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Title: Cima F2 Exam Questions


1
CIMA F2 - Advanced Financial Reporting exam in
just 24 HOURS! 100 REAL EXAM QUESTIONS
ANSWERS CIMA F2 - Advanced Financial
Reporting Buy Complete Questions Answers File
from http//www.certs4you.com/cima/f2-dumps.html 1
00 Exam Passing Guarantee Money Back Assurance
Sample Questions
2
  • Question No 1
  • Which TWO of the following statements about bonds
    and their issue are true?
  • Credit rating agencies assign risk categories to
    bond issues.
  • Bonds are a form of loan capital, traded on stock
    exchanges.
  • Bonds are a risk-free form of investing because
    they will always be repaid.
  • All bonds have the same terms and conditions when
    issued.
  • A bond issue is never underwritten because the
    return is fixed and guaranteed.
  • Answer A, B Question No 2
  • RS is a listed entity that has no subsidiaries
    although its Finance Director is also a director
    of TU, an unconnected entity. It is preparing
    its financial statements to 30 September 20X6.
  • Which of the following substantial transactions
    must be disclosed in these financial statements
    in accordance with IAS 24 Related Party
    Disclosures?
  • Pension payments made on behalf of the Managing
    Director of RS.
  • Purchase of production materials from TU at a
    discounted price to the current market value.
  • Sale of finished goods to TU at normal selling
    price.
  • Performance related bonus payments made to the
    office staff for the year.
  • Answer A Question No 3
  • 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 was 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
    the value of goodwill to be included in the
    consolidated statement of financial position of
    ST as at 31 December 20X5?
  • A. 450,000 B. 1,450,000 C. 950,000 D.
    570,000

Answer A
3
  • Question No 4
  • An entity has declared a dividend of 0.12 a
    share. The cum dividend market price of one
    equity share is 1.40. Assuming a dividend growth
    rate of 7 a year, what is the entity's cost of
    equity?
  • A. 17.0
  • B. 8.6
  • C. 16.2
  • D. 9.4
  • Answer A Question No 5
  • LM granted 100 share options to each of its 400
    employees on 1 January 20X7. The options will
    only vest if employees remain with LM for 3 years
    from the grant date. The fair value of each
    share option was 5 on 1 January 20X7. 20
    employees left in the year to 31 December 20X7
    and at that date it was estimated that a further
    35 would leave over the following two years.
    Which of the following journal entries did LM
    process to account for the share options in the
    year to 31 December 20X7, in accordance with
    IFRS2 Share-based Payments?
  • Dr Profit or loss 57,500 Cr Other reserves
    within equity 57,500
  • Dr Profit or loss 57,500 Cr Liabilities
    57,500
  • Dr Profit or loss 172,500 Cr Other reserves
    within equity 172,500
  • Dr Profit or loss 172,500 Cr Liabilities
    172,500
  • Answer A Question No 6
  • HJ is currently in dispute with an employee, who
    is claiming 400,000 in a legal case against
    them. HJ's legal advisors have stated that it is
    probable that they will lose the case and will
    have to pay the amount claimed. Also, HJ are
    claiming 250,000 from a supplier of defective
    goods and the legal advisors have stated that it
    is probable that HJ will be successful in this
    claim. What is the correct accounting treatment
    for these two items in HJ's financial
    statements?
  • Provide for the 400,000 potential outflow and
    disclose the 250,000 potential inflow.
  • Provide for the 400,000 potential outflow and
    recognise the 250,000 potential inflow.
  • Disclose the 400,000 potential outflow and
    disclose the 250,000 potential inflow.
  • Disclose the 400,000 potential outflow and
    recognise the 250,000 potential inflow.

Answer A
4
  • Question No 7
  • AB acquired its subsidiary on 1 January 20X7 when
    the fair value of net assets was the same as book
    value with the exception of property, plant and
    equipment that had a fair value 500,000 higher
    than carrying value. These assets were assessed
    to have a remaining useful life of 5 years from
    the date of acquisition. What is the net
    consolidation adjustment to the property, plant
    and equipment balance at 31 December 20X9? Give
    your answer to the nearest whole number (in
    '000s). ?
  • Answer 200000, 200
  • Question No 8
  • LM is preparing its consolidated financial
    statements for the year ended 30 April 20X5.
    During the year LM acquired 30 of the equity
    shares of AB giving it significant influence over
    AB. LM conducted ratio analysis comparing the
    financial performance of the group for 30 April
    20X4 and 20X5. Which of the following ratios
    would not be comparable as a result of the
    acquisition of AB?
  • Operating profit margin.
  • Return on capital employed.
  • Earnings per share.
  • Interest cover.
  • Answer C Question No 9
  • How would KL account for its investment in MN in
    its consolidated financial statements for the
    year to 31 December 20X9?
  • Joint venture
  • Joint arrangement
  • Financial asset
  • Subsidiary
  • Answer A

5
  • Question No 10
  • LM acquired 15 of the equity share capital of ST
    on 1 January 20X6 for 18 million. LM acquired a
    further 50 of the equity share capital of ST for
    50 million on 1 January 20X7 when the fair
    value of ST's net assets was 82 million. The
    original 15 investment in ST had a fair value
    of 20 million at 1 January 20X7. The non
    controlling interest in ST was measured at its
    fair value of 30 million at the date control in
    ST was acquired. Calculate the goodwill arising
    on the acquisition of ST that LM included in its
    consolidated financial statements at 31 December
    20X7. Give your answer to the nearest million.
    ? million
  • Answer 18, 18000000
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