Strategic Business Reporting (SBR)

Progress Test 2
For exams in September 2020, December 2020,
March 2021 and June 2021
 SBR: PROGRESS TEST 2

Progress Test 2

(30 questions – approximate time 45 minutes)

1 HH has agreed to provide services over a two-year period for a fixed contract price of
$200,000. Costs paid so far in the first year are $81,000 and 45% of the work has been
completed. The contract has been more expensive than expected and HH is concerned that
the contract may ultimately be loss-making.
How much revenue should be recognised by HH at the end of the first year?
A $200,000
B $100,000
C $81,000
D $90,000

2 AB is expanding and requires additional long-term finance. The board of directors has
approved the issue of convertible bonds. In discussion with the Finance Director, an ACCA
member, the Chief Executive made it clear that he did not want the gearing ratio of AB to
increase as there would be a risk of breaching a loan covenant and that the convertible
bonds should be classified as equity in their entirety.
Which of the following statements about the convertible bonds is true?
A There is no ethical issue as the Chief Executive's proposed accounting treatment for
the convertible bonds is correct.
B The Chief Executive has ultimate responsibility for the financial statements and so the
ethical burden would fall on him if there were any issue with the classification of the
bonds.
C It is the responsibility of the directors to prepare the financial statements in an ethical
manner and hence the convertible bonds should be split into their debt and equity
components.
D In substance, as the bonds will become shares, they behave as equity.

3 Vials, a public limited company, paid its employees a bonus on 10 March 20X4 for work
completed in the year ended 31 December 20X3. The financial statements of Vials were
authorised for issue on 31 March 20X4. Vials, has no legal obligation to pay a bonus
because the employees' contracts do not include a promised bonus. However, for the past
ten years, Vials has consistently paid a bonus to its employees equivalent to approximately
3% of their salary.
How should Vials account for the bonus in the financial statements for the year ended
31 December 20X3?
A No expense or liability should be recorded as the bonus is not paid until the following
accounting period
B An expense and liability for 3% of employees' salary should be recognised
C An expense and liability for the actual amount of bonus paid should be recognised
D The bonus should be disclosed as a non-adjusting event after the reporting period in
a note to the financial statements

17
SBR: PROGRESS TEST 2

4 Tagg, a public limited company, operates a defined benefit pension plan for its employees.
On 31 December 20X4, Tagg closed down a loss-making division, making all the employees
of that division redundant. These employees were allowed to remain members of the
pension plan but no further contributions in relation to these employees were permitted by
either the employees or Tagg.
How should the change in the present value of the defined benefit obligation in
relation to these employees be recorded in the financial statements for the year
ended 31 December 20X4?
A An increase in the obligation and a corresponding expense in profit or loss
B A reduction in the obligation and corresponding income in profit or loss
C An increase in the obligation, treated as a remeasurement, with the remeasurement
loss being recognised in other comprehensive income
D A decrease in the obligation, treated as a remeasurement, with the remeasurement
gain being recognised in other comprehensive income

5 In which of the following circumstances would a provision be recognised under

IAS 37 Provisions, Contingent Liabilities and Contingent Assets in the financial
statements for the year ending 31 March 20X6?
1 A board decision was made on 15 March 20X6 to close down a division with potential
costs of $100,000. At 31 March 20X6 the decision had not been communicated to
managers, employees or customers.
2 There are anticipated costs from environmental damage to the land surrounding its
factory as result of a chemical leak. Although not legally required in the regime in
which they entity operates, in the past all environmental damage has been rectified by
the company.
3 It is anticipated that a major refurbishment of the company Head Office will take place
from June 20X6 onwards costing $85,000.
A 1 and 2
B 2 and 3
C 2 only
D 3 only

18
 SBR: PROGRESS TEST 2

6 On 31 December 20X5, Walesby, a public limited company, issues zero coupon convertible
debt with a par value of $1,000,000 and a liability component of $750,000. The market rate
of equivalent non-convertible debt with the same maturity is 8%.
The tax authorities do not allow the entity to claim for any deduction from the imputed
discount on the liability component of the convertible debt.
Assume a tax rate of 30%.
How should Walesby account for deferred tax on this convertible debt for the year
ended 31 December 20X5?
A There is no deferred tax impact as there is no temporary difference
B A deferred tax asset of $75,000 should be recognised with a corresponding credit to
profit or loss
C A deferred tax liability of $75,000 should be recognised with a corresponding debit to
profit or loss
D A deferred tax liability of $75,000 should be recognised with a corresponding debit to
the equity element of the convertible debt

7 Beth, a public limited company, sold some trade receivables which arose during
November 20X7 to a factoring company on 30 November 20X7. The trade receivables sold
are unlikely to default in payment based on past experience but they are long dated with
payment not due till 1 June 20X8. Beth has given the factor a guarantee that it will
reimburse any amounts not received by the factor. Beth received $45 million from the factor
being 90% of the trade receivables sold. The trade receivables are not included in the
statement of financial position of Beth and the balance not received from the factor (10% of
the trade receivables factored) of $5 million has been written off to profit or loss.
What, if any, adjustment is required in Beth's financial statements for the year ended
30 November 20X7 in relation to these trade receivables?
A No adjustment is required as Beth no longer has the risks and rewards associated
with these trade receivables
B Reinstate the $50 million trade receivables, reverse the $5 million expense and record
the $45 million received from the factor as a liability
C Reinstate $45 million of the trade receivables and record the $45 million received
from the factor as a liability
D Reinstate the $45 million of the trade receivables and record the $45 million received
from the factor as income

8 PQ borrowed $10 million at 6% on 1 January 20X2. The loan will be repaid on 31 December
20X4. In order to hedge the fair value risk, Planter acquired a derivative (at zero cost) whose
value is linked to an interest rate index.
At 31 December 20X2, the market interest rate had fallen to 4.5%, bringing the fair value of
the loan to $10,280,900. At that date, the derivative was standing at a gain of $280,900.

19
SBR: PROGRESS TEST 2

Assuming the hedge accounting criteria of IFRS 9 Financial Instruments have been
met, how should the loan and the derivative be accounted for in the financial
statements of PQ for the year ended 31 December 20X2?
Loan Derivative
A Financial liability measured at cost: Financial asset measured at fair value:
$10 million $280,900
Gain of $280,900 in profit or loss
B Financial liability measured at fair value: Financial liability measured at fair value:
$10,280,900 $280,900
Gain of $280,900 in profit or loss Loss of $280,900 in profit or loss
C Financial asset measured at fair value: Financial liability measured at fair value:
$10,280,900 $280,900
Loss of $280,900 in other comprehensive Gain of $280,900 in other comprehensive
income income
D Financial liability measured at fair value: Financial asset measured at fair value:
$10,280,900 $280,900
Loss of $280,900 in profit or loss Gain of $280,900 in profit or loss

9 On 31 December 20X2, Hill, a public limited company, sold an asset to a third-party

institution and agreed to lease it back under a 20-year lease arrangement. The carrying
amount of the asset prior to the disposal at 31 December 20X2 was $12 million with a
remaining useful life of 20 years. The sales prices and fair value are $15 million which is the
present value of the lease payments. The agreement transfers the title of the asset back to
Hill at the end of the lease at nil cost.
How should Hill account for the sale of the asset in the financial statements for the
year ended 31 December 20X2?
A Derecognise the asset and recorded a $3 million profit on disposal.
B Record the $15 million proceeds as a liability, increase the asset's carrying amount by
$3 million and record deferred income of $3 million to be released over the lease term.
C Record the $15 million proceeds as a liability and leave the asset at its carrying
amount of $12 million.
D Record the $15 million proceeds as a liability, increase the asset's carrying amount by
$3 million and record a $3 million profit on disposal

10 Denning, a public limited company, entered into a lease agreement for a building on
1 December 20X6. The building was converted into office space during the year at a cost to
Denning of $10 million. The lease is for a period of six years at the end of which the building
must be returned to the lessor in its original condition. Denning thinks that it would cost
$2 million to convert the building back to its original condition at prices at 30 November 20X7.
The entries that have been made in the financial statements of Denning for the year ended
30 November 20X7 were the charge for the lease rental ($4 million per annum annually in
advance on 1 December) and the improvements to the building. Both items had been
charged to cost of sales. The improvements were completed during the financial year.
A full year's depreciation is charged in the year of acquisition.

