Section A – ALL 15 questions are compulsory and MUST be attempted

Please use the grid provided on page two of the Candidate Answer Booklet to record your answers to
each multiple choice question. Do not write out the answers to the MCQs on the lined pages of
the answer booklet.
Each question is worth 2 marks.

1.Which one of the following is an enhancing qualitative characteristic of financial information

according to the Conceptual Framework?
A Timeliness
B Materiality
C Relevance
D Accruals
2 Which one of the following is not an item which is required to be shown on the face of the
statement of financial position according to IAS 1 Presentation of Financial Statements?
A Inventories
B Biological assets
C Irrecoverable debt provision
D Investment property
3 What is the correct treatment of equity dividends under IAS 1?
A Dividends payable are included in current liabilities
B Dividends paid are deducted from retained earnings
C Dividends payable are shown in the statement of changes in equity
D Dividends paid are deducted from 'other comprehensive income'
4 Watson acquired a property on 1 January 20X1 for $250,000, being $200,000 for the building and
$50,000 for the land. The building was judged to have a useful life of 50 years. On 1 January 20X6
the property was independently valued which resulted in an increase of $100,000 to the carrying
amount of the building and $50,000 to the carrying amount of the land. The useful life is unchanged.
What is the depreciation charge for the year ended 31 December 20X6?
A $5,520
B $6,222
C $6,273
D $6,818
5 Which one of the following could be capitalised as an intangible asset?
A Internally-generated goodwill
B Training costs related to a new product
C A purchased brand name
D Business start-up costs
6 An asset has a carrying amount of $1.2 million. Its replacement cost is $1 million, its fair value is
$800,000 and its value in use is $950,000. The legal expenses involved in selling the asset are
estimated at $20,000.
What is the amount of the impairment loss suffered by the asset?
A $250,000
B $420,000
C $200,000
D $270,000
7 A discontinued operation was disposed of in the current year. How should this be presented in the
statement of profit or loss?
A A one-line entry showing post-tax profit or loss of the operation and the post-tax gain or loss on disposal
B A separate column showing the results of the discontinued operation, with the gain or loss on disposal
included under 'other income'
C A one-line entry showing the pre-tax profit or loss of the operation and the pre-tax gain or loss on
disposal included under 'other income'. Tax effects included in 'income tax expense'
D A one-line entry showing pre-tax profit or loss of the operation and pre-tax gain or loss on disposal, with
tax effects included under 'income tax expense'
8 Mammoth acquired 80% of the 100,000 $1 equity shares of Minor on 1 January 20X7. The
consideration consisted of one Mammoth share for each two shares in Minor and $300,000 cash. The
market price of a Mammoth share at 1 January 20X7 was $2.50 and the market price of a Minor
share on the same date was $1.75. Mammoth measure noncontrolling interest at fair value based on
share price. At the acquisition date Minor had retained earnings of $85,000 and $100,000 in
revaluation surplus. Its head office building had a fair value $60,000 in excess of its carrying amount.
What was the goodwill on acquisition?
A $190,000
B $55,000
C $90,000
D $75,000
9 Catfish has owned 75% of Shark for a number of years. During the year to 31 December 20X8
Shark sold goods to Catfish for $75,000. Catfish had resold 40% of these goods by the year end.
Shark applies a 25% mark-up on all sales. By what amount should the consolidated retained
earnings of Catfish at 31 December 20X8 be reduced in respect of these intragroup sales?
A $33,750
B $6,750
C $8,438
D $9,000
10 Frog acquired 80% of Tadpole on 1 April 20X7. The individual financial statements of Frog and
Tadpole for the year ended 31 December 20X7 showed revenue of $280,000 and $190,000
respectively. In the post-acquisition period Tadpole sold goods priced at $40,000 to Frog. 50% of
these goods were still held in inventory by Frog at the end of the year.
What was group revenue in the consolidated statement of profit or loss for the year ended 31
December 20X7?
