(BOLD SENTENCE ARE THE ANSWER)

1. Which TWO of the following should be taken into account when determining the cost of inventories per IAS2 Inventories?

A Storage costs of part-finished goods

B Trade discounts

C Recoverable purchase taxes

D Administrative costs

2. According to IAS2 Inventories, which TWO of the following should be accounted for in the cost of an item of inventory?

A Material wasted due to a machine breakdown

B Import duties on shipping of inventory inwards

C Storage costs of finished goods

D Trade discounts received on purchase of inventory

3. According to IAS2 Inventories, which TWO of the following costs should be included in inventory valuations?

A Transport costs for raw materials

B Abnormal material usage

C Storage costs relating to finished goods

D Fixed production overheads

4. How should import duties be dealt with when valuing inventories at the lower of cost and net realisable value (NRV) according to IAS2 Inventories? (select one answer)

A Added to cost

B Ignored

C Deducted in arriving at NRV

D Deducted from cost

5. How should prompt payment discount be dealt with when valuing inventories at the lower of cost and net realisable value (NRV), according to IAS2Inventories?

A Added to cost

B Ignored

C Deducted in arriving at NRV

D Deducted from cost

6. How should sales staff commission be dealt with when valuing inventories at the lower of cost and net realisable value (NRV), according to IAS2 Inventories? (select one answer)

A Added to cost

B Ignored

C Deducted in arriving at NRV

D Deducted from cost

7. How should trade discounts be dealt with when valuing inventories at the lower of cost and net realisable value (NRV) according to IAS2 Inventories? (select one answer)

A Added to cost

B Ignored

C Deducted in arriving at NRV

D Deducted from cost

8. Are the following statements true or false, according to IAS2 Inventories?

(1) Cost of factory management should be included in the cost of inventory.

(2) Maintenance expenses for an item of equipment used in the manufacturing process should be included in the cost of inventory.

Statement (1) Statement (2)

A False False

B False True

C True False

D True True

9. The Coronet Company has a cost card in relation to an item of goods manufactured as follows:

Materials $70

Storage costs of finished goods 18

Delivery to customers 4

Irrecoverable purchase taxes 6

According to IAS2 Inventories, at what figure should the item be valued in inventory?

A $88

B $76

C $98

D $94

10. The Parrotbill Company produces units of product UB06. The following costs have been incurred: cost per unit

Direct materials and labour 1.80

Variable production overhead 0.25

Factory administrative costs 0.15

Fixed production costs 0.20

Under IAS2 Inventories, what is the correct inventory value of a unit of product UB06?

A $2.05

B $2.25

C $1.95

D $2.40

11. The Hopkins Company is a manufacturing company. The cost per unit of an item of inventory is shown on its card as follows:

Materials $30

Production labour costs 33

Production overheads 12

General administration costs 10

Marketing costs 5

According to IAS2 Inventories, what is the value of one completed item of inventory in Hopkins's statement of financial position?

A $63

B $85

C $75

D $90

12. The Marmot Company has partially-completed inventory located in its factory, to which the following estimates relate:

Production costs incurred to date $2,900

Production costs to complete 2,000

Transport costs to customer 300

Future selling costs 400

Selling price 2,800

According to IAS2 Inventories, what is the net realizable value of Marmot’s inventory?

A $2,100

B $2,800

C $400

D $100

13. The Whimbrel Company has two products in its inventory which have costs and selling prices per unit as follows:

Product X Product Y

Selling price 200 300

Materials and conversion costs 150 180

General administration costs 30 80

Selling costs 60 70

Profit/(loss) (40) (30)

At the year end, the manufacture of items of inventory has been completed but no selling costs have yet been incurred. According to IAS2 Inventories, should these products be carried in Whimbrel's statement of financial position at cost or net realisable value (NRV) rule?

Product X Product Y

A NRV NRV

B NRV Cost

C Cost NRV

D Cost Cost

14. Which ONE of the following statements best describes 'residual value'?

A The estimated net amount currently obtainable if the asset were at the end of its useful life

B The present value of estimated future cash flows expected to arise from the continuing use of the asset and from its ultimate disposal

C The amount at which the asset could be exchanged between knowledgeable, willing parties in an arm's length transaction

D The amount of cash or cash equivalents that could currently be obtained by selling the asset in an orderly disposal

15. Which ONE of the following terms best describes the cost (or an amount substituted for cost) of an asset less its residual value?

A Revalued amount

B Carrying amount

C Recoverable amount

D Depreciable amount

16. Which ONE of the following statements best describes the carrying amount of an asset?

A The cost (or an amount substituted for cost) of the asset less its residual value

B The amount at which the asset is recognized in the statement of financial position after deducting any accumulated depreciation and accumulated impairment losses

C The higher of the assets net selling price and its value in use

D The fair value of the asset at the date of a revaluation less any subsequent accumulated impairment losses

17. Which ONE of the following terms best describes the removal of an asset from an entity's statement of financial position?

A Derecognition

B Impairment

C Write-off

D Depreciation

18. Which ONE of the following statements best describes the term 'depreciation'?

A The systematic allocation of an asset's cost less residual value over its useful life

B The removal of an asset from an entity's statement of financial position

C The amount by which the recoverable amount of an asset exceeds its carrying amount

D The amount by which the carrying amount of an asset exceeds its recoverable amount

19. Are the following statements regarding the cost of an asset true or false, according to IAS16 Property, plant and equipment?

(1) The cost includes cash equivalents paid to acquire an asset.

(2) The cost includes the fair value of any non-monetary consideration given to acquire an asset.

Statement (1) Statement (2)

A False False

B False True

C True False

D True True

20. Which of the following terms best describes the systematic allocation over its useful life of the cost of an asset, or other amount substituted for cost, less its residual value?

A Depreciation

B Derecognition

C Impairment

D Value in use

21. Which ONE of the following terms best describes the amount at which an asset could be exchanged between knowledgeable, willing parties in an arm's length transaction?

