Consolidated Financial Statements

According to AASB 10, which of the following best describes a 'Parent'?

Under AASB 10, which factor determines whether an entity should prepare consolidated financial statements?

Which of the following is the most accurate qualitative definition of 'control' under AASB 10?

According to AASB 10, what three elements must be present for an investor to have control over an investee?

Under AASB 10, 'power' over an investee is defined as:

According to AASB 10, what is the general presumption regarding power when an investor holds more than 50% of the voting rights in an investee?

Which of the following is an example of an 'existing right' that could give an investor power over an investee, according to AASB 10?

According to AASB 10, what are 'potential voting rights,' and under what condition should they be considered when assessing control?

According to AASB 10, what is meant by 'substantive rights' in the context of potential voting rights?

Under AASB 10, which of the following factors should be considered when determining whether potential voting rights are 'substantive'?

What is the definition of 'protective rights' under AASB 10, and how do they affect the assessment of control?

Which of the following scenarios describes a situation where rights would likely be considered 'protective,' according to AASB 10?

According to AASB 10, what does 'current ability to direct' refer to in the context of assessing power?

According to AASB 10, 'relevant activities' are defined as:

An entity is established by Entity A and Entity B to research, develop, and manufacture a new drug. If Entity A is primarily responsible for the research and development phase, and Entity B will take over after regulatory approval for manufacturing and distribution, which entity likely controls Entity C before regulatory approval, assuming all other control criteria are satisfied?

According to AASB 10, is it possible for an investor with majority voting rights (greater than 50%) to lack control over an investee? If so, under what circumstances?

Under AASB 10, how is 'exposure, or rights, to variable returns' defined in the context of assessing control over an investee?

According to AASB 10, what does the 'ability to use power to affect returns' refer to in the context of determining control?

In the context of AASB 10, what is the key difference between a 'principal' and an 'agent' in terms of control assessment?

Fund Manager X sets up and markets a fund to a broad range of investors. X receives market-based remuneration, including a performance element, holds a small (< 5%) direct interest, and is required to operate the fund within a defined investment strategy and subject to relevant laws. There are no ‘kick-out’ rights. According to AASB 10, is X the principal of the fund?

Under AASB 10, what are the three main factors that should be assessed to determine if ‘Control’ exists?

AASB 10 provides an exception to consolidation requirements for certain 'investment entities.' Which of the following is a key criterion for an entity to qualify as an investment entity?

Under AASB 10, if an investment entity is the subsidiary of a parent that is not an investment entity, is consolidation required?

According to AASB 10, in which of the following scenarios would an investment entity (IE) parent not consolidate its subsidiary?

What are some of the challenges in applying the concept of 'control' in public sector consolidations?

What are some of the common issues that arise when determining control in the not-for-profit private sector (e.g., charities, clubs)?

AASB 10 Appendix E provides implementation guidance for not-for-profit entities. What is the scope of this guidance?

According to AASB 10 Appendix E, what are some common sources of power for not-for-profit entities?

According to AASB 10 Appendix E, what factors should be considered when assessing the power of an investor over a not-for-profit investee?

Under AASB 10 Appendix E, does providing funding to a not-for-profit entity automatically grant the investor control?

According to AASB 10 Appendix E, how can 'variable returns' be interpreted in the context of not-for-profit entities?

According to AASB 10 Appendix E, is the existence of congruent objectives alone sufficient for a not-for-profit investor to conclude that it controls an investee?

According to AASB 10, who is likely to prepare consolidated financial statements in the following scenario: A Ltd owns 100% of B Ltd, and B Ltd owns 100% of C Ltd?

Under AASB 10, what is the general relationship between the acquirer in a business combination and the parent entity for consolidation purposes?

Which of the following is NOT a factor to consider when an investor holds less than 50% of the voting rights but may still have power over an investee, according to AASB 10?

Determine if D Ltd controls E Ltd: D Ltd → E Ltd (45%) Over 20 other shareholders each holding < 2% of the voting power. These shareholders rarely attend meetings and vote. Does D Ltd control E Ltd?

Determine if F Ltd controls G Ltd: F Ltd → G Ltd (35%) 3 other shareholders each holding 5% of votes. The remaining 50% of voting rights held by numerous small investors. 75% of the vote holders have been attending recent AGMs (including F)Does F Ltd control G Ltd?

HRI is a charity that provides housing for destitute persons. 75% of its funding comes from State government grants with the remainder being sourced from private donations. The government grants contain a number of specific restrictions on how funds can be used, regular reporting and audit requirements, minimum service standards, etc. Does the government control HRI?

