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

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

Question 3

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 truein respect of AB's ratios calculated at 31 December 20X9?

Options :

A : AB-s return on capital employed would be lower as a result of this sale being recorded.

B : AB-s current ratio 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

Question 4

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 5

Which of the following are limitations of financial statement figures for ratio analysis? Select the ALL that apply.

Options :

A : Only provides historic data

B : Only provides financial information

C : Limited information to identify trends over time

D : Provide only summarised information

E : Contains complicated information that needs to be summarised

F : Only provides forecast data

Answer: A,B,C,D

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