F7 (FR) – Chapter 08 – PART D – CBE MCQs – ACCA

These are ACCA F7 (FR) Financial Reporting MCQs for Part-D of the Syllabus “Preparation of financial statements”.

These multiple-choice questions (MCQs) are designed to help ACCA F7 students to better understand the exam format. We aim to instill in students the habit of practicing online for their CBE exams. By doing so, students can reduce exam stress and prepare more effectively.

Please note:

  • Students should not attempt these MCQs until they have finished the entire chapter.
  • All questions are compulsory, so please do not skip any.

We hope that these MCQs will be a valuable resource for students preparing for the ACCA F7 (FR) exam.

INFORMATION ABOUT THESE CBE MCQs Test/Quiz

Course:ACCA – Association of Chartered Certified Accountants
Fundamental Level:Applied Skills
Subject:Financial Reporting
Paper:F7 – FR
Chapter and Topic08 – Consolidated statements of financial positions
Syllabus Area:D – “Preparation of financial statements”
Questions Type:CBE MCQs
Exam Section:Section A

Syllabus Area

These Multiple Choice Questions (MCQs) cover the Syllabus Area Part-D of the Syllabus; “Preparation of financial statements” of ACCA F7 (FR) Financial Reporting Module.

Time

These MCQs are not time-bound. Take your time and solve them without stress. Pay proper attention and focus. Do not rush or hesitate

Result

Students will get their F7 CBE MCQs Test results after they finish the entire test. They will also be able to see the correct and incorrect answers, as well as explanations for the incorrect questions.

Types of Questions

MCQs: Choose one from the given options.
Multiple choice: Choose all those answers which seem correct/ or incorrect to you, as per the requirement of the question. Keep your eye on the wording “(select all those which are correct/ or incorrect)“.
Drop-down: Select from the list provided.
Type numbers: Type your answer in numbers as per the requirement of the question.

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F7 (FR) - Chapter 08 - Part D - MCQs - The consolidated statement of financial position

Course: ACCA - Association of Chartered Certified Accountants
Subject:
F7 (FR) - Financial Reporting
Syllabus Area: D - Preparation of financial statements
Chapter: 08 - The consolidated statement of financial position
Exam Section: Section A
Questions type: MCQs
Time: No Time Limit

INSTRUCTIONS

  1. If you are using mobile, turn on the mobile rotation and solve the MCQs on wide screen for better experience.

REQUEST

  1. Please rate the quiz and give us feedback once you completed the quiz.
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1 / 12

Cloud Co obtained a 60% holding in the 100,000 $1 shares of Mist Co on 1 January 20X8. Cloud Co paid $250,000 cash immediately with an additional $400,000 payable on 1 January 20X9 and one share in Cloud Co for each two shares acquired. Cloud Co has a cost of capital of 8% and the market value of its shares on 1 January 20X8 was $2.30.

What was the total consideration paid for Cloud Co's share of Mist Co?

2 / 12

On 1 April 20X0 Picant Co acquired 75% of Sander Co's equity shares by means of a share exchange and an additional amount payable on 1 April 20X1 that was contingent upon the post-acquisition performance of Sander Co. At the date of acquisition Picant Co assessed the fair value of this contingent consideration at $4.2 million but by 31 March 20X1 it was clear that the amount to be paid would be only $2.7 million.

Using the drag and drop options below, demonstrate how Picant Co would account for this $1.5 million adjustment in its financial statements as at 31 March 20X1?

3 / 12

Tazer Co, a parent company, acquired Lowdown Co, an unincorporated entity, for $2.8 A fair value exercise performed on Lowdown Co's net assets at the date of purchase showed:

$'000
Property, plant and equipment 3,000
Identifiable intangible asset 500
Inventories 300
Trade receivables less payables 200
4,000

How should the purchase of Lowdown be reflected in Tazer Co's consolidated statement of financial position?

4 / 12

Boat Co acquired 60% of Anchor Co on 1 January At the date of acquisition, the carrying amount of Anchor Co's net assets were the same as their fair values, with the exception of an item of machinery which had a carrying amount of $90,000, a fair value of $160,000 and a remaining useful life of five years.

Non-controlling interests are valued at fair value.

What is the journal entry required to reflect this fair value adjustment in the consolidated statement of financial position of Boat Co as at 31 December 20X6?

Options $  $
(A) Debit Retained earnings  25,200
Debit Non-controlling interest  16,800
Debit Property, plant and equipment  28,000
Credit Goodwill 70,000
(B) Debit Retained earnings 8,400
Debit Non-controlling interest 5,600
Debit Property, plant and equipment 56,000
Credit Goodwill 70,000
(C) Debit Retained earnings 57,600
Debit Non-controlling interest 38,400
Debit Property, plant and equipment 64,000
Credit Goodwill 160,000
(D) Debit Retained earnings 42,000
Debit Property, plant and equipment 28,000
Credit Goodwill 70,000

 

5 / 12

Crash Co acquired 70% of Bang Co's 100,000 $1 ordinary shares for $800,000 when the retained earnings of Bang Co were $570,000.
Bang Co also has an internally developed customer list which has been independently valued at $90,000. The non-controlling interest in Bang Co was judged to have a fair value of $220,000 at the date of acquisition.

