Cima F2 Practice Test

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Pass CIMA F2 - Advanced Financial Reporting exam
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• QUESTION NO 1
• Which THREE of the following would typically
  indicate a finance lease?
• An asset with a useful life of ten years is being
  leased for ten years.
• The lessor is responsible for the annual
  maintenance of the asset.
• The lessee has the option to buy the asset at the
  end of the lease for 1.
• The lease contract for an asset includes an
  upgrade to the asset every two years.
• A leased asset has been specifically modified for
  the lessee's use.
• Answer A, C, E
• QUESTION NO 2
• AB acquired 90 of the equity of YZ on 31
  December 20X2. On the same date YZ acquired 60
  of the equity shares of VW for 750,000. AB has
  no other subsidiaries. The following information
  regarding YZ and VW was available

What amount will AB include in its consolidated
statement of financial position in respect of
non controlling interest at 31 May 20X6?
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A. 816,400 B. 741,400 C. 840,600 D.
811,000 Answer B QUESTION NO 3 ST acquired 75
of the 2 million 1 equity shares of CD on 1
January 20X3, when the retained earnings of CD
were S3,550,000. CD has no other reserves. ST
paid 5,600,000 for the shares in CD and the non
controlling interest was measured at its fair
value of S1,400,000 at acquisition. At 1 January
20X3, the fair value of CD's net assets were
equal to their carrying amount, with the
exception of a building. This building had a fair
value of 1,000,000 in excess of its carrying
amount and a remaining useful life of 25 years on
1 January 20X3. At 31 December 20X5, the
retained earnings of ST and CD were 8,500,000
and 5,250,000 respectively. What is the value
of goodwill to be included in the consolidated
statement of financial position of ST as at 31
December 20X5? A. 450,000 B. 1,450,000 C.
950,000 D. 570,000 Answer A
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• QUESTION NO 4
• The dividend yield of ST has fallen in the year
  to 31 May 20X5, compared to the previous year.
• The share price on 31 May 20X4 was 4.50 and on
  31 May 20X5 was 4.00. There were no issues of
  share capital during the year.
• Which of the following should explain the
  reduction in the dividend yield for the year to
  31 May 20X5 compared to the previous year?
• The dividend paid in the year was reduced in
  order to pay for new assets.
• Surplus cash was used to pay a special dividend
  in addition to the normal dividend in the year.
• The profit for the year fell significantly and
  the dividend per share stayed the same.
• To compensate investors for the reduction in
  share price a higher dividend per share was
  paid.
• Answer A QUESTION NO 5
• CD commenced a construction contract on 1 April
  20X9. The contract value was agreed at 100,000.
  CD had incurred 40,000 costs to date and
  estimated costs to completion were 50,000. At
  the year ended 31 December 20X9 this contract
  was estimated to be 60 complete. CD adopted the
  provisions of IAS 11 Construction Contracts when
  preparing its financial statements for the year
  to 31 December 20X9.
• What value should be included in CD's profit for
  the year ended 31 December 20X9 in respect of
  this contract? Give your answer to the nearest
  whole number. ?
• Answer 6000, 6

5

• QUESTION NO 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?
• Shares in another entity held for short term
  trading purposes fall within this category.
• Transaction costs in relation to these assets are
  expensed to profit or loss on acquisition.
• Transaction costs in relation to these assets are
  added to the initial cost of the asset on
  acquisition.
• The gain or loss on the subsequent measurement of
  these assets is recorded within other
  comprehensive income.
• The gain or loss on the subsequent measurement of
  these assets is recorded within profit for the
  year.
• Once the asset has been subsequently measured to
  fair value an impairment review is undertaken.
• Answer A, B, E

6
QUESTION NO 7 MN had the following profit
figures for the year ended 30 November 20X6 MN's
statement of financial position at 30 November
20X6 included the following
Calculate return on capital employed for MN for
the year ended 30 November 20X6. Give your
answer to one decimal place. ? Answer 15.9,
15.91, 15.90, 16, 16.0 QUESTION NO 8 GH granted
100 share options to each of its 1,000 employees
on 1 January 20X8. The fair value of each option
was 7 on 1 January 20X8 and had risen to 8 at
31 December 20X8. Which of the following
statements represents the treatment that GH
adopted to account for the related expense of
these share options in its financial statements
for the year ended 31 December 20X8, in
accordance with IFRS 2
7

• Share-based Payments?
• The expense was measured using the fair value of
  7 and the credit entry was to equity.
• The expense was measured using the fair value of
  7 and the credit entry was to liabilities.
• The expense was measured using the fair value of
  8 and the credit entry was to equity.
• The expense was measured using the fair value of
  8 and the credit entry was to liabilities.
• Answer A
• QUESTION NO 9
• CD acquired 100 of the equity share capital of
  FG for cash consideration of Kr1,200,000 on 1
  January 20X7.
• Retained earnings of FG at the date of
  acquisition was Kr800,000. CD operates from
  Country A and its functional and presentation
  currency is . FG is located and trades
  throughout Country B and its functional currency
  is the Krona (Kr).
• CD has no other subsidiaries. Goodwill had not
  suffered any impairment to date. Summarised data
  from the statements of financial position for
  both entities at 31 December 20X7 is presented
  below

8

• Calculate the exchange difference arising on the
  retranslation of goodwill on the acquisition in
  the consolidated statement of financial position
  of CD at 31 December 20X7. Give your answer to
  the nearest 000.
• Answer 14, 14000, 13636, 13637
• QUESTION NO 10
• LK acquired 100 of the equity shares of TU on 1
  January 20X4. LK disposed of 60 of TU for
• 2,400,000 on 30 September 20X4. The sale
  proceeds reflected the fair value of TU's shares
  on that date.
• The remaining 40 shareholding gave LK the
  ability to exercise significant influence over
  the activities of TU. TU reported profit of
  1,800,000 for the year ended 31 December 20X4
  and this accrued evenly throughout the year.
• Calculate the investment in associate that will
  be presented in LK's consolidated statement of
  financial position as at 31 December 20X4.
• Give your answer to the nearest whole '000.
  000
• Answer 1780, 1780000
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