CIMA Advanced Financial Reporting - F2 Exam Practice Test
Question 1
EF has redeemable 10% bonds which are currently trading at $94.00 for each $100 of nominal value. The bonds can be redeemed at par in five years' time. The corporate income tax rate is 22%.
The present value of the cash flows associated with $100 nominal value of these bonds at a discount rate of 7% is $9.28.
Calculate the post tax cost of debt.
Give your answer as a percentage to one decimal place.
%
The present value of the cash flows associated with $100 nominal value of these bonds at a discount rate of 7% is $9.28.
Calculate the post tax cost of debt.
Give your answer as a percentage to one decimal place.
%
Correct Answer:
9.4, 9.3, 9.39, 9.40
Question 2
Which TWO of the following statements about bonds and their issue are true?
Correct Answer: A,E
Question 3
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?
Which of the following describes the value of the financial asset on the date of acquisition?
Correct Answer: C
Question 4
LM acquired 15% of the equity share capital of ST on 1 January 20X6 for $18 million. LM acquired a further 50% of the equity share capital of ST for $50 million on 1 January 20X7 when the fair value of ST's net assets was $82 million. The original 15% investment in ST had a fair value of $20 million at 1 January 20X7. The non controlling interest in ST was measured at its fair value of $30 million at the date control in ST was acquired.
Calculate the goodwill arising on the acquisition of ST that LM included in its consolidated financial statements at 31 December 20X7.
Give your answer to the nearest $ million.
$ ? million
Calculate the goodwill arising on the acquisition of ST that LM included in its consolidated financial statements at 31 December 20X7.
Give your answer to the nearest $ million.
$ ? million
Correct Answer:
18, 18000000
Question 5
Information from the financial statements of RST for the year ended 30 April 20X9 is as follows:
At 30 April 20X9 the ordinary shares are trading at $4.75.
What is the price earnings (P/E) ratio for RST at 30 April 20X9?
At 30 April 20X9 the ordinary shares are trading at $4.75.
What is the price earnings (P/E) ratio for RST at 30 April 20X9?
Correct Answer: C
Question 6
LK acquired 100% of the equity shares of TU on 1 January 20X4. LK disposed of 60% of TU for £2,400,000 on 30 September 20X4. The sale proceeds reflected the fair value of TU's shares on that date.
The remaining 40% shareholding gave LK the ability to exercise significant influence over the activities of TU. TU reported profit of $1,800,000 for the year ended 31 December 20X4 and this accrued evenly throughout the year.
Calculate the investment in associate that will be presented in LK's consolidated statement of financial position as at 31 December 20X4.
Give your answer to the nearest whole $'000.
$ 000
The remaining 40% shareholding gave LK the ability to exercise significant influence over the activities of TU. TU reported profit of $1,800,000 for the year ended 31 December 20X4 and this accrued evenly throughout the year.
Calculate the investment in associate that will be presented in LK's consolidated statement of financial position as at 31 December 20X4.
Give your answer to the nearest whole $'000.
$ 000
Correct Answer:
1780, 1780000
Question 7
Information from the financial statements of RST for the year ended 30 April 20X9 is as follows:
At 30 April 20X9 the ordinary shares are trading at $4.75.
What is the price earnings (P/E) ratio for RST at 30 April 20X9?
At 30 April 20X9 the ordinary shares are trading at $4.75.
What is the price earnings (P/E) ratio for RST at 30 April 20X9?
Correct Answer: C
Question 8
AB acquired its one subsidiary, CD, on 1 January 20X1. At this date the fair value of CD's property, plant and equipment was found to be $40 million higher than its carrying value. The relevant items had a remaining estimated useful life of 10 years from the date of acquisition.
At 31 December 20X4 AB and CD presented property, plant and equipment of $100 million and $50 million respectively in their individual financial statements.
The value of property, plant and equipment presented in AB's consolidated statement of financial position at 31 December 20X4 is:
At 31 December 20X4 AB and CD presented property, plant and equipment of $100 million and $50 million respectively in their individual financial statements.
The value of property, plant and equipment presented in AB's consolidated statement of financial position at 31 December 20X4 is:
Correct Answer: A
Question 9
Ratios have been produced below for EF for the year to 31 March:
Which TWO of the following could explain the movement in both gearing and ROCE?
Which TWO of the following could explain the movement in both gearing and ROCE?
Correct Answer: A,B