A $392,500
B $402,500
C $450,000
D $382,500
11 Python obtained 30% of the equity shares of Cobra on 1 June 20X8 for $700,000. It is able to
exercise significant influence over Cobra. During the year to 31 May 20X9 Cobra made sales of
$200,000 to Python, priced at cost plus 25% mark-up. Python still had 50% of these goods in
inventory at the year end. Cobra's statement of profit or loss for the year ended 31 May 20X9 shows
profit for the year of $650,000.
What amount should be shown as 'investment in associate' in the consolidated statement of financial
position of Python as at 31 May 20X9?
A $895,000
B $875,000
C $835,000
D $870,000
12 Which of the following will be treated as part of the cost of inventories?
i. Import duties on raw materials
ii. Labour involved in production
iii. Distribution costs
iv. Fixed production overheads
v. Storage costs of finished goods
vi. Cost of wasted materials
A i, ii, vi
B ii, iv, v
C iii, iv, vi
D i, ii, iv
13 A construction contract was commenced on 1 April 20X7 for a price of $2.5 million. At 31
December 20X7 the contract was judged to be 40% complete, costs incurred to date amounted to
$1.4 million and further costs to complete were expected to be $1.3 million. Progress billings of
$300,000 have been issued but no payment has yet been received.
What amount should be shown in the statement of financial position as at 31 December 20X7 in
respect of 'amounts due to/from customers'?
A $900,000 due to customers
B $900,000 due from customers
C $1,020,000 due to customers
D $1,020,000 due from customers
14 On 1 April 20X7 a company rents a warehouse under a two-year operating lease for $240,000 per
annum. As an incentive to sign the contract it is given the first two months rent-free. What amount
in respect of lease rental should be charged to profit or loss for the year ended 31 December 20X7?
A $228,000
B $168,000
C $133,000
D $171,000
15 Tangier had 200,000 shares in issue at 1 January 20X4. On 1 April 20X4 it made a 1 for 4 rights
issue at a price of $1.20. The market value immediately prior to the issue was $1.80. Profit for the
year ended 31 December 20X4 was $560,000.
What is EPS for the year?
A $2.32
B $2.24
C $2.61
D $2.80
Section B – ALL 15 questions are compulsory and MUST be attempted

Please use the grid provided on page two of the Candidate Answer Booklet to record your
answers to each multiple choice question. Do not write out the answers to the MCQs on the
lined pages of the answer booklet.
Each question is worth 2 marks.
1 Which one of the following is an enhancing qualitative characteristic of financial
information according to the Conceptual Framework?
A Timeliness
B Materiality
C Relevance
D Accruals
2 Which one of the following is not an item which is required to be shown on the face of the
statement of financial position according to IAS 1 Presentation of Financial Statements?
A Investment property
B Biological assets
C Irrecoverable debt provision
D Inventories
3 What is the correct treatment of equity dividends under IAS 1?
A Dividends payable are included in current liabilities
B Dividends paid are deducted from retained earnings
C Dividends payable are shown in the statement of changes in equity
D Dividends paid are deducted from 'other comprehensive income'
4 Watson acquired a property on 1 January 2015 for $250,000, being $200,000 for the
building and $50,000 for the land. The building was judged to have a useful life of 50 years.
On 1 January 2018 the property was independently valued which resulted in an increase of
$100,000 to the carrying amount of the building and $50,000 to the carrying amount of the
land. The useful life is unchanged. What is the depreciation charge for the year ended 31
December 2018?
A $5,520
B $6,222
C $6,273
D $6,818
5 Which one of the following could be capitalised as an intangible asset?
A Internally-generated goodwill
B Training costs related to a new product
C A purchased brand name
D Business start-up costs
6 An asset has a carrying amount of $1.2 million. Its replacement cost is $1 million, its fair
value is $800,000 and its value in use is $950,000. The legal expenses involved in selling the
asset are estimated at $20,000.
What is the amount of the impairment loss suffered by the asset?
A $250,000
B $420,000
C $200,000
D $270,000
7 A discontinued operation was disposed of in the current year. How should this be
presented in the statement of profit or loss?
