Consolidation

Question 1

Which of the following statements is true?
A. To control an investee the share of equity is the relevant measurement.
B.The ability to use its power over the investee to affect the amount of the
investor’s returns is one of the requirements of control.
C. In a firm relationship the controlling company is the subsidiary and the
controlled company is the parent.

Answer 1

Only B is correct

Question 2

Which of the following companies would least likely qualify to be regarded as
subsidiaries of Parent AG?
A. Firm D in which Parent AG has 52% votes but no place on the board of
directors
B. Firm G in which Parent AG has 25% shares and a place on the board of
directors
C. Firm T in which Parent AG holds 100% votes and all places on the board of directors

Answer 2

Only B is correct

Question 3

Which of the following statements is correct with regard to preparation of
consolidated financial Statement?
A. To be a subsidiary a parent should hold 100% of its equity shares.
B. Goodwill of a subsidiary and an associate is treated identically.
C. Consolidated balance sheets exclude assets that are not directly owned by the group.

Answer 3

Only B is correct