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NEW QUESTION 12
What is the total comprehensive income attributable to the shareholders of GHI that will be presented in GHI's consolidated statement of changes in equity for the year ended 31 December 20X4?
- A. $2,880,000
- B. $2,780,000
- C. $3,260,000
- D. $2,875,000
Answer: B
NEW QUESTION 13
Following the impairment review of the investment in BC, what would be the carrying value of this associate in KL's consolidated statement of financial position at 31 December 20X9?
- A. $1,800,000
- B. $1,050,000
- C. $1,240,000
- D. $1,960,000
Answer: B
NEW QUESTION 14
MS Group's total profit for period on their consolidated income statement is £31,000. This includes adjusting for their share of joint venture JV2. Calculate the share of joint venture MS Group received based on the following information.
MS operating profit £41,000
Dividend from JV2 £5,000
Finance cost £3,000
Tax £11,000
- A. £6,000
- B. £9,000
- C. £5,000
- D. £1,000
- E. £7,000
- F. £4,000
Answer: F
NEW QUESTION 15
KL sells luxury leather handbags and has 3 stores in exclusive shopping areas. Following years of static revenues and margins, in August 20X6 KL opened a fourth store at a busy airport terminal which is proving to be successful.
The revenue and gross profit of KL for the years ended 31 March 20X7 and 20X6 are as follows:
Which of the following would be a contributing factor to the movement in the gross profit margin of KL?
- A. A worldwide shortage of leather resulting in increased prices from suppliers.
- B. KL locating a new supplier prepared to supply handbags at a cheaper price.
- C. KL locating a new supplier closer to the warehouse, reducing distribution costs.
- D. The opportunity to sell handbags in the airport store at a premium price.
Answer: A
NEW QUESTION 16
Ratios calculated from the financial statements of ST Group for the years ended 31 August 20X7 and
20X6 are as follows:
Which of the following would have contributed to the movements in these ratios?
- A. During 20X7 ST Group increased the useful life of its vehicles to five years from four and adjusted the depreciation charge accordingly.
- B. During 20X7 ST Group acquired an associate which made a relatively small profit for the year.
- C. The fair value of an investment acquired in 20X7 and classified as fair value through profit or loss has increased in value by the year end.
- D. ST Group extended its customer base which resulted in an increase in the volume of sales during
20X7.
Answer: A
NEW QUESTION 17
On 1 September 20X3, GH purchased 200,000 $1 equity shares in QR for $1.20 each and classified this investment as held for trading.
GH paid a 1% transaction fee to its broker on this transaction. QR's equity shares had a fair value of
$1.35 each on 31 December 20X3.
Which of the following journals records the subsequent measurement of this financial instrument at 31 December 20X3?
- A. Option A
- B. Option D
- C. Option B
- D. Option C
Answer: A
NEW QUESTION 18
LM is preparing its consolidated financial statements for the year ended 30 April 20X5. During the year LM acquired 30% of the equity shares of AB giving it significant influence over AB.
LM conducted ratio analysis comparing the financial performance of the group for 30 April 20X4 and
20X5.
Which of the following ratios would not be comparable as a result of the acquisition of AB?
- A. Return on capital employed.
- B. Operating profit margin.
- C. Interest cover.
- D. Earnings per share.
Answer: D
NEW QUESTION 19
An entity has declared a dividend of $0.12 a share. The cum dividend market price of one equity share is
$1.40.
Assuming a dividend growth rate of 7% a year, what is the entity's cost of equity?
- A. 16.2%
- B. 9.4%
- C. 8.6%
- D. 17.0%
Answer: D
NEW QUESTION 20
AAA is the only director of entity CD. AAA is also a director of entity GH. CD owns 30% of the equity of MN and 60% of the equity of OP.
Identify which of the following are related parties of CD by placing the appropriate response against one.
Answer:
Explanation:
NEW QUESTION 21
On 1 January 20X4 JK had 1,500,000 ordinary shares in issue. On 1 September 20X4 JK issued 600,000 ordinary shares at the market value of $2.50 a share. For the financial year ended 31 December 20X4 the statement of profit or loss shows profit before tax of $625,000 and profit after tax of $500,000.
What is the earnings per share for the year ended 31 December 20X4?
- A. 36.8 cents
- B. 29.4 cents
- C. 26.3 cents
- D. 23.8 cents
Answer: B
NEW QUESTION 22
LM are just about to pay a dividend of 20 cents a share. Historically, dividends have grown at a rate of
5% each year.
The current share price is $3.05.
The cost of equity using the dividend valuation model is:
- A. 12.4%
- B. 11.9%
- C. 6.9%
- D. 7.4%
Answer: A
NEW QUESTION 23
EF have just paid a dividend of 20 cents a share and the current share price is $3.75. EF regularly reinvests 40% of its profit for the year and generates a return on reinvested funds of 12%.
The cost of equity for EF using the dividend valuation model is:
- A. 10.4%
- B. 13.2%
- C. 12.9%
- D. 10.7%
Answer: A
NEW QUESTION 24
Which of the following statements is true in respect of ST's gross profit margin based on the information given?
- A. Gross profit margin has increased as a result of management negotiating a premium price for the contract with the new customer.
- B. Economies of scale have been achieved from increased revenues resulting in a reduction in the gross profit margin.
- C. The associate's gross profit margin is greater than ST's leading to an overall increase in ST's margin.
