Kowloon Limited Is an Entity Listed in Hong Kong

question 30

Multiple Choice

Kowloon Limited is an entity listed in Hong Kong. Kowloon Limited holds a 100% investment in Aussie Pty Ltd, an Australian based company, who in turn holds a 90% interest in Skippy Pty Ltd. Aussie Pty Ltd and the Aussie group (comprising Aussie and Skippy) are both non-reporting entities. Which of the following statements is correct?

• A) Aussie Pty Ltd will be required to prepare consolidated financial statements as the ultimate Australian parent.
• B) Aussie Pty Ltd will not be required to prepare consolidated financial statements as they are a non-reporting entity.
• C) Aussie Pty Ltd will be required to prepare consolidated financial statements only if directed to do so by ASIC.
• D) Aussie Pty Ltd will not be required to prepare consolidated financial statements as Kowloon is a listed foreign entity.

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Definitions:

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and are a significant portion of production costs.

Raw Materials Inventory

The stock of basic materials that are used in production but have not yet been processed.

Standard Costs

Predetermined or budgeted costs for materials, labor, and overhead, used as benchmarks to measure actual performance and manage costs.

Standard Costs

Standard costs are estimated expenses related to the production of goods or services under normal conditions.