20
 SBR: PROGRESS TEST 2

What adjustments are required to the financial statements of Denning for the year
ended 30 November 20X7?
1 The leasehold improvement costs of $10 million should be reversed from cost of sales
and capitalised as property, plant and equipment instead.
2 The present value of the lease payments not paid at 1 December 20X6 should be
recognised as a lease liability. The other side of the accounting entry is to debit a
right-of-use asset. Interest should be applied to the lease liability and charged to profit
or loss.
3 The initial lease payment should be reversed from cost of sales and added to the
carrying amount of the right-of-use asset.
4 The $2 million that it would cost to convert the building back to its original condition
should be capitalised as property, plant and equipment and recorded as a provision.
5 Depreciation should be charged on the amount capitalised.
A 2 and 5
B 1, 2, 4 and 5
C 1 and 4
D All of them

11 At 1 April 20X2, S acquired 80,000 of the 100,000 issued $1 ordinary shares of T. On

1 October 20X3, S disposed of 20,000 shares in T for $125,000. At that date, the
non-controlling interest in T was measured at $80,000.
What is the accounting entry to record the adjustment to equity in the
consolidated financial statements of the S group for the year ended 31 December
20X3?
A DEBIT NCI $80,000
DEDIT Group retained earnings $45,000
CREDIT Bank $125,000
B DEBIT Bank $125,000
CREDIT NCI $80,000
CREDIT Profit for the year $45,000
C DEBIT Bank $125,000
CREDIT NCI $125,000
D DEBIT Bank $125,000
CREDIT NCI $80,000
CREDIT Group retained earnings $45,000

21
SBR: PROGRESS TEST 2

12 AB has a subsidiary, CD and two associates, EF and GH. During the year ended
31 December 20X1, the following transactions took place:
 AB charged a management fee to each of CD, EF and GH.
 EF sold goods to GH at cost (EF's normal selling price is cost plus 20%).
 CD sold goods to AB at market value.
Which ONE of the following should be disclosed in the financial statements of EF?
A The management fee payable by EF to AB
B The sale of goods by EF to GH
C The sale of goods by CD to AB
D The management fee payable by CD and GH to AB

13 On 1 January 20X7, AGR acquired 80% of the ordinary share capital of its subsidiary BLK.
The book value of BLK's net assets at the date of acquisition was $1,300,000. This value
included $300,000 in respect an item of plant which had a fair value of $500,000. The plant
had a remaining useful life of ten years at acquisition.
On acquisition, AGR identified an intangible asset that BLK developed internally but had not
been recognised in BLK's financial statements. This asset was valued by external experts at
$150,000 on 1 January 20X7 and is expected to generate economic benefits from the
acquisition date until 31 December 20X8.
As at 1 January 20X7, there was a court case outstanding against BLK. The lawyers
believed that BLK had a legal obligation as the outflow was only possible, it was disclosed
as a contingent liability in the financial statements of BLK. This contingent liability had a fair
value of $100,000 at acquisition and $70,000 at 31 December 20X7.
What are the fair value adjustments required to the net assets of BLK in the
consolidated statement of financial position of the AGR group as at 31 December
20X7?
Fair value adjustments
Plant Intangible asset Contingent liability
$ $ $
A (20,000) (75,000) 30,000
B 200,000 Don't recognise Disclose
C 500,000 150,000 (100,000)
D 180,000 75,000 (70,000)

14 The board of directors of TJF have just been awarded share-appreciation rights which
vest in one year's time. They have decided to revise their accounting policies.
Which ONE of the proposed changes in accounting policies would be considered
ethical?
A Increase the useful life of plant and machinery as TJF has consistently been
recognising large profits on disposal.
B Discount all provisions whether short term or long term.
C Change the revenue recognition policy for sale of goods from delivery date to order
date.
D Capitalise advertising expenses to match them to the period of expected revenue.

22
 SBR: PROGRESS TEST 2

15 Yogi has held an 80% investment in Bear for many years. On 31 December 20X0 it
disposed of all of its investment. Details of the acquisition and disposal are as follows:
$'000
Cost of investment 3,690
Fair value of Bear's net assets at acquisition
(reflected in Bear's books) 4,500
Consideration received on 31 December 20X0 9,940
Two-thirds of the goodwill had been written-off for impairment losses by the date of disposal.
The summarised statement of financial position of Bear on 31 December 20X0 showed the
following:
$'000
Net assets 10,350

Share capital 3,000

Retained earnings 7,350
10,350
Yogi elected to measure the non-controlling interests in Bear at acquisition at the
proportionate share of the fair value of the acquiree's identifiable net assets.
What is the profit or loss on disposal of the shares in Bear that will be included in the
consolidated statement of profit or loss and other comprehensive income of Yogi for
the year ended 31 December 20X0?
Note. Ignore tax and make all calculations to the nearest thousand dollars.
A ($410,000)
B $1,570,000
C $1,660,000
D $1,630,000