- D. Gross profit margin has reduced due to the increased cost of the new contract.
Answer: A
NEW QUESTION 25
ST has sold its main office property, which had a carrying value of $360,000, to AB, a property management entity.
The property was sold for $400,000 which is equal to its fair value and was immediately leased back under an operating lease agreement.
Which of the following journals will record this transaction?
- A. Option A
- B. Option D
- C. Option B
- D. Option C
Answer: A
NEW QUESTION 26
ST acquired 80% of the equity shares of AB on 1 January 20X7. AB acquired 60% of the equity shares of UV on 1 January 20X8. Profit for the year ended 31 December 20X9 for AB is $160,000 and for UV is
$100,000.
Calculate the non-controlling interest figure to be included within ST's consolidated statement of profit or loss for the year ended 31 December 20X9.
Give your answer to the nearest whole number in $000s.
$ ?
Answer:
Explanation:
84000, 84
NEW QUESTION 27
Which THREE of the following would determine the functional currency of an overseas subsidiary in accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates?
- A. The currency which principally influences the choice of functional currency of the parent.
- B. The currency which the parent company uses to present its financial statements.
- C. The currency in which all non-current assets are purchased and recognised.
- D. The currency that mainly influences labour, material and other costs.
- E. The currency in which operating receipts are retained.
- F. The currency which principally influences selling prices for goods and services.
Answer: D,E,F
NEW QUESTION 28
FG and RS operate in the same retail sector within the same country and are of a similar size. The following ratios have been calculated based on the financial statements for the year ended 30 September 20X4:
Which of the following factors would limit the usefulness of these ratios as a basis for assessing the comparative performances of FG and RS?
- A. RS has a higher level of borrowings and associated finance costs.
- B. RS sold a piece of land for a sum much greater than its carrying value.
- C. RS operates at the low margin end of the market whilst FG operates at the high margin end.
- D. FG has a higher level of deferred tax liabilities than RS.
Answer: C
NEW QUESTION 29
Which of the following reduce the usefulness of ratio analysis when comparing entities that operate in the same industry? Select ALL that apply.
- A. An entity adopting a policy of revaluing its non current assets.
- B. Accounting estimates in respect of depreciation being different between entities.
- C. The effect of a material and unusual item being disclosed separately in the notes.
- D. Ratios being quick and easy to calculate.
- E. The revenue figure being aggregated from many different activities and sources.
- F. Ratio calculations being based on historical information.
Answer: A,B,E,F
Explanation:
Calculation_F0
NEW QUESTION 30
AB acquired its one subsidiary, CD, on 1 January 20X1. At this date the fair value of CD's property, plant and equipment was found to be $40 million higher than its carrying value. The relevant items had a remaining estimated useful life of 10 years from the date of acquisition.
At 31 December 20X4 AB and CD presented property, plant and equipment of $100 million and $50 million respectively in their individual financial statements.
The value of property, plant and equipment presented in AB's consolidated statement of financial position at 31 December 20X4 is:
- A. $174 million
- B. $190 million
- C. $150 million
- D. $134 million
Answer: A
NEW QUESTION 31
KL acquired 75% of the equity share capital of MN on 1 January 20X8. The group's policy is to value non- controlling interest at fair value at the date of acquisition. MN acquired 60% of the equity share capital of PQ on 1 January 20X9 for $360 million.
At 1 January 20X9 the fair value of the non-controlling interest in PQ was $220 million and the fair value of the net assets of PQ at 1 January 20X9 were $320 million.
Calculate the goodwill arising on the acquisition of PQ at 1 January 20X9.
Give your answer to the nearest million.
$ ? million
Answer:
Explanation:
170, 170000000
NEW QUESTION 32
When accounting for a finance lease under IAS 17 Leases, which TWO of the following are recognised in the statement of profit or loss?
- A. Depreciation of the leased asset
- B. Capital repayment element of the lease payments
- C. Finance cost element of the lease payments
- D. Lease payments payable
- E. Lease payments paid
Answer: A,C
NEW QUESTION 33
XY puchased 2% of the equity shares of FG on 1 October 20X3.
XY paid $25,000 for the shares as well as a transaction cost of 2.5% of the purchase price.
The shares are being held for short term trading and XY intend to sell them in December 20X3.
At the year end of 31 October 20X3, the shares in FG could be sold for $28,000.
What is the journal entry to record the subsequent measurement for this investment at 31 October
20X3?
- A. Debit investment in equity shares $2,375 and credit profit or loss $2,375.
- B. Debit investment in equity shares $2,375 and credit other reserves $2,375.
- C. Debit investment in equity shares $3,000 and credit other reserves $3,000.
- D. Debit investment in equity shares $3,000 and credit profit or loss $3,000.
Answer: D
NEW QUESTION 34
In the year ended 31 December 20X7, FG leased a piece of machinery. The accountant of FG had prepared the financial statements for the year to 31 December 20X7 on the basis of the lease being an operating lease.
However, following the end of year audit it has been agreed that the machinery is in fact held under a finance lease and therefore the financial statements need to be corrected.
The correction will have which THREE of the following affects on the financial statements?
- A. Finance costs will increase.
- B. Non-current assets will decrease.
- C. Depreciation costs will decrease.
- D. Current liabilities will increase.
- E. Non-current assets will increase.
- F. Non-current liabilities will decrease.
Answer: A,D,E
NEW QUESTION 35
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