Question 1

Whatis meant by the term 'a placing of ordinary shares'?

Options :

A : Selling new ordinary shares to a financial institution on a pre-arranged basis.

B : Selling new ordinary shares directly to the public.

C : Selling existing ordinary shares to new investors through a stock exchange.

D : Selling new ordinary shares to existing shareholders.

Answer: A

Question 2

STacquired 70% of the equitysharesofDE for $87,500 on 30 September 20X5. Atthe date of acquisition the net assets of DE were $54,700 and the fair value of the non controlling interest wasmeasured at $19,700. There has been no impairment of goodwill.

On 30 September 20X9 ST disposedofits entire investmentinDE for $262,500 whenthe net assets of DEwere $96,250.

What is the gain or loss on disposal of DEthat will be included in ST'sconsolidated profit or lossfor the year ended30 September 20X9?

Options :

A : $113,750 loss

B : $166,250 loss

C : $166,250 gain

D : $113,750 gain

Answer: D

Question 3

ST has sold its main office property, which had a carrying value of $360,000,to AB, a property management entity.

The property was sold for $400,000 which isequal to itsfair value and was immediately leased back under an operating lease agreement.

Which of the following journals will record this transaction?

Options :

A :

B :

C :

D :

Answer: A

Question 4

ST acquired 75% of the 2 million $1 equity shares of CD on 1 January 20X3, when the retained earnings of CD were S3,550,000. CD has no other reserves.

ST paid $5,600,000 for the shares in CD and the non controlling interest was measured at its fair value of S1,400,000 at acquisition.

At 1 January 20X3, the fair value of CD's net assets were equal to their carrying amount, with the exception of a building. This building had a fair value of $1,000,000 in excess of its carrying amount and a remaining useful life of 25 years on 1 January 20X3.

At 31 December 20X5, the retained earnings of ST and CD were $8,500,000 and $5,250,000 respectively.

What is thefigure fornon-controlling interestto be shown in the consolidated statement of financial position of STas at 31 December 20X5?

Options :

A : $1,795,000

B : $1,607,500

C : $1,825,000

D : $1,805,000

Answer: A

Question 5

RST sells computer equipment and prepares its financial statements to 31 December.

On 30 September 20X5 RST soldcomputer software along with a two year maintenance package to a customer. The customer is given the right to return the goods within six months and claim a full refund if they are not satisfied with the computer software. The risk of return is considered to be insignificant for RST.

How should the revenue from this transaction and the right of return be recognised in thefinancial statements for the year ended 31 December 20X5?

Options :

A : Recognise 100% of the revenue from both the sale of goods and the maintenance contract and create aprovision for the anticipated level of returns.

B : Do not recognise any revenue from the sale of goods or the maintenance contract and do not create aprovision for the anticipated level of returns.

C : Recognise 12.5% of the revenue from both the sale of goods and the maintenance contract and do not create aprovision for the anticipated level of returns.

D : Recognise 100% of the revenue from the sale of goods,12.5% of the revenue from the maintenance contract and create aprovision for the anticipated level of returns.

Answer: D