Pass the CIMA Management F2 Questions and answers with ExamsMirror

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?

GH owned 70% of the equity share capital of XY at 1 January 20X6.  GH acquired a further 20% of XY's equity share capital on 31 December 20X6 for $430,000.  Non controlling interest was measured at $600,000 immediately prior to the 20% acquisition.  

Which of the following amounts will GH debit to non controlling interest when the 20% acquisition is adjusted for in its consolidated financial statements at 31 December 20X6?

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?

PQ entered into a $300,000 contract on 1 January 20X9 to provide computer hardware to WX with support services for the 3 years from the date of installation.

The contract is made up as follows: 

The hardware was delivered to WX on 1 January 20X9 and installed immediately. WX paid the full value of the contract on 30 June 20X9.

What journal entry records PQ's revenue from this contract for the year ended 31 December 20X9?

RS is a listed entity that has no subsidiaries although its Finance Director is also a director of TU, an unconnected entity.

It is preparing its financial statements to 30 September 20X6. 

Which of the following substantial transactions must be disclosed in these financial statements in accordance with IAS 24 Related Party Disclosures?

Which of the following statements is true in respect of ST's gross profit margin based on the information given?

WX acquired 20% of the equity share capital of MN for $135 million in 20X5. WX acquired a further 40% of the equity share capital of MN for $400 million on 1 October 20X8 when the fair value of the net assets of MN were $800 million.

The fair value of the initial 20% investment in MN was $175 million at 1 October 20X8. There has been no impairment of the investment in MN. WX uses the proportion of net assets method to value non-controlling interest at acquisition.

Calculate the goodwill arising on the acquisition of MN.

Give your answer to the nearest $ million.

 $ ?  million

KL issued $100,000 of 6% convertible debentures at par on 1 January 20X7. These debentures are redeemable at par or can be converted into 5 shares for each $100 of nominal value of debentures on 31 December 20X9.

The share price on 1 January 20X7 is $18 a share. The share price is expected to grow at a rate of 7% a year.

The expected redemption value for each $100 nominal value of debentures on the date of conversion is:

Information from the financial statements of RST for the year ended 30 April 20X9 is as follows:

At 30 April 20X9 the ordinary shares are trading at $4.75.

What is the price earnings (P/E) ratio for RST at 30 April 20X9?

GH acquired 3,000,000 of the 12,000,000 equity shares of JK. All shares carried equal voting rights and no other single shareholder of JK held more than 10% of the equity shares. GH has the power to participate in the financial and operating policy decisions but not control them.

Based on the information provided above, how would GH's investment in JK be accounted for in its consolidated financial statements?