Summer Sale Limited Time 65% Discount Offer - Ends in 0d 00h 00m 00s - Coupon code: ecus65

CIMA F2 - F2 Advanced Financial Reporting

Page: 3 / 8
Total 268 questions

FG granted share options to its 500 employees on 1 August 20X0. Each employee will receive 1,000 share options provided they continue to work for FG for the four years following the grant date. The fair value of the options at the grant date was $1.30 each. In the year ended 31 July 20X1, 20 employees left and another 50 were expected to leave in the following three years. In the year ended 31 July 20X2, 18 employees left and a further 30 were expected to leave during the next two years.

The amount recognised in the statement of profit or loss for the year ended 31 July 20X1 in respect of these share options was $139,750. 

Calculate the charge to FG's statement of profit or loss for the year ended 31 July 20X2 in respect of the share options.

A.

$154,050

B.

$141,050

C.

$293,800

D.

$280,800

RS has issued an instrument with a nominal value of $1 million, at a discount of 2.5%, and a coupon rate of 6%. The terms of the issue are that the instrument must either be redeemed at par, at the option of the holder, in three years' time, or alternatively converted into equity shares in RS.

The characteristics of this instrument taken as a whole indicates that it would be classifed as which of the following?

A.

Compound instrument

B.

Debt instrument

C.

Equity instrument

D.

Discounted instrument

In recent years EBITDA has been adopted by large entities as a key measure of performance. The following figures have been extracted from the financial statements of UV for the year ended 30 November 20X9:  

What is EBITDA for UV for the year ended 30 November 20X9?

Give your answer to the nearest $'000.

$ ? 000

A local council is one year into a two year project to renovate local parks. The project is on track to be completed within the set time-scale, however it has proved more costly than initially expected.

The project is on track to be completed within its two year period. Contracts for the labour and materials needed to renovate the parks were agreed at the start of the project and no changes have arisen. Despite the fact

that the council has yet to fully settle these contracts, costs are set to be as budgeted.

Why would this example not be recognised as a provision?

A.

Neither the timing nor the amount of the provision is uncertain.

B.

The settlement of the contract is unlikely to result in an outflow from the council.

C.

The council doesn't have a present obligation from the project.

D.

The council has no potential future obligations arising from the project.

AB acquired an investment in a debt instrument on 1 January 20X5 at its nominal value of $25,000, which it intends to hold until maturity. The instrument carried a fixed coupon interest rate of 5%, payable in arrears. Transactions costs of $5,000 were paid in respect of this investment.  The effective interest rate applicable to this instrument was estimated at 9%.  

Calculate the value of this investment that AB will include in its statement of financial position at 31 December 20X5.

Give your answer to the nearest whole number. 

$ ?  

WX acquired 20% of the equity share capital of MN for $135 million in 20X5. WX acquired a further 40% of the equity share capital of MN for $400 million on 1 October 20X8 when the fair value of the net assets of MN were $800 million.

The fair value of the initial 20% investment in MN was $175 million at 1 October 20X8. There has been no impairment of the investment in MN. WX uses the proportion of net assets method to value non-controlling interest at acquisition.

Calculate the goodwill arising on the acquisition of MN.

Give your answer to the nearest $ million.

 $ ?  million

When accounting for a finance lease under IAS 17 Leases, which TWO of the following are recognised in the statement of profit or loss?

A.

Finance cost element of the lease payments

B.

Depreciation of the leased asset

C.

Lease payments paid

D.

Lease payments payable

E.

Capital repayment element of the lease payments

As at 31 October 20X7 TU's financial statements show the entity having profit after tax of $600,000 and 900,000 $1 ordinary shares in issue. There have been no issues of shares during the year. At 31 October 20X7 TU have 300,000 share options in issue, which allow the holders to purchase ordinary shares at $2 a share in 3 years' time. The average price of the ordinary shares throughout the year was $5 a share.

What is the diluted earnings per share for the year ended 31 October 20X7?

A.

66.7 cents

B.

58.8 cents

C.

50.0 cents

D.

55.6 cents

CD granted 1,000 share options to its 100 employees on 1 January 20X8.To be eligible, employees must remain employed for 3 years from the grant date. In the year to 31 December 20X8, 15 staff left and a further 25 were expected to leave over the following two years.

The fair value of each option at 1 January 20X8 was $10 and at 31 December 20X8 was $15.

Which THREE of the following are true in respect of recording these share options in the year ended 31 December 20X8?

A.

The credit entry will be to equity.

B.

The credit entry will be to non-current liabilities.

C.

Fair value at 1 January 20X8 will be used to value the options.

D.

Fair value at 31 December 20X8 will be used to value the options.

E.

The calculation of the charge for the year will be adjusted for actual leavers only.

F.

The calculation of the charge for the year will be adjusted for actual and estimated leavers.

GG's gearing is currently 50% compared to the industry average of 40% (both measured as debt/equity). GG's debt is all in the form of a single bank loan that is repayable in five years' time. The directors of GG are seeking to raise finance for a new project and they are considering an additional bank loan from the same bank.

Which of the following would prevent the bank from lending the finance for the project in the form of a new bank loan?

A.

A covenant on the existing bank loan that restricts the level of dividend that can be paid.

B.

A projected decrease in interest cover that would breach a covenant on the existing loan.

C.

The revaluation of GG's property that shows an increase in its value since the existing bank loan was taken out.

D.

A projected lack of profits to be able to claim tax relief on the additional interest arising from the new loan.