Free F1 Financial Reporting Exam CIMAPRA19-F01-1 Exam Practice Test

In accordance with IFRS 3 Business Combinations, acquisition accounting of an investment in another entity within the consolidated statement of financial position means that the:

• Parent's and 100% of the other entity's assets and liabilities are added together line by line.
• Group's share of the net assets of the other entity are shown as one line under non-current assets.
• Parent's and group share of the other entity's assets and liabilities are added together line by line.
• Group's share of the net assets of the other entity are shown as one line within equity.

ST has an asset that was classified as held for sale at 30 June 20X4. The asset's carrying value was $230,000 and its fair value $210,000.The cost of disposal was estimated to be $15,000.In accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, which of the following values should be used for the asset in the statement of financial position as at 30 June 20X4?

• $230,000
• $215,000
• $210,000
• $195,000

XY is an entity incorporated in Country B but operates in several countries. Monthly management meetings to decide on strategic matters take place in Country A, where the majority of its production happens. XY sells most of its goods to Country C.In accordance with the Organization for Economic Co-operation and Development (OECD) rules on corporate residence which of the following statements is true?

• XY is resident in Country B because this is the country of its incorporation.
• XY is resident in Country C because this is the country where XY generates most of its revenue.
• XY is resident in Country A because this is the country of its effective management.
• XY is resident in Country A because this is the country where XY undertakes most of its production.

In accordance with IAS 16 Property, Plant and Equipment, in which of the following situations would subsequent expenditure on a non-current asset be capitalised?

• An entity purchased an aircraft five years ago, when its engines were separately identified in the accounting records. The engines now need to be replaced at a cost of $2 million each. When the engines are replaced the aircraft is expected to be airworthy for a further 5 years.
• An entity's head office building suffered a major fire, the upper floors and roof were completely destroyed. The entity proposes to restore the building at a cost of $1 million and move back in to the building to use it as a head office again.
• An entity's delivery vehicle was in a car park when the car park was flooded. The engine and interior of the vehicle needed extensive repair and renovation costing $25,000.
• A manufacturing entity closes its factory for two weeks each summer for routine maintenance and repairs. The current year's cost of maintenance and repairs was $62,000.

Mr AM is the owner of Waxco Ltd. Mr AM was born in India, but currently resides in the US

• He has gained dual Indian and American citizenship. Mr AM first registered Waxco Ltd in the USA when he started the company ten years ago. However, because of lower costs, the company moved its central management station to Germany two years ago. Waxco Ltd has other smaller offices such as call centres across Asia, in locations such as Pakistan and Cambodia, however Waxco Ltd only currently sell goods in the USA. Which of the countries mentioned are relevant for determining Waxco Ltd's competent jurisdiction?
• The USA
• Germany
• India
• Pakistan
• Cambodia

Mr K is being pressured by his manager to change figures in his report so that it will improve his manager's bonus.His manager has promised Mr K a promotion if he agrees to do this.What threats is Mr K facing?

• Intimidation and familiarity
• Familiarity and self-interest
• Self-review and advocacy
• Intimidation and self-interest

Which THREE of the following statements are true?

• Tax depreciation replaces accounting depreciation when calculating the taxable profit.
• Tax depreciation increases the taxable profit.
• Balancing allowances increase the taxable profit.
• Balancing charges increase the taxable profit.
• Balancing charges reduce the taxable profit.
• Balancing allowances reduce the taxable profit.

The development of an international financial reporting standard generally goes through a number of stages.Which of the following is NOT a stage of development?

• Producing an exposure draft for public comment
• Establishing an advisory committee
• Developing and publishing a discussion paper
• Establishing an interpretations committee

From the list below identify the item that appears in the statement of financial position.

• The amount of interest charged on loans during the year.
• The amount of loans outstanding at the year end.
• The amount of loans repaid during the year.
• The amount of interest actually paid during the year.

Entity T operates within several countries, but its country of residence is Country F. In 20X5, Entity T made $8.4 million in Country M. Country M has a flat rate corporation tax of 5.9%.Country F and Country M operate a double taxation treaty which uses a foreign tax credit system. In Country F, there is a tax of 10% tax on all foreign income.Taking into account the credit, what is the total tax liability that Entity T owes on its Country M income, in Country F?

• $344,400
• $495,600
• $840,000
• $450,000