- Mock One Financial Reporting F7FR-MK1-217-Q Time allowed: 3 hours 15 minutes This examination is divided into three sections: Section A ~ All 15 questions aré compulsory and MUST be attempted Section B ~ All 15 questions are compulsory and MUST be attempted Section C — BOTH questions are compulsory and MUST be attempted Do NOT open this question paper until instructed by the supervisor. Do NOT record any of your answers on the question paper. ©2017 Becker Educational Development Corp. Paper F/ fii BECKER PROFESSIONAL EDUCATION’ANSWER BOOKLET USE THIS PAGE TO RECORD ANSWERS TO MULTIPLE CHOICE QUESTIONS ern ty If your question paps 2s ess than 60 questions flin the relevant answers ony ach multiple ch your choice of answer festion has only one correct answer. Flin ane bubble only (A 8, CorD) te indicate AMPLE ‘+The ark avalable for eech question isinicated on your question paper. There sno penalty for incorrect answers oF unanswered questions "No marks are awerded i you donot clearly indicate your final chooe aif move than ane bubble per question efile in + Tovolda selected answer, place a cross) over the bubble. MOooO MOO0O0 WOOO eooo0 B2O00 MOOOO MOQO00 MOO0O MOOOO Moooo0 BIOOO BOOOO M®2ooo MOOOO MOQOOO BaQoOo0 BOooo MOOOO BOOOO mAOOOO0 M2000 MOOOO BMOOOO MOQOO MOOoo0O WS 9.0,0 wmIOO00 BMOOOO MOOooo BMOO00 MOOOO BOOOO MOOoOO WMOoO090 BOOOO MOOOO0 MO2OooO BOOOO MaeQod BMaOQoOo MOOO00 MmOOOO aoooo BOOO0 WMOooO MOOoO BMQOoOo MOQ0O BMOOO00 Bwoaoo0 Booo0d BMOOOO MOooo wmOO0O0 Moooao MOOOO WOOO0 MOoOoOo eaooo0 wBoOaO00 NIDYVIN SIHL NI aLIl¥M LON OGSection A — All 15 questions are compulsory and MUST be attempted. Please use the grid provided on page 2 to indicate your chosen answer 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 On 28 September 20X6, GY Co received an order from a new customer, ZZ Co, for products with a sales value of $750,000. ZZ Co enclosed a deposit with the order of $75,000. On 30 September 20X6, GY Co had not completed the credit referencing of ZZ Co and:had not despatched any goods, Which of the following will correctly record this transaction in GY Co’s financial statements for the year ended 30 September 20X6 according to IFRS 15 Revenue from Contracts with Customers? A Debit Cash $75,000; Credit Revenue $75,000 B Debit Cash $75,000; Debit Trade receivables $675,000; Crédit Contract liability $750,000 c Debit Cash $75,000; Credit Contract liability $75,000 D Debit Trade receivables $750,000: Credit Revemuie $750,000 2 Consider the following statements regarding historical cost accounting: (2) Holding gains on assets are never recognised (2) Inflation can be ignored when comparitig financial performance between different time periods (3) Market values are reported for non-curteftt assets Which of the above statements are correct? A 1 only B 2only c 1 and 2 D and 3 3 A company has $500,000 issued share capital of $0.50 equity shares. The following events occurred in the financial year ended 31 December 20X6: (2) On 31 March, paid a final dividend of $0.10 a share which had been proposed on 31 December 20XS. (2) On 31 July, paid an interim dividend of $0.05 a share (8) On 31 December, proposed a final dividend of $0.12 a share. What amount for dividends should be included in the statement of changes in equity for the year ended 31 December 20X67 A 875,000 B $150,000 c $85,000 D $170,000 (©2017 seca eaucatorl Development Corp i gms sere 34 According to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, which of the following would require a prior period adjustment in a company’s financial statements for the year ended 31 October 20X6? A Inventory as at 31 October 20X4 had been materially over-valued due to an error in the year-end inventory count that caused inventory in one warehouse to be counted vice B The straight line method of depreciation used to depreciate vehicles up to 31 October 20X5 was changed to reducing balance method from 1 November 20X5 c The non-controlling interest in a subsidiary acquired on 1 December 20X5 has been measured at fair value. Non-controlling interests in all other subsidiaries are valued at their share of identifiable net assets, D A business