16 Pinder acquired 80,000 ordinary shares in Polymer several years ago. Polymer has an
issued share capital of 100,000 ordinary shares. The summarised statement of profit or loss
of Polymer for the year ended 31 December 20X0 is:
$m
Profit before tax 60
Income tax expense (20)
Profit for the year 40
Dividends paid and payable –
On 1 April 20X0, Pinder sold 20,000 shares in Polymer.
What will appear as non-controlling interests in profit for the year in the consolidated
financial statements of Pinder for the year ended 31 December 20X0?
A $8m
B $14m
C $16m
D $21m

23
SBR: PROGRESS TEST 2

17 On 30 September 20X8, NM enters into a contract to transfer Products A and B to a

customer in exchange for $100,000. The contract requires Product A to be delivered first
and states that the payment for Product A is conditional on the delivery of Product B.
Therefore, the consideration of $100,000 is only due after NM has transferred both Products
A and B to the customer.
NM identifies the promises to transfer Products A and B as separate performance
obligations. On the basis of their relative stand-alone selling prices, NM allocates $40,000 to
the performance obligation to transfer Product A and $60,000 to the performance obligation
to transfer Product B.
On 31 December 20X8, NM transfers Product A to the customer. NM intends to transfer
Product B to the customer on 31 March 20X9.
What accounting entry should NM make to record the transfer of Product A to its
customer on 31 December 20X8?
A DEBIT Contract asset $40,000; CREDIT Revenue $40,000
B DEBIT Trade receivable $40,000; CREDIT Revenue $40,000
C DEBIT Contract asset $100,000; CREDIT Revenue $100,000
D DEBIT Trade receivable $100,000; CREDIT Revenue $40,000, CREDIT Contract
liability $60,000

18 UH acquired a 12% investment in TG on 1 January 20X5 for $72,000 when TG's retained
earnings were $265,000. The fair value of the investment at 31 December 20X8 was
$195,000.
On 31 December 20X8 UH acquired an additional 63% of the 1 million $1 shares of TG for
$940,000 when the retained earnings of UH were $380,000.
The group elected to measure the non-controlling interests in TG at fair value. The fair value
of the non-controlling interest at 31 December 20X8 was $380,000.
How much is the goodwill that is included in the consolidated statement of financial
position for the UH group as at 31 December 20X8?
A $100,000
B $135,000
C $207,000
D $1,135,000

19 Several years ago DVS acquired 75% of EWT's 1 million $1 shares at a cost of $1.7 million.
Retained earnings at acquisition were $800,000 and the fair value of the net assets was
considered to be the same as the book value. Non-controlling interest was measured at its
fair value of $500,000 at acquisition.
Retained earnings of EWT on 31 January 20X7 were $3.7 million. On that date DVS
disposed of 10% of the ordinary share capital of EWT, leaving it holding 65% of EWT's
ordinary shares. The disposal proceeds were $600,000. There has been no impairment of
goodwill since the acquisition of the shares in EWT.

24
 SBR: PROGRESS TEST 2

What adjustment should be recorded in the consolidated financial statements of the

DVS Group in relation to this disposal?
A $400,000 adjustment to equity to be recorded in consolidated retained earnings
B $130,000 profit on disposal to be recorded in profit or loss
C $110,000 adjustment to equity to be recorded in consolidated retained earnings
D $30,000 profit on disposal to be recorded in profit or loss

