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F2 – Advanced Financial Reporting

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Showing 13–15 of 15 questions

Question 13

LM acquired 80% of the equity shares of ST when ST's retained earnings were $50 million. The fair value of the net assets of ST included a contingent liability with a fair value of $100 million at the date of acquisition and a fair value of $40 million at 31 December 20X6. No other fair value adjustments were required at the date of acquisition.

LM and ST had retained earnings of $200 million and $80 million respectively at 31 December 20X6.

The consolidated retained earnings of LM at 31 December 20X6 were:

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    $164 million
  • ○

    $176 million
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    $272 million
  • ○

    $284 million
Question 14

GH is a listed entity which holds equity shares in one subsidiary and one associate.

Information extracted from the most recent financial statements is as follows:

What is the interest cover for the year?

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  • ○

    9.6 times
  • ○

    10.7 times
  • ○

    11.7 times
  • ○

    8.5 times
Question 15

Which of the following would cause a deferred tax balance to be included in the statement of financial position for an entity?

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  • ○

    Expenses in the statement of profit or loss which are not allowable for tax creating a permanent difference.
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    The acquisition of land for which there is no tax depreciation.
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    The acquisition of plant and equipment a year ago where the tax depreciation rate is different to the accounting depreciation rate.
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    Impairment of goodwill that arose on the acquisition of a subsidiary entity.