Exam (elaborations)
FAC2602 Assignment 1 (2021) Answers
- Institution
- University Of South Africa (Unisa)
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FAC2602Assignment 1 for semester 1 & 2 of 2021
Unique number: 779824
REQUIRED:
Answer the following 15 multiple-choice questions concerning the group consolidated
financial statements of the Metropolis Ltd Group as at 31 December 2020. Select only
one option per question.
1. Which one of the following statements is incorrect?
1. A parent can control a subsidiary when it acquires more than 50% of the voting
rights of the subsidiary.
2. An investor can control a subsidiary when it has rights to variable returns from
the subsidiary.
3. A parent controls a subsidiary only if it acquires 50% or more of the shares of
the subsidiary.
4. A parent controls a subsidiary if, amongst other things, it exerts power over the
subsidiary.
2. Which one of the following statements is correct with regards to a 70%-owned
subsidiary?
1. 100% of the parent’s retained earnings will be added to 100% of the
subsidiary’s retained earnings at consolidation, in the statement of changes in
equity.
2. 100% of the parent’s assets will be added to 70% of the subsidiary’s assets at
consolidation, in the statement of financial position.
3. 100% of the parent’s retained earnings will be added to 70% of the subsidiary’s
retained earnings at consolidation, in the statement of changes in equity.
4. The retained earnings of the subsidiary will be allocated to the non-controlling
interests in total.
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