20 Pitt has a property surplus to requirements which it proposes to treat as held for sale under
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.
The property needs some minor repairs before it can be sold but a buyer has been found
and a price agreed subject to the repairs being made.
The current year end is 31 December 20X3 and Pitt has agreed to make the repairs by
30 April 20X4 with a planned completion date for the sale of 31 May 20X4.
The property has a carrying amount of $20 million. The estimated cost of repairs is
$500,000, estimated selling costs are $100,000 and the agreed selling price is $30 million.
What is the correct treatment for this property in the financial statements for the year
ended 31 December 20X3?
A Derecognise the property and record a profit on disposal of $10 million
B Reclassify the property as 'held for sale' within current assets
C Retain the property in non-current assets within 'property, plant and equipment' as the
IFRS 5 held for sale criteria have not been met
D Recognise the selling costs and cost of repairs in the year ended 31 December 20X3
21 AB owns several subsidiaries. On 1 July 20X6, AB purchases a 90% stake in the equity
shares of CD with the intention of selling them on within a year at a profit. At 31 December
20X6, the shares are actively being marketed for sale at their fair value.
How should the AB group account for CD in its consolidated financial statements for
the year ended 31 December 20X6?
A CD's assets, liabilities, income and expenses should be aggregated to AB's and the
other subsidiaries on a line by line basis
B CD's assets, liabilities, 6/12 of its income and expenses should be aggregated to AB's
and the other subsidiaries on a line by line basis
C CD's assets and liabilities should be shown on two separate lines in the consolidated
statement of financial position as 'held for sale' within current assets and current
liabilities and in the consolidated statement of profit or loss, 6/12 of CD's results
should be shown separately as a 'discontinued operation'
D The investment in CD should be treated as an 'investment in equity instrument' and
measured at fair value in the consolidated financial statements of the AB group

25
SBR: PROGRESS TEST 2

22 Penn, a public limited company, performed a review of its non-current assets shortly before
its year end of 31 December 20X2.
It identified assets with a combined carrying amount of $100,000 that are very old and
inefficient. Penn plans to scrap these assets on 31 March 20X3 and replace them with new
assets.
How should Penn account for these non-current assets in the year ended
31 December 20X2?
A Classify them as 'held for sale' within current assets and write them down to their fair
value less costs to sell
B Continue to classify them as 'property, plant and equipment' within non-current assets
and write them down for an impairment to their recoverable amount
C Derecognise the full carrying amount of $100,000 and record a loss on disposal of
$100,000
D Classify them as a 'discontinued operation', disclosing them separately from
'continuing operations'

23 A purchased 70% of B on 1 January 20X0, a company located in a foreign country where

the currency is the newt. The fair value of the identifiable net assets of B amounted to
128,000 newts at the date of acquisition and A paid $136,000 to acquire its interest in B.
An impairment test conducted on 31 December 20X5 resulted in impairment losses
amounting to $10,000 being recognised in the group financial statements against the
recognised goodwill of B.
Relevant exchange rates were:
 1 January 20X0 $1: 0.8 newts
 31 December 20X5 $1: 0.7 newts
 31 December 20X7: $1: 0.9 newts
A elected to measure the non-controlling interests in B at acquisition at the proportionate
share of the fair value of the acquiree's identifiable net assets.
At what value would the goodwill be consolidated in the group financial statements of
A for the year ended 31 December 20X7?
A $13,555
B $14,000
C $9,200
D $21,333

24 Which of the following would NOT be an indication that a foreign operation has the
same functional currency as the parent?
A The foreign operation is financed principally by bank loans in the territory in which it
operates
B The foreign operation acts as an import agent for the parent
C Cash received from customers by the foreign operation is returned to the parent
D The foreign operation is an associate; 90% of its purchases are from the parent

26
 SBR: PROGRESS TEST 2

25 Rat acquired 75% of the equity shares of Mole, a foreign operation, on 1 January 20X5,
when its reserves were 220,000 units. The fair value of Mole's net assets was considered to
be the same as the book value at acquisition. Summarised statements of financial position
of the two entities at 31 December 20X6 are shown below:
Rat Mole
$'000 Unit'000
Investment in Mole 350 –
Other assets 3,550 1,260
3,900 1,260
Share capital ($1/Unit1 ordinary shares) 1,000 500
Reserves 1,900 460
2,900 960
Liabilities 1,000 300
3,900 1,260
Exchange rates were as follows:
Unit = $1
1 January 20X5 2.0
31 December 20X6 2.5
Rat elected to measure the non-controlling interests in Mole at their proportionate share of
net assets at acquisition. Total cumulative exchange losses on goodwill as at 31 December
20X6 are $16,000. There has been no impairment of goodwill since acquisition.
What are consolidated reserves at 31 December 20X6 (to the nearest $)?
A $1,902,000
B $1,906,000
C $1,918,000
D $1,956,000

26 Salmon has owned 75% of the ordinary shares in Trout since 1 January 20X0. It sold the
investment for $500,000 on 1 June 20X5. The net assets of Trout on that date included
the following:
$
Cash and bank 15,000
Bank overdraft (50,000)
Bank loan (repayable 20X9) (300,000)
What will appear as the net cash inflow in respect of acquisitions and disposals in the
consolidated statement of cash flows of Salmon for the year ended 31 December 20X5?
A $465,000
B $485,000
C $535,000
D $835,000

