Quiz C1-C2 Eng

QUIZ C1-C2 ENG
1. Negative goodwill should be:

a. Allocated to non-current assets
b. Recorded in the income statement
c. Matched to future losses
d. Ignore
2. On 1 January 2013, E Ltd paid £560,000 to acquire 80% of the ordinary share capital of F Ltd. The
equity of F Ltd on that date consisted of ordinary share capital of £300,000 and retained earnings of
£150,000. All of its assets and liabilities were carried at fair value. On 31 December 2016, the retained
earnings of E Ltd and F Ltd are £1,870,000 and £65,000 respectively. Goodwill arising on consolidation
has suffered an impairment loss of 70% since 1 January 2013. The retained earnings figure which should
be shown in the consolidated statement of financial position at 31 December 2016 is:
a. £1,708,000
b. £1,662,000
d. £1,725,000
d. £1,645,000
3. Under IFRS 3, acquired contingent liabilities are:
a. Always included in the cost of combination
b. Included in goodwill
c. Included in the cost of combination, only if they can be reliably measured
d. Included in NCI
4. Applying the acquisition method involves the following steps: (i)Identifying an acquirer; (ii)Measuring
the cost of the combination. (iii)Allocating, at the acquisition date, the cost of the combination to the
assets acquired and liabilities and contingent liabilities assumed. (iv)Amortising the goodwill.
a. i – iii
b. i – iv
c. ii – iii
d. i – ii
5. On 1 July 2019, A Ltd pays £870,000 to acquire the entire share capital of B Ltd. The equity of B Ltd
on that date consists of ordinary share capital of £400,000 and retained earnings of £210,000. The fair
value of the non-current assets of B Ltd on 1 July 2019 exceeds their carrying amount by £35,000. Tax
rate 20%. The amount paid for goodwill by A Ltd is:
a. £470,000
b. £260,000
c. £225,000
d. £232,000
6. At 1 January 20X4 Yogi acquired 80% of the share capital of Bear for $1,400,000. At that date the
share capital of Bear consisted of 600,000 ordinary shares of 50c each and its reserves were $50,000. The
fair value of the non-controlling interest was valued at $525,000 at the date of acquisition.
In the consolidated statement of financial position of Yogi and its subsidiary Bear at 31 December 20X8,
what amount should appear for goodwill?
a. $1,050,000
b. $450,000
c. $1,575,000
d. $630,000
7. At 1 January 20X6 Fred acquired 75% of the share capital of Barney for $750,000. At that date the
share capital of Barney consisted of 20,000 ordinary shares of $1 each and its reserves were $10,000. The
fair value of the non-controlling interest was valued at $150,000 at 1 January 20X6.
In the consolidated statement of financial position of Fred and its subsidiary Barney at 31 December
20X9, what amount should appear for goodwill?
a. $720,000
b. $750,000
c. $870,000
d. $150,000
8. Which of the following statement(s) is / are correct with regard to preparation of consolidated financial
Statement?
i) To be a subsidiary a parent should hold 100% of its equity shares
ii) Consolidation merely addition together of two Statements of financial position
iii) In consolidation a subsidiary and an associate are treated identically
iv) Consolidated balance sheet excludes assets not owned by the group
a. None
b. i&ii
c. ii&iv
d. ii&iii
9. IFRS 3:
a. Allows only the acquisition method or merger method
b. Allows either the unitings of interest method, or the acquisition method
c. Allows only the acquisition method
d. Allows only the unitings of interest method
10. Which of the following statements is not a key feature of the acquisition method?
a. An acquirer being identified for each business combinationamortization
b. The cost of business combination being measured at fair value of the net assets received from the acquiree
c. The acquired identifiable net assets being measured at the fair value
d. The goodwill being measured as the consideration transferred plus the amount of any NCI interest plus the
fair value of any previously held equity intersest in the acquire less the fair value of the identifiable net assets
acquired.
11. On 1 January 2009, P Ltd paid £480,000 to acquire 65% of the ordinary share capital of Q Ltd. The
equity of Q Ltd on that date consisted of ordinary share capital of £200,000 and retained earnings of
£150,000. The fair value of the non-current assets of Q Ltd on 1 January 2009 exceeded their carrying
amount by £250,000. Goodwill arising on consolidation has suffered an impairment loss of 40% between
1 January 2009 and 31 December 2016. The goodwill figure which should be shown in the consolidated
statement of financial position at 31 December 2016 is:
a. £36,000
b. £78,000
c. £151,500
d. £54,000

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QUIZ C1-C2 ENG

1. Negative goodwill should be:

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