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Free CIMA F2 Exam Questions & Answer
NEW QUESTION 126
XY purchased $100,000 of quoted 8% bonds in the current year which it intends to hold until redemption.
Which of the following identifies the correct classification and subsequent measurement basis for this financial instrument?
- A. A held to maturity financial asset subsequently measured at amortised cost.
- B. A loans and receivables financial asset subsequently measured at amortised cost.
- C. A held to maturity financial asset subsequently measured at fair value with gains and losses in reserves.
- D. A loans and receivables financial asset subsequently measured at fair value with gains and losses in reserves.
Answer: A
NEW QUESTION 127
GH granted 100 share options to each of its 1,000 employees on 1 January 20X8. The fair value of each option was $7 on 1 January 20X8 and had risen to $8 at 31 December 20X8.
Which of the following statements represents the treatment that GH adopted to account for the related expense of these share options in its financial statements for the year ended 31 December 20X8, in accordance with IFRS 2 Share-based Payments?
- A. The expense was measured using the fair value of $7 and the credit entry was to liabilities.
- B. The expense was measured using the fair value of $8 and the credit entry was to liabilities.
- C. The expense was measured using the fair value of $7 and the credit entry was to equity.
- D. The expense was measured using the fair value of $8 and the credit entry was to equity.
Answer: C
NEW QUESTION 128
Which of the following is NOT an example of an unconsolidated structured entity as defined in IFRS12 Disclosure of Interests in Other Entities?
- A. A securitisation vehicle
- B. An asset-backed financing scheme
- C. An investment fund
- D. A post-employment benefit plan
Answer: D
NEW QUESTION 129
A group presents its financial statements in A$.
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$150,000.
- D. A$75,758.
Answer: D
NEW QUESTION 130
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. A 50% non controlling interest will be shown in the consolidated financial statements.
- B. The 10% investment being revalued to fair value at 1 January 20X4.
- C. Net assets at 1 January 20X4 being compared to the purchase consideration and a transfer to equity made.
- D. Assets, liabilities, income and expenses being fully consolidated from 1 January 20X4.
- E. Goodwill being calculated at 1 January 20X4 for the first time.
- F. The goodwill calculated at 31 December 20X2 being revalued at 1 January 20X4.
Answer: B,D,E
NEW QUESTION 131
CD acquired 100% of the equity share capital of FG for cash consideration of Kr1,200,000 on 1 January
20X7.
Retained earnings of FG at the date of acquisition was Kr800,000. CD operates from Country A and its functional and presentation currency is $. FG is located and trades throughout Country B and its functional currency is the Krona (Kr).
CD has no other subsidiaries. Goodwill had not suffered any impairment to date.
Summarised data from the statements of financial position for both entities at 31 December 20X7 is presented below:
Which of the following is the correct application of IAS 21 The Effects of Changes in Foreign Exchange Rates in translating FG's statement of financial position into the presentation currency of CD for consolidation purposes at 31 December 20X7?
- A. * Monetary assets and liabilities at closing rate.
* Non monetary assets and liabilities at historic rate. - B. * Monetary assets and liabilities at historic rate.
* Non monetary assets and liabilities at closing rate. - C. * Goodwill at closing rate.
* Assets and liabilities at closing rate. - D. * Goodwill at historic rate.
* Assets and liabilities at closing rate.
Answer: C
NEW QUESTION 132
Which of the following reduce the usefulness of ratio analysis when comparing entities that operate in the same industry? Select ALL that apply.
- A. The revenue figure being aggregated from many different activities and sources.
- B. Accounting estimates in respect of depreciation being different between entities.
- C. An entity adopting a policy of revaluing its non current assets.
- D. The effect of a material and unusual item being disclosed separately in the notes.
- E. Ratios being quick and easy to calculate.
- F. Ratio calculations being based on historical information.
Answer: A,B,C,F
Explanation:
Calculation_F0
NEW QUESTION 133
An investor owns 75 shares values at $1.50 each. If the shares increase in value to $1.75, how much money will the investor have made through this capital gain?
- A. $187.50
- B. $112.50
- C. $131.25
- D. $26.25
- E. $18.75
- F. $15
Answer: E
NEW QUESTION 134
Information extracted from JK's statement of financial position for the year ended 31 May 20X5 is as follows:
Calculate the gearing ratio (Debt/Equity measured as a percentage) at 31 May 20X5.
Give your answer to one decimal place.
? %
Answer:
Explanation:
58.4, 58, 58.44, 59, 58.5, 58.0
NEW QUESTION 135
Which of the following defines the calculation of interest cover?
- A. Profit before interest and tax divided by finance costs
- B. Finance costs divided by profit after tax
- C. Profit after tax divided by finance costs
- D. Finance costs divided by profit before interest and tax
Answer: A
NEW QUESTION 136
FG granted share options to its 500 employees on 1 August 20X0. Each employee will receive 1,000 share options provided they continue to work for FG for the four years following the grant date. The fair value of the options at the grant date was $1.30 each. In the year ended 31 July 20X1, 20 employees left and another 50 were expected to leave in the following three years. In the year ended 31 July 20X2, 18 employees left and a further 30 were expected to leave during the next two years.
The amount recognised in the statement of profit or loss for the year ended 31 July 20X1 in respect of these share options was $139,750.
Calculate the charge to FG's statement of profit or loss for the year ended 31 July 20X2 in respect of the share options.
