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CIMA Advanced Financial Reporting Sample Questions:
1. 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.
$ ?
2. What is the total comprehensive income attributable to the non-controlling interest that will be presented in GHI's consolidated statement of changes in equity for the year ended 31 December 20X4?
A) $595,000
B) $575,000
C) $95,000
D) $190,000
3. FG and RS operate in the same retail sector within the same country and are of a similar size. The following ratios have been calculated based on the financial statements for the year ended 30 September 20X4:
Which of the following factors would limit the usefulness of these ratios as a basis for assessing the comparative performances of FG and RS?
A) RS sold a piece of land for a sum much greater than its carrying value.
B) RS has a higher level of borrowings and associated finance costs.
C) FG has a higher level of deferred tax liabilities than RS.
D) RS operates at the low margin end of the market whilst FG operates at the high margin end.
4. An entity undertakes an issue of new debt which has the effect of reducing the entity's weighted average cost of capital (WACC).
Which of the following would best explain why the WACC will have fallen?
A) The new debt is being used to replace existing debt that had the same cost.
B) The risk to the shareholders has reduced leading to a fall in the cost of equity.
C) The new debt is being used to replace existing debt that had a lower cost.
D) The entity was 100% equity financed prior to the issue of the debt.
5. AB, a listed entity, prepared its financial statements to 31 December 20X7, in accordance with international accounting standards.
Which THREE of the following were disclosed as related parties of AB in its financial statements?
A) AB's defined benefit pension plan.
B) AB's main supplier, GH, who supplies more than 70% of AB's goods for manufacture.
C) ST, an entity that was jointly established by AB and CD, and that is accounted for as a joint venture in AB's financial statements to 31 December 20X7.
D) AB's bank that provides more than 60% of the entity's loan finance.
E) The wife of the Managing Director of AB, to whom AB sold a motor vehicle in the year to 31 December 20X7.
Solutions:
| Question # 1 Answer: Only visible for members | Question # 2 Answer: C | Question # 3 Answer: D | Question # 4 Answer: D | Question # 5 Answer: A,C,E |
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