[Jan-2022] F2 Exam Dumps, F2 Practice Test Questions
Attested F2 Dumps PDF Resource [2022]
NEW QUESTION 17
XY's investments enable it to exercise control over AB and have significant influence over FG and JK.
The Managing Director of XY is a non-executive director of LM. XY does not hold any investment in LM.
XY is preparing its consolidated financial statements for the year ended 30 September 20X9.
Which of the following transactions during the year will be disclosed in these financial statements in accordance with IAS 24 Related Party Disclosures?
- A. Sale of goods from FG to JK at their current market value.
- B. Sale of a motor vehicle from XY to a Director of AB's spouse at its current market value.
- C. Sale of non current assets from XY to LM at their current market value.
- D. Sale of goods with a trade discount to a major customer of XY.
Answer: B
NEW QUESTION 18
XY has a weighted average cost of capital (WACC) of 10% based on its gearing level (measured as debt/debt+equity) of 40%. It is considering a signficant new project.
In which of the following situations would it be appropriate to appraise this project using XY's existing WACC of 10%?
- A. The project is an extension of XY's current operations and is funded by equal amounts of debt and equity.
- B. The project is an extension of XY's current operations and is funded 40% by debt and 60% by equity.
- C. The project is in a different industry to XY's current operations and is funded by equal amounts of debt and equity.
- D. The project is in a different industry to XY's current operations and funded entirely by equity.
Answer: B
NEW QUESTION 19
AB sold the majority of its operating equipment to LM for cash on 30 December 20X9 and then immediately leased it back under an operating lease.
AB used the cash proceeds from the sale to reduce its long term borrowings significantly. No early repayment charge was levied by the lender.
Which of the following statements is true in respect of AB's ratios calculated at 31 December 20X9?
- A. AB's current ratio would be lower as a result of this sale being recorded.
- B. AB's return on capital employed would be lower as a result of this sale being recorded.
- C. AB's non-current asset turnover would be lower as a result of this sale being recorded.
- D. AB's gearing ratio would be lower as a result of this sale being recorded.
Answer: D
NEW QUESTION 20
GH is seeking to finance a substantial new project that is guaranteed to enhance the profitability of the entity. Its key determinants in deciding upon the best source of finance are to balance the following requirements:
1) to minimise the costs of issue of the finance;
2) to avoid the need to find cash to repay the source of finance; and
3) to ensure that the long-term gearing level does not increase.
Which of the following financing options best meets these requirements?
- A. A term loan
- B. Convertible loan stocks
- C. Redeemable preference shares
- D. Initial public offering of ordinary shares
Answer: B
NEW QUESTION 21
KL sells luxury leather handbags and has 3 stores in exclusive shopping areas. Following years of static revenues and margins, in August 20X6 KL opened a fourth store at a busy airport terminal which is proving to be successful.
The revenue and gross profit of KL for the years ended 31 March 20X7 and 20X6 are as follows:
Which of the following would be a contributing factor to the movement in the gross profit margin of KL?
- A. KL locating a new supplier closer to the warehouse, reducing distribution costs.
- B. KL locating a new supplier prepared to supply handbags at a cheaper price.
- C. A worldwide shortage of leather resulting in increased prices from suppliers.
- D. The opportunity to sell handbags in the airport store at a premium price.
Answer: C
NEW QUESTION 22
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 23
KL issued $100,000 of 6% convertible debentures at par on 1 January 20X7. These debentures are redeemable at par or can be converted into 5 shares for each $100 of nominal value of debentures on
31 December 20X9.
The share price on 1 January 20X7 is $18 a share. The share price is expected to grow at a rate of 7% a year.
The expected redemption value for each $100 nominal value of debentures on the date of conversion is:
- A. $90.00
- B. $100.00
- C. $103.04
- D. $110.25
Answer: D
NEW QUESTION 24
Which TWO of the following would be the primary disadvantages of producing the disclosures required in IFRS12 Disclosure of Interests in Other Entities?
- A. The auditors will have to audit these disclosures.
- B. The disclosures will give competitors commercially sensitive information.
- C. The disclosures take time and therefore incur costs which erodes shareholder value.
- D. The disclosures will highlight the risks associated with interests in other entities.
- E. The users of the financial statements may feel overburdened with information.
Answer: C,E
NEW QUESTION 25
AAA is the only director of entity CD. AAA is also a director of entity GH. CD owns 30% of the equity of MN and 60% of the equity of OP.
Identify which of the following are related parties of CD by placing the appropriate response against one.
