ACCT2542+2009+Final+Exam+Cut - Consolidation 1 The entity concept of consolidation involves the following I Line-by-line and full aggregation of the

ACCT2542+2009+Final+Exam+Cut - Consolidation 1 The entity...

This preview shows page 1 - 3 out of 12 pages.

Page 1 of 12 Consolidation1)The entity concept of consolidation involves the following: I Line-by-line and full aggregation of the account balances of the Parent and Subsidiary II Eliminations and adjustments to remove the financial effects of transactions and balances between the Parent and Subsidiary in full III Minority interest disclosed in equity and calculated as the proportion of group equity attributable to shareholders other than the shareholders of the Parent IV Posting consolidation journal entries into the books of the Parent a)All of the above b)I and II only c)I, II and III only d)I, III and IV only e)II, III and IV only 2)The Parentprovided administration services to the Subsidiaryduring the year to 30 June 2009 amounting to $50,000. The Subsidiary has paid for these services by year end. The consolidation worksheet entries for 30/6/09 include: 3)The Parentprovided management services to the Subsidiaryamounting to $45,000 during the previous year to 30 June 2008. The subsidiary paid for these services on 1 July 2008. The consolidation worksheet entries for 30/6/09 include:
Background image
Page 2 of 12 4)TheParentholds 90% of the shares of the Subsidiary. At 30 June 2009 the Subsidiary owes the Parent $40,000 for inventory purchases. The consolidation worksheet entries for 30/6/09 include: 5)The Subsidiaryhas utilised the Parent’sbank overdraft account to pay employee wages of $80,000 during the year to 30 June 2009. The Subsidiary has not repaid this amount by year end. The consolidation worksheet entries for 30/6/09 include: a)Dr. Intercompany payable $80,000 Cr. Employee expenses $80,000 b)Dr. Intercompany payable $80,000 Cr. Intercompany receivable $80,000 c)Dr. Bank overdraft $80,000 Cr. Employee expenses $80,000 d)Dr. Cash at bank $80,000 Cr. Employee expenses $80,000 e)No entries for this are required for 30/6/09
Background image
Image of page 3

You've reached the end of your free preview.

Want to read all 12 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture