Question 1

The tax benefit on a company's asset is 180,000 and the useful life on that asset is five years. The company creates a deferred tax provision to spread this benefit over the asset's useful life.

What entry is needed to reduce this deferred tax provision in the company's year two accounts?

Options :

A : DR Deferred tax liability (SOFP) 36,000

B : CR Deferred tax liability (SOFP) 36,000

C : DR Corporation tax (income statement) 36,000

D : CR Corporation tax (income statement) 36,000

E : DR Deferred tax liability (SOFP) 144,000

F : CR Deferred tax liability (SOFP) 144,000

G : DR Corporation tax (income statement) 144,000

H : CR Corporation tax (income statement) 144,000

Answer: A

Question 2

XY's investments enable it to exercisecontrol over AB and havesignificant influence over FG and JK.

The Managing Director of XY is a non-executive director of LM. XYdoes not hold any investment inLM.

XYispreparingitsconsolidated financial statements for the year ended 30 September 20X9.

Which of the followingtransactions during the year will be disclosed in these financial statements in accordance with IAS 24 Related Party Disclosures?

Options :

A : Sale of goods with a trade discount to a major customer of XY.

B : Sale of a motor vehicle from XY toa Director of AB'sspouse at its current market value.

C : Sale of non current assets from XY to LM at their current market value.

D :

Sale of goods from FG to JK at their current market value.

Answer: B

Question 3

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:

Options :

A : A$75,758.

B : A$66,667.

C : A$150,000.

D : A$132,000.

Answer: A

Question 4

Ratios have been produced below for EF for the year to 31 March:

Which TWO of the following could explain themovement in both gearing and ROCE?

Options :

A : A rights issue on 31 March 20X3.

B : A debt issue on 31 March 20X3.

C : A revaluation upwards on the head office property on 1 April 20X2.

D :

A bonus issue of shares on 1 April 20X2.

E : A bank loan to purchase new machinery on 31 March 20X3.

Answer: A,C

Question 5

The dividend yield of ST hasfallen in theyear to 31 May 20X5, compared to the previous year.

The share price on 31 May 20X4 was $4.50 and on 31 May 20X5 was $4.00. There were no issues of share capital during the year.

Whichof the following should explain the reduction in the dividend yield for the year to 31 May 20X5 compared to the previous year?

Options :

A : The dividend paid in the year was reduced in order to pay for new assets.

B : Surplus cash was used to pay a special dividend in additionto the normal dividend in the year.

C :

The profit for the year fell significantly and the dividend per share stayed the same.

D : To compensate investors for thereduction in share price a higher dividend per share was paid.

Answer: A

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