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NEW QUESTION 10
AB acquired 90% of the equity of YZ on 31 December 20X2. On the same date YZ acquired 60% of the equity shares of VW for $750,000. AB has no other subsidiaries.
The following information regarding YZ and VW was available:
What amount will AB include in its consolidated statement of financial position in respect of non controlling interest at 31 May 20X6?
- A. $811,000
- B. $840,600
- C. $741,400
- D. $816,400
Answer: C
NEW QUESTION 11
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 12
JK is seeking to raise new finance through a rights issue of equity shares.
Which THREE of the following statements are correct?
- A. Entities have the opportunity to underwrite a rights issue.
- B. A rights issue will dilute an existing shareholder's control of the entity if they do not take up their rights.
- C. An alternative name for a rights issue is a scrip issue of shares.
- D. The administration costs associated with a rights issue are higher than those for an initial public offering.
- E. Shareholders must pay the full market price for shares offered in a rights issue.
- F. Shareholders' entitlement to rights may be sold on their behalf.
Answer: A,B,F
NEW QUESTION 13
A group presents its financial statements in A$.
The goodwill of its only foreign subsidiary was measured at B$100,000 at acquisition. There have been no impairments to this goodwill.
Exchange rates (where A$/B$ is the number of B$'s to each A$) are as follows:
The value of goodwill to be included in the group's statement of financial position in respect of its foreign subsidiary for the year ended 31 December 20X4 is:
- A. A$66,667.
- B. A$132,000.
- C. A$75,758.
- D. A$150,000.
Answer: C
NEW QUESTION 14
Which TWO of the following statements about bonds and their issue are true?
- A. Credit rating agencies assign risk categories to bond issues.
- B. Bonds are a form of loan capital, traded on stock exchanges.
- C. A bond issue is never underwritten because the return is fixed and guaranteed.
- D. All bonds have the same terms and conditions when issued.
- E. Bonds are a risk-free form of investing because they will always be repaid.
Answer: A,B
NEW QUESTION 15
DE acquired 10% of the equity shares of KL on 31 December 20X2.
A further 50% of the equity shares of KL were acquired by DE on 1 January 20X4.
Which THREE of the following would be part of the process for recording the second purchase of shares?
- A. Goodwill being calculated at 1 January 20X4 for the first time.
- B. Assets, liabilities, income and expenses being fully consolidated from 1 January 20X4.
- C. The goodwill calculated at 31 December 20X2 being revalued at 1 January 20X4.
- D. The 10% investment being revalued to fair value at 1 January 20X4.
- E. Net assets at 1 January 20X4 being compared to the purchase consideration and a transfer to equity made.
- F. A 50% non controlling interest will be shown in the consolidated financial statements.
Answer: A,B,D
NEW QUESTION 16
XY's investments enable it to exercise control over AB and have significant influence over FG and JK.
The Managing Director of XY is a non-executive director of LM. XY does not hold any investment in LM.
XY is preparing its consolidated financial statements for the year ended 30 September 20X9.
Which of the following transactions during the year will be disclosed in these financial statements in accordance with IAS 24 Related Party Disclosures?
- A. Sale of goods with a trade discount to a major customer of XY.
- B. Sale of a motor vehicle from XY to a Director of AB's spouse at its current market value.
- C. Sale of goods from FG to JK at their current market value.
- D. Sale of non current assets from XY to LM at their current market value.
Answer: B
NEW QUESTION 17
Which of the following is a related party according to the definition of a related party in IAS24 Related Party Disclosures?
- A. Major supplier
- B. Managing Director
- C. Major customer
- D. Provider of finance
Answer: B
NEW QUESTION 18
AB owned 80% of the equity share capital of FG at 1 January 20X6. AB disposed of 10% of FG's equity share capital on 31 December 20X6 for $400,000. The non controlling interest was measured at
$700,000 immediately prior to the disposal.
Which of the following represents the adjustment that AB made to non controlling interest in respect of the disposal when it prepared its consolidated financial statements at 31 December 20X6?
- A. Debit of $350,000
- B. Credit of $50,000
- C. Debit of $400,000
- D. Credit of $350,000
Answer: D
NEW QUESTION 19
XY has a weighted average cost of capital (WACC) of 12%. The debt:equity ratio is 1:3 and this is considered low for the industry. XY needs to raise finance to purchase new machinery in the coming year.
Which of the following forms of finance is most likely to increase the WACC?
- A. Finance lease
- B. 8% preference shares
- C. Rights issue of equity shares
- D. 6% bank loan
Answer: C
NEW QUESTION 20
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. $3,260,000
- B. $2,880,000
- C. $2,875,000
- D. $2,780,000
Answer: D
NEW QUESTION 21
Information from the financial statements of an entity for the year to 31 December 20X5:
The gearing ratio calculated as debt/equity and interest cover are:
- A. gearing of 15% and interest cover of 4.
- B. gearing of 15% and interest cover of 6.
- C. gearing of 16% and interest cover of 4.
- D. gearing of 16% and interest cover of 6.
Answer: B
NEW QUESTION 22
ST granted 1,000 share appreciation rights (SARs) to its 100 employees on 1 December 20X7. To be eligible, employees must remain employed for 3 years from the grant date. In the year to 30 November
20X8, 10 staff left and a further 20 were expected to leave over the following two years. The fair value of each SAR was $12 at 1 December 20X7 and $15 at 30 November 20X8.
What is the accounting entry to record this transaction for the year to 30 November 20X8?
- A. Dr Staff costs $280,000, Cr Equity $280,000
- B. Dr Staff costs $350,000, Cr Non-current liabilities $350,000
- C. Dr Staff costs $280,000, Cr Non-current liabilities $280,000
- D. Dr Staff costs $350,000, Cr Equity $350,000
Answer: B
NEW QUESTION 23
Which of the following would limit the effectiveness of analysis performed on the operating profit margins of two separate entities with the same total revenue over a12 month period?
- A. Different pattern of monthly revenues caused by seasonality.
- B. Different accounting estimates in respect of depreciation of property, plant and equipment.
- C. Different approaches to allocating expenses to cost of sales, administration expenses and distribution costs.
- D. Different interest rates on loan finance available to the entities.
Answer: B
NEW QUESTION 24
JK is seeking to raise finance for a project and the directors would prefer to take out a fixed rate bank loan repayable over the next 5 years. The project will increase the profit of JK even after taking into account the additional interest costs.
Which of the following statements about the use of a bank loan in this situation is true?
- A. A bank loan has high issue costs compared to an issue of equity shares because it takes longer to arrange.
- B. The interest on a bank loan is deducted from profit before dividends can be declared to equity shareholders each year.
- C. Because the assets of a business belong to the equity shareholders, a bank loan should NOT be secured on the assets of the business.
- D. In the long term servicing a bank loan is more expensive than servicing equity shares due to the higher risk for the lender.
Answer: B
NEW QUESTION 25
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