A A one-line entry showing post-tax profit or loss of the operation and the post-tax gain or loss
on disposal
B A separate column showing the results of the discontinued operation, with the gain or loss on
disposal included under 'other income'
C A one-line entry showing the pre-tax profit or loss of the operation and the pre-tax gain or loss
on disposal included under 'other income'. Tax effects included in 'income tax expense'
D A one-line entry showing pre-tax profit or loss of the operation and pre-tax gain or loss on
disposal, with tax effects included under 'income tax expense'
8 Mammoth acquired 80% of the 100,000 $1 equity shares of Minor on 1 January 20X7.
The consideration consisted of one Mammoth share for each two shares in Minor and
$300,000 cash. The market price of a Mammoth share at 1 January 20X7 was $2.50 and the
market price of a Minor share on the same date was $1.75. Mammoth measure
noncontrolling interest at fair value based on share price. At the acquisition date Minor
had retained earnings of $85,000 and $100,000 in revaluation surplus. Its head office
building had a fair value $60,000 in excess of its carrying amount.
What was the goodwill on acquisition?
A $190,000
B $55,000
C $90,000
D $75,000
9. Catfish has owned 75% of Shark for a number of years. During the year to 31 December
20X8 Shark sold goods to Catfish for $75,000. Catfish had resold 40% of these goods by the
year end. Shark applies a 25% mark-up on all sales. By what amount should the
consolidated retained earnings of Catfish at 31 December 20X8 be reduced in respect of
these intragroup sales?
A $33,750
B $6,750
C $8,438
D $9,000
10 Frog acquired 80% of Tadpole on 1 April 20X7. The individual financial statements of
Frog and Tadpole for the year ended 31 December 20X7 showed revenue of $280,000 and
$190,000 respectively. In the post-acquisition period Tadpole sold goods priced at $40,000
to Frog. 50% of these goods were still held in inventory by Frog at the end of the year.
What was group revenue in the consolidated statement of profit or loss for the year ended
31 December 20X7?
A $392,500
B $402,500
C $450,000
D $382,500
11 Python obtained 30% of the equity shares of Cobra on 1 June 20X8 for $700,000. It is
able to exercise significant influence over Cobra. During the year to 31 May 20X9 Cobra
made sales of $200,000 to Python, priced at cost plus 25% mark-up. Python still had 50%
of these goods in inventory at the year end. Cobra's statement of profit or loss for the year
ended 31 May 20X9 shows profit for the year of $650,000.
What amount should be shown as 'investment in associate' in the consolidated statement of
financial position of Python as at 31 May 20X9?
A $895,000
B $875,000
C $835,000
D $870,000
12 Which of the following will be treated as part of the cost of inventories?
i. Import duties on raw materials
ii. Labour involved in production
iii. Distribution costs
iv. Fixed production overheads
v. Storage costs of finished goods
vi. Cost of wasted materials
A i, ii, vi
B ii, iv, v
C iii, iv, vi
D i, ii, iv
13 A construction contract was commenced on 1 April 20X7 for a price of $2.5 million. At
31 December 20X7 the contract was judged to be 40% complete, costs incurred to date
amounted to $1.4 million and further costs to complete were expected to be $1.3 million.
Progress billings of $300,000 have been issued but no payment has yet been received. What
amount should be shown in the statement of financial position as at 31 December 20X7 in
respect of 'amounts due to/from customers'?
A $900,000 due to customers
B $900,000 due from customers
C $1,020,000 due to customers
D $1,020,000 due from customers
14 A company set up a gas exploration site on 1 January 20X1, which will operate for five
years. At the end of five years the site will need to be dismantled and the landscape
restored. The amount required for dismantling and restoration, discounted at the
company's cost of capital of 8%, is $1.2 million and a provision is set up for this amount.
What is the total amount charged to profit or loss for the year ended 31 December 20X2 in
respect of these dismantling and restoration costs?
A $343,680
B $336,000
C $103,680
D $96,000
15 How are financial assets initially measured under IFRS 9 (excluding assets held for
trading or subject to a specific designation)?
A Fair value
B Fair value plus transaction costs
C Fair value minus transaction costs
D Amortised cost