CPA Financial Reporting - FR Exam Questions
QUESTION NO: 1
Watson earns a bonus of 2% of net profit from his employers, ABC Co. In September 2012, Watson received a payment-in-anticipation of $3,000. On 31 December 2012, the directors estimated that net profits for the year would probably be $170,000.
What figure should be included in the Statement of Comprehensive Income for the year ended 31 December 2012 as an employee benefit?
Watson earns a bonus of 2% of net profit from his employers, ABC Co. In September 2012, Watson received a payment-in-anticipation of $3,000. On 31 December 2012, the directors estimated that net profits for the year would probably be $170,000.
What figure should be included in the Statement of Comprehensive Income for the year ended 31 December 2012 as an employee benefit?
Correct Answer: A
QUESTION NO: 2
One plc has owned 100% of Ten Ltd and 60% of Six Ltd for many years. At 31 December 2012 the trade receivables and trade payables shown in the individual company statements of financial position were as follows.
One plcTen LtdSix Ltd $000$000$000 Trade receivable 503040 Trade payable 301520 Trade payable are made up as follows Amount owning to One--Ten 2-4 Six 3-Other suppliers251516
301520
The intra-group accounts agreed after taking into account the following.
1)An invoice for $3,000 posted by Ten Ltd on 31 December 2012 was not received by One pIc until 2 January 2013
2)A cheque for $2,000 posted by One pIc on 30 December 2012 was not received by Six Ltd until 4 January 2013.
What amount should be shown as trade receivables in the consolidated statement of financial position of One plc for the year ended 31 December 2012?
One plc has owned 100% of Ten Ltd and 60% of Six Ltd for many years. At 31 December 2012 the trade receivables and trade payables shown in the individual company statements of financial position were as follows.
One plcTen LtdSix Ltd $000$000$000 Trade receivable 503040 Trade payable 301520 Trade payable are made up as follows Amount owning to One--Ten 2-4 Six 3-Other suppliers251516
301520
The intra-group accounts agreed after taking into account the following.
1)An invoice for $3,000 posted by Ten Ltd on 31 December 2012 was not received by One pIc until 2 January 2013
2)A cheque for $2,000 posted by One pIc on 30 December 2012 was not received by Six Ltd until 4 January 2013.
What amount should be shown as trade receivables in the consolidated statement of financial position of One plc for the year ended 31 December 2012?
Correct Answer: B
QUESTION NO: 3
The net book value of land and buildings at 31 December 2012 of Ruth Ltd was $56,000. Ruth Ltd revalues its land and building at the end of each accounting year. At 31 December 2012 the land and buildings is revalued to $52,600 into the financial statements. The building's remaining life at 1 January 2012 was 8 years. Ruth Ltd does not make an annual transfer from the revaluation reserve to retained earnings in respect of therealizationof the revaluation surplus.
What is the gain / loss on revaluation of land and buildings as at 31 December 2012? Ignore deferred tax on the revaluation surplus.
The net book value of land and buildings at 31 December 2012 of Ruth Ltd was $56,000. Ruth Ltd revalues its land and building at the end of each accounting year. At 31 December 2012 the land and buildings is revalued to $52,600 into the financial statements. The building's remaining life at 1 January 2012 was 8 years. Ruth Ltd does not make an annual transfer from the revaluation reserve to retained earnings in respect of therealizationof the revaluation surplus.
What is the gain / loss on revaluation of land and buildings as at 31 December 2012? Ignore deferred tax on the revaluation surplus.
Correct Answer: D
QUESTION NO: 4
Sparrow plc owns a building, currently carried in its accounting records at $800,000. It has agreed to exchange this building for a building owned by Turner Ltd. The building currently owned by Sparrow plc has a fair value of $1 million. The building currently owned by Turner Ltd has a fair value of $1.1 million. Sparrow plc has agreed to pay the legal costs of the transfer which amount to $10,000.
According to IAS 16 Property, Plant and Equipment, at what value should the building currently owned by Turner Ltd be recorded initially in Sparrow plc's accounting records?
Sparrow plc owns a building, currently carried in its accounting records at $800,000. It has agreed to exchange this building for a building owned by Turner Ltd. The building currently owned by Sparrow plc has a fair value of $1 million. The building currently owned by Turner Ltd has a fair value of $1.1 million. Sparrow plc has agreed to pay the legal costs of the transfer which amount to $10,000.
According to IAS 16 Property, Plant and Equipment, at what value should the building currently owned by Turner Ltd be recorded initially in Sparrow plc's accounting records?
