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

Which THREE of the following statements are true in relation to financial assets designated as fair value through profit or loss under IAS 39 Financial Instruments: Recognition andMeasurement?

• Sharesin another entity held for short term trading purposes fall within this category.
• Transaction costs in relation to these assets are expensed to profit or loss on acquisition.
• Transaction costs in relation to these assets areadded to theinitial cost of the asset on acquisition.
• The gainor loss on thesubsequent measurement of these assetsisrecordedwithin other comprehensive income.
• The gain or loss on the subsequent measurement of these assets is recorded within profit for the year.
• Oncethe asset has beensubsequentlymeasured to fair value an impairment review is undertaken.

AB has taxable temporary differences arising from the revaluation of non current assets.What is the journal entry to record the movement in the provision for deferred taxresulting from this difference?

• Option
• Option
• Option

Which of the following statements about ST is true?

• The return on the investment in associate on an annual basis is 14%.
• The effective tax rate incurred by ST has remained largely the same.
• The increase in administrative expenses is in line with the increase in revenues.
• The ratio of distribution costs to revenue hasincreased significantly.

GH's financial statementsshow the following:What is the value of the dividend received from the associate to be included in GH'sconsolidated statement of cash flows for the year?Give your answer to the nearest $000.$? 000

GH issued a 6% debenture for $1,000,000 on 1 January 20X4. A broker fee of $50,000 was payable in respect of this issue. The effective interest rate associated with this debt instrument is 7.2%.The carrying value of the debenture at 31 December 20X4 is:

• $958,400
• $1,065,600
• $1,012,000
• $961,400

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

Which of the followingreduce the usefulnessof ratio analysis when comparing entities that operate in the same industry?Select ALL that apply.

• The revenue figure being aggregated from many different activities and sources.
• Accounting estimates in respect of depreciation being different between entities.
• The effect of a material and unusual item being disclosed separately in the notes.
• An entity adopting a policy of revaluing its non current assets.
• Ratio calculations being based on historical information.
• Ratios being quick and easy to calculate.

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.

Which of the following defines the calculation of interest cover?

• Profit before interest and tax divided by finance costs
• Finance costs divided by profit before interest and tax
• Profit after tax divided by finance costs
• Finance costs divided by profit after tax

Which of the followingreduce the usefulnessof ratio analysis when comparing entities that operate in the same industry? Select ALL that apply.

• The revenue figure being aggregated from many different activities and sources.
• Accounting estimates in respect of depreciation being different between entities.
• The effect of a material and unusual item being disclosed separately in the notes.
• An entity adopting a policy of revaluing its non current assets.
• Ratio calculations being based on historical information.
• Ratios being quick and easy to calculate.