Reference no: EM132650721
Question 1: On January 1, 20X7, Marina Co. acquired 80% of the ordinary voting shares of Bay Inc. Both entities have a December 31 fiscal year end. During 20X7, Marina paid RM225,000 to Bay as management fees, and Bay loaned RM144,000 to Marina.
Which of the following statements describes the impact on the CSOFP?
a) The RM144,000 will be added to the balance of the loan payable account as an adjustment on the CSOFP
b) Consolidated assets will be less than the sum of the parent and subsidiary's assets due to the intercompany transactions.
c) Consolidated retained earnings attributable to the parent will be RM225,000 higher than would be the case had the management fees not been charged.
d) Consolidated liabilities will be more than the sum of the parent and subsidiary's assets due to the intercompany transactions.
Question 2: Which of the following statements describes the impact on the CSOPOL & OCI?
a. The RM225,000 in management fees will be added to revenues as an adjustment on the CSOPOL & OCI.
b. Consolidated net income will be less than the sum of the parent and subsidiary's net income due to the intercompany transactions.
c. Consolidated retained earnings attributable to the parent will be RM180,000 higher than would be the case had the management fees not been charged.
d. Consolidated expenses will be less than the sum of the parent and subsidiary's expenses due to the intercompany transactions.
Question 3: Subside owns 60% of Diary at 31 December 20X8. On 1 July 20X9, it buys a further 20% of Diary. How this transaction should be treated in the group financial statements at 31 December 20X9.
a. As a transaction between owners, with an adjustment to the parent's equity to reflect the difference between the consideration paid and the decrease in non-controlling interest.
b. Record at its fair value at the date of acquisition plus a 20% share of the profits accrued.
c. An adjustment to the parent's equity to reflect the increase between the consideration paid and the increase in non-controlling interest.
d. Record at its cost of acquisition at the date of acquisition minus a 20% share of the profits accrued.
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