- A. $280,800
- B. $293,800
- C. $154,050
- D. $141,050
Answer: D
NEW QUESTION 137
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 $400,000
- B. Debit of $350,000
- C. Credit of $50,000
- D. Credit of $350,000
Answer: D
NEW QUESTION 138
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?
- A. DR Deferred tax liability (SOFP) £36,000
- B. CR Deferred tax liability (SOFP) £144,000
- C. DR Deferred tax liability (SOFP) £144,000
- D. CR Deferred tax liability (SOFP) £36,000
- E. CR Corporation tax (income statement) £36,000
- F. DR Corporation tax (income statement) £144,000
- G. CR Corporation tax (income statement) £144,000
- H. DR Corporation tax (income statement) £36,000
Answer: A
NEW QUESTION 139
On 1 January 20X1 KL acquired 75% of the equity shares of PQ. Goodwill arising on the acquisition was
$480,000. On 31 December 20X3 KL sold the full investment of PQ to XY Group for $2,000,000. On this date the net assets of PQ were $1,340,000 and the non-controlling interests stood at $410,000.
What is the gain on disposal to be recognised in the consolidated statement of profit or loss of KL?
- A. $590,000
- B. $635,000
- C. $660,000
- D. $180,000
Answer: B
NEW QUESTION 140
RST sells computer equipment and prepares its financial statements to 31 December.
On 30 September 20X5 RST sold computer software along with a two year maintenance package to a customer. The customer is given the right to return the goods within six months and claim a full refund if they are not satisfied with the computer software. The risk of return is considered to be insignificant for RST.
How should the revenue from this transaction and the right of return be recognised in the financial statements for the year ended 31 December 20X5?
- A. Recognise 12.5% of the revenue from both the sale of goods and the maintenance contract and do not create a provision for the anticipated level of returns.
- B. Recognise 100% of the revenue from both the sale of goods and the maintenance contract and create a provision for the anticipated level of returns.
- C. Recognise 100% of the revenue from the sale of goods,12.5% of the revenue from the maintenance contract and create a provision for the anticipated level of returns.
- D. Do not recognise any revenue from the sale of goods or the maintenance contract and do not create a provision for the anticipated level of returns.
Answer: C
NEW QUESTION 141
On 1 January 20X7 GH purchased plant and equipment at a cost of $400,000. The temporary differences in respect of this plant and equipment at 31 December 20X7 and 20X8 have been calculated as follows:
Assume that there are no other temporary differences in the periods and that the corporate income tax rate is 25%. GH is expected to have significant taxable profits in the future.
Which of the following is the correct impact in GH's statement of financial position at 31 December 20X8 in respect of deferred tax?
- A. Increase in the deferred tax liability.
- B. Increase in the deferred tax asset.
- C. Decrease in the deferred tax asset.
- D. Decrease in the deferred tax liability.
Answer: B
NEW QUESTION 142
ST acquired 75% of the 2 million $1 equity shares of CD on 1 January 20X3, when the retained earnings of CD were S3,550,000. CD has no other reserves.
ST paid $5,600,000 for the shares in CD and the non controlling interest was measured at its fair value of S1,400,000 at acquisition.
At 1 January 20X3, the fair value of CD's net assets were equal to their carrying amount, with the exception of a building. This building had a fair value of $1,000,000 in excess of its carrying amount and a remaining useful life of 25 years on 1 January 20X3.
At 31 December 20X5, the retained earnings of ST and CD were $8,500,000 and $5,250,000 respectively.
What is the value of goodwill to be included in the consolidated statement of financial position of ST as at 31 December 20X5?
- A. $950,000
- B. $450,000
- C. $570,000
- D. $1,450,000
Answer: B
NEW QUESTION 143
In recent years EBITDA has been adopted by large entities as a key measure of performance. The following figures have been extracted from the financial statements of UV for the year ended 30 November 20X9:
What is EBITDA for UV for the year ended 30 November 20X9?
Give your answer to the nearest $'000.
$ ? 000
Answer:
Explanation:
61500, 61500000
NEW QUESTION 144
AB, a listed entity, prepared its financial statements to 31 December 20X7, in accordance with international accounting standards.
Which THREE of the following were disclosed as related parties of AB in its financial statements?
- A. AB's defined benefit pension plan.
- B. AB's main supplier, GH, who supplies more than 70% of AB's goods for manufacture.
- C. AB's bank that provides more than 60% of the entity's loan finance.
- D. The wife of the Managing Director of AB, to whom AB sold a motor vehicle in the year to 31 December 20X7.
- E. ST, an entity that was jointly established by AB and CD, and that is accounted for as a joint venture in AB's financial statements to 31 December 20X7.
Answer: A,D,E
NEW QUESTION 145
Which of the following best describes the goal of WACC as a measure?
- A. To work out the average return that is required by the company on its investments in order to satisfy all debt holders.
- B. To work out the minimum return that is required by the company on its investments in order to satisfy all shareholders and debt holders.
- C. To work out the average return that is required by the company on its investments in order to satisfy all shareholders and debt holders.
- D. To work out the average return that is required by the company on its investments in order to satisfy all shareholders.
Answer: C
NEW QUESTION 146
What is the total comprehensive income attributable to the non-controlling interest that will be presented in GHI's consolidated statement of changes in equity for the year ended 31 December 20X4?
- A. $595,000
- B. $95,000
- C. $190,000
- D. $575,000
Answer: B
NEW QUESTION 147
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