Corporate Financial Reporting – Corporate and Management Accounting MCQ

As of the year-end, the parent’s statement of financial position reports rent receivable as an asset at ₹ 60,000 and this includes ₹ 15,000 due from the subsidiary. Subsidiary reports rent payable as ₹ 15,000. Which ofthe following will be included in the consolidated statement of financial position?

Any amount owed by one member of a group to another needs to be canceled when preparing the consolidated statement of financial position. As of the year-end, the parent’s receivable includes ₹ 90,000 due from the subsidiary; whereas the subsidiary reports that it owes only ₹ 60,000 to the parent. The difference has arisen because of cash in transit. Which is the correct way of dealing with the situation when preparing the consolidated statement of financial position?

Subsidiary’s inventory at the year-end included ₹ 1,80,000 purchased from its parent. Further goods invoiced by the parent at ₹ 45,000 were in transit. The parent invoices the subsidiary at cost plus 20%. The amount of unrealized profit that needs to be eliminated from the parent’s retained earnings would be:

What is the amount of the unrealized profit to be eliminated if the parent’s year-end inventory includes ₹ 5,40,000 goods invoiced to it by its 60% owned subsidiary at cost plus 25%?

A parent owns two-third of the subsidiary’s equity. As of a year-end the subsidiary’s inventory includes goods sent to it by the parent invoiced at ₹ 3,60,000. The parent has purchased these goods for ₹ 3,00,000. Which of the following are the correct entries for eliminating unrealized profit?

S Ltd. is a subsidiary of H Ltd. S Ltd. remitted a cheque for ₹ 5,000 to H Ltd. on 30th March 2018, which was received by H Ltd. on 1st April 2019. The accounting year of both companies closed on 31st March 2019. Which of the following treatment is correct in the consolidated financial statement for a cheque in transit?

Following are the balances of H Ltd. &S Ltd. on 31.3.2019:

The General reserve of S Ltd. on 31.3.2020 was ₹ 90,000. Break-up of its profit and loss account is given below:On 1.7.2019, H Ltd. acquired an interest in S Ltd. by acquiring ₹ 72,000 fully paid equity shares of ₹ 10 each for ₹ 8,00,000. The total paid-up share capital of S Ltd. is ₹ 8,00,000. H Ltd. credited the entire amount of interim dividend received to its profit and loss account.How much goodwill or capital reserve will be shown in the consolidated balance sheet?

H Ltd. holds 75% Shares in S Ltd. In January 2019 S Ltd. sold to its parent company H Ltd. goods costing ₹ 15,000 for ₹ 20,000. On 31st March 2019 half of these goods were lying as unsold in godowns of H Ltd. Which of the following is the correct treatment for unrealized profit on stock while preparing the consolidated financial statement of H Ltd. & S Ltd.?

Following are the balances of S Ltd. on 31.3.2019:Equity Share Capital 720,00,000General Reserve 77,00,000Profit & Loss Account 714,00,000H Ltd. acquired 70% shares on T. 1.2019 Balances of general reserve and profit and loss account on 1.4.2018 of S Ltd. were ₹ 1,00,000 and ₹ 5,00,000 respectively. Minority Interest =?

Following are the balances of S Ltd. on 31.3.2019:Equity Share Capital 710,00,000General Reserve 73,50,000Profit & Loss Account 77,00,000H Ltd. acquired 80% shares on 31st July 2018. Balances of general reserve and profit and loss account on 1.4.2018 of S Ltd. were 750,000 and 72,50,000 respectively. Share of Minority in post-acquisition profit will be –

Following are the balances of S Ltd. on 31.3.2019:General Reserve 71,75,000Profit & Loss Account 73,50,000H Ltd. acquired 6096 shares on 30th June 2018. Balances of general reserve and profit and loss account on 1.4.2018 of S Ltd. were ₹ 25,000 and ₹ 1,25,000 respectively. Share of H Ltd. in post-acquisition profit will be –

Balances of S Ltd. on 31.3.2019 are:General Reserve ₹ 70,000Profit & Loss Account ₹ 1,40,000

The Balance Sheet of S Ltd. is as follows:

H Ltd. holds 7,500 shares of S Ltd. Total shares of S Ltd. are 10,000 of ₹ 10 each. General Reserve and Profit & Loss balance of S Ltd. are ₹ 3 5,000 & ₹ 27,500 respectively out of which 40% relates to the post-acquisition period. Minority Interest =?

H Ltd. acquires 70% of the equity shares of S Ltd. on 1.1.2019. On that date, the paid-up capital of S Ltd. was 10,000 equity shares of ₹ 10 each; the accumulated reserve balance was ₹ 1,00,000. H Ltd. paid ₹ 1,60,000 to acquire 70% interest in the S Ltd. Assets of S Ltd. were revalued on 1.1.2019 and a revaluation loss of ₹ 20,000 was ascertained. Which of the following is correct in relation to the cost of control of the group consolidated financial statement?

Goodwill =?

If A Ltd. is proved to be a subsidiary company of B Ltd., C Ltd. & D Ltd. then which company is liable to prepare Consolidated Financial Statement?

In which of the following case the C Ltd. will be subsidiary of A Ltd.

As per AS-21, a Consolidated Financial Statement will not be prepared by the parent company when-

The group’s share of the pre-acquisition reserves of a subsidiary form part of the:

Which exchange rate will be considered for the conversion of the share capital of the subsidiary company?

Post-acquisition dividend received by Holding Company is:

Pre-acquisition dividend received by Holding Company is credited to:

Preparation of consolidated Balance Sheet of holding company and its subsidiary company is as per –

Which of the following statement is false?

Which of the following is the best theoretical justification for consolidated financial statements?

Y Company has a receivable from its parent, X Company. Should this receivable be separately reported on Y’s balance sheet and in X’s consolidated balance sheet?Y’s balance sheet X’s balance sheet

Which of the following is not normally considered the right of an ordinary shareholder?

When dealing with consolidated balance sheets, the expression cost of control could be used instead of:

On consolidation, if the total of the fair value of the assets acquired is less than the whole purchase consideration then the differences should be treated as:

The claim by outsiders to assets featured on a consolidated balance sheet is known as:

If stock is sold for a profit from one group member to another, how should this be dealt with in the final accounts?

How is negative goodwill reported on the consolidated statement of financial position?

Which of the following is true?

What is the term used to describe dividends paid by one company in the group to another in the same group?

If less than 100% of a subsidiary’s share capital has been acquired then what is the rule for inclusion of the subsidiary’s assets on the consolidated balance sheet?

On a consolidated balance sheet, if the shares of a company have been bought for more than the balance sheet value then the difference would appear as:

Which of the following statements are incorrect with regard to the preparation of a consolidated statement of financial position?(A) Gain on fair valuation of a subsidiary’s asset is a pre-acquisition profit.(B) Non-controlling interest does not deserve any portion of fair valuation gain.(C) If an asset is not reported in the subsidiary’s ledger it need not be fair valued.(D) Gain on fair valuation of subsidiary’s asset inflates the cost of goodwill.Select the correct answer from the options given below.

Which of the following treatment is correct for mutual debts with regard to purchasing and sale of goods between holding and subsidiary company?

Unrealized profit on goods sold and included in stock is deducted from:

If the closing balance of general reserve of a subsidiary is less than the opening balance of general reserve then it can be concluded that –

If the closing balance of general reserve of a subsidiary is more than the opening balance of general reserve then it can be concluded that

Which of the following treatment of ‘Share Capital’ of the subsidiary company is correct?

Deduction of outsiders liabilities from total assets then dividing it by number of shares, the resultant figure will be