Latest CIMA F2 First Attempt, Exam real Dumps Updated [Dec-2021]
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NEW QUESTION 56
LM granted 100 share options to each of its 400 employees on 1 January 20X7. The options will only vest if employees remain with LM for 3 years from the grant date. The fair value of each share option was $5 on 1 January 20X7.
20 employees left in the year to 31 December 20X7 and at that date it was estimated that a further 35 would leave over the following two years.
Which of the following journal entries did LM process to account for the share options in the year to 31 December 20X7, in accordance with IFRS2 Share-based Payments?
- A. Dr Profit or loss $57,500 ; Cr Other reserves within equity $57,500
- B. Dr Profit or loss $172,500 ; Cr Other reserves within equity $172,500
- C. Dr Profit or loss $172,500 ; Cr Liabilities $172,500
- D. Dr Profit or loss $57,500 ; Cr Liabilities $57,500
Answer: A
NEW QUESTION 57
GH's financial statements show the following:
What is the value of the dividend received from the associate to be included in GH's consolidated statement of cash flows for the year?
Give your answer to the nearest $000.
$ ? 000
Answer:
Explanation:
300, 300000
NEW QUESTION 58
Which TWO of the following are true in relation to IAS21 The Effects of Changes in Foreign Exchange Rates when consolidating an overseas subsidiary?
- A. Goodwill is reflected in the consolidated statement of financial position translated at the exchange rate on the date of acquisition.
- B. Assets and liabilities of the subsidiary are translated at each reporting date using the average exchange rate for the period.
- C. 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.
- D. The statement of profit or loss of the subsidiary is translated for the reporting period using the closing exchange rate.
- E. A current period exchange gain or loss is shown within the consolidated statement of comprehensive income within other comprehensive income.
Answer: C,E
NEW QUESTION 59
When consolidating for group accounts, a number of calculations and adjustments are required to properly combine the entities into a single group. Which of the following processes are involved in this consolidation method?
Select ALL that apply:
- A. Adjustment for equity
- B. Add together the assets and liabilities of parent and subsidiary
- C. Adjust for investment in subsidiaries
- D. Adjustment for profits
- E. Adjustment for depreciation and amortisation
Answer: A,B,C
NEW QUESTION 60 
Calculate the exchange difference arising on the retranslation of goodwill on the acquisition in the consolidated statement of financial position of CD at 31 December 20X7.
Give your answer to the nearest $000.
$ ? 000
Answer:
Explanation:
14, 14000,
13636, 13637
NEW QUESTION 61
LM is a car dealer that is supplied inventory by car manufacturer SQ. Trading between LM and SQ is subject to a contractual agreement. This agreement states the following:
* Legal title of the cars remains with SQ until they are sold by LM to a third party.
* Upon notification of sale to a third party by LM, SQ raises an invoice at the price agreed at the original date of delivery to LM.
* LM has the right to return any car at any time without incurring a penalty.
* LM is responsible for insuring all of the cars on its property.
When considering how these cars should be accounted for, which THREE of the following statements are true?
- A. When LM sells a car to a third party, SQ should recognise the revenue associated with that sale.
- B. SQ should recognise the cars as inventory in their financial statements.
- C. The most significant risks attached to the cars are held by SQ.
- D. The most significant risks attached to the cars are held by LM.
- E. LM should recognise the cars as inventory in their financial statements.
- F. SQ should recognise revenue when the cars are delivered to LM.
Answer: A,B,C
NEW QUESTION 62
JK has calculated its inventory holding period:
Which THREE of the following would have contributed to the above movement in inventory holding period?
- A. A substantial contract is due to be dispatched early in April 20X8.
- B. JK is enforcing stringent inventory control techniques following management instructions.
- C. In January 20X8 a major competitor entered the market in which JK operates.
- D. It has been difficult to obtain one of JK's main components due to import issues with its overseas supplier.
- E. JK's main supplier offered a significant one-off discount for purchases made in March 20X8.
- F. JK suffered industrial action by its production staff in the period December 20X7 to February 20X8.
Answer: A,C,E
NEW QUESTION 63
The following is extracted from MN's statement of financial position at 30 September 20X1.
Calculate the gearing (measured as debt:equity) ratio of MN at 30 September 20X1.
Give your answer to one decimal place.
%
Answer:
Explanation:
63.8, 63.78, 63.7, 63.80
NEW QUESTION 64
Which of the following should be eliminated when using the equity method to account for associates in a parent's financial statements?
Select ALL that apply.
- A. Intra-group balances and transactions
- B. Unrealised profits
- C. Goodwill payments
- D. Dividends from associates
Answer: B,D
NEW QUESTION 65
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$75,758.
- B. A$150,000.
- C. A$132,000.
- D. A$66,667.
Answer: A
NEW QUESTION 66
XY has in issue a 6% convertible bond which is redeemable at par or convertible into equity shares in one year's time. The conversion terms are 20 equity shares for each $100 of convertible bond. The conversion value in one year's time is expected to be $105 per $100 nominal of the bond based on the current share price of $5.25.
Which of the following statements about the bond is correct?
- A. If the bond is redeemed rather than converted that means that the investor will receive $105 for each
$100 of nominal value. - B. The yield to maturity of the convertible bond is a constant 6%.
- C. XY's post tax cost of debt for the convertible bond will be higher than the yield to maturity.
- D. The bond will be converted into equity shares in one year's time if the share price does not change.
Answer: D
NEW QUESTION 67
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 68
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:
Calculate the exchange difference arising on the retranslation of goodwill on the acquisition in the consolidated statement of financial position of CD at 31 December 20X7.
Give your answer to the nearest $000.
Answer:
Explanation:
14, 14000, 13636, 13637
NEW QUESTION 69
PQ is a retail business. In recent years they have improved their financial performance and increased their revenue. The following ratios have been calculated for the years ended 31 December 20X4 and
20X3:
Which of the following explanations of PQ's financial performance is consistent with these ratios?
- A. In 20X4 PQ reduced the unit selling price resulting in an increase in volumes sold and an increase in overall revenue.
- B. In 20X4 taxation legislation was amended which reduced the rate of corporate income tax by 3.5%.
- C. In 20X4 PQ sold a retail outlet resulting in a significant gain on disposal which has been deducted from administrative expenses.
- D. PQ changed suppliers early in 20X4 because the new supplier agreed to supply the same goods at a cheaper price.
Answer: D
NEW QUESTION 70
Which of the following principles are the basic principles followed by the consolidated income statement?
Select ALL that apply.
- A. After profit for the period, show the profit split between amounts attributable to the parent's shareholders and other shareholders
- B. Include investment income from subsidiary to parent (e.g. dividend payments or loan interest)
- C. Include all of the parent's income and expenses plus all of the subsidiaries' income and expenses
- D. Include all of the parent's income and expenses minus all of the subsidiaries' income and expenses
- E. Ignore investment income from subsidiary to parent (e.g. dividend payments or loan interest)
Answer: A,C,E
NEW QUESTION 71
Which TWO of the following are relevant ethical considerations when selecting an accounting policy?
- A. It shows faithful representation of the financial statements.
- B. It maximises shareholder wealth.
- C. It is straightforward to implement.
- D. It shows a favourable view of performance.
- E. It is in accordance with International Financial Reporting Standards.
Answer: A,E
NEW QUESTION 72
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