Which of the following is a condition that has to be met for an entity to be exempt the requirement to prepare consolidated financial statements?
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:
Which THREE of the following statements are NOT true of the IFRS Foundation trustees?
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?
When a trading loss is incurred by an entity, the entity may be able to claim loss relief. The way in which loss relief is claimed vanes from country to country.
Which of the following is NOT normally a way of claiming loss relief for a trading loss?
AB has prepared its financial statements for the year ended 31 July 20X5. On 15 September 20X5 a major fraud was uncovered by the external auditors which had taken place during the year to 31 July 20X5 The financial statements have not yet been authorised
In accordance with IAS 10 Events After the Reporting Period, AB should treat the fraud as:
Which of the following methods could be used by a tax authority to reduce tax evasion and avoidance?
Which TWO of the following are implications of employee income tax being paid to the tax authority through a Pay-As-You-Earn scheme?
AB has been asked to analyze the receivables days of an entity with a view to improving the working capital cycle.
The following results have been produced for receivable days:
Which of the following is NOT an explanation of why the days have increased?
Statements of financial position for YZ, BC and DE at 31 March 20X2 include the following balances:
YZ purchased 90% of BC's equity shares for $508,000 on 1 January 20X2. On 1 January 20X2 BC's retained earnings were $183,000. YZ uses the proportion of net assets method to value non-controlling interest at acquisition.
YZ purchased 30% of DE's equity shares on 1 April 20X1 for $112,000. DE's retained earnings at 1 April 20X1 were $88,000.
On 1 February 20X2 YZ sold goods to BC for $28,000 at a mark up of 25% on cost. All the goods were still in BC's inventory at 31 March 20X2.
Calculate the value of the investment in associate to be recognised in the consolidated statement of financial position at 31 March 20X2.
Give your answer to nearest whole $.
DE purchased an asset on 1 January 20X1 for $60,000 with a useful economic life of six years and a residual value of $3,000.
DE uses straight line depreciation for this asset.
On 31 December 20X3 the asset has a value in use of $ $28,000 and a fair value of $26,000.
Which of the following values should be used for the asset in DE's statement of financial position as at 31 December 20X3?
The following information relates to ABC.
Which of the following would be a reason for the movement in the trade receivable days?
MN recently took out a 5 year term loan to buy raw materials to take advantage of a supplier's bulk discount that had been offered to them.
What approach to financing working capital has MN undertaken?
The auditor has identified a material but not pervasive mis-statement whilst undertaking the external audit of an entity's financial statements.
This will result in a modified audit report with the opinion being .
Company R use a defined benefit plan pension scheme. Employee UW has been working for Company R for 25 years. The defined benefit plan is 1.5% of the employee's annual salary during their time at the company,
for every year of employment.
Employee UW started on a £18,000 per annum salary. After 10 years of employment. Employee UW received a promotion and began earning £22,000. After another 3 years of employment. Employee UW got promoted
to a wage of £35,000, and is still on this salary now. How much pension has Employee UW accumulated since working at Company R?
PZ has the following working capital ratios:
Which of the following could be the reason for the movements?
The following data has been extracted from GH's accounting records:
What is GH's average inventory days for the year ended 31 March 20X3?
CDO is an entity that is preparing to apply to its local stock market for a listing. CDO is currently run by a board of ten directors, each of whom manages a department of CDO. The board is chaired by Ms E who is also CDO's Chief Executive Officer.
Which TWO of the following actions would assist CDO to meet corporate governance regulations?
On 1 January 20X2 an entity began work on constructing a factory. It purchased the land for $14 million, built the factory buildings for $11 million and installed plant and equipment for $7 million. The project was completed on 31 December 20X3 when the factory was deemed ready to use, however, the factory did not start operations until 1 June 20X4.
To fund the project the entity borrowed $25 million on 1 January 20X2, with interest at 10% per year.
The loan was repaid in full on 31 December 20X4.
Calculate the total amount to be added to the cost of property, plant and equipment in respect of the above development.
Give your answer to the nearest $ million.
Indicate the possible reasons for the changes identified below to working capital ratios by placing the appropriate reason against each change.
Which of the following are techniques that can be used by a company to ensure they receive timely payment of receivables? Select ALL that apply:
ST has $20,000 of plant and machinery which was acquired on 1 April 20X0. Tax depreciation rates on plant and machinery are 20% reducing balance. All plant and machinery was sold for $12,000 on 1 April 20X2.
Calculate the tax balancing allowance or charge on disposal for the year ended 31 March 20X3 and state the effect on the taxable profit.
