Which consolidation method should be used in preparing consolidated financial statements in accordance with IFRS? A. Proportionate consolidation method.B. Either identifiable net assets or fair value enterprise method.C. New entity method.D. Parent company method.

To achieve the objective of having common accounting language all over the world, The International…

Answered: Which consolidation method should be…

Business

Accounting

Which consolidation method should be used in preparing consolidated financial statements in accordance with IFRS?

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter16: Advanced Topics Concerning Complex Auditing Judgments

Section: Chapter Questions

Problem 21MCQ

See similar textbooks

Related questions

Q: Discuss how intercompany transfers should be treated for consolidation purposes, in both the…

A: Inter-company transactions: Inter-Company transactions are the transactions that occur between the…

Q: Explain the differences between IFRS and US GAAP in process of business acquisitions and…

A: Accounting standards are the rules and guidelines used by the business to prepare financial…

Q: Explain the impact that a net operating loss of an acquired affiliate has on consolidated figures.

A: Consolidated financial statements: These financial statements are consolidated financial statements…

Q: An entity shall determine whether a transaction or other event is a business com applying the…

A: An entity shall determine whether a transaction or other event is a business combination by…

Q: Demonstrate the consolidation process when a corporate ownership structure is characterized by…

A: Definition: A connecting affiliation exists when 2 or more entities within a particular business…

Q: consolidated financial statements

A: The related party transactions during the period should be disclosed in the group's consolidated…

Q: An entity shall determine whether a transaction or other event is a business combination by applying…

A: In case if business combination the acquirer will get benefited control over a transaction

Q: Which of the following statements is incorrect? For each business combination, one of the combining…

A: Business: A business is an organization entirely made for earning profits or for fulfilling social…

Q: What are changes in accounting principle and how do they affect financial statements? What are two…

A: 1)What are changes in accounting Principle and how do they affect financial statements? 2)What are…

Q: Explain the concepts of business acquisitions, mergers and consolidation of financial statements.

A: The merger or acquisition of smaller companies into large business entities is known as…

Q: Question 1 Discuss how the consolidated financial statements reflect: (a) The “single economic…

A: When one company owns or controls the other company or shares in other company, then first company…

Q: The purpose of consolidated accounts are as follows except: Show obligations of the group Show…

A: The purpose of consolidated accounts are as follows except to Show obligations of the subsidiary.

Q: preparation of consolidated financial statements

A: Second option is wrong because the preparation of consolidated financial statements does not…

Q: Question i Explain the purpose of the pre-acquisition entries in the preparation of consolidated…

A: Note: “Since you have asked multiple question, we will solve the first question for you. If you want…

Q: How are intra-entity inventory transfers treated on the consolidation worksheet and how are they…

A: Intra entity transfer means the sale and purchase of inventory between 2 entities of the same group.

Q: Prepare the set of consolidated financial statement of financial position on the date of acquisition…

A: Consolidated financial statements comprise of the group financial statements in which the…

Q: Which of the following is the best theoretical justification for consolidated financial…

Q: S1: The preparation of consolidated financial statements after acquisition is materially different…

A: Statement 1 is correct as consolidated financial statements are prepared for the parent company who…

Q: Statement I: A consolidation occurs when the entity that issues securities (the legal acquirer) is…

A: Consolidation In the consolidation parent company acquired the control over one or more subsidiary…

Q: what amount will be reported for Shareholders’ Equity in the combined company’s statement of…

A: Shareholders’ equity is the total amount of the capital which is associated with the shareholders…

Q: Discuss how the consolidated financial statements reflect: (a) The distinction between “control” and…

A: Consolidated financial statements are statements that are prepared for combination of parent company…

Q: Consolidated financial statements are typically prepared when one company has A. a substantial…

A: Consolidated financial statements are prepared when a parent-subsidiary relationship exists. A…

Q: Discuss how the consolidated financial statements reflect: (a) The “single economic entity” concept.

