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F2 – Advanced Financial Reporting

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Showing 4–6 of 15 questions

Question 4

Which THREE of the following statements about preference shares are true?

Select all that apply, then click Submit answer.

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    For an investor, preference shares carry more risk than ordinary shares.
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    Unlike ordinary shares, preference shares may be cumulative.
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    The characteristics of preference shares are closer to debt than equity.
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    Preference shares cannot be issued as redeemable shares.
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    Preference shareholders receive their dividend entitlement before the equity shareholders.
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    Preference shareholders rank below the equity shareholders in a winding up.
Question 5

EF acquired a copy machine under a three-year operating lease. EF will pay nothing in year one and then will pay $6,000 in years two and three. The estimated economic useful life of the machine is six years.

Which THREE of the following statements are true in respect of how EF will account for its use of the machine and the associated operating lease payments?

Select all that apply, then click Submit answer.

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    An asset of $12,000 will be included in EF's property, plant and equipment at the start of the lease.
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    EF will record no expense in year one in respect of the operating lease charges for this machine.
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    EF will record a credit to bank of $6,000 in year two.
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    EF will include an accrual of $4,000 at the end of year one in respect of the lease payments.
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    EF will charge $4,000 to profit or loss in each of the three years in respect of this operating lease.
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    EF will include an accrual of $6,000 at the end of year one in respect of the lease payments.
Question 6

Which THREE of the following statements are true in relation to financial assets designated as fair value through profit or loss under IAS 39 Financial Instruments: Recognition and Measurement?

Select all that apply, then click Submit answer.

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    Shares in another entity held for short term trading purposes fall within this category.
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    Transaction costs in relation to these assets are expensed to profit or loss on acquisition.
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    Transaction costs in relation to these assets are added to the initial cost of the asset on acquisition.
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    The gain or loss on the subsequent measurement of these assets is recorded within other comprehensive income.
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    The gain or loss on the subsequent measurement of these assets is recorded within profit for the year.
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    Once the asset has been subsequently measured to fair value an impairment review is undertaken.