On 1 July 20X7, VWX enters into a 12-month lease for personal computers paying a non-refundable deposit of $600. Lease payments of $500 are paid monthly in arrears. VWX chooses to recognise the assets in the lease as short life and low value
Which of the following gives the correct value for the expense in the statement of profit or loss and corresponding prepayment and accrual in VWX's statement of financial position for the year ended 31 December 20X7?
A
B
C
D
In Country X, trading losses in any year can be carried back and set off against trading profits in the previous year, with any unrelieved losses carried forward to set against the first available trade profits in future years.
GH had the following taxable profits and losses in years 20X1 to 20X4:
What are the taxable profits for 20X4, assuming the most efficient use of the loss is made?
The following information is extracted from the trial balance of YY at 30 September 20X3.
i. Included in revenue is a refundable deposit of $20 million for a sales transaction that is due to take place on 14 October 20X3.
ii. The cost of closing inventory is $28 million, however, the net realisable value is estimated at $25 million.
iii. The interest free loan was obtained on 1 January 20X3. The loan is repayable in 12 quarterly installments starting on 31 March 20X3. All installments to date have been paid on time.
Calculate the cost of sales that would be shown in YY's statement of profit or loss for the year ended 30 September 20X3.
Give your answer to the nearest $ million.
Which of the following is NOT a principle in the CIMA Code of Ethics for Professional Accountants?
Mr AM is the owner of Waxco Ltd. Mr AM was born in India, but currently resides in the USA. 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?
XYZ is a manufacturer. Which of these should be classified as other comprehensive income in XYZs statement of profit or loss and other comprehensive income for the year ended 31 December 20X4?
UV has recently been having cash flow issues due to its credit customers paying after the credit period they have been granted.
UV is looking into factoring the receivables to a factoring company on a recourse basis to improve its cash flow.
Which TWO of the following will UV encounter as a result of employing the factoring company?
The following information relates to a single asset:
*Original cost of $186,000
*Estimated residual value of $6,000
*Expected useful life of 10 years
*Accumulated depreciation at 31 December 20X5 of $66,960
*Annual depreciation rate of 20% on a reducing balance basis
Calculate the amount of depreciation that should be charged to profit or loss for the year ended 31 December 20X6.
Give your answer to the nearest whole number.
In which of the following concepts is profit an increase in the nominal value of capital over a period?
Which THREE of the following matters should an entity consider when determining the credit terms granted to a customer?
PP supplies zero-rated and standard-rated goods. During the year ended 30 March 20X3, the standard-rated goods made up 50% of the total supplies. During the year ended 30 March 20X4 this percentage increased to 60%.
What percentage of input tax suffered can PP claim back in the year ended 30 March 20X4?
Give your answer as a whole number.
The International Accounting Standards Board's "The Conceptual Framework for Financial Reporting" identifies fundamental and enhancing qualitative characteristics of financial statements.
Which of the following is included within the fundamental characteristics?
ABC uses an aggressive approach to managing its working capital. XYZ uses a conservative approach to managing its working capital.
Which of the following is ABC more at risk of compared to XYZ?
Which THREE of the following actions, considered in isolation, would increase the working capital cycle of an entity?
An entity had a current tax liability of $187,000 in its statement of financial position as at 30 September 20X5. It was subsequently negotiated and eventually agreed with the tax authorities that the entity would pay $192,000 and this was paid on 6 January 20X6.
The entity's management estimate that the tax due on profits for the year to 30 September 20X6 is $231,000.
Calculate the entity's corporate income tax expense included in its statement of profit or loss for the year ended 30 September 20X6.
Give your answer to the nearest whole $000.
XYZ's accounting profit for the last reporting period is $200,000. This is after deduction of:
• Accounting depreciation of $40,000.
• Entertaining expenses of $10,000 which are disallowable for tax purposes
• Directors' salaries of 530.000
Tax depreciation allowances of $60,000 are available and the rate of corporate income tax is 20%.
What is the corporate tax liability of XYZ for the reporting period?
T T T is an online retailer. It has 1,000 units of Product X in inventory at the year end. The following information relates to Product X:
c
What is the amount that should be included in the cost of TTT's inventory of Product X?
If an entity makes a capital loss in a period, which of the following is the most likely way that will be allowed for relieving that capital loss?
During the year a piece of equipment that originally cost $96,000, with accumulated depreciation of $39,000, met the criteria of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations to be classified as held for sale.
The equipment is being advertised for sale at $46,000 and costs of $1,000 will be incurred to enable the sale to be completed.
At what value should the equipment be included in the statement of financial position at the year end assuming that it remains unsold?
Give your answer to the nearest whole number.
