chapter 13 - financial fixed assets and business combinations

Multiple ChoiceIdentify the choice that best completes the statement or answers the question.

1. Which of the following items is not a financial fixed asset?a. Shares in subsidiariesb. Marketable securitiesc. Loans to subsidiariesd. Shares in associated companies

ANSWER: BModerate

POINTS: 0 / 1REF: page 449

2. Which of the following statements is not correct?a. The economic entity resulting from the combination of two or more enterprises

linked by intercorporate investments of sufficient importance to warranteffective control of one over the other is called a group.

b. If an investor or a shareholder wants or needs to shape her or his opinion aboutthe financial position and the performance potential of a group, it is essential todevelop group accounts.

c. In most countries, a group is generally a legal entity.d. Group accounts are also called consolidated accounts or consolidated financial

statements.

ANSWER: CModerate

POINTS: 0 / 1REF: pages 453, 454

3. Given the following data:o P owns directly 43% of C2;o P owns directly 30% of C1;o C1 owns directly 40% of C2;

What is the percentage of control of the parent P over C2?a. 30%b. 40%c. 43%d. 82%

ANSWER: CDifficult


4. What is the consolidation method used in case of significant influence?a. Full consolidationb. Proportionate consolidation

Name: Score: 0 / 10 points (0%)

Chapter 13 Financial fixed assets and business combinations

c. Global integrationd. Equity method

ANSWER: DModerate


5. Given the following data:o P owns directly 100% of C;o Share capital of P amounts to 200;o Share capital of C amounts to 100;

What is the share capital in the consolidated balance sheet of the group comprised ofP and C?

a. 100b. 200c. 300d. 400

ANSWER: BModerate


6. If the parent company owns 90% of the shares of its subsidiary, the parent companyintegrates ___________ of the assets and liabilities of the subsidiary in its consolidatedaccounts.a. 80%b. 90%c. 99%d. 100%

ANSWER: DModerate


7. Under the entity concept, how are the minority interests reported in the financialstatements?a. No minority interests are reported.b. Minority interests are part of liabilities of consolidated entity.c. Minority interests are included as a part of shareholders’ equity.d. Minority interests are reported between shareholders’ equity and liabilities.

ANSWER: CModerate


8. Given the following data:o Purchase price 420o Interest in book value of shareholders’ equity 320of subsidiary at the time of acquisitiono Interest in fair value of identifiable assets 390and liabilities of subsidiary

What is the amount of the goodwill?a. 0b. 30c. 70d. 100

ANSWER: BDifficult

POINTS: 0 / 1REF: pages 465 467

9. What is generally the first step of the consolidation process?a. Consolidation entries and operations.b. Preconsolidation.c. Preparation of the consolidated financial statements.d. Identify the companies to be consolidated.

ANSWER: DModerate


10. Given the following data:o A merges with B o Number of shares included in the capital of A 4 000 o Par value 100o Net assets of A 1 200 000o Number of shares included in the capital of B 2 000 o Par value 100o Net assets of B 300 000

What is the amount of the merger premium?a. 200b. 0c. 100d. 300

ANSWER: ADifficult


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chapter 13 - financial fixed assets and business combinations

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