Volcano Co acquired 75% of the equity share capital of Lava Co on 1 September 20-新东方在线职业题库

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Volcano Co acquired 75% of the equity share capital of Lava Co on 1 September 20X3. The retained profits of the two

individual companies at the beginning and end of their financial year were as follows.

Volcano Co Lava Co $’000 $’000

Retained earnings at 1 January 20X3 596 264

Retained earnings at 31 December 20X3 650 336

What is the parent company’s share of consolidated retained earnings that should be reported in the consolidated statement of financial position of the Volcano Group at 31 December 20X3?

A

$668,000

B

$674,000

C

$704,000

D

$722,000

Chapter23Introductiontoconsolidatedfinancialstatements

Retained post-acquisition earnings of Lava Co = 4/12 x $(336,000 - 264,000) = $24,000.

多做几道

Which of the following is a ratio which is used to measure how much a business owes in relation to its size?

A

Asset turnover

B

Profit margin

C

Gearing

D

Return on capital employed

A business operates on a gross profit margin of 331/3%. were $680. Gross profit on a sale was $800, and expenses

What is the net profit margin?

A

3.75%

B

5%

C

11.25%

D

22.67%

A company has the following details extracted from its statement of financial position：

$'000

Inventories 1,900

Receivables 1,000

Bank overdraft 100

Payables 1,000

The industry the company operates in has a current ratio norm of 1.8. Companies who manage liquidity well in this industry

have a current ratio lower than the norm.

Which of the following statements accurately describes the company’s liquidity position?

A

Liquidity appears to be well managed as the bank overdraft is relatively low

B

Liquidity appears to be poorly-controlled as shown by the large payables balance

C

Liquidity appears to be poorly-controlled as shown by the company’s relatively high current ratio

D

Liquidity appears to be poorly-controlled as shown by the existence of a bank

Why is analysis of financial statements carried out?

A

So that the analyst can determine a company’s accounting policies

B

So that the significance of financial statements can be better understood through comparisons

with historical performance and with other companies

C

To get back to the ‘real’ underlying figures, without the numbers being skewed by the

requirements of International Financial Reporting Standards

D

To produce a report that can replace the financial statements, so that the financial statements

no longer need to be looked at

Which of the following transactions would result in an increase in capital employed?

A

Selling inventory at a profit

B

Writing off a bad debt

C

Paying a payable in cash

D

Increasing the bank overdraft to purchase a non-current asset

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