EF has been offering its customers a 60 day credit period, but now wants to improve its cash flow.
EF is proposing to offer a 2% discount for payment in 15 days.
Assume a 365 day year and an invoice value of $100.
Which of the following is the effective annual interest rate EF will incur for this action?
You work in the finance department of an entity. A director has approached you and asked you to falsify sales invoices which would significantly inflate revenue. The CIMA Code of Ethics suggests that you should deal with such an ethical dilemma by following a number of stages.
Place each of the stages identified below into chronological order.
LM is preparing its cash forecast for the next three months.
Which of the following items should be left out of its calculations?
An entity purchased equipment on 1 April 20X4 for $200,000. The equipment was depreciated using the reducing balance method at 20% a year.
Depreciation was charged up to and including 31 March 20X7. At that date the recoverable amount of the equipment was $94,000.
Calculate the impairment loss on the equipment in accordance with IAS 36 Impairment of Assets.
Give your answer to the nearest whole $.
Statements of financial position for FG, IJ and KL at 31 December 20X5 include the following balances:
FG acquired 90% of IJ's equity shares for $358,000 on 1 July 20X5 when IJ's retained earnings were $98,000.
FG acquired 100% of KL's equity shares for $360,000 on 1 January 20X5 when KL's retained earnings were $155,000.
FG used the proportion of net assets method to value non-controlling interests at acquisition.
KL sold a piece of land to FG for $130,000 on 1 September 20X5. At the date of transfer the land had a carrying value of $50,000.
The management of FG expect KL to make profits in the future and no impairment ot its goodwill was proposed at 31 December 20X5.
Calculate the non-controlling interest balance in FG's consolidated statement of financial position at 31 December 20X5.
Give your answer to nearest whole $.
On 31 July 20X8, CDE's directors decided to sell an asset with a carrying amount of $26,000. On that date it ceased to be used in readiness for its sale.
There is an active second-hand market for this type of asset and it has been advertised at its market value of $24,000 When a seller is found, the asset will need to be dismantled at a cost of $1,000
What is the amount to be recognised as an asset held for sale on 31 July 20X8?
Give your answer to the nearest $.
Country ZZ allows the cost of a capital asset to be adjusted for an indexation allowance which takes into consideration the effect of inflation, although the indexation allowance cannot convert a chargeable gain into a chargeable loss.
The following data relates to the sale of an asset ABC has the following working capital ratios at 31 December 20X2:
Dunng the year ended 31 December 20X4 credit purchases wefe $1,700,000 and at 31 December 20X4 the outstanding trade payables balance was $340,000
Calculate the working capital cycle for ABC.
Give your answer to the nearest whole number of days and assume there are 365 days in a year. March 20X4:
Calculate the chargeable gain or loss in respect of the sale of this asset.
Give your answer to the nearest $.
An entity's policy is to finance the investment in working capital using short-term financing to fund all of its investment in fluctuating net current assets as well as some of its investment in permanent net current assets.
What is this working capital financing policy known as?
EF is a large manufacturing entity with several of its manufacturing sites in different locations. Currently all of the sites have a local procurement department. EF's board are looking to implement a centralized purchasing system.
Match the tokens according to whether you believe each statement is either an advantage or disadvantage of implementing a centralized purchasing system for EF.
DEF is considering introducing a Pay-As-You-Earn (PAYE) system but unsure of the advantages of using it.
Which of the following statements are advantages from the employees perspective of an entity using a PAYE system for collecting taxes from employees.
Select ALL that apply.
STU commenced trading on 1 January. Total sales for the month of January were $250,000. which were 75% on credit and 25% for cash. Sales are expected to increase by 10% a month Irrecoverable debts are estimated to be 5% of credit sales Of the credit sales expected to pay, 50% pay in the month following the sale and the remaining 50% the month after.
The cash expected to be received in February is:
An entity has a working capital cycle of 120 days which has been calculated in part from the following data:
What is the stock holding period on the basis of 365 days in a year?
Give your answer to the nearest whole day.
There are two main approaches that a country could adopt in respect of corporate governance regulation - a rules based approach and a principles based approach. Match the following statements with the appropriate approach by placing either rules based or principles based against each of them.
An entity bought a capital item for $110,000 on 1 March 20X4 incurring legal fees at the date of purchase of $2,500.
On 1 May 20X4 additional costs classified as capital expenditure by the tax rules of the country of $25,000 were incurred in respect of the asset. On 1 June 20X4 repairs not classified as capital expenditure were incurred at a cost of $15,000.
The asset was sold for $250,000 on 30 November 20X8 and costs to sell were incurred of $4,300.
Calculate the chargeable gain on the disposal.
