?
20. When a subsidiary company that has a non-controlling interest (NCI) declares a dividend, the
treatment in the consolidated statement of financial position of dividends not paid is:
a. The non-controlling interest portion of the dividend owing should be eliminated along
with the parent entity’s share, leaving a zero balance in dividends payable.
b. The NCI’s portion should be deducted from the non-controlling interest’s share in
equity. There should be no dividend amounts remaining in the consolidated statement
of financial position, but the amount owed to the NCI should be disclosed separately.
c. The amount owing to NCI as a dividend payable should be included in the consolidated
statement of financial position as a current liability.
d. The amount of dividends payable to both the parent entity and the NCI will be
eflected in the consolidated statement of financial position.
21. Calculating goodwill for a subsidiary that has a non-controlling interest involves:
a. Taking the parent entity’s share of the fair value of the identifiable net assets of the
subsidiary and deducting it from the fair value of the consideration paid.
b. Dividing the fair value of the consideration paid for the subsidiary by the percentage
ownership of the parent entity and deducting the fair of the identifiable net assets of
the subsidiary from that amount.
c. Taking the book value of equity of the subsidiary and the deducting the fair value of
the consideration paid for the subsidiary.
d. Dividing the fair value of identifiable net assets of the subsidiary by the percentage
ownership of the parent entity and deducting this amount from the fair value of the
consideration paid.
22. Calculating the non-controlling interest (NCI) in the operating profit and opening retained
earnings of a subsidiary is done by:
a. Taking the operating profit and the operating retained earnings figures of the
subsidiary and multiplying them by the percentage ownership held by the NCI.
b. Adjusting the operating profit and opening retained earnings of the subsidiary for any
intragroup transactions and multiplying them by the percentage ownership held by
the NCI.
c. Adjusting the operating profit of the subsidiary for any unrealized profit or expense of
the subsidiary as a result of any intragroup transactions and multiplying both this and
the opening retained earnings by the percentage ownership held by the NCI.
d. Adjusting opening retained earnings and the operating profit for any unrealized profit
or expense of the subsidiary as a result of intragroup transactions and multiplying this
by the percentage ownership held by the NCI.
23. LI-U Ltd purchased 60 percent of the issued capital and in the process gained control over
DANA Ltd on 1 July 2019. The fair value of the net assets of DANA Ltd at purchased was
represented by:
Share Capital
Retained Earnings
P2, 140, 000
840, 000
P2, 980,000
LI-U Ltd paid cash consideration of P1, 850, 000 for DANA Ltd. During the period ended 30 June
2020, DANA Ltd paid management fees of P200,000 to LI-U Ltd and DANA had an operating profit of
P530,000. DANA Ltd paid a dividend of P100,000 during the period. LI-U purchased an inventory from
DANA during the period for P80,000. The inventory cost DANA Ltd P56,000 and at the end of the period
LI-U had 50 percent of that inventory still on hand. Goodwill has been determined to have been
impaired by P6,200 during the period. Companies in the group use perpetual inventory systems and
accrue dividends when they are declared by subsidiaries. Ignore tax implications. For the period ended
30 June 2020, what consolidation journal entries are required and what is the non-controlling interest?
24. LEA Ltd purchased 90 percent of the issued capital and in the process gained control over
Maroon Ltd on 1 July 2019. The fair value of the net assets of Maroon Ltd at purchased was
represented by:
Share Capital
Retained Earnings
P3, 220, 000
740, 000
P3, 960,000
LEA Ltd paid cash consideration of P3, 700, 000 for Maroon Ltd. During the period ended 30
June 2021, Maroon Ltd paid management fees P100,000 to LEA Ltd and Maroon had an
operating profit of P405, 000. Maroon Ltd declared a dividend of P98,000 during the period.
LEA purchased inventory from Maroon during the period ended 30 June 2021 for P100,000.
The inventory cost Maroon Ltd P85,000 and at the end of the period LEAD had 35 percent of
that inventory still on hand. Maroon’s opening retained earnings for the period ended 30 June
2021 was P810,000. Goodwill has been determined to have been impaired by P13,600.
Companies in the group use perpetual inventory systems and accrue dividends when they are
declared by subsidiaries. There were no other inter-company transactions. Ignore tax
implications. For the period ended 30 June 2021, what consolidation journal entries re
required and what is the outside equity interest?
25. Which of the following is not one of the stages used to determine non-controlling interest?
a. The non-controlling interest in the current period’s profit or loss
b. The non-controlling interest in share capital at the date of acquisition of the subsidiary
by the parent entity
c. The non-controlling interest in the goodwill at acquisition
d. The non-controlling interest in reserves at the date of acquisition of the subsidiary by
the parent entity.