Free F2 Advanced Financial Reporting Exam CIMAPRA19-F02-1 Exam Practice Test

EF obtained a government licence, free of charge, to operate a silver mine in 20X7 and $5 million was spent on preparing the site. The mine commenced operation on 1 January 20X8.The licence requires that at the end of the mine's useful life of 20 years,the site above ground must be reinstated to its original position.EF estimated that the cost in 20 years' time of this reinstatement will be $3 million, which has a present value of $1 million at 1 January 20X8.Which THREE of the following describe how the cost of the reinstatement of the site should be treated in the financial statements of EF in the year ended 31 December 20X8?

• The cost of the mine will be increased by $1 million on 1 January 20X8.
• The cost of the mine will be increased by $3 million on 1 January 20X8.
• There will be a credit to finance costs for the unwinding of the discount on the reinstatement provision.
• There will be a debit to finance costs for the unwinding of the discount on the reinstatement provision.
• Only the cost of the site preparation will be depreciated over the mine's useful economic life.
• Depreciation will be charged over 20 years on the full cost of the mine including the reinstatement cost.

MNO has calculated its return on capital employed ratio for 20X4 and 20X5 as 41% and 56% respectively.Taking each statement in isolation, which would explain the movement in the ratio between the2 years?

• In 20X5 the average interest rate on borrowing decreased compared to 20X4.
• In 20X4 an onerous contract was provided for and this provision did not change in 20X5.
• In 20X5 the increase in value of MNO's head office was reflected in the financial statements.
• In 20X4 an unused building was sold at a price in excess of its carrying value.

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 $50,000. At the year ended 31 December 20X9 this contract was estimated to be 60% complete. CD adopted the provisions of IAS 11 Construction Contracts when preparing its financial statements for the year to 31 December 20X9.What value should be included in CD's profit for the year ended 31 December 20X9 in respect of this contract?Give your answer to the nearest whole number.$?

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?

• $400,000
• $120,000
• $200,000
• $430,000

As at 31 October 20X7 TU's financial statementsshow the entity having profit after tax of$600,000 and 900,000$1 ordinary sharesin issue. There have been no issues of shares during the year. At 31 October 20X7 TUhave 300,000 share options in issue, which allow the holders to purchase ordinary shares at $2a share in 3 years' time. The average price of the ordinary shares throughout the year was $5a share.What is the diluted earnings per share for the year ended 31 October 20X7?

• 66.7 cents
• 58.8 cents
• 50.0 cents
• 55.6 cents

When preparing a consolidated statement of cash flows, which of the following describes thecorrectpresentationof an associate's dividends?

• Dividends received from the associate in cash flows from investing activities
• Dividends received from the associate in cash flows from operating activities
• Dividends paid by the associate in cash flows from financing activities
• Dividends paid by the associate in cash flows from investing activities

LM are just about to pay a dividend of 20 cents a share. Historically, dividends have grown at a rate of 5% each year.The current share price is $3.05.The cost of equity using the dividend valuation model is:

• 12.4%
• 11.9%
• 7.4%
• 6.9%

CD has 200,000 equity shares with a current market value of $2.50 each. The annualdividend of $0.50 a share is about to be paid.CD also has redeemable debt with a nominal value of $100,000. This is currently trading at $90 for each $100 of nominal value.The cost of equity is 20% and the post tax cost of debt is 6%.What is CD's weighted average cost of capital?Give your answer in % to one decimal place.? %

Operating segments are separately reportable where they exceed 15% of revenue / profits / assets. These must in total cover 80% of total revenue. Is this statement true or false?

• True
• False

What is the total comprehensive incomeattributable tothe non-controlling interestthat will be presented in GHI's consolidated statement of changes in equity for the year ended 31 December 20X4?

• $95,000
• $595,000
• $575,000
• $190,000