A Fair value

B Value in use

C Residual value

D Realizable value

22. Which TWO of the following statements are correct per IAS16 Property, plant and equipment?

A Assets are depreciated even if their fair value exceeds their carrying amount

B Land and buildings are accounted for separately, even when acquired together

C A non-current asset acquired as the result of an exchange of assets is not recognized

D A gain on disposal of a non-current asset is classified as revenue

23. According to IAS16 Property, plant and equipment, which TWO of the following items should be capitalized into the cost of property, plant and equipment?

A Cost of excess materials resulting from a purchasing error

B Cost of testing whether the asset works correctly

C Initial operating losses whilst demand builds up

D Cost of preparing the site for installation

24. Under the principles of IAS16 Property, plant and equipment, which TWO of the following should be included in the cost of an item of property, plant and equipment?

A Initial delivery and handling costs

B Apportioned general overhead costs

C Costs of training staff on the new asset

D Installation and assembly costs

25. Which TWO of the following disclosures must be made under IAS16 Property, plant and equipment?

A The existence and amounts of restrictions on title

B A narrative discussion of future capital expenditure plans

C The disposal proceeds of each major asset sold in the period

D The measurement bases used for determining the gross carrying amount

26. Which ONE of the following statements regarding depreciation is true, according to IAS16 Property, plant and equipment?

A An asset must be depreciated from the date of its purchase to the date of sale

B The annual depreciation charge should be constant over the life of the asset

C The total cost of an asset must eventually be depreciated

D If the carrying amount of an asset is less than the residual value, depreciation is not charged

27. Under IAS16 Property, plant and equipment, which TWO of the following costs relating to non-current assets should be capitalized?

A Replacement of a building's roof every 15 years

B Maintenance of an asset on a three-monthly basis

C Installation and assembly costs

D Replacement of small spare parts annually

28. The Charcoal Company is purchasing a second-hand polishing machine from a competitor who has gone bankrupt. It will incur the following costs:

Agreed price to be paid to vendor $8,000

Dismantling the machine at its current location $400

Transportation to Charcoal's factory $350

Machine refurbishment costs prior to re-installation $175

Re-installation $125

Under IAS16 Property, plant and equipment, the total included in non-current assets in respect of the machine should be

A $8,875

B $9,050

C $8,125

D$8,000

29. The Plaice Company acquired a new filing machine, the list price of which was $49,000. The supplier allowed a trade discount of $1, 700 off the list price. On delivery, the cost of installing the machine in its desired location was $450. According to IAS16 Property, plant and equipment, at what cost should the filing machine be measured in the financial statements of Plaice?

A $47,750

B $49,000

C $49,450

D $47,300

30. The Tanager Company purchased a boring machine on 1 January 2001 for $81,000. The useful life of the machine is estimated at 3 years with a residual value at the end of this period of $6,000. During its useful life, the expected units of production from the machine are:

2001 12,000 units

2002 7,000 units

2003 5,000 units

What should be the depreciation expense for the year ended 31 December 2002, using the most appropriate depreciation method permitted by IAS16 Property, plant and equipment?

A $27,000

B $21,875

C $23,625

D $25,000

31. The Lamprey Defense Company acquired an aero plane in 2005. At the time of acquisition, the cost of the jet frame was $4.6million and the additional cost of the engine was $600,000. In 2008, the engine was replaced with a new one costing $1, 100,000. At the time of replacement, the accumulated depreciation to date on the jet Frame was $1,750,000 and on the engine was $400,000. Using the principles outlined in IAS16 Property, plant and equipment, what amount should be derecognized at the date of replacement?

A $200,000

B Nil

C $600,000

D $1,100,000

32. The Mateo Company acquired a drilling machine on 1 October 2005 at a cost of $25, 000 and depreciated it at 25% per annum on a straight line basis. On 1 October 2007,$5,000 was spent on an upgrade to the machine in order to improve its efficiency and increase the inflow of economic benefits over the machine's remaining life. According to IAS16 Property, plant and equipment, what depreciation expense should be recognized in profit or loss for the year ended 30 September 2008

A $8,750

B $6,250

C $7,500

D $11,250

33. The Marled Company purchased a non-current asset with a useful life of 12 years on 1 January 2007 for $6,500,000. At its year end of 31 December 2007, the amount the company would receive from the disposal of the asset if it was already of the age and in the condition expected at the end of its useful life was estimated at $700, 000. Inclusive of inflation the actual amount expected to be received on disposal was estimated at $900, 000. What should be the depreciation charge under IAS16 Property, plant and equipment, for the year ended 31 December 2007?

A $483, 333

B $466, 667

C Nil

D$541, 667

34. Are the following statements true or false, according to IAS38 Intangible assets?

(1) The cost of an asset should include the amount of any cash or cash equivalents paid to acquire the asset.

(2) The cost of an asset should include non-cash consideration measured at fair value.

Statement (1) Statement (2)

A False False

B False True

C True False

D True True

35. Are the following statements in relation to development true or false, according to IAS38 Intangible assets?

(1) The products being developed should have already been put into commercial production or use.

(2) Development involves the application of research findings.

Statement (1) Statement (2)

A False False

B False True

C True False

D True True

36. According to IAS38 Intangible assets, which TWO of the following criteria are relevant in determining the useful life of an intangible asset?

A Obsolescence

B The amortization period

C The expected usage of the asset

D The residual value of the asset

37. According to IAS38 Intangible assets, amortization of an intangible asset with a finite useful life should commence when (select one answer)

A it is first recognized as an asset

B it is probable that it will generate future economic benefits

C it is available for use

D the costs can be identified with reasonable certainty

38. A brand name that was acquired separately should initially be recognized, according to IAS38 Intangible assets, at (select one answer)

A recoverable amount

B either cost or fair value at the choice of the acquirer

C fair value

D cost

39. According to IAS38 Intangible assets, the recognition criteria for an intangible asset include which TWO of the following conditions?

A It must be measured at cost

B Its cost can be measured reliably

C It is probable that future economic benefits will arise from its use

D It is an integral part of the business

40. Are the following statements are true or false, according to IAS38 Intangible assets?

(1) Intangible assets cannot be treated as having an indefinite useful life.

(2) Intangible assets with a finite useful life should be measured at cost and tested annually for impairment.

Statement (1) Statement (2)

A False False

B False True

C True False

D True True

41. Are the following statements true or false, according to IAS38 Intangible assets?

(1) Expenditure during the research phase of a project may sometimes be capitalized as an intangible asset.

(2) Expenditure during the development phase of a project may sometimes be capitalized as an intangible asset.

Statement (1) Statement (2)

A False False

B False True

C True False

D True True

42. Are each of the following factors relevant, according to IAS38 Intangible assets, in determining the annual amortization expense on an intangible asset?

(1) The cost.

(2) The amortization method.

Factor (1) Factor (2)

A Not relevant Not relevant

B Not relevant relevant

C Relevant Not relevant

D Relevant Relevant

43. Are the following statements true or false, according to IAS38 Intangible assets?

(1) Intangible assets acquired in a business combination should only be recognized if they have already been recognised by the entity being acquired.

(2) Intangible assets acquired in a business combination should not be recognized separately from goodwill.

Statement (1) Statement (2)

A False False

B False True

C True False

D True True

44. The Marko Company has acquired a trademark relating to the introduction of a new manufacturing process. The costs incurred were as follows:

Cost of trademark $3,500,000

Expenditure on promoting the new product $50,000

Employee benefits relating to the testing of the

proper functioning of the new process $200,000. According to IAS38 Intangible assets, what is the total cost that should be capitalized as an intangible non-current asset in respect of the new process?

A $3,750,000

B $3,700,000

C $3,500,000

D $3,550,000

45. Which TWO of the following transactions would be presented in a statement of cash flows, according to IAS7 Statement of cash flows? q Conversion of loans into shares q Loan interest received q Loan interest owed q Proceeds of loan issue.

46. Which ONE of the following items should be presented under Cash flows from investing activities, according to IAS7 Statement of cash flows? q Employee costs q Property revaluation q Redemption of debentures q Development costs capitalized in the period

47. Which ONE of the following items should be presented under Cash flows from financing activities, according to IAS7 Statement of cash flows? q Employee costs q Property revaluation q Redemption of debentures q Development costs capitalized in the period

48. Which ONE of the following items should be presented under Cash flows from operating activities, according to IAS7 Statement of cash flows? q Employee costs q Property revaluation q Redemption of debentures q Development costs capitalized in the period

49. Which TWO of the following can be classified as Cash and cash equivalents under IAS7 Statement of cash flows? q Redeemable preference shares due in 180 days q Loan notes held due for repayment in 90 days q Equity investments q A bank overdraft

50. In accordance with IAS7 Statement of cash flows, and treating it as a nonrecurring event, which classification of the cash flow arising from the proceeds from an earthquake disaster settlement would be most appropriate? q Cash flows from operating activities q Cash flows from investing activities q Cash flows from financing activities q does not appear in the cash flow statement

51. In accordance with IAS7 Statement of cash flows, and treating it as a nonrecurring event, which classification of the cash flow arising from the proceeds of sale of a subsidiary would be most appropriate? q Cash flows from operating activities q Cash flows from investing activities q Cash flows from financing activities q does not appear in the cash flow statement

52. In accordance with IAS7 Statement of cash flows, and treating it as a nonrecurring event, which classification of the cash flow arising from the disposal proceeds of a major item of plant would be most appropriate? q Cash flows from operating activities q Cash flows from investing activities q Cash flows from financing activities q does not appear in the cash flow statement

53. An entity has declared preference dividends for the year of $14,000 (based on its 7% $2,00,000 irredeemable preference shares in issue).At the start of the year, there was a balance of $7,000 for preference dividends payable. At the end of the year no amount was owing to preference shareholders in respect of dividends. The preference dividend paid for the year is not simply the $14,000 declared, as this amount needs to be adjusted for any opening and closing balances. What is the amount of dividend paid? q$28,000 q$10,500 q$21,500 q28,500 qNone of the above.

54. An item of plant was disposed of for cash proceeds of $1,000. The carrying amount of the item of plant at the date of the sale was: $ Cost 3,000 Less: Accumulated depreciation 1,300 carrying amount $1700. A loss of $700 (the difference between the proceeds of $1,000 and the carrying amount of $1,700) should be recognized in profit or loss and the non-current asset should be removed from the statement of financial position. What is the amount of cash proceeds received should be recognized in the statement of cash flows as an investing activity “proceeds from sale of property, plant and equipment”. q$1000 q$1,700 q$4,300 q$2100 qNone of the above.

55. Extracts from the draft financial statements of Deluxe for the year ended 31 December 2008,are set out below: Revenue $250,000, Cost of sales: Opening inventories $30,000, Purchases $218,000, Closing inventories ($52,000) Cost of sales ($196,000), Gross profit $54,000, Other operating expenses (all cash costs except, for depreciation of $11,000) ($21,600), Profit from operations 32,400.Statement of financial position extracts

31 Dec 2008 31 Dec 2007

Trade receivables $68,000 $23,000

Trade payables 21,600 42,800

What is the amount net cash provided by operating activities for Deluxe for the year ended 31 December 2008 using the direct method? q$2, 05,000 q$2, 39,000 q$10,600 q$44,800 qNone of the above.

56. An item of plant was disposed of for cash proceeds of $1,000. The carrying amount of the item of plant at the date of the sale was: Cost $3,000, Accumulated depreciation 1,300, Carrying amount 1,700. What amount should be recognized in profit or loss and the non-current asset should be removed from the statement of financial position. q$1,000 q$3,000 q$1,300 q$2,300 q700

57. An item of plant was disposed of for cash proceeds of $3,000. The carrying amount of the item of plant at the date of the sale was: Cost $9,000, Accumulated depreciation 3,900, Carrying amount 5,100. What amount should be recognized in the operating activities of cash flow statement q$3,000 q$9,000 q$3,900 q$12,000 qNone

58. Which ONE of the following items should be presented under Cash flows from investing activities, according to IAS7 Statement of cash flows? q Employee costs q PPE revaluation q Redemption of debentures q Dividend received qnone

59. Which ONE of the following items should be presented under Cash flows from investing activities, according to IAS7 Statement of cash flows? q Finance costs q land revaluation q Redemption of bonds q interest received qNone

60. Which ONE of the following items should be presented under Cash flows from financing activities, according to IAS7 Statement of cash flows? q Employee costs q Property revaluation q Finance lease payments q Development costs capitalized in the period qNone of the above.

61. Which ONE of the following items should be presented under Cash flows from operating activities, according to IAS7 Statement of cash flows? q Doubtful expenses q Property revaluation q Redemption of debentures q Development costs capitalized in the period. qNone of the above.

62. Which TWO of the following can be classified as Cash and cash equivalents under IAS7 Statement of cash flows? q Redeemable preference shares due in 180 days q Loan notes q Equity investments q short term deposit.

63. In accordance with IAS7 Statement of cash flows, and treating it as a nonrecurring event, which classification of the cash flow arising from the purchase of a separate business would be most appropriate? q Cash flows from operating activities q Cash flows from investing activities q Cash flows from financing activities q does not appear in the cash flow statement

64. In accordance with IAS7 Statement of cash flows, and treating it as a nonrecurring event, which classification of the cash flow arising from the disposal proceeds of a major item of machinery would be most appropriate? q Cash flows from operating activities q Cash flows from investing activities q Cash flows from financing activities q does not appear in the cash flow statement

65. Which TWO of the following should be taken into account when determining the cost of inventories per IAS2 Inventories? qStorage costs of part-finished goods q Trade discounts qRecoverable purchase taxes qAdministrative costs qNone of the above.

66. According to IAS2 Inventories, which TWO of the following should be accounted for in the cost of an item of inventory? qMaterial wasted due to a machine breakdown q Import duties on shipping of inventory inwards q Storage costs of finished goods q Trade discounts received on purchase of inventory

67. How should import duties be dealt with when valuing inventories at the lower of cost and net realizable value (NRV) according to IAS2 Inventories? q Added to cost q Ignored q Deducted in arriving at NRV q Deducted from cost qNone of the above.

68. The Coronet Company has a cost card in relation to an item of goods manufactured as follows: Materials $70; Storage costs of finished goods $18; Delivery to customer’s $4 Irrecoverable purchase taxes $6. According to IAS2 Inventories, at what figure should the item be valued in inventory? q$88 q$76 q$98 q$94 qNone of the above.

69. The Marmot Company has partially-completed inventory located in its factory, to which the following estimates relate: Cost per unit: Production costs incurred to date 2,900; Production costs to complete 2,000; Transport costs to customer 300; Future selling costs 400; Selling price 2,800. According to IAS2 Inventories, what is the net realizable value of Marmot’s inventory? q$2,100 q$2,800 q$400 q$100 q None of the above.

70. Which ONE of the following terms best describes the removal of an asset from an entity's statement of financial position? q Derecognizing q Impairment q Write-off q Depreciation qNone of the above.

71. Which ONE of the following items should be presented under Cash flows from operating activities, according to IAS7 Statement of cash flows? q Profit on sale of machinery q Property revaluation q Redemption of debentures q Interest expenses. qNone of the above.

72. 4. Which ONE of the following items should be presented under Cash flows from operating activities, according to IAS7 Statement of cash flows? q Interest received q Property revaluation q Redemption of debentures q derecognizing. qNone of the above.

73. Which TWO of the following can be classified as Non-Cash investing and financing activities under IAS7 Statement of cash flows? q Issue of bonus share q Loan notes held due for repayment in 90 days q Equity investments q conversion of bonds into capital. qNone of the above.

30. Which one of the following can be classified as non cash charges under IAS7 Statement of cash flows? q Redeemable preference shares due in 180 days q amortization expenses q dividend paid q a bank overdraft qNone of the above.

74. Are the following statements in relation to the term 'dilution' true or false? According to IAS33 Earnings per share?

(1) A reduction in earnings per share is an example of dilution.

(2) A reduction in loss per share is an example of dilution.

Statement (1) Statement (2)

A False False

B False True

C True False

D True True

75. Which TWO of the following items must be disclosed, according to IAS33 Earnings per share?

A Forecast earnings per share for the following financial year

B A five-year trend analysis of earnings per share

C The weighted average number of ordinary shares used to calculate earnings per share

D The earnings figures used in calculating basic and diluted earnings per share

76. Are the following statements true or false, according to IAS33 Earnings per share?

(1) Earnings per share amounts should not be presented if they are negative, i.e. losses per share.

(2) Earnings per share amounts calculated for discontinued operations should be presented.

Statement (1) Statement (2)

A False False

B False True

C True False

D True True

77. The Peabody Company is calculating its weighted average number of ordinary shares in issue during the year ended 31 December 20X7. During the year it issued new ordinary shares for cash at full market price and made a 1 for 8 bonus issue. Are the following statements true or false, according to IAS33 Earnings per share?

(1) New shares issued as a result of bonus issue should be time apportioned from their date of issue.

(2) New shares issued for cash at full market price should be time apportioned from their date of issue.

Statement (1) Statement (2)

A False False

B False True

C True False

D True True

78. Smertin is a company listed on a recognized stock exchange. Given below is an extract from its statement of comprehensive income for the year ended 31 December 20X7.

Profit before tax 580,000

Income tax expense 150,000

Profit after tax 430,000

In addition to the above information the company paid during the year an ordinary dividend of CU40,000 and a dividend on its redeemable preference shares of CU50,000. The company had CU100,000 of CU0.50 ordinary shares in issue throughout the year and authorized share capital of 1,000,000 ordinary shares.

What should be the basic earnings per share figure for the year according to IAS33 Earnings per share?

A CU2.15

B CU1.90

C CU0.38

D CU0.43

79. Cyan is a company listed on a recognized stock exchange. Its financial statements for the year ended 31 December 20X7 showed earnings per share of CU0.850. On 1 July 20X8 Cyan made a 3 for 1 bonus issue. According to IAS33 Earnings per share, what figure for the 20X7 earnings per will be shown as comparative information in the financial statements for the year ended 31 December 20X8?

A CU0.212

B CU2.550

C CU3.400

D CU0.283

80. The Suhail Company is listed on a recognized stock exchange. At 31 December 2007, the company had $50,000 ordinary shares of $0.25 in issue. Profit before tax for the year was $50,000 and the tax Charge was $12,500. According to IAS33, what is Suhail's basic earnings per share for the year?

A $0.250

B $0.375

C $0.500

D $0.188

81. The Viera Company is listed on a recognized stock exchange. During the year ended 31 December 2007, the company had 5 million ordinary shares of $1 and 500,000 6% irredeemable preference shares of $1 in issue. Profit before tax for the year was $800,000 and the tax charge was $200,000. According to IAS33, what is Viera's basic earnings per share for the year?

A $0.114

B $0.109

C $0.160

D $0.120

82. The Polyphony Company had 100,000 equity shares in issue on 1 January 2007. On 1 July 2007 it issued 20,000 new shares by way of a 1 for 5 bonuses. On 1 October 2007 it issued 28,000 new shares for cash at full market price. When calculating basic earnings per share, how many shares should be divided into the profit after tax, according to IAS33 Earnings per share?

A 100,000

B 117,000

C 148,000

D 127,000

83. Which TWO of the following transactions would be presented in a statement of cash flows, according to IAS7 Statement of cash flows? q Conversion of loans into shares q Loan interest received q Loan interest owed q Proceeds of loan issue.

84. Which ONE of the following items should be presented under Cash flows from investing activities, according to IAS7 Statement of cash flows? q Employee costs q Property revaluation q Redemption of debentures q Development costs capitalized in the period

85. Which ONE of the following items should be presented under Cash flows from financing activities, according to IAS7 Statement of cash flows? q Employee costs q Property revaluation q Redemption of bonds q Development costs capitalized in the period

86. Which ONE of the following items should be presented under Cash flows from operating activities, according to IAS7 Statement of cash flows? q Depletion expenses q Property revaluation q Redemption of debentures q Development costs capitalized in the period

87. Which TWO of the following can be classified as Cash and cash equivalents under IAS7 Statement of cash flows? q Redeemable preference shares due in 180 days q Loan notes q Equity investments qgovernmental securities

88. Which ONE of the following can be classified as Cash and cash equivalents under IAS7 Statement of cash flows? q Redeemable preference shares due in 180 days q Loan notes held due for repayment in 90 days q Equity investments qPPE

89. In accordance with IAS7 Statement of cash flows, and treating it as a nonrecurring event, which classification of the cash flow arising from the proceeds from flood damages disaster settlement would be most appropriate? q Cash flows from operating activities q Cash flows from investing activities q Cash flows from financing activities q does not appear in the cash flow statement

90. In accordance with IAS7 Statement of cash flows, and treating it as a nonrecurring event, which classification of the cash flow arising from the proceeds of sale of a sister company would be most appropriate? q Cash flows from operating activities q Cash flows from investing activities q Cash flows from financing activities q does not appear in the cash flow statement

91. In accordance with IAS7 Statement of cash flows, and treating it as a nonrecurring event, which classification of the cash flow arising from the disposal proceeds of a major item of PPE would be most appropriate? q Cash flows from operating activities q Cash flows from investing activities q Cash flows from financing activities q does not appear in the cash flow statement

92. An entity has declared preference dividends for the year of $14,000 (based on its 7% $2, 00,000 irredeemable preference shares in issue).At the start of the year, there was a balance of $7,000 for preference dividends payable. At the end of the year no amount was owing to preference shareholders in respect of dividends. The preference dividend paid for the year is not simply the $14,000 declared, as this amount needs to be adjusted for any opening and closing balances. What is the amount of dividend paid? q$28,000 q$10,500 q$21,000 q28,500 qNone of the above.

93. An entity has declared preference dividends for the year of $7,000 (based on its 7% $1, 00,000 irredeemable preference shares in issue).At the start of the year, there was a balance of $3,500 for preference dividends payable. At the end of the year no amount was owing to preference shareholders in respect of dividends. The preference dividend paid for the year is not simply the $7,000 declared, as this amount needs to be adjusted for any opening and closing balances. What is the amount of dividend paid? q$14,000 q$10,500 q$11,000 q28,500 qNone of the above.

94. An item of plant was disposed of for cash proceeds of $1,000. The carrying amount of the item of plant at the date of the sale was: $ Cost 3,000 Less: Accumulated depreciation 1,300 carrying amount $1700. A loss of $700 (the difference between the proceeds of $1,000 and the carrying amount of $1,700) should be recognized in profit or loss and the non-current asset should be removed from the statement of financial position. What is the amount of cash proceeds received should be recognized in the statement of cash flows as an investing activity “proceeds from sale of property, plant and equipment”. q$1000 q$1,700 q$4,300 q$2100 qNone of the above.

95. Extracts from the draft financial statements of Deluxe for the year ended 31 December 2008, are set out below: Revenue $250,000, Cost of sales: Opening inventories $30,000, Purchases $218,000, Closing inventories ($52,000) Cost of sales ($196,000), Gross profit $54,000, Other operating expenses (all cash costs except, for depreciation of $11,000) ($21,600), Profit from operations 32,400.Statement of financial position extracts

31 Dec 2008 31 Dec 2007

Trade receivables $68,000 $23,000

Trade payables 21,600 42,800

What is the amount net cash provided by operating activities for Deluxe for the year ended 31 December 2008 using the direct method? q$2, 05,000 q$2, 39,000 q$10,600 q$44,800 qNone of the above.

96. An item of plant was disposed of for cash proceeds of $1,000. The carrying amount of the item of plant at the date of the sale was: Cost $3,000, Accumulated depreciation 1,300, Carrying amount 1,700. What amount should be recognized in profit or loss q$1,000 q$3,000 q$1,300 q$2,300 q700qNone of the above.

97. An item of plant was disposed of for cash proceeds of $3,000. The carrying amount of the item of plant at the date of the sale was: Cost $9,000, Accumulated depreciation 3,900, Carrying amount 5,100. What amount should be recognized in the operating activities of cash flow statement q$3,000 q$9,000 q$3,900 q$12,000 q$2,100 qNone of the above.

98. Which ONE of the following items should be presented under Cash flows from investing activities, according to IAS7 Statement of cash flows? qIncome tax expenses q PPE revaluation q Redemption of debentures q Dividend received qnone

99. Which ONE of the following items should be presented under Cash flows from investing activities, according to IAS7 Statement of cash flows? q Finance costs q land revaluation q Redemption of bonds q interest received qSale of PPE

100. Which ONE of the following items should be presented under Cash flows from financing activities, according to IAS7 Statement of cash flows? q Employee costs q Property revaluation q Payment of non-current interest bearing borrowings q Development costs capitalized in the period qnone of the above.

101. Which ONE of the following items should be presented under Cash flows from operating activities, according to IAS7 Statement of cash flows? qLoss on sale of old assets q Property revaluation q Redemption of debentures q Development costs capitalized in the period. qNone of the above.

102. Which TWO of the following can be classified as Cash and cash equivalents under IAS7 Statement of cash flows? q Redeemable preference shares due in 180 days qcommercial securities q Equity investments q short term deposit.

103. In accordance with IAS7 Statement of cash flows, and treating it as a nonrecurring event, which classification of the cash flow arising from the purchase of a separate business would be most appropriate? q Cash flows from operating activities q Cash flows from investing activities q Cash flows from financing activities q does not appear in the cash flow statement

104. In accordance with IAS7 Statement of cash flows, and treating it as a nonrecurring event, which classification of the cash flow arising from the disposal proceeds of a major item of machinery would be most appropriate? q Cash flows from operating activities q Cash flows from investing activities q Cash flows from financing activities q does not appear in the cash flow statement

105. Which TWO of the following should be taken into account when determining the cost of inventories per IAS2 Inventories? qStorage costs of part-finished goods q cash discounts qRecoverable purchase taxes qAdministrative costs qNone of the above.

106. According to IAS2 Inventories, which TWO of the following should be accounted for in the cost of an item of inventory? qMaterial wasted due to a machine breakdown q Import duties on shipping of inventory inwards q Storage costs of finished goods q Trade discounts received on purchase of inventory

107. How should import duties be dealt with when valuing inventories at the lower of cost and net realizable value (NRV) according to IAS2 Inventories? q Added to cost q Ignored q Deducted in arriving at NRV q Deducted from cost qnone of the above.

108. The Coronet Company has a cost card in relation to an item of goods manufactured as follows: Materials $72; Storage costs of finished goods $18; Delivery to customer’s $4 Irrecoverable purchase taxes $6. According to IAS2 Inventories, at what figure should the item be valued in inventory? q$88 q$78 q$98 q$94 qNone of the above.

109. The Caret Company has a cost card in relation to an item of goods manufactured as follows: Materials $75; Storage costs of finished goods $10; Delivery to customer’s $5 Irrecoverable purchase taxes $10. According to IAS2 Inventories, at what figure should the item be valued in inventory? q$88 q$85 q$98 q$94 qNone of the above.

110. The Marmite Company has partially-completed inventory located in its factory, to which the following estimates relate: Cost per unit: Production costs incurred to date 3,900; Production costs to complete 4,000; Transport costs to customer 700; Future selling costs 1,000; Selling price 7,800. According to IAS2 Inventories, what is the net realizable value of Marmot’s inventory? q$2,100 q$2,800 q$400 q$100 q None of the above.

110. The Lorgnette Company has a cost card in relation to an item of goods manufactured as follows: Materials $82; Storage costs of partly finished goods $10; Delivery to customer’s $10 Irrecoverable purchase taxes $10. According to IAS2 Inventories, at what figure should the item be valued in inventory? q$88 q$102 q$98 q$94 qNone of the above.

111. Which ONE of the following terms best describes the removal of an asset from an entity's statement of financial position? q Derecognizing q Impairment q Write-off q Depreciation qNone of the above.

113. Which ONE of the following items should be presented under Cash flows from operating activities, according to IAS7 Statement of cash flows? q Profit on sale of machinery q Property revaluation q Redemption of debentures q Interest expenses. qNone of the above.

114. Which two of the following items should be presented under Cash flows from operating activities, according to IAS7 Statement of cash flows? q Interest received q Property revaluation q Redemption of debentures q derecognizing. qNone of the above.

115. Which TWO of the following can be classified as Non-Cash investing and financing activities under IAS7 Statement of cash flows? q Issue of bonus share q Loan notes held due for repayment in 90 days q Equity investments q conversion of bonds into capital. qNone of the above.

116. Which one of the following can be classified as non cash charges under IAS7 Statement of cash flows? q Redeemable preference shares due in 180 days q amortization expenses q dividend paid q a bank overdraft qNone of the above.

117. Which ONE of the following statements best describes 'residual value'? q The estimated net amount currently obtainable if the asset were at the end of its useful life qThe present value of estimated future cash flows expected to arise from the continuing use of the asset and from its ultimate disposal qThe amount at which the asset could be exchanged between knowledgeable, willing parties in an arm's length transaction q The amount of cash or cash equivalents that could currently be obtained by selling the asset in an orderly disposal

118. Which ONE of the following terms best describes the cost (or an amount substituted for cost) of an asset less its residual value? qRevalued amount q carrying amount q Recoverable amount qDepreciable amount

119. Which ONE of the following statements best describes the carrying amount of an asset? qThe cost (or an amount substituted for cost) of the asset less its residual value q The amount at which the asset is recognized in the statement of financial position after deducting any accumulated depreciation and accumulated impairment losses qThe higher of the assets net selling price and its value in use qThe fair value of the asset at the date of a revaluation less any subsequent accumulated impairment losses

120. Which ONE of the following statements best describes the term 'depreciation'? qThe systematic allocation of an asset's cost less residual value over its useful life qThe removal of an asset from an entity's statement of financial position qThe amount by which the recoverable amount of an asset exceeds its carrying amount qThe amount by which the carrying amount of an asset exceeds its recoverable amount

121. Are the following statements regarding the cost of an asset true or false, according to IAS16 Property, plant and equipment?

(1) The cost includes cash equivalents paid to acquire an asset.

(2) The cost includes the fair value of any non-monetary consideration given to acquire an asset.

Statement (1) Statement (2)

qFalse False

q False True

q True False

qTrue True

122. Which of the following terms best describes the systematic allocation over its useful life of the cost of an asset, or other amount substituted for cost, less its residual value? qDepreciation qDerecognizing qImpairment q Value in use

123. Which ONE of the following terms best describes the amount at which an asset could be exchanged between knowledgeable, willing parties in an arm's length transaction? qFair value q Value in use qResidual value qRealizable value

124. Which TWO of the following statements are correct per IAS16 Property, plant and equipment? qAssets are depreciated even if their fair value exceeds their carrying amount q Land and buildings are accounted for separately, even when acquired together qA non-current asset acquired as the result of an exchange of assets is not recognized qA gain on disposal of a non-current asset is classified as revenue

125. According to IAS16 Property, plant and equipment, which TWO of the following items should be capitalized into the cost of property, plant and equipment? qCost of excess materials resulting from a purchasing error qCost of testing whether the asset works correctly q Initial operating losses whilst demand builds up qCost of preparing the site for installation

126. Under the principles of IAS16 Property, plant and equipment, which TWO of the following should be included in the cost of an item of property, plant and equipment? q Initial delivery and handling costs qApportioned general overhead costs q Costs of training staff on the new asset qInstallation and assembly costs

127. Which TWO of the following disclosures must be made under IAS16 Property, plant and equipment? q The existence and amounts of restrictions on title qA narrative discussion of future capital expenditure plansq The disposal proceeds of each major asset sold in the period q The measurement bases used for determining the gross carrying amount

128. Which ONE of the following statements regarding depreciation is true, according to IAS16 Property, plant and equipment? qAn asset must be depreciated from the date of its purchase to the date of sale qThe annual depreciation charge should be constant over the life of the asset qThe total cost of an asset must eventually be depreciated qIf the carrying amount of an asset is less than the residual value, depreciation is not charged

129. Under IAS16 Property, plant and equipment, which TWO of the following costs relating to non-current assets should be capitalized? qReplacement of a building's roof every 15 years qMaintenance of an asset on a three-monthly basis qInstallation and assembly costs qReplacement of small spare parts annually

130. The Charcoal Company is purchasing a second-hand polishing machine from a competitor who has gone bankrupt. It will incur the following costs: Agreed price to be paid to vendor $8,000 Dismantling the machine at its current location $400, Transportation to Charcoal's factory $350, Machine refurbishment costs prior to re-installation $175, Re-installation $125. Under IAS16 Property, plant and equipment, the total included in non-current assets in respect of the machine should be q $8,875 q$9,050 q$8,125 q$8,000

131. The Plaice Company acquired a new filing machine, the list price of which was $49,000. The supplier allowed a trade discount of $1, 700 off the list price. On delivery, the cost of installing the machine in its desired location was $450. According to IAS16 Property, plant and equipment, at what cost should the filing machine be measured in the financial statements of Plaice? q $47,750 q $49,000 q $49,450 q$47,300

132. The Tanager Company purchased a boring machine on 1 January 2001 for $81,000. The useful life of the machine is estimated at 3 years with a residual value at the end of this period of $6,000. During its useful life, the expected units of production from the machine are:2001: 12,000 units; 2002: 7,000 units; 2003: 5,000 units What should be the depreciation expense for the year ended 31 December 2002, using the most appropriate depreciation method permitted by IAS16 Property, plant and equipment? q$27,000 q$21,875 q $23,625 q$25,000

133. The Lamprey Defense Company acquired an aero plane in 2005. At the time of acquisition, the cost of the jet frame was $4.6million and the additional cost of the engine was $600,000. In 2008, the engine was replaced with a new one costing $1, 100,000. At the time of replacement, the accumulated depreciation to date on the jet Frame was $1,750,000 and on the engine was $400,000. Using the principles outlined in IAS16 Property, plant and equipment, what amount should be derecognized at the date of replacement? q$200,000 q Nil q $600,000 q $1,100,000

134. The Mateo Company acquired a drilling machine on 1 October 2005 at a cost of $25, 000 and depreciated it at 25% per annum on a straight line basis. On 1 October 2007, $5,000 was spent on an upgrade to the machine in order to improve its efficiency and increase the inflow of economic benefits over the machine's remaining life. According to IAS16 Property, plant and equipment, what depreciation expense should be recognized in profit or loss for the year ended 30 September 2008 q $8,750 q$6,250 q$7,500 q $11,250

135. The Marled Company purchased a non-current asset with a useful life of 12 years on 1 January 2007 for $6,500,000. At its year end of 31 December 2007, the amount the company would receive from the disposal of the asset if it was already of the age and in the condition expected at the end of its useful life was estimated at $700, 000. Inclusive of inflation the actual amount expected to be received on disposal was estimated at $900, 000. What should be the depreciation charge under IAS16 Property, plant and equipment, for the year ended 31 December 2007? q $483, 333 q $466, 667 q Nil q $541, 667.

136. Are the following statements true or false, according to IAS38 Intangible assets? (1) The cost of an asset should include the amount of any cash or cash equivalents paid to acquire the asset. (2) The cost of an asset should include non-cash consideration measured at fair value.

Statement (1) Statement (2)

q False False

q False True

q True False

q True True

137. Are the following statements in relation to development true or false, according to IAS38 Intangible assets? (1) The products being developed should have already been put into commercial production or use. (2) Development involves the application of research findings.

Statement (1) Statement (2)

q False False

q False True

qTrue False

q True True

138. According to IAS38 Intangible assets, which TWO of the following criteria are relevant in determining the useful life of an intangible asset? qObsolescence q The amortization period q The expected usage of the asset q The residual value of the asset

139. According to IAS38 Intangible assets, amortization of an intangible asset with a finite useful life should commence when (select one answer) q it is first recognized as an asset q it is probable that it will generate future economic benefits q it is available for use q the costs can be identified with reasonable certainty

140. A brand name that was acquired separately should initially be recognized, according to IAS38 Intangible assets, at (select one answer) qrecoverable amount qeither cost or fair value at the choice of the acquirer q fair value q cost

141. According to IAS38 Intangible assets, the recognition criteria for an intangible asset include which TWO of the following conditions? q It must be measured at cost qits cost can be measured reliably qIt is probable that future economic benefits will arise from its use q It is an integral part of the business

142. Are the following statements are true or false, according to IAS38 Intangible assets? (1) Intangible assets cannot be treated as having an indefinite useful life. (2) Intangible assets with a finite useful life should be measured at cost and tested annually for impairment.

Statement (1) Statement (2)

qFalse False

q False True

qTrue False

q True True

143. Are the following statements true or false, according to IAS38 Intangible assets? (1) Expenditure during the research phase of a project may sometimes be capitalized as an intangible asset. (2) Expenditure during the development phase of a project may sometimes be capitalized as an intangible asset.

Statement (1) Statement (2)

qFalse False

q False True

qTrue False

q True True

144. Are each of the following factors relevant, according to IAS38 Intangible assets, in determining the annual amortization expense on an intangible asset? (1) The cost. (2) The amortization method.

Factor (1) Factor (2)

q Not relevant Not relevant

q Not relevant Relevant

q Relevant Not relevant

q Relevant Relevant

145. Are the following statements true or false, according to IAS38 Intangible assets? (1) Intangible assets acquired in a business combination should only be recognized if they have already been recognized by the entity being acquired. (2) Intangible assets acquired in a business combination should not be recognized separately from goodwill.

Statement (1) Statement (2)

qFalse False

q False True

qTrue False

q True True

146. The Whimper Company has two products in its inventory which have costs and selling prices per unit as follows:

Product X Product Y

Selling price 400 600

Materials and conversion costs 300 360

General administration costs 60 160

Selling costs 120 140

Profit/(loss) (80) (60)

At the year end, the manufacture of items of inventory has been completed but no selling costs have yet been incurred. According to IAS2 Inventories, should these products be carried in Whimper’s statement of financial position at cost or net realizable value (NRV) rule?

Product X Product Y

A NRV NRV

B NRV Cost

C Cost NRV

D Cost Cost

147. The charcoals Company is purchasing a second-hand polishing machine from a competitor who has gone bankrupt. It will incur the following costs: Agreed price to be paid to vendor $24,000 Dismantling the machine at its current location $1,200, Transportation to Charcoal's factory $1050, Machine refurbishment costs prior to re-installation $525, Re-installation $375. Under IAS16 Property, plant and equipment, the total included in non-current assets in respect of the machine should be q $8,875 q$27,150 q$8,125 q$24,000 qNone of the above.

148. The Plaice Company acquired a new filing machine, the list price of which was $59,000. The supplier allowed a trade discount of $1, 700 off the list price. On delivery, the cost of installing the machine in its desired location was $450. According to IAS16 Property, plant and equipment, at what cost should the filing machine be measured in the financial statements of Plaice? q $57,750 q $49,000 q $49,450 q$47,300 qNone of the above.

149. The Tanager Company purchased a boring machine on 1 January 2001 for $91,000. The useful life of the machine is estimated at 3 years with a residual value at the end of this period of $6,000. During its useful life, the expected units of production from the machine are: 2001: 12,000 units; 2002: 9,000 units; 2003: 5,000 units What should be the depreciation expense for the year ended 31 December 2002, using the most appropriate depreciation method permitted by IAS16 Property, plant and equipment? q$27,000 q$31,875 q $23,625 q$25,000 qNone of the above.

150. The Lamprey Defense Company acquired an aero plane in 2005. At the time of acquisition, the cost of the jet frame was $5.6million and the additional cost of the engine was $800,000. In 2008, the engine was replaced with a new one costing $1, 200,000. At the time of replacement, the accumulated depreciation to date on the jet Frame was $1,850,000 and on the engine was $500,000. Using the principles outlined in IAS16 Property, plant and equipment, what amount should be derecognized at the date of replacement? q$200,000 q Nil q $3,00,000 q $1,100,000 qNone of the above.

151. The Mateo Company acquired a drilling machine on 1 October 2005 at a cost of $25, 000 and depreciated it at 25% per annum on a straight line basis. On 1 October 2007, $5,000 was spent on an upgrade to the machine in order to improve its efficiency and increase the inflow of economic benefits over the machine's remaining life. According to IAS16 Property, plant and equipment, what depreciation expense should be recognized in profit or loss for the year ended 30 September 2008 q $8,750 q$6,250 q$7,500 q $11,250 qNone of the above.

152. The Marled Company purchased a non-current asset with a useful life of 12 years on 1 January 2007 for $7,500,000. At its year end of 31 December 2007, the amount the company would receive from the disposal of the asset if it was already of the age and in the condition expected at the end of its useful life was estimated at $800, 000. Inclusive of inflation the actual amount expected to be received on disposal was estimated at $900, 000. What should be the depreciation charge under IAS16 Property, plant and equipment, for the year ended 31 December 2007? q $5, 83, 333 q $5, 66, 667 q Nil q $6, 41, 667. qNone of the above.