What was the goodwill arising on acquisition?

6 / 12

Witch Co acquired 70% of the 200,000 equity shares of Wizard, its only subsidiary, on 1 April 20X8 when the retained earnings of Wizard Co were $450,000. The carrying amounts of Wizard Co's net assets at the date of acquisition were equal to their fair values.

Witch Co measures non-controlling interest at fair value, based on share price. The market value of Wizard Co shares at the date of acquisition was $1.75.

At 31 March 20X9 the retained earnings of Wizard Co were $750,000. At what amount should the non-controlling interest appear in the consolidated statement of financial position of Witch Co at 31 March 20X9? $_______

Note. You are not required to put $ sign nor any coma. (e.g. 1000)

7 / 12

Platt Co has owned 60% of the issued equity share capital of Serpi Co for many years. At 31 October 20X7, the individual statements of financial position included the following:

Platt Co Serpi Co
$ $
Current assets 700,000 500,000
Current liabilities 300,000 200,000

Neither had a bank overdraft at 31 October 20X7.

During the year ended 31 October 20X7, Platt Co made $100,000 sales on credit to Serpi Co. Serpi Co had one-quarter of these goods in inventory at 31 October 20X7. Platt Co makes a 20% gross profit margin on all sales.

On 31 October 20X7, Serpi Co sent a cheque for $50,000 to pay all of the outstanding balance due to Platt Co. Platt Co did not receive this cheque until 2 November 20X7.

Platt Co's policy for in-transit items is to adjust for them in the parent company.

In respect of current assets and current liabilities, what amounts will be reported in Platt Co's consolidated statement of financial position at 31 October 20X7?

8 / 12

On 1 August 20X7 Patronic Co purchased 18 million of the 24 million $1 equity shares of Sardonic Co. The acquisition was through a share exchange of two shares in Patronic Co for every three shares in Sardonic Co. The market price of a share in Patronic Co at 1 August 20X7 was $5.75. Patronic Co will also pay in cash on 31 July 20X9 (two years after acquisition) $2.42 per acquired share of Sardonic Co. Patronic Co's cost of capital is 10% per annum.

What is the amount of the consideration attributable to Patronic Co for the acquisition of Sardonic Co?

9 / 12

On 1 January 20X5, Pratt Co acquired 80% of the equity shares of Sam Co. Pratt Co values non-controlling interests at fair value and, at the date of acquisition, goodwill was valued at $20,000. At December 20X5, the goodwill was fully impaired.

In reviewing the fair value of Sam Co's net assets at acquisition, Pratt Co concluded that property, plant and equipment, with a remaining life of five years, had a fair value of $5,000 in excess of its carrying amount.

Sam Co has not incorporated any of these adjustments into its individual financial statements.

What is the total charged to group retained earnings at 31 December 20X5 as a result of these consolidation adjustments?

10 / 12

Phantom Co acquired 70% of the $100,000 equity share capital of Ghost Co, its only subsidiary, for $200,000 on 1 January 20X9 when the retained earnings of Ghost Co were $156,000.

At 31 December 20X9 retained earnings are as follows.

$
Phantom Co 275,000
Ghost Co 177,000

Phantom Co considers that goodwill on acquisition is impaired by 50%. Non-controlling interest is measured at fair value, estimated at $82,800.

Using the drop down box, select what are group retained earnings at 31 December 20X9?

11 / 12

On 1 June 20X1 Premier Co acquired 80% of the equity share capital of Sandford Co. At the date of acquisition the fair values of Sandford Co's net assets were equal to their carrying amounts with the exception of its property. This had a fair value of $1.2 million BELOW its carrying amount. The property had a remaining useful life of eight years.

What effect will any adjustment required in respect of the property have on group retained earnings at 30 September 20X1?

12 / 12

On 1 July 20X5, Pull Co acquired 80% of the equity of Sat Co. At the date of acquisition, goodwill was calculated as $10,000 and the non-controlling interesOperating expenses t was measured at fair value. In conducting the fair value exercise on Sat Co's net assets at acquisition, Pull Co concluded that property, plant and equipment with a remaining life of ten years had a fair value of $300,000 in excess of its carrying amount. Sat Co had not incorporated this fair value adjustment into its individual financial statements.

At the reporting date of 31 December 20X5, the goodwill was fully impaired. For the year ended 31 December 20X5, Sat Co reported a profit for the year of $200,000.

What is the Pull Group profit for the year ended 31 December 20X5 that is attributable to non-controlling interests?

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