A: Whenever one company has control over another company by investing in its share capital, then one…

Q: How are rights, warrants, and options of subsidiary companies treated in the computation of…

Q: PFRS 3 must be applied when accounting for business combinations, but does not apply to: i.…

A: PFRS 3 is an accounting standard that is related with providing guidance on accounting treatment of…

Q: Discuss how the consolidated financial statements reflect: (a) The "single economic entity" concept.…

A: Consolidated financial statements are statements that are prepared for combination of parent company…

Q: Which of the following statements is incorrect concerning the preparation of consolidated financial…

A: For preparation of consolidated financial statements: 1. Uniform accounting policies to be applied…

Q: Choose the correct. Which of the following is the best theoretical justification for consolidated…

A: Consolidated financial statements: When an investor company holds above 50% in the outstanding…

Q: In connection with the examination of the consolidated financial statements Mott Industries,…

A: Auditor's report should be clear having opening , scope and opinion paragraphs. Opinion of auditor…

Q: Which of the following statements is not correct in relation to consolidation accounting key terms?…

A: Parent and subsidiary are two types of companies. Parent company is that company who has control…

Q: How is the amount assigned to the non-controlling interest normally determined when a consolidated…

Q: Consolidated financial statements are the financial statements of a group in which the assets,…

A: As per IAS 27, Consolidated Financial Statements are the financial statements of a group in which…

Q: If a company prepares a consolidated income statement, IFRS requires that net income be reported O…

A: Consolidated income statement includes all the expenses and incomes of both parent company and…

Q: Under what circumstances does a company prepare consolidated financial statements?

A: Consolidated statements must be prepared 1. when one company owns more than 50% of the outstanding…

Q: intercompany transactions and debts should be treated for consolidation purposes

A: Intercompany transactions and debts in consolidation means the transactions and mutual dues between…

Q: entity that is represented by a single set of consolidated financial statements

A: Option a is wrong because economic entity is a distinct entity that does not require consolidated…

Q: Explain why consolidated entities defer intra-entity gross profit in ending inventory and the…

A: Despite the entry TI, the inflated ending inventory figure causes cost of goods sold to be too low…

Q: When we are preparing consolidated financial statements, will the financial statements of the parent…

A: Consolidation is a term used for merging of several companies of an industry. The assets,…

Q: Acquisition accounting requires an acquirer and an acquirer to be identified for every business…

A: Solution: An acquirer is a entity/business who obtains control over another entity/Business.…

Q: Consolidation financial statements are prepared when a parent-subsidiary relationship exists in…

A: Financial statements show the financial performance/position of the business entity. It is prepared…

Question

Which consolidation method should be used in preparing consolidated financial statements in accordance with IFRS?

A. Proportionate consolidation method.
B. Either identifiable net assets or fair value enterprise method.
C. New entity method.
D. Parent company method.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Please concisely explain how the excess investment cost over book value is allocated. When is the intra-entity’s profits recognized on transfers between the investor and investee? What is the controlling interest percentage for a consolidated accounting financial statement?
Discuss how intercompany transactions and debts should be treated for consolidation purposes, in both the statement of financial position and the statement of comprehensive income.
The identifiable assets acquired and liabilities assumed in a business combination are generally measured at: a. Acquisition-date fair values b. Previous carrying amounts c. Fair value less cost to sell d. Cost
Discuss how the consolidated financial statements reflect:(a) The distinction between “control” and “ownership”.
Under what circumstances does a company prepare consolidated financial statements?
Discuss how the consolidated financial statements reflect: (a) The "single economic entity" concept. (b) The distinction between "control" and "ownership".
How is the amount assigned to the non-controlling interest normally determined when a consolidated balance sheet is prepared immediately after a business combination?
Question 1Discuss how the consolidated financial statements reflect:(a) The “single economic entity” concept.(b) The distinction between “control” and “ownership”
The purpose of consolidated accounts are as follows except: Show obligations of the group Show obligations of the subsidiary Show the results the group achievs with its resourses Show the economic resources controlled by the group
What is the requirement and justification for the use of consolidated Financial Statements?
Acquisition accounting requires an acquirer and an acquirer to be identified for every business combination. Where a new entity (H) is created and two pre-existing entities, S and A, which of these entities will be designated as the acquirer? a. H b. S or A c. S d. A
An appropriation of accumulated profits for possible contingencies should be a. Transferred to income as losses are realized b. Shown within shareholders’ equity in the statement of financial position c. Charged with all losses related to that contingency d. Classified in the liability section of the statement of financial position