Question 1

What is the total amount of deferred taxes that would appear on Seek's Consolidated Balance Sheet as at December 31, 2016?

Accepted Answer

From the information given in the case, Seek has a deferred tax liability of $1,200. This amount appears in the Consolidated Balance Sheet as at December 31, 2016. Therefore, the correct answer is option B.

Question 2

What is the amount of Consolidated Retained Earnings at December 31, 2016?

Accepted Answer

D

Question 3

What is the total amount of intercompany receivables to be eliminated from the financial statements?

Accepted Answer

The intercompany receivables between Company A and Company B should be eliminated as part of the consolidation process. The total intercompany receivables shown in the data is $10,000, so this amount should be eliminated. Option A is incorrect as there are intercompany transactions that need to be eliminated. Option C and D are incorrect as they are not reflective of the given data.

Question 4

What is the total amount of miscellaneous assets that would appear on Seek's Consolidated Balance Sheet as at December 31, 2016?

Accepted Answer

Seek's Consolidated Balance Sheet as at December 31, 2016, shows miscellaneous assets of $650,000.

Question 5

What is the total amount of intercompany sales and purchases that must be eliminated from the financial statements?

Accepted Answer

Intercompany sales and purchases amounting to $12,000 each ($24,000 in total) should be eliminated because they represent transactions between the two companies and are not revenues or expenses for the consolidated entity.

Question 6

Which of the following statements pertaining to any acquisition differential arising from a joint venture is correct?

Accepted Answer

In the formation of a new joint venture, there is no acquisition differential because the joint venture is created from scratch, and there are no pre-existing net assets to allocate the differential to.

Question 7

What is the total amount of other expenses that would appear on the Consolidated Income Statement?

Accepted Answer

The answer of What is the total amount of other...

Question 8

The primary beneficiary of a variable interest enterprise:

Accepted Answer

The primary beneficiary of a variable interest enterprise must include the assets, liabilities, and results of the variable interest enterprise in its consolidated financial statements, as per the guidelines under GAAP (Generally Accepted Accounting Principles). Thus, option A is the correct choice. Option B is incorrect because recording income just on a cash basis does not reflect the actual performance and financial position of the variable interest enterprise. Option C is incorrect because the primary beneficiary must report the results of the variable interest enterprise on an ongoing basis, not just on the sale of its interest. Option D is incorrect because the primary beneficiary must consolidate the financial statements of the variable interest enterprise when it has a significant influence, which is not restricted to the extent of voting share capital.

Question 9

According to GAAP, what is the key feature of a joint arrangement?

Accepted Answer

According to GAAP, the key feature of a joint arrangement is joint control, meaning that no one venturer can unilaterally control the venture regardless of the size of the equity contribution. This means that options A and D are incorrect because they imply that one or only a few venturers have control over the joint arrangement. Option B is also incorrect because it implies that more than one venturer has a controlling interest, but does not clarify whether they have joint control or not.

Question 10

What is the total amount of cost of sales that would appear on the Consolidated Income Statement?

Accepted Answer

The answer of What is the total amount of cost...

Question 11

What is the amount of non-controlling interest that would appear on Seek's December 31, 2016 Consolidated Balance Sheet?

Accepted Answer

Seek's non-controlling interest is calculated as 20% of the net assets of the subsidiary, which is $136,000 (20% x $680,000).

Question 12

Company A and B agree to engage in a joint venture. Which of the following statements pertaining to joint ventures is correct?

Accepted Answer

In a joint venture, both parties have joint control over the venture, meaning decisions are made jointly by both parties involved. The amount of resources each party contributes can vary, and the party contributing the most resources does not necessarily have control over the venture. Joint ventures may or may not have a stated economic useful life, depending on the specific agreement between the parties involved.

Question 13

What is the amount of miscellaneous liabilities that would appear on Seek's December 31, 2016 Consolidated Balance Sheet?

Accepted Answer

The correct amount of miscellaneous liabilities on Seek's December 31, 2016 Consolidated Balance Sheet is $166,000.

Question 14

What is the total amount of sales that would appear on the Consolidated Income Statement?

Accepted Answer

The total amount of sales that would appear on the Consolidated Income Statement is $816,000. This is because the Consolidated Income Statement combines the sales of all of the subsidiaries of a company, and the total sales of the subsidiaries is $816,000.

Question 15

Which of the following requirements is in line with the requirements set out in IAS 28 Investments in Associates and Joint Ventures for the treatment of unrealized gains and losses on non-monetary assets contributed to jointly controlled operations?

Accepted Answer

Unrealized gains and losses on non-monetary assets contributed to jointly controlled operations should be eliminated against the underlying assets, as per IAS 28.

Question 16

What is the total amount of inventory that would appear on Seek's Consolidated Balance Sheet as at December 31, 2016?

Accepted Answer

Seek's Consolidated Balance Sheet as at December 31, 2016 would include inventory of $129,000.

Question 17

At what amount would John record its initial investment in Jinxtor?

Accepted Answer

According to the information given, John invested $800,000 in Jinxtor. Therefore, the correct option is D.

Question 18

What is the amount of Consolidated Net Income for 2016?

Accepted Answer

Consolidated Net Income for 2016 is $206,200.

Question 19

How are intercompany transactions handled in a joint venture?

Accepted Answer

In a joint venture, intercompany transactions are generally eliminated, but only to the extent of the venturer's share of any after tax profit. This means that only the portion of the intercompany profits that belong to the venturer will be eliminated, while the remaining portion will be reflected in the joint venture's financial statements. This approach ensures that the joint venture's financial statements reflect only the economic substance of the transactions and the venturer's proportionate share of the results.

Question 20

What is the total amount of intercompany pre-tax profits in ending inventory?

Accepted Answer

The total amount of intercompany pre-tax profits in ending inventory is $3,000. This is calculated by taking the difference between the ending inventory balance of $15,000 and the beginning inventory balance of $12,000.

Quiz 9: Other Consolidation Reporting Issues