Give your answer to the nearest $.
Statements of financial position for FG, IJ and KL at 31 December 20X5 include the following balances:
FG acquired 90% of IJ's equity shares for $358,000 on 1 July 20X5 when IJ's retained earnings were $98,000.
FG acquired 100% of KL's equity shares for $360,000 on 1 January 20X5 when KL's retained earnings were $155,000.
FG used the proportion of net assets method to value non-controlling interests at acquisition.
KL sold a piece of land to FG for $130,000 on 1 September 20X5. At the date of transfer the land had a carrying value of $50,000.
The management of FG expect KL to make profits in the future and no impairment ot its goodwill was proposed at 31 December 20X5.
Calculate the total goodwill to be included in FG's consolidated statement of financial position as at 31 December 20X5.
Give your answer to the nearest whole $.
The following information is extracted from OO's statement of financial position at 31 March:
Included in other payables is interest payable of $80,000 at 31 March 20X2 and $73,000 at 31 March 20X1.
The following information if included within OO's statement of profit or loss for the year ended 31 March 20X2:
Included within finance cost is $124,000 which relates to interest paid on a finance lease. 00 includes finance lease interest within financing activities on its statement of cash flows.________________
Within OO's statement of cash flow for the year ended 31 March 20X2 which figures should be included to reflect the changes in working capital within the net cash flow from operating activities?
On 1 July 20X8 JKL has 100 units of inventory, which cost $8 each. The following transactions arose during the month of July:
JKL values inventory using the first in. first out method.
What is the value of JKL's inventory at 31 July 20X8?
Give your answer to the nearest $.
Which of the following would be capitalized as an intangible asset in accordance with IAS 38 Intangible Assets?
In accordance with the Conceptual Framework for Financial Reporting, which of the following describes the historical cost measurement basis for an asset?
EF purchased an asset on 1 September 20X4 for $800,000, exclusive of import duties of $30,000. EF is resident in country Y where indexation is allowed on purchase costs when the asset is disposed of.
EF sold the asset on 31 August 20X9 for $1,500,000 incurring transaction charges of $20,000. The indexation factor increased by 40% in the period from 1 September 20X4 to 31 August 20X9.
Capital gains are taxed at 30%.
What is the tax due on disposal of the asset?
AAA has the following working capital ratios at 30 March 20X4:
During the year ended 30 March 20X4 credit purchases were $3,600 and at 30 March 20X4 the outstanding trade payables amounted to $522.
The year ended 30 March 20X4 was not a leap year.
Calculate the working capital cycle for AAA.
Give your answer to one decimal place.
WX is considering an investment in ST.
At 31 December 20X2 ST had the following balances in its statement of financial position:
Which of the following would cause ST to become an associate investment of WX?
The financial statements of JK for the year ended 31 August 20X4 were approved on 10 November 20X4.
Within these financial statements which of the following would have been treated as a non-adjusting event in accordance with IAS 10 Events After the Reporting Period?
Which of the following is the most appropriate definition of the term 'factoring'?
An entity purchased an asset on 1 April 20X4 for $320,000, exclusive of import duties of $32,000.
The entity sold the asset on 31 March 20X9 for $480,000 incurring legal fees of $12,000.
The entity is resident in Country Y where chargeable capital gains are taxed at 20% and no indexation is allowed.
Calculate the amount of capital tax that the entity is due to pay.
Give your answer to the nearest whole $.
Country A permits the following deductions in an entity's annual corporate income tax return in relation to entertaining expenses and gifts;
1 Employee entertaining up to a value of $150 a head
2 Entertaining of overseas customers.
3 Individual gifts not to exceed $10 in value
Which THREE of the following actions would be regarded as tax evasion?
The following information is extracted from the statement of financial position for ZZ at 31 March 20X3:
Included within cost of sales in the statement of profit or loss for the year ended 31 March 20X3 is $20 million relating to the loss on the sale of plant and equipment which had cost $100 million in June 20X1.
Depreciation is charged on all plant and equipment at 25% on a straight line basis with a full year's depreciation charged in the year of acquisition and none in the year of sale.
The revaluation reserve relates to the revaluation of ZZ's property.
The total depreciation charge for property, plant and equipment in ZZ's statement of profit of loss for the year ended 31 March 20X3 is $80 million.
The corporate income tax expense in ZZ's statement of profit or loss for year ended 31 March 20X3 is $28 million.
ZZ is preparing its statement of cash flows for the year ended 31 March 20X3.
What figure should be included for corporate income tax paid in order to arrive at the net cash flow from operating activities?
Give your answer to the nearest $ million.
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TESTED 02 May 2024
