MCQ on Accounts of Holding Companies (Revised)

MCQ on Accounts of Holding Companies


State whether the following statements are true or false:

1. Every holding company is required to present a consolidated balance sheet under the companies act, 2013.   False

2. Minirity interest shown in the consolidated balance sheet is the equity held by the outsiders in the subsidiary company.                                True

3. Cost of control is the exces price paid for investment over and above proportionate share of net assets acquired by the holding company.                                            True

4. There is no need to show inter company dividends in the consolidated profit and loss account.                             True

5. Profit on revaluation of Fixed assets is a capital profit and depreciation on such amount is a revenue loss.        True

6. The financial year of holding and subsidiary company must be the same.                          False

7. Dividends paid out of pre-acquisition profits must be credited to investment in shares of the subsidiary account.  True


5. Excess of paid up value of the shares over cost of investment is  considered as:

a.       Goodwill                             
b.      Capital Reserve
c.       Minority Interest            
d.      Non of above

6. Profit earned before acquisition of share is treated as

a.       Capital profit                   
b.      Revenue profit
c.       General Reserve             
d.      Revaluation Loss

7. Profit earned after acquisition of share is treated as

a.       Capital profit                     
b.      Revenue profit
c.       General Reserve             
d.      Revaluation Loss

8. Preparation of consolidated statement as per AS 21 is

a.       Optional
b.      Mandatory for listed Companies
c.       Mandatory for Pvt. Ltd.
d.      Companies Ltd. partnership firm

9. Holding Co. share in capital profits of subsidiary company is adjusted in :

a.       Cost of control
b.      Shown on Assets side of Balance sheet
c.       Revenue profit
d.      None of above

10. Holding Co. share in revenue profits of subsidiary company is adjusted in :

a.                   a. Cost of control
b.      Shown on Assets side of Balance sheet
c.       Profit and loss account
d.      None of above

11. . Unrealised profit on goods sold and included in stock is deducted from :

a.       Capital Profit
b.      Revenue Profit
c.       Fixed Assets
d.      Minority interest

12. Face value debentures of subsidiary co. held by Holding Company is deducted from :

a.       Debentures
b.      Cost of control
c.       Minority interest
d.      Debentures in consolidated balance sheet

13. Which of the following statement is true:

a.      There is no change in the amount of capital reserve before and after issue of bonus share of the issue is made from out of pre-acquisition profit.

b.      There is change in the amount of capital reserve before and after issue of bonus share of the issue is made from out of post-acquisition profit.

c.       There is change in the amount of capital reserve before and after issue of bonus share of the issue is made from out of pre-acquisition profit.

d.      There is no connection between the issue of bonus shares and the calculation of capital reserve.

14. Consolidated financial statements are prepared on the principle:

a.       In form the companies are one entity; in substance they are separate.
b.      In form the companies are separate; in substance they are one.
c.       In form and substance the companies are one entity.
d.      In form and substance the companies are separate.

15. Minority Interest includes :

a.       Share in share capital
b.      Share in Capital profit
c.       Share in Revenue profit
d.      All of the above


19. Which Exchange rate will be considered for conversion of share capital of subsidiary company.

a.       Opening Rate
b.      closing rate
c.       Average Rate
d.      Rate of which date share acquired (actual)

20. A subsidiary company shall be excluded from consolidation when:

a.       Control is intended to be temporary
b.      It operates under severe long-term restrictions which significantly impair its ability to transfer funds to the parent
c.       Always included for consolidation
d.      Both a and b.