AB acquired a financial investment on 1 January 20X9, incurring $5,000 related agency fees. AB initially classified the investment as held for trading, in accordance with IAS 32 Financial Instruments: Presentation. Which of the following statements reflects the accounting treatment that AB adopted in respect of this investment when it prepared its financial statements to 31 December 20X9?

A. Agency fees were recorded as an expense and the gain/loss on the remeasurement of the investment at the year end was recorded in profit or loss for the year.

B. Agency fees were recorded as an expense and the gain/loss on the remeasurement of the investment at the year end was recorded in other comprehensive income.

C. Agency fees were added to the cost of the investment and the gain/loss on the remeasurement of the investment at the year end was recorded in profit or loss for the year.

D. Agency fees were added to the cost of the investment and the gain/loss on the remeasurement of the investment at the year end was recorded in other comprehensive income.

AB acquired a financial investment on 1 January 20X9, incurring $5,000 related agency fees. AB initially classified the investment as held for trading, in accordance with IAS 32 Financial Instruments: Presentation.

Which of the following statements reflects the accounting treatment that AB adopted in respect of this investment when it prepared its financial statements to 31 December 20X9?

A. Agency fees were recorded as an expense and the gain/loss on the remeasurement of the investment at the year end was recorded in profit or loss for the year.

B. Agency fees were recorded as an expense and the gain/loss on the remeasurement of the investment at the year end was recorded in other comprehensive income.

C. Agency fees were added to the cost of the investment and the gain/loss on the remeasurement of the investment at the year end was recorded in profit or loss for the year.

D. Agency fees were added to the cost of the investment and the gain/loss on the remeasurement of the investment at the year end was recorded in other comprehensive income.

ST owns 75% of the equity share capital of GH. GH owns 80% of the equity share capital of RS.

The following balances relate to RS:

The non controlling interest in respect of RS had a fair value of $56,000 at acquisition. There has been no impairment to goodwill since acquisition.

What value should be included in ST's consolidated statement of financial position for the non controlling interest in RS at 31 December 20X9?

A. $116,000

B. $86,000

C. $93,500

D. $146,000

AB, a listed entity, prepared its financial statements to 31 December 20X7, in accordance with international accounting standards.

Which THREE of the following were disclosed as related parties of AB in its financial statements?

A. AB's defined benefit pension plan.

B. The wife of the Managing Director of AB, to whom AB sold a motor vehicle in the year to 31 December 20X7.

C. ST, an entity that was jointly established by AB and CD, and that is accounted for as a joint venture in AB's financial statements to 31 December 20X7.

D. AB's bank that provides more than 60% of the entity's loan finance.

E. AB's main supplier, GH, who supplies more than 70% of AB's goods for manufacture.

An entity undertakes an issue of new debt which has the effect of reducing the entity's weighted average cost of capital (WACC). Which of the following would best explain why the WACC will have fallen?

A. The entity was 100% equity financed prior to the issue of the debt.

B. The risk to the shareholders has reduced leading to a fall in the cost of equity.

C. The new debt is being used to replace existing debt that had a lower cost.

D. The new debt is being used to replace existing debt that had the same cost.

Which TWO of the following are true for an entity raising equity finance using a rights issue rather than a placing of equity shares to new investors?

A. The administration is more complex and therefore likely to be more costly.

B. The shares will sell at a higher price and therefore generate more funds.

C. The voting rights of existing shareholders will be unaffected if the shareholders take up their rights.

D. The cost of underwriting will be lower because the risk of the issue is lower.

E. The issue will widen the base of shareholders if all shareholders take up their rights.

AB and CD are separate entities that prepare financial statements to 31 May using international accounting standards. AB and CD provide technical support services to the financial services industry and operate in the same country. The financial statements are identical except for the following:

1.

AB purchased all operating equipment, paying $100,000, using a 5 year bank loan. The useful life of the equipment was 5 years.

2.

CD signed an operating lease agreement for all operating equipment for 5 years paying $20,000 per year.

Both entities charge all expenses relating to the equipment to cost of sales.

From the information provided, which of the following ratios would be reliably comparable for AB and CD?

A. Gross profit margin

B. Return on capital employed

C. Non current asset turnover

D. Profit before tax margin

The dividend yield of ST has fallen in the year to 31 May 20X5, compared to the previous year.

The share price on 31 May 20X4 was $4.50 and on 31 May 20X5 was $4.00. There were no issues of share capital during the year.

Which of the following should explain the reduction in the dividend yield for the year to 31 May 20X5 compared to the previous year?

A. The dividend paid in the year was reduced in order to pay for new assets.

B. Surplus cash was used to pay a special dividend in addition to the normal dividend in the year.

C. The profit for the year fell significantly and the dividend per share stayed the same.

D. To compensate investors for the reduction in share price a higher dividend per share was paid.

The consolidated statement of profit or loss for VW for the year ended 30 September 20X7 includes the following:

What is VW's interest cover for the year ended 30 September 20X7?

A. 4.5

B. 3.3

C. 4.1

D. 5.1

CORRECT TEXT

GH's financial statements show the following:

What is the value of the dividend received from the associate to be included in GH's consolidated statement of cash flows for the year?

Give your answer to the nearest $000.

$ ? 000

A. 300, 300000