Question 1

What is the total comprehensive incomeattributable to the shareholders of GHI that will be presented in GHI's consolidated statement of changes in equity for the year ended 31 December 20X4?

Options :

A : $2,780,000

B : $2,880,000

C : $2,875,000

D : $3,260,000

Answer: A

Question 2

The tax benefit on a company's asset is 180,000 and the useful life on that asset is five years. The company creates a deferred tax provision to spread this benefit over the asset's useful life.

What entry is needed to reduce this deferred tax provision in the company's year two accounts?

Options :

A : DR Deferred tax liability (SOFP) 36,000

B : CR Deferred tax liability (SOFP) 36,000

C : DR Corporation tax (income statement) 36,000

D : CR Corporation tax (income statement) 36,000

E : DR Deferred tax liability (SOFP) 144,000

F : CR Deferred tax liability (SOFP) 144,000

G : DR Corporation tax (income statement) 144,000

H : CR Corporation tax (income statement) 144,000

Answer: A

Question 3

When consolidating for group accounts, a number of calculations and adjustments are required to properly combine the entities into a single group. Which of the following processes are involved in this consolidation method?

Select ALL that apply:

Options :

A : Add together the assets and liabilities of parent and subsidiary

B : Adjust for investment in subsidiaries

C : Adjustment for equity

D : Adjustment for profits

E : Adjustment for depreciation and amortisation

Answer: A,B,C

Question 4

Which of the following best describes the goal of WACC as a measure?

Options :

A : To work out the average return that is required by the company on its investments in order to satisfy all shareholders and debt holders.

B : To work out the average return that is required by the company on its investments in order to satisfy all shareholders.

C : To work out the average return that is required by the company on its investments in order to satisfy all debt holders.

D : To work out the minimum return that is required by the company on its investments in order to satisfy all shareholders and debt holders.

Answer: A

Question 5

AB and EF are located in the same country and prepare their financial statements to 31 October in accordance with International Accounting Standards. EF supplies AB with a component that is vital to AB's product range. AB is considering acquiring a controlling interest in EF by 31 December 20X4 in order to guarantee future supply. The Board of EF has indicated that such an approach would be postively considered. AB would use its control to make AB the sole customer of EF.

The Finance Director of AB has been granted access to EF's management accounts and has conducted some initial analysis from the financial press. The results togther with comparisons for AB for the year to 31 October 20X4 are presented below:

AB and EF are forecasting revenues of S1,500,000 and $700,000 respectively for the year ended 31 October 20X5.

Which of the followingindependent optionswouldexplainthe differencebetween thegearingratios of AB and EF at 31 October 20X4?

Options :

A : EF-s average cost of borrowing is significantly lower than that of AB and EF has taken advantage of that.

B : EF has a policy of revaluing non current assetswhereas AB does not.

C : EF made a bonus issue of shares from retained earnings during the year whereas AB did not.

D : EF-s market value of sharesat 31 October 20X4 is lower than that of AB.

Answer: A