Consolidation under MPERS

In accordance with Section 9 of MPERS, under what circumstances is a parent exempted from consolidating its subsidiaries?

If the parent itself is a subsidiary, and its ultimate parent (or any intermediate parent) produces consolidated general purpose financial statements that comply with MFRS or MPERS or if the majority of subsidiaries held are those acquired with the intention of selling or disposing it off within one year

If the parent itself is a subsidiary, and its ultimate parent (or any intermediate parent) produces consolidated general purpose financial statements that comply with MPERS or IFRS

If the majority of subsidiaries held are those acquired with the intention of selling or disposing it off within one year

If it has no subsidiaries other than those acquired with the intention of selling or disposing it off within one year

Under the PERS framework, a parent is exempted from consolidating its subsidiary if it operates under severe long term restrictions. How is the treatment for such instances under Section 9 of MPERS?

An SPE may take the form of a corporation, trust, partnership or unincorporated entity

Under the PERS framework (MASB 11), there was no explicit mention on consolidating SPEs

Such an exemption is not available under MPERS

Section 9 requires consolidation of special purpose entities (SPE) which a reporting entity controls

In terms of consolidation procedures, Section 9 requirements remain largely similar to that under the PERS framework. However, when it comes to the measurement of non-controlling interests (minority interests under the PERS framework), there is a significant difference. How is non-controlling interests accounted for under MPERS?

Under Section 9 of MPERS, profit or loss and certain component of other comprehensive income is attributed to the owners of the parent and to the NCI

If the subsidiary subsequently makes profits (after making losses previously), the majority interest (i.e. the parent) is allocated all such profits until the NCI share of losses previously absorbed by the majority has been recovered

Losses applicable to the non-controlling interests (NCI) in a consolidated subsidiary that exceeds the NCI in the equity of the subsidiary (and any further losses) are charged against the majority interest (i.e. the parent)

Total comprehensive income is to be attributed to the owners of the parent and to the non-controlling interest even if this results in the NCI having a deficit balance

Under Section 14 of MPERS, an entity is given an accounting policy CHOICE to account for its associates using -

Equity method or fair value model

Cost model or fair value model

Cost model, equity method or fair value model

Cost model, equity method, revaluation model or fair value model

How does an investor measure its investment in associates under the cost model of the MPERS framework?

Investment in associates are measured at cost less depreciation and less any accumulated impairment losses, including those investments for which there is a published price quotation

Other than investments for which there is a published price quotation, investment in associates are measured at cost less any accumulated impairment losses

Other than investments for which there is a published price quotation, investment in associates are measured at cost less depreciation and less any accumulated impairment losses

Investment in associates are measured at cost less any accumulated impairment losses, including those investments for which there is a published price quotation

The following are TRUE in relation to measuring investments in associates using the fair value model, EXCEPT -

The investment is initially recognised at the transaction price (including transaction costs) and is subsequently adjusted to reflect the investor share of the profit or loss and other comprehensive income of the associate

An investment in an associate is recognised initially at the transaction price. Transaction price excludes transaction costs

At each reporting date, an investor shall measure its investments in associates at fair value, with changes in fair value recognised in profit or loss, using the fair valuation guidance in Section 11 of MPERS

An investor using the fair value model shall use the cost model for any investment in an associate for which it is impracticable to measure fair value reliably without undue cost or effort

A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control; which is the cornerstone in accounting for joint ventures. Joint ventures can take the following forms -

Jointly controlled operations, jointly controlled assets, or jointly controlled liabilities

Jointly controlled operations, jointly controlled assets, or jointly controlled entities

Jointly controlled operations, jointly controlled assets, or jointly controlled liabilities

Jointly controlled operations or jointly controlled entities

Jointly-controlled operations (JCO) involves the use of the assets and other resources of the venturers rather than the establishment of a corporation, partnership or other entity, or a financial structure that is separate from the venturers themselves. How do venturers account for JCOs?

A venturer of JCO uses the equity method in its consolidated financial statements and applies the cost method or revalued amount in its separate financial statements

The accounting treatment for JCO under the MPERS framework is similar to Investment in Associates in Section 14, whereby a venturer has a policy choice in using either cost model, equity method or fair value model

A venturer shall measure its investments in jointly controlled entities for which there is a published price quotation using the fair value model

A venturer shall recognise in its own financial statements the assets that it controls and the liabilities that it incurs, and the expenses that it incurs and its share of the income that it earns from the sale of goods or services by the joint venture

This arrangement involves the joint control and often the joint ownership, by the venturers of one or more assets contributed to, or acquired for the purpose of, the joint venture and dedicated to the purposes of the joint venture. This arrangement best describes -

Jointly-controlled liabilities

Jointly-controlled operations

Jointly-controlled entity

Jointly-controlled asset

The following is TRUE about special purpose entities (SPE), EXCEPT for?

An SPE may take the form of a corporation, trust, partnership or unincorporated entity

Section 9 requires consolidation of special purpose entities (SPE) which a reporting entity controls only if it is in the form of a trust, partnership or unincorporated entity

Section 9 requires consolidation of special purpose entities (SPE) which a reporting entity controls

Under the PERS framework (MASB 11), there was no explicit mention on consolidating SPEs

Consolidation under MPERS

In accordance with Section 9 of MPERS, under what circumstances is a parent exempted from consolidating its subsidiaries?

Under the PERS framework, a parent is exempted from consolidating its subsidiary if it operates under severe long term restrictions. How is the treatment for such instances under Section 9 of MPERS?

Under Section 14 of MPERS, an entity is given an accounting policy CHOICE to account for its associates using -

How does an investor measure its investment in associates under the cost model of the MPERS framework?

The following are TRUE in relation to measuring investments in associates using the fair value model, EXCEPT -

A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control; which is the cornerstone in accounting for joint ventures. Joint ventures can take the following forms -

Jointly-controlled operations (JCO) involves the use of the assets and other resources of the venturers rather than the establishment of a corporation, partnership or other entity, or a financial structure that is separate from the venturers themselves. How do venturers account for JCOs?

This arrangement involves the joint control and often the joint ownership, by the venturers of one or more assets contributed to, or acquired for the purpose of, the joint venture and dedicated to the purposes of the joint venture. This arrangement best describes -

The following is TRUE about special purpose entities (SPE), EXCEPT for?

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