Correct Answer: D
QUESTION NO: 5
On 1 January 2012, Viceroy Co entered into a finance lease agreement to obtain a machine which would have cost $166,000 if it had been purchased outright. The machine has a useful life of five years, and the lease period is six years. At the end of the lease period, the machine will be returned to thelesser. As well as requiring a final payment, the terms of the lease are:
Initial rental$8,000
Monthly rentals, payable in arrears60 x $3,200
Interest rate implicit in lease8% per annum
Viceroy has a 31 December year end, and provides for depreciation on machinery on the straight-line basis.
How much should be charged in the statement of profit or loss for the year to 31 December 2012 as a result of the lease agreement?
On 1 January 2012, Viceroy Co entered into a finance lease agreement to obtain a machine which would have cost $166,000 if it had been purchased outright. The machine has a useful life of five years, and the lease period is six years. At the end of the lease period, the machine will be returned to thelesser. As well as requiring a final payment, the terms of the lease are:
Initial rental$8,000
Monthly rentals, payable in arrears60 x $3,200
Interest rate implicit in lease8% per annum
Viceroy has a 31 December year end, and provides for depreciation on machinery on the straight-line basis.
How much should be charged in the statement of profit or loss for the year to 31 December 2012 as a result of the lease agreement?
Correct Answer: B
QUESTION NO: 6
Gene Ltd has the following assets and liabilities at 31 December 2005.
Note$ Fixtures and fittings at carrying amount(1)10,000 Receivables(2)8,000 Cash and cash equivalents1,000 Payable(5,000) 14,000
Notes
(1)
The fixtures and fittings have been held for three years and had an estimated useful life of six years. If the fixtures and fittings were to be sold on 31 December 2005 they would realise $14,000
(2)
If Gene Ltd was to cease trading it is estimated that an allowance against receivables of $500 would need to be made
At what amount would the net assets be stated in the statement of financial position of Gene Ltd at 31 December 2005 under the breakup basis?
Gene Ltd has the following assets and liabilities at 31 December 2005.
Note$ Fixtures and fittings at carrying amount(1)10,000 Receivables(2)8,000 Cash and cash equivalents1,000 Payable(5,000) 14,000
Notes
(1)
The fixtures and fittings have been held for three years and had an estimated useful life of six years. If the fixtures and fittings were to be sold on 31 December 2005 they would realise $14,000
(2)
If Gene Ltd was to cease trading it is estimated that an allowance against receivables of $500 would need to be made
At what amount would the net assets be stated in the statement of financial position of Gene Ltd at 31 December 2005 under the breakup basis?
Correct Answer: C
QUESTION NO: 7
The following statements relate to intangible assets.
1) An intangible asset should beamortizedon a systematic basis over the asset's useful life.
2) Internally generated goodwill may be carried in the statement of financial position if the value can be determined with reasonable certainty.
3) Internally generated brands can never berecognizedas intangible assets.
Which of the above statements are consistent with IAS 38 Intangible Assets?
The following statements relate to intangible assets.
1) An intangible asset should beamortizedon a systematic basis over the asset's useful life.
2) Internally generated goodwill may be carried in the statement of financial position if the value can be determined with reasonable certainty.
3) Internally generated brands can never berecognizedas intangible assets.
Which of the above statements are consistent with IAS 38 Intangible Assets?
Correct Answer: D
QUESTION NO: 8
The income statement of Haggle for the year to 30 November 2012 reported a profit before tax of $132,593, after charging depreciation of $8,742 and interest of $5,844.
The company does not hold any inventory, and no credit is granted to customers. The amount owed to suppliers at 30 November 2012 was $9,429 greater than the amount owed at 30 November 2011. During the year the taxation liability of $7,374 was paid. Neither any interest was owed at 30 November 2011, nor at 30 November 2012.
What amount should be reported as 'Net cash from operating activities' in the cash flow statement for the year to 30 November 2012?
The income statement of Haggle for the year to 30 November 2012 reported a profit before tax of $132,593, after charging depreciation of $8,742 and interest of $5,844.
The company does not hold any inventory, and no credit is granted to customers. The amount owed to suppliers at 30 November 2012 was $9,429 greater than the amount owed at 30 November 2011. During the year the taxation liability of $7,374 was paid. Neither any interest was owed at 30 November 2011, nor at 30 November 2012.
What amount should be reported as 'Net cash from operating activities' in the cash flow statement for the year to 30 November 2012?
Correct Answer: A
