Revision Questions

Question 1

When an IFRS conflicts with the Conceptual Framework, the _ _ _ _ should be followed

Answer 1

IFRS;

Question 2

A provision is:
- A l______ of uncertain t_____ and/or a______
- The amount is not necessarily an e_______
- It may be known and the uncertainty surrounds the t_____ of the payment
- Provisions are recognised in the f______ s________ when certain criteria are met

Answer 2

liability; timing; amount;
estimate;
timing;
financial statements;

Question 3

• A gain from the sale of a n__ - c______ a____ is recognised as part of the profit or loss for the period, but
• The r_________ of a n__ - c_______ a_____ is not recognised in profit or loss; it is recognised in e_____ as part of o_____ c___________ i______

Answer 3

non-current asset;
revaluation; non-current asset;
equity; other comprehensive income;

Question 4

A director’s report includes:
- Details of the individual d_______ on the board.
- A review of the entity’s o_________ during the period

Answer 4

directors; operations;

Question 5

The corporate governance report includes details on:
- The details of the m_______ of various c_________

Answer 5

members; committees;

Question 6

Q8 P428

Answer 6

$520k;

Question 7

Dividends paid are found in the s_______ of c______ in e_____

Answer 7

statement; changes; equity;

Question 8

Which of the following items is not required to be shown in a separate line in the statement of changes in equity?
A) Revaluation of a property
B) A prior period adjustment resulting from a change in accounting policy
C) A share issue in the year
D) Dividends paid to ordinary shareholders

Answer 8

A) Revaluation of a property

Question 9

Q5 P430 Study Guide

Answer 9

See textbook;
Statement of profit or loss = $45k
Statement of financial position = $323k

Question 10

For revenue to be recognised over a period of time, the following criteria must be met:
- The entity’s performance does not create an a____ with an a________ u__ to the entity, and the entity has an e_________ r_____ to payment for performance completed to date.
- The customer simultaneously r_______ and c________ the benefits as the performance takes place.
- The entity’s performance c______ or e_______ an asset that the customer c_______ as the asset is c_______ or e________.

Answer 10

asset; alternative use; enforceable right;
receives; consumes;
creates; enhances; controls; created; enhanced;

Question 11

Q13 P432 Study Guide

Answer 11

$441,000;

Question 12

• Deferred tax amounts may not be classified as c_______.
• Tax losses are an example of a d_________ t_________ d__________.

Answer 12

current;
deductible temporary difference;

Question 13

Deferred tax relating to the revaluation of a p_______ is reported as o______ c___________ i_______

Answer 13

property; other comprehensive income;

Question 14

Q17 P433 Study Guide

Answer 14

A;

Question 15

Q19 P433

Answer 15

$4,782 gain;

Question 16

• The currency that mainly influences ales prices set by an entity is likely to be the f________ c________
• A revalued f______ a_____ is translated at the exchange rate in force on the d____ of the r_________

Answer 16

functional currency;
foreign asset; date; revaluation;

Question 17

• IFRS 10 states that all m_______ s________ should be consolidated;
• Investments in g____ c_______ in individual entity accounts are held at c___ or in accordance with IFRS _ ;
• The accounting policies of the s_______ must be brought in line with those of the g_____ for the purposes of c_________.

Answer 17

material subsidiaries;
group companies; cost; 9;
subsidiary; group; consolidation;

Question 18

Q7 P437 Study Guide

Answer 18

$75,000;

Question 19

Q8 P437 Study Guide;

Answer 19

$139,000;

Question 20

Q9 P438;

Answer 20

$339,522;

Question 21

Q10 P438

Answer 21

$765,333;

Question 22

Q12 P439 Study Guide;

Answer 22

$446k;
$142k;

Question 23

Q13 P439 Study Guide;

Answer 23

A decrease of $2,500;

Question 24

When a question asks for the ‘adjustment to X’s Cost of Sales’:
- If the year is not the year of the transfer, calculate the difference in d_________ o____
- ‘Old’ depreciation = O_______ cost * Original d________ r____
- ‘New’ depreciation = S______ price / Remaining u______ l___ (yrs)

Answer 24

depreciation only;
Original; depreciation rate;
Selling; useful life;

Question 25

Q14 P439 Study Guide

Answer 25

$19,697 to add back to profit;

Question 26

Dividend income relating to investments other than s________ (and a________) is carried across to the consolidated statement of profit or loss.

Answer 26

subsidiaries; associates;

Question 27

When a question asks for the 'adjustment required to X's profit in respect of transfer', if the transfer happens in the year in question, the difference in URP is made up of: - The l___ on t_______ (selling price - carrying amt) - The d________ in d_________

Answer 27

loss; transfer; difference; depreciation;

Question 28

Q17 P440;

Answer 28

$127,900;

Question 29

Q18 P440;

Answer 29

$391,150;

Question 30

Where an associate is l___ making, the i_______ should discontinue including its share of l_____ when the investor's share of l_____ of the a_______ equals or exceeds its i______ in the associate.

Answer 30

loss; investor; losses; losses; associate; interest;

Question 31

- A decrease in e_______ increases p_____ and hence e_____ and therefore d_______ the gearing ratio. - A decrease in the allowance for r__________ also increases e_____ and therefore d________ the gearing ratio. - An upward revaluation increases e_____ and so d________ the gearing ratio. - The payment of a d_______ decreases e_____ and hence i_______ the gearing ratio.

Answer 31

expenses; profits; equity; decreases; receivables; equity; decreases; equity; decreases; dividend; equity; increases;

Question 32

An upwards revaluation of property, plant and equipment is likely to lead to: - Decreased n__ p_____ m_____ because as assets are revalued upwards, d________ will i_______, making profit l_____ and the profit margin d_______ accordingly. - Upwards revaluations increases e_____, therefore d_________ the gearing ratio. - Interest cover is likely to d_______ because profit before interest and tax will fall due to the higher d_________ - Non-current asset turnover is calculated as r_______ / n__ - c______ assets. Therefore, it too will d________.

Answer 32

net profit margin; depreciation; increase; lower; decrease; equity; decreases; decrease; depreciation; revenue / non-current assets; decrease;