ACCA · Question 50 · Preparing simple consolidated financial statements
Scenario: TechNova PLC acquired 80% of CyberNetix Ltd on 1 Jan 20X5 for $500,000 cash. At acquisition, CyberNetix's retained earnings were $200,000 and share capital was $100,000. NCI fair value at acquisition was $120,000. During 20X5, TechNova sold goods to CyberNetix for $80,000 (25% mark-up on cost). Half remained in inventory at year-end (31 Dec 20X5). CyberNetix's 20X5 profit was $150,000.
What is the primary purpose of preparing these consolidated financial statements?
Answer options:
To calculate the tax liability of the group
To present the financial information of the parent and its subsidiary as a single economic entity
To show the legal form of the relationship between the companies
To determine the dividend payable to the parent's shareholders
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