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Fundamentals Level - Skills Module

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Paper F7

Financial Reporting

Specimen Exam applicable from

September 2016

p/y>398 T DThh BH ;?/=>398= v>/7:>/-Please use the grid provided on page two of the Candidate Answer Booklet to record your answers to each multiplechoice question. Do not write out the answers to the MCQs on the lined pages of the answer booklet.Each question is worth 2 marks.1Whi ch of the following should be capitalised in the initial carrying amount of an item of plant?

(1)Cost o f transporting the plant to the factory (2)Cost o f installing a new power supply required to operate the plant (3)Cost o f a three-year plant maintenance agreement (4)Cost o f a three-week training course for staff to operate the plant

A(1) and (3)

B(1) and (2)

C(2) and (4)

D(3) and (4)

2When a parent is evaluating the assets of a potential subsidiary, certain intangible assets can be recognised separately

from goodwill, even though they have not been recognised in the subsidiary"s own statement of financial position.

Which of the following is an example of an intangible asset of the subsidiary which may be recognised separately

from goodwill when preparing consolidated financial statements?

AA new research project which the subsidiary has correctly expensed to profit or loss but the directors of the parent

have reliably assessed to have a substantial fair value

BA global advertising campaign which was concluded in the previous financial year and from which benefits are

expected to flow in the future

CA contingent asset of the subsidiary from which the parent believes a flow of future economic benefits is possible

DA customer list which the directors are unable to value reliably

3On 1 October 20X4, Flash Co acquired an item of plant under a five-year finance lease agreement. The plant had a

cash purchase cost of $25m. The agreement had an implicit finance cost of 10% per annum and required an

immediate deposit of $2m and annual rentals of $6m paid on 30 September each year for five years.

What is the current liability for the leased plant in Flash Co"s statement of financial position as at 30 September

20X5?

A$19,300,000

B$4,070,000

C$5,000,000

D$3,850,000

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On the assumption that Ambel Co is an associate of Caddy Co, what would be the carrying amount of the

investment in Ambel Co in the consolidated statement of financial position of Caddy Co as at 30 September

20X5? A "61AB51555

B"619EA1555

C"61A6A1555

D"61BE51555

Which of the following circumstances may invalidate the comparison of Quartile Co"s ratios with those of the

sector average? .60X=$Cwt $rDAAt=C$HtpA1$gDpACx;t$Q>$wpB$tG?tAxt=rts$Bxv=xuxrp=C$AxBx=v$r>BCB$u>A$xCB$?DArwpBtB

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B.80$p=s$.:0

C.80$p=s$.90

D.60$p=s$.:0

13Which of the following criticisms does NOT apply to historical cost financial statements during a period of rising

prices?

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X=Et=C>AH$CDA=>EtABxG$Cx What is Fowler"s trade receivables collection period as at 30 September 20X5?

A65B$spHB

BDE$spHB

CAB$spHB

DA6$spHB

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At what amount should the non-controlling interests in Square Co be valued in the consolidated statement of

financial position of the Pyramid group as at 30 September 20X5?

A"8B1BD51555

B"C1E551555

C"C1CD51555

D"6818851555

(30 marks) O q23= 3= v x6v85 :v1/7 p/y>398 U x/138= 98 :v1/ O7

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Plant carrying amountRevaluation surplus

$000$000

A480nil

B300185

C480185

D

300nil

18What is the value in use of Telepath Co"s plant as at 30 September 20X3?

A$600,000

B$450,000

C$499,600

D$nil

19Which of the following are TRUE in accordance with IAS 36 Impairment of Assets?

(1)A cash generating unit is the smallest identifiable group of assets for which individual cash flows can be identified

and measured

(2)When c onsidering the impairment of a cash generating unit, the calculation of the carrying amount and the

recoverable amount does not need to be based on exactly the same group of net assets

(3)When i t is not possible to calculate the recoverable amount of a single asset, then that of its cash generating unit

should be measured instead

A(1) only

B(2) and (3)

C(3) only

D(1) and (3)

20What is the carrying amount of Rilda Co"s plant at 30 September 20X3 after the impairment loss has been

correctly allocated to its assets?

A$2,479,000

B$2,800,000

C$2,211,000

D$3,500,000

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position of Neutron Co as at 30 September 20X3?

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C"615A51555

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