segment sells kitchen units to customers, From 1 April 20X6, the segment also offers a kitchen fitting service to customers In the year to 31 May 20X5, Ordov Co recognised an increase of $125,000\in the value of land. in the year to 31 May 20X6, a further increase of $12,000 was recognised. During the year to 31 May 20X7, the land suffered an impairment of $30,000. Based on the above information, what are the changes in amounts of retained profits and total equity over the three years? Retained profits Total equity A An increase of $107,000 An increase of $107,000 B An increase of $137,000 An increase of $107,000 c An increase of $107,000 No change D No change ‘An increase of $107,000 6 Dash Co has the following two legal claims outstanding: . A legal action agaitist Dash Co claiming compensation of $700,000, filed in February 20X7. Dash Go has been advised that it is probable that the liability will materialise. . A legal action by Dash Co against another entity, claiming damages of $300,000, started in March 20X7. Dash Co has been advised that it is probable that it will win the case. How should Dash Co report these legal actions in its financial statements for the year ended 30 April 20X7? Legal action against Dash Co Damages claim by Dash Co A Disclose as a note No disclosure B Make a provision No disclosure c ‘Make a provision Disclose as a note D ‘Make a provision Recognise an asset (©2017 seca eaucatorl Development Corp i gms sere 47 At 31 October 20X6 the non-current assets of Nium Co had a carrying amount of $754,860 and a tax base of $543,875. At 31 October 20XS, the company’s provision for deferred tax was $39,853, The tax rate is 20%. ‘What amount should be reported in Nium Co’s statement of profit or loss for the year to 31 October 20X6 for deferred tax? A B Charge of $2, € Credit of S D Charge of $42,197 8 The books of Eastham Co show the following s Loss before interest and tax 5,000 Depreciation 23,000 Income from associate 6,000 Tax paid 10,000 What is Eastham Cos net cash inflow from operating activities? A $12,000 B $22,000 c D $14,000 9 ‘The following are future cash flows projected for an item of machinery: (2) $200,000 to be incurred in three years’ time which will extend the life of the machine by a further five years (2) $55,000 annual reyemtie from products produced by the machine (3) $6,000 of finance costs on a bank loan taken out to purchase the machine (4) $60,000 maintenance costs to be incurred in 12 months* time Which of the above cash flows are relevant to the calculation of the machine’s value in use? A Land 2 B iand3 c 2and4 D 3and4 (©2017 seca eaucatorl Development Corp i gms sere 310 u 2 On | January 20X4 Able Co purchased 75% of the equity share capital of Cain Co for $920,000. During the year ended 31 December 20X6, Cain Co sold goods to Able Co for $30,000; the goods were sold at a mark-up of 20%. At 31 December 20X6, 80% of the goods were still held as inventory by Able Co. Retained earnings of the two companies on acquisition and as at 31 December 20X6 are as follows Able Co Cain Co Ss Ss 1 January 20X4 374,000 107,000 31 December 20X6 427,000 151,000 What will be the consolidated retained earnings for the Able group as at 31 December 20X6? Ignore goodwill. A $456,000 B $457,000 c $460,000 D Jethro Co issued $500,000 6% bonds at a discount of $% on 1 January 20X3. The bond will be repaid five years after issue at a premium of $100,000. Interest is paid annually in arrears and the effective interest rate of this instrument is 10.5% What will be the finance expense charged (o Jetliro Co’s profit or loss for the year ended 31 December 20X6? A $30,000 B $49,875 c $51,962 D $54,863 20X6 Mango Co entered into a lease agreement for an item of equipment. The contract included an initial deposit of $6,000 and three further annual payments of $10,000; the first in two years’ time on 31 December 20X7. The effective rate of interest on the contract is 10%, Applying the requirements of IFRS 16 Leases, at what amount should the right-of-use asset be measured on the commencement date? A $24,868 B 530,868 c $28,607 D $22,607 (©2017 seca eaucatorl Development Corp i gms sere 6