Entity A holds 40% of the voting shares in Entity B. The remaining 60% is held by a highly dispersed group of small investors who historically do not attend shareholder meetings. Entity A has also demonstrated the ability to consistently appoint the majority of Entity B's board of directors. Consider only these facts. Does Entity A control Entity B?

According to AASB 10, what is the primary determinant of whether an entity must present consolidated financial statements?

Under AASB 10, which of the following elements is NOT required for an investor to have control over an investee?

According to AASB 10, which of the following best describes 'relevant activities'?

According to AASB 10, what is the significance of 'substantive rights' in the context of potential voting rights?

Under AASB 10, which of the following is the most critical factor in determining whether an investor's potential voting rights are substantive?

According to AASB 10, which of the following is an example of a factor that might prevent potential voting rights from being considered substantive?

Under AASB 10, how are 'protective rights' best characterized?

According to AASB 10, if rights are deemed to be merely 'protective,' what is the implication for the assessment of control?

Under AASB 10, what does 'current ability to direct' primarily emphasize in the context of assessing power?

According to AASB 10, which of the following actions would most likely be considered a 'relevant activity'?

Entity A owns 48% of Entity C and formulates the day-to-day activities. Entity B owns 52% but plays no part. If Entity B disagrees with the management policies of A, they can take control by virtue of its majority voting interests. According to AASB 10, who controls Entity C?

Entity C is established by Entities A and B to research, develop, and manufacture a new drug. Entity A is primarily responsible for research and development phase, and Entity B will take over after regulatory approval for manufacturing and distribution. Assuming all other control criteria are satisfied, according to AASB 10, which entity may control Entity C?

According to AASB 10, is it possible for an investor with majority voting rights (greater than 50%) to lack control over an investee?

Under AASB 10, which of the following factors could indicate that an investor with less than 50% of the voting rights has power over an investee?

According to AASB 10, what constitutes 'exposure, or rights, to variable returns' from involvement with an investee?

According to AASB 10, what is the key distinction between a 'principal' and an 'agent' in the context of determining control?

Under AASB 10, which of the following factors is LEAST relevant when determining whether a fund manager is acting as a principal or an agent?

According to AASB 10, what are the three essential components that must be assessed to determine if control exists?

According to AASB 10, what are the key requirements for an entity to qualify as an investment entity?

According to AASB 10, is an investment entity permitted to consolidate a subsidiary?

According to AASB 10, which of the following scenarios would require an investment entity (IE) parent to consolidate its subsidiary?

According to AASB 10, what are some of the unique challenges in applying the concept of 'control' in public sector consolidations?

According to AASB 10 Appendix E, what is the typical source of power for not-for-profit entities?

Under AASB 10 Appendix E, which of the following is the correct interpretation of variable returns in the context of not-for-profit entities?

Under AASB 10 Appendix E, a not-for-profit investor and investee may have the same congruent objectives. Is this alone enough for the investor to determine control?

Under AASB 10, Investor A has a 48% equity investment in Investee B. The other 52% is held by dispersed investors with each holding less than 2%. Investor A has been trying to push through resolutions at the last few AGMs, but has been unsuccessful due to the other shareholders voting against them. Investor A has a call option to acquire 3% of shares in Investee B from another investor. At the time the call option was entered into, the strike price was 'in the money' but now is significantly 'out of the money'. Consider only these facts. Who controls Investee B?

According to AASB 10, Investor Z owns 49% of Investee Y. They are in the same industry, and the strategic direction of Investee Y is heavily influenced by Investor Z, because Investor Z has provided specialised and difficult to source IP to Investee Y. Investee Y has 5 other major shareholders, and each of them owns 10-11% of the company. At the AGMs, 3 of the 5 other major shareholders consistently vote alongside Investor Z and support all resolutions. Can the demonstrated support of 3 other major shareholders be considered a legally binding agreement between these 4 investors?

The local council provides 95% of the funding to an aged care NFP, with the remaining 5% coming from philanthropic donations. The local council places several members onto the NFP's board, who are charged with ensuring the NFP provides the aged care services aligned with the local council's public health plan. The local council also imposes stringent capital expenditure requirements on the NFP, and all expenditure over $10,000 must be approved. The NFP management is unhappy with the council's directions, as they would like to expand the aged care services outside of alignment with the local council's public health plan due to unmet demands in the market. Does the local council control the NFP aged care provider?