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QUIZ- Chapter 6: Consolidated financial statements (part 3)

Name: Date: ___

Year and section: Score:
Multiple choice. Write the letter of the answer before the number.

1. When NCI is measured at proportionate share, goodwill is attributed to ________________..

a) the owners of the parent c) both the owners of the parent and NCI
b) the owners of the non-controlling interests d) directly in equity

2. When NCI is measured at fair value, goodwill is attributed to ________________..

a) the owners of the parent c) both the owners of the parent and NCI
b) the owners of the non-controlling interests d) directly in equity

3. Each of the group members' individual financial statements shall be adjusted first for the following before
consolidation except:
a) in-transit items c) errors
b) capital expenditures d) currency translations

4. If the parent's ownership interest in a subsidiary changes but does not result to a loss of control, the change is
accounted for as an ______________________.
a) income or loss in the statement of profit or loss c) equity transaction
b) impairment of goodwill d) adjustment to NCI

5. Loss of control is accounted for _____________________ .

a) retrospectively c) both retrospectively and prospectively
b) prospectively d) none of the above

6. Which of the following consolidation theories is supported by PFRS 10 Consolidated Financial Statements and
PFRS 12 Disclosure of interests in other entities effective on January 1, 2013?
a) proprietary theory c) hybrid theory
b) parent company theory d) entity theory

7. If a parent loses control of a subsidiary by selling its interest on the subsidiary to an associate or a joint venture,
the gain or loss from the transaction shall be recognized in the parent’s profit or loss only to the extent of in that
associate or joint venture. The remaining part of the gain is eliminitaed against the carrying amount of the
investment in that associate or joint venture. The preceeding statement is ___________.
a) true
b) false

8. It is a legal entity created by a sponsor to accomplish narrow and well- defined objective for the sponsor.
a) associate c) charity organization
b) special purpose entity d) welfare institution

9. In the consolidation of a reverse acquisition, the NCI reflects the NCI’s proportionate interest in the
______________________ of the legal acquiree’s net assets.
a) pre-combination carrying amounts c) carrying amounts at the end of the year
b) fair value d) value in use
10. Which of the following is not an example of instances where the parent can lose control over the subsidiary?
a) the parent acquires all remaining NCI in the acquire
b) subsidiary becomes subject to the control of a government, court, administer or regulator
c) the parent ceases to be entitled to receive returns
d) the parent’s previous status as a principal changes to an agent

11. At December 31, 2019, Gohan, Inc. owned 90% of Videl Corp., a consolidated subsidiary, and 20% of Pan
Corp., an investee in which Gohan cannot exercise significant influence. On the same date, Gohan had receivables
of P300,000 from Videl and P200,000 from Pan. In its December 31, 2019 consolidated balance sheet, Gohan
should report accounts receivable from affiliates of:
a) 500,000 c) 230,000
b) 340,000 d) 200,000

12. – 20.
On January 1, 20x2, ABC Co, sells out 60% out of its 80% interest in XYZ, Inc. for P100,000. ABC's remaining
20% interest in XYZ has a fair value of P25,000. This gives ABC significant influence over XYZ. The statement
of financial position immediately before the sale are shown below.
Statement of financial
As at January 1, 20x2
Carrying amount
XYZ Inc. Consolidated of XYZ’s net
ASSETS (a) (b) (c) = (b) – (a)
Cash 23000 57000 80000 57000
Accounts receivable 75000 22000 97000 22000
Inventory 105000 15000 120000 15000
Investment in subsidiary 75000
Equipment 200000 50000 260000 60000
Accumulated depreciation -60000 -20000 -84000 (24000)
Goodwill 3000
TOTAL ASSETS 418000 124000 476000 130000

Accounts payable 43000 30000 73000 30000
Bonds payable 30000 30000
Total liabilities 73000 30000 103000 30000
Share capital 170000 50000 170000
Share premium 65000 65000
Retained earnings 110000 44000 118000
Noncontrolling interest 20000
Total equity 345000 94000 373000 100000
TOTAL LIAB. & EQUITY 418000 124000 476000
12-13. The above problem requires ____________________.
a) deconsolidation
b) consolidation
c) reverse acquisition
d) sale of subsiary

14-15. How much is the investment retained in the former subsidiary recognized?
a) 75,000
b) 100,000
c) 50,000
d) 25,000

16-17. How much is XYZ’s net identifiable assets?

a) 130,000
b) 145,000
c) 154,000
d) 100,000

18-20. How much is the gain on disposal?

a) 45000
b) 145,000
c) 100,000
d) 42,000


1. A
2. C
3. B
4. C
5. B
6. D
7. A
8. B
9. A
10. A
11. D . The receivable from Videl will be eliminated in consolidation. The receivable from Pan will not be eliminated
(Pan is not a subsidiary), thus, it remains. Gohan reports accounts recivables from affiliates (Pan) of P200,000 in its
consolidated balance sheet.
12 – 13. A. ABC sold 60% out of 80% of its interest over XYZ which results to loss of control over the subsidiary.
14-15. D.
16-17. D
18-20. D

Consideration received (at fair value) 100000

Investment retained in the former subsidiary (at fair value) 25000
NCI (carrying amount) 20000
Total 145000
Less: Former subsidiary's net identifiable assets (carrying amount) -100000
Goodwill (carrying
Gain or loss on disposal of controlling interest 42000