Answer:
Explanation:
NEW QUESTION 26
AB acquired its subsidiary on 1 January 20X7 when the fair value of net assets was the same as book value with the exception of property, plant and equipment that had a fair value $500,000 higher than carrying value.
These assets were assessed to have a remaining useful life of 5 years from the date of acquisition.
What is the net consolidation adjustment to the property, plant and equipment balance at 31 December
20X9?
Give your answer to the nearest whole number (in '$000s).
$?
Answer:
Explanation:
200000, 200
NEW QUESTION 27
FGH plans to issue a large number of shares to the public via an IPO.
It is considering either an offer for sale at a fixed price or an offer for sale by tender.
Which of the following would be an advantage to FGH of using the offer for sale by tender compared to the fixed price offer?
- A. Tenders are more attractive to less sophisticated investors thus maximising potential investment.
- B. The shares will be sold to different investors at differing values thus maximising the capital raised.
- C. There is potential for reaching a higher share price thus maximising capital raised.
- D. There would be more certainty over the issue price of the shares.
Answer: C
NEW QUESTION 28
KL acquired 75% of the equity share capital of MN on 1 January 20X8. The group's policy is to value non- controlling interest at fair value at the date of acquisition. MN acquired 60% of the equity share capital of PQ on 1 January 20X9 for $360 million.
At 1 January 20X9 the fair value of the non-controlling interest in PQ was $220 million and the fair value of the net assets of PQ at 1 January 20X9 were $320 million.
Calculate the goodwill arising on the acquisition of PQ at 1 January 20X9.
Give your answer to the nearest million.
$ ? million
Answer:
Explanation:
170, 170000000
NEW QUESTION 29
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. $154,050
- C. $293,800
- D. $141,050
Answer: D
NEW QUESTION 30
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 31
AB and CD are competitors supplying components to the car manufacturing industry. AB operates in Country X and CD operates in Country Y.
Both entities were incorporated on the same day, are the same size and prepare financial statements to 31 March each year using international accounting standards.
Which of the following statements taken individually would limit the usefulness of the comparison of the return on capital employed ratio between the two entities?
- A. The average rate of borrowing is 2% in Country X and 7% in Country Y.
- B. The corporate tax rate is 25% in Country X and 40% in Country Y.
- C. The currency is Dollar in Country X and Krona in Country Y.
- D. The average rate of inflation is 3% in Country X and 10% in Country Y.
Answer: D
NEW QUESTION 32
Following the impairment review of the investment in BC, what would be the carrying value of this associate in KL's consolidated statement of financial position at 31 December 20X9?
- A. $1,050,000
- B. $1,800,000
- C. $1,240,000
- D. $1,960,000
Answer: A
NEW QUESTION 33
CD granted 1,000 share options to its 100 employees on 1 January 20X8.To be eligible, employees must remain employed for 3 years from the grant date. In the year to 31 December 20X8, 15 staff left and a further 25 were expected to leave over the following two years.
The fair value of each option at 1 January 20X8 was $10 and at 31 December 20X8 was $15.
Which THREE of the following are true in respect of recording these share options in the year ended 31 December 20X8?
- A. The calculation of the charge for the year will be adjusted for actual and estimated leavers.
- B. The credit entry will be to non-current liabilities.
- C. Fair value at 1 January 20X8 will be used to value the options.
- D. The calculation of the charge for the year will be adjusted for actual leavers only.
- E. The credit entry will be to equity.
- F. Fair value at 31 December 20X8 will be used to value the options.
Answer: A,C,E
NEW QUESTION 34
A group presents its financial statements in A$.
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 35
EF acquired a copy machine under a three-year operating lease. EF will pay nothing in year one and then will pay $6,000 in years two and three. The estimated economic useful life of the machine is six years.
Which THREE of the following statements are true in respect of how EF will account for its use of the machine and the associated operating lease payments?
- A. EF will include an accrual of $6,000 at the end of year one in respect of the lease payments.
- B. EF will include an accrual of $4,000 at the end of year one in respect of the lease payments.
- C. EF will charge $4,000 to profit or loss in each of the three years in respect of this operating lease.
- D. EF will record a credit to bank of $6,000 in year two.
- E. EF will record no expense in year one in respect of the operating lease charges for this machine.
- F. An asset of $12,000 will be included in EF's property, plant and equipment at the start of the lease.
Answer: B,C,D
NEW QUESTION 36
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 37
......
Latest F2 Actual Free Exam Questions Updated 212 Questions: https://www.dumpsreview.com/F2-exam-dumps-review.html
