Question 1

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

Options :

A : 4,000

B : 9,000

C : 1,000

D : 7,000

E : 6,000

F : 5,000

Answer: A

Question 2

On 30 November 20X9 OPQ acquires a financial asset that is classified as Available for Sale.

Which of the following describes the value of the financial asset on the date ofacquisition?

Options :

A : Fair value excluding transaction costs.

B : Fair value including transaction costs.

C : Present value including transaction costs.

D : Present value excluding transaction costs.

Answer: B

Question 3

Which TWO of the following are true in relation to IAS21 The Effects of Changes in Foreign Exchange Rates when consolidating an overseas subsidiary?

Options :

A : Acurrent period exchange gain or loss is shown within the consolidated statement of comprehensive income within other comprehensive income.

B : Goodwill is re-translated at the end of each reporting period and reflected at the period end exchange rate in the consolidated statement of financial position.

C :

Assets and liabilities of the subsidiary are translated at each reporting date using the average exchange rate for the period.

D : Goodwill is reflected in the consolidated statement of financial position translated at the exchange rate on the date of acquisition.

E : The statement of profit or loss of the subsidiary is translated for the reporting period using the closing exchange rate.

Answer: A,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

An entity undertakes an issue of new debt which has the effect of reducing the entity's weighted average cost of capital (WACC).

Which of the following would best explain why the WACC will have fallen?

Options :

A : The entity was 100% equity financed prior to the issue of the debt.

B : The risk to the shareholders has reduced leading to a fall in the cost of equity.

C : The new debt is being used to replace existing debt that had a lower cost.

D : The new debt is being used to replace existing debt that had the same cost.

Answer: A

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