27
SBR: PROGRESS TEST 2

27 The GH group had a carrying amount of goodwill in its consolidated statement of financial
position of $6.9 million at 31 December 20X2 and $6.3 million at 31 December 20X1.
GH acquired 75% of the equity share capital of AB on 1 July 20X2 for cash consideration of
$300,000 plus the issue of 1 million $1 equity shares in GH, which had a fair value of $2.15
per share at the date of acquisition. The fair values of the net assets of AB acquired on
1 July 20X2 were as follows:
$'000
Property, plant and
equipment 1,200
Inventories 1,700
Receivables 900
Cash and cash equivalents 200
Payables (1,800)
2,200
GH did not acquire or dispose of any other investments in the year. GH elected to measure
the non-controlling interests in AB at acquisition at the proportionate share of the fair value
of AB's net assets.
Which of the following is true in relation to the amount and treatment of the goodwill
impairment in the consolidated statement of cash flows for the GH group for the year
ended 31 December 20X2 (assume the indirect method is used)?
Amount Treatment
A $200,000 Add back in 'operating activities' section
B $350,000 Do not include in statement of cash flows
as it is a non-cash expense
C $600,000 Deduct in 'operating activities' section
D $200,000 Deduct in 'investing activities' section

28 The trainee accountant has prepared the consolidated statements of cash flows of the SF
group for the year ended 31 December 20X1. An extract from this statement of cash flows is
provided below:
$'000
Cash flows from operating activities
Profit before taxation 6,290
Adjustment for
Depreciation (3,100)
Impairment of goodwill (570)
Investment income 320
Finance costs (1,350)
Share of associate's profit (1,500)
Decrease in inventories 4,800
Decrease in trade receivables 200
Decrease in trade payables 2,300
Cash generated from operations 7,390

28
 SBR: PROGRESS TEST 2

Once the trainee accountant's mistakes have been corrected, what should the correct
cash generated from operations figure be (round your answer to the nearest $'000)?
A $7,390,000
B $10,130,000
C $12,190,000
D $16,790,000

29 The EF group recorded property, plant and equipment in its consolidated statement of
financial position for the years ended 31 December 20X3 and 31 December 20X4 as
$44.4 million and $51.1 million respectively. During the year ended 31 December 20X4,
depreciation of $3.1 million was charged and EF sold property with a carrying amount of
$1 million for $1.2 million.
On 1 October 20X4, EF disposed of its entire 75% shareholding in its subsidiary GH for
$10 million. On 1 October 20X4, EF had a property, plant and equipment balance of
$2.5 million.
What is the cash outflow for the purchase of property, plant and equipment to be
recorded in the 'investing activities' section of the consolidated statement of cash
flows of the EF group for the year ended 31 December 20X4?
A $10,800,000
B $13,075,000
C $13,300,000
D $13,500,000

30 Extracts from the consolidated financial statements of the AB Group for the year ended
30 June 20X1 are shown below.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (EXTRACT)
20X1 20X0
Non-current liabilities $'000 $'000
Long-term borrowings 41,100 53,400
Deferred tax liability 900 600
42,000 54,000
Current liabilities
Payables 32,100 30,600
Income tax 1,800 2,700
33,900 33,300
Total liabilities 75,900 87,300

29
SBR: PROGRESS TEST 2

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE

INCOME FOR THE YEAR ENDED 30 JUNE 20X1 (EXTRACT)
$'000
Profit before tax 6,290
Income tax expense (1,800)
Profit for the year 4,490
Other comprehensive income (not reclassified to P/L):
Revaluation gain on PPE 1,450
Share of associate's OCI (net of tax) 120
Tax on OCI (250)
Other comprehensive income for the year 1,320
Total comprehensive income 5,810
Additional information
AB acquired 70% of the ordinary share capital of XY on 1 January 20X1. At that date AB
had an income tax liability of $500,000.
What is the amount of tax paid to be recorded in the 'operating activities' section of
the consolidated statement of cash flows of the AB Group for the year ended
30 June 20X1?
A $2,650,000
B $2,900,000
C $3,150,000
D $3,200,000

END OF PROGRESS TEST

30