Question 1

How would KL account for itsinvestment in MNin its consolidated financial statements for the year to 31 December 20X9?

Options :

A : Joint venture

B : Joint arrangement

C : Financial asset

D : Subsidiary

Answer: A

Question 2

When establishing a group structure, which of the following factors need to be considered: Select ALL that apply.

Options :

A : Whether control has been established

B : The percentage ownership

C : The date of acquisition

D : Non-controlling interests

E : Goodwill

F : Intra-group investments

G : Whether control is direct or indirect

Answer: A,B,C

Question 3

GG's gearing is currently 50% compared to the industry average of 40% (both measured as debt/equity). GG's debt is all in the form of a single bank loan that is repayable in five years' time. The directors of GG are seeking to raise finance for a new project and they are considering an additional bank loan from the same bank.

Which of the following would prevent the bank from lending the finance for the project in the form of a new bank loan?

Options :

A : A covenant on the existing bank loan that restricts the level of dividend that can be paid.

B : A projected decrease in interest cover that would breach a covenant on the existing loan.

C : The revaluation of GG-s property that shows an increase in its value since the existing bank loan was taken out.

D : A projected lack of profits to be able to claim tax relief on the additional interest arising from the new loan.

Answer: B

Question 4

Which THREE of the followingwould typically indicate a finance lease?

Options :

A : An asset with a useful life of ten years is being leased for ten years.

B : The lessor is responsible for the annual maintenance of the asset.

C : The lessee has the option to buy the asset at the end of the lease for $1.

D : The lease contract for an asset includes an upgrade to the asset every two years.

E : A leased asset has been specifically modified for the lessee-s use.

Answer: A,C

Question 5

GH owned 70% of the equity share capital of XY at 1 January 20X6. GH acquired a further 20% of XY's equity share capital on 31 December 20X6 for $430,000. Non controlling interest was measured at $600,000 immediately prior to the 20?quisition.

Which of the following amounts will GH debit to non controlling interest when the 20?quisition is adjusted for in its consolidated financial statements at 31 December 20X6?

Options :

A : $400,000

B : $120,000

C : $200,000

D : $430,000

Answer: A

Free CIMAPRO19-F02-1-ENG Mock Exam – Practice Online Confidently

Buying Options: