On 1 January 20X6 AB, a listed entity, had 10,000,000 $1 ordinary shares in issue. On 1 April 20X6 AB issued 3,000,000 $1 ordinary shares at their full market price. AB's profit was reported as $1,100,000 after charging corporate income tax of $500,000.
Place the correct values for profit and weighted average number of shares in the boxes below that will be used to calculate AB's earnings per share for the year to 31 December 20X6.
BC are currently seeking to establish an accounting policy for a particular type of transaction.
There are four alternative ways in which this transaction can be treated. Each treatment will have a different outcome on the financial statements as follows:
• Treatment one means that the financial statements will be easier to prepare.
• Treatment two will give a fair representation of the transaction in the financial statements.
• Treatment three will maximise the profit figure presented in the financial statements.
• Treatment four means that the financial statements will be more easily understood by shareholders.
Which accounting treatment should BC adopt?
LM is a car dealer that is supplied inventory by car manufacturer SQ. Trading between LM and SQ is subject to a contractual agreement. This agreement states the following:
• Legal title of the cars remains with SQ until they are sold by LM to a third party.
• Upon notification of sale to a third party by LM, SQ raises an invoice at the price agreed at the original date of delivery to LM.
• LM has the right to return any car at any time without incurring a penalty.
• LM is responsible for insuring all of the cars on its property.
When considering how these cars should be accounted for, which THREE of the following statements are true?
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.
$ ?
Which of the following taken independently would explain the reduction in the profits as highlighted by the Chairman's press release?
Following the impairment review of the investment in BC, what would be the carrying value of this associate in KL's consolidated statement of financial position at 31 December 20X9?
GH's financial statements show the following:
What is the value of the dividend received from the associate to be included in GH's consolidated statement of cash flows for the year?
Give your answer to the nearest $000.
$ ? 000
EF have just paid a dividend of 20 cents a share and the current share price is $3.75. EF regularly reinvests 40% of its profit for the year and generates a return on reinvested funds of 12%.
The cost of equity for EF using the dividend valuation model is:
Ratios have been produced below for EF for the year to 31 March:
Which TWO of the following could explain the movement in both gearing and ROCE?
AB and CD are separate entities that prepare financial statements to 31 May using international accounting standards. AB and CD provide technical support services to the financial services industry and operate in the same country. The financial statements are identical except for the following:
• AB purchased all operating equipment, paying $100,000, using a 5 year bank loan. The useful life of the equipment was 5 years.
• CD signed an operating lease agreement for all operating equipment for 5 years paying $20,000 per year.
Both entities charge all expenses relating to the equipment to cost of sales.
From the information provided, which of the following ratios would be reliably comparable for AB and CD?
