Full F2 Practice Test and 212 unique questions with explanations waiting just for you!
CIMA Management Dumps F2 Exam for Full Questions - Exam Study Guide
NEW QUESTION 120
Which of the following, in accordance with IFRS 2 Share-based Payments, are only applicable to the accounting treatment of cash settled rather than equity settled share-based payment schemes?
Select ALL that apply.
- A. The instruments in the scheme are remeasured at the end of each financial year to fair value.
- B. The expense of the scheme is spread to profit or loss over the vesting period.
- C. The instruments in the scheme are measured at the fair value at the grant date of the scheme.
- D. The credit entry in the financial statements is to equity.
- E. The credit entry in the financial statements is to liabilities.
Answer: A,E
NEW QUESTION 121
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$75,758.
- D. A$150,000.
Answer: C
NEW QUESTION 122
FG's statement of profit or loss account for year ended 31 December 20X1 is:
What is the operating profit margin for FG for the year ended 31 December 20X1?
Give your answer to the nearest whole %.
? %
Answer:
Explanation:
14
NEW QUESTION 123
ST has in issue unquoted 7% debentures which were issued at par and are redeemable in 1 year's time.
These debentures cannot be traded. The yield to maturity on these debentures has been calculated at
5%.
Which of the following would explain why the yield to maturity is lower than the coupon?
- A. The debentures will be redeemed at their par value.
- B. The debentures will be redeemed at a discount to their par value.
- C. ST will benefit from the tax relief on the interest payment.
- D. The market value of the debentures must be higher than their par value.
Answer: B
NEW QUESTION 124
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 125
A convertible bond with a nominal value of $100 can be redeemed at par in 5 years' time or be converted into 1 new equity share for every $5 of bond held.
The current equity share price is $3.50 and it is anticipated that this will grow at a rate of 7% per year.
What is the value of the conversion option of the bond in 5 years' time?
Give your answer to two decimal places.
$ ?
Answer:
Explanation:
98.18, 98.17, 98.179, 98.178
NEW QUESTION 126
Information from the financial statements of an entity for the year to 31 December 20X5:
The gearing ratio calculated as debt/equity and interest cover are:
- A. gearing of 15% and interest cover of 4.
- B. gearing of 15% and interest cover of 6.
- C. gearing of 16% and interest cover of 4.
- D. gearing of 16% and interest cover of 6.
Answer: B
NEW QUESTION 127
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% acquisition.
Which of the following amounts will GH debit to non controlling interest when the 20% acquisition is adjusted for in its consolidated financial statements at 31 December 20X6?
- A. $400,000
- B. $120,000
- C. $200,000
- D. $430,000
Answer: A
NEW QUESTION 128
The following information relates to DEF for the year ended 31 December 20X7:
* Property, plant and equipment has a carrying value of $3,500,000 and a tax written down value of
$2,500,000.
* There are unused tax losses to carry forward of $1,250,000. These tax losses have arisen due to poor trading conditions which are not expected to improve in the foreseeable future.
* The corporate income tax rate is 25%.
In accordance with IAS 12 Income Taxes, the financial statements of DEF for the year ended 31 December 20X7 would recognise deferred tax balances of:
- A. Option D
- B. Option B
- C. Option A
- D. Option C
Answer: C
NEW QUESTION 129
CD commenced a construction contract on 1 April 20X9. The contract value was agreed at $100,000. CD had incurred $40,000 costs to date and estimated costs to completion were $50,000. At the year ended
31 December 20X9 this contract was estimated to be 60% complete. CD adopted the provisions of IAS
11 Construction Contracts when preparing its financial statements for the year to 31 December 20X9.
What value should be included in CD's profit for the year ended 31 December 20X9 in respect of this contract?
Give your answer to the nearest whole number.
$ ?
Answer:
Explanation:
6000, 6
NEW QUESTION 130
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 of acquisition?
- A. Fair value including transaction costs.
- B. Present value including transaction costs.
- C. Present value excluding transaction costs.
- D. Fair value excluding transaction costs.
Answer: A
NEW QUESTION 131
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. $180,000
- C. $660,000
- D. $635,000
Answer: D
NEW QUESTION 132 
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 133
LM has made the following share purchases during the year:
* Purchased 55% of the equity share capital of OP.
* Purchased 45% of the equity share capital of QR. LM have the power to appoint the majority of board members on the QR board.
* Purchased 30% of the equity share capital of ST. LM is represented by one director on the main board of ST which has five members in total. The other 70% of ST's equity share capital is owned by a single company, UV.
The Managing Director has told you that OP has performed well, but both QR and ST have not performed as expected. He is therefore pleased that OP will be included as a subsidiary and that QR and ST will only be included as investments in the group financial statements.
In accordance with the ethical principle of professional competence and due care how should the investments in OP, QR and ST be treated in the group financial statements?
- A. OP should be consolidated and QR and ST should be equity accounted.
- B. OP and QR should be equity accounted and ST should be valued at cost.
- C. OP and QR should be consolidated and ST should be equity accounted.
- D. OP should be consolidated, QR should be equity accounted and ST should be valued at cost.
Answer: C
NEW QUESTION 134
Which of the following taken independently would explain the reduction in the profits as highlighted by the Chairman's press release?
- A. Extended credit terms to customers.
- B. Installation costs of new equipment.
- C. Amortisation of development expenditure.
- D. Staff training costs.
Answer: D
NEW QUESTION 135
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