Question 1

MS Group's total profit for period on their consolidated income statement is 31,000. This includes adjusting for their share of joint venture JV2. Calculate the share of joint venture MS Group received based on the following information.

MS operating profit 41,000

Dividend from JV2 5,000

Finance cost 3,000

Tax 11,000

Options :

A : 4,000

B : 9,000

C : 1,000

D : 7,000

E : 6,000

F : 5,000

Answer: A

Question 2

W and Y are very similar entities with the same level of profit before interest and tax. However, W has gearing of 95% and Y has gearing of 30%.

Which of the following statements is true?

Options :

A : Investing in W carries a higher level of risk than investing in Y.

B : A greater proportion of profit will be available out of which to declare a dividend in W.

C : Investors in Y will expect a higher return than investors in W.

D : Y has a greater commitment to meet interest payments than W.

Answer: A

Question 3

Which of the following are limitations of financial statement figures for ratio analysis? Select the ALL that apply.

Options :

A : Only provides historic data

B : Only provides financial information

C : Limited information to identify trends over time

D : Provide only summarised information

E : Contains complicated information that needs to be summarised

F : Only provides forecast data

Answer: A,B,C,D

Question 4

How would KL account for itsinvestment in MNin its consolidated financial statements for the year to 31 December 20X9?

Options :

A : Joint venture

B : Joint arrangement

C : Financial asset

D : Subsidiary

Answer: A

Question 5

Which TWO of the following are true in relation to IAS21 The Effects of Changes in Foreign Exchange Rates when consolidating an overseas subsidiary?

Options :

A : Acurrent period exchange gain or loss is shown within the consolidated statement of comprehensive income within other comprehensive income.

B : Goodwill is re-translated at the end of each reporting period and reflected at the period end exchange rate in the consolidated statement of financial position.

C :

Assets and liabilities of the subsidiary are translated at each reporting date using the average exchange rate for the period.

D : Goodwill is reflected in the consolidated statement of financial position translated at the exchange rate on the date of acquisition.

E : The statement of profit or loss of the subsidiary is translated for the reporting period using the closing exchange rate.

Answer: A,B

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