1. At 1 January 20X0 Casey had government grants held in deferred income of $900,000.

During the year, Casey

released $100,000 to the statement of profit or loss. At 31 December 20X0, the remaining deferred income
balance was $1,100,000.
Select the TWO amounts to be included in the statement of cash flows for Casey.
Amortisation of government grant Receipt of grant
____________ __________
A) Increase of 100,000 to cash generated from operations
B) Cash received from grant $300,000 in investing activities
C) Decrease of 100,000 to cash generated from operations
D) Cash received from grant $100,000 in investing activities

2. The following information has been taken or calculated from Fowler’s financial statements for the year ended 30
September 20X4.
Fowler’s cash cycle at 30 September 20X4 is 70 days. Its inventory turnover is six times.
Year-end trade payables are $230,000.
Purchases on credit for the year were $2 million.
Cost of sales for the year was $1.8 million.
What is Fowler’s trade receivables collection period as at 30 September 20X4?
$______________ days

3. Quartile is in the jewellery retail business which can be assumed to be highly seasonal. For the year ended 30
September 20X4, Quartile assessed its operating performance by comparing selected accounting ratios with those
of its business sector average as provided by an agency. You may assume that the business sector used by the
agency is an accurate representation of Quartile’s business.
Which TWO of the following circumstances may invalidate the comparison of Quartile’s ratios with those of
the sector average?
A In the current year, Quartile has experienced significant rising costs for its purchases
B The sector average figures are compiled from companies whose year-end is between 1 July 20X4 and 30
September 20X4
C Quartile does not revalue its properties, but is aware that others in this sector do
D During the year, Quartile discovered an error relating to the inventory count at 30 September 20X3. This error was
correctly accounted for in the financial statements for the current year ended 30 September 20X4

4. Rogers has just completed their financial statements for the year ended 30 June 20X6. They are reporting a net
profit of $1,250,000 for the current year, and they have $1 million 50 cent shares in issue. The current market
price of Rogers' shares is $3.50.
Rogers has paid total dividends during the year ended 30 June 20X6 of $1,500,000.
What is the Price Earnings (P/E) ratio of Rogers for the year ended 30 June 20X6?
_____________ times
What is the dividend yield (to one decimal place) for the year ended 30 June 20X6?
______________ %

5. Which of the following definitions is not included within the definition of control per IFRS 10 Consolidated
Financial Statements?
A Having power over the investee
B Having exposure, or rights, to variable returns from its investment with the investee
C Having the majority of shares in the investee
D Having the ability to use its power over the investee to affect the amount of the investor’s returns

6. Which TWO of the following statements about provisions are true?

A Future operating losses cannot be provided for
B Changes in provisions should be applied retrospectively, adjusting the prior year financial statements
C Provisions should be accounted for prudently, reflecting the maximum that could possibly be paid out
D Provisions should be discounted to present value if the effect of the time value of money is material

7. CN started a three-year contract to build a new university campus on 1 April 20X4. The contract had a fixed price
of $90 million. CN will satisfy the performance obligation over time. CN incurred costs to 31 March 20X5 of $77
million and estimated that a further $33 million would need to be spent to complete the contract.
CN measures the progress of contracts using work completed compared to contract price.
At 31 March 20X5, a surveyor valued the work completed to date at $63 million.
Select the correct amounts to be shown in revenue and cost of sales in the statement of profit or loss for the
year ended 31 March 20X5?
Revenue _____ Cost of sales__________
A) $63 million B) $77 million C) $57 million D) $83 million

8. In relation to IAS 21 The Effects of Changes in Foreign Exchange Rates, which of the following statements
are true?
(i) Exchange gains and losses arising on the retranslation of monetary items are recognised in other comprehensive
income in the period.
(ii) Non-monetary items measured at historical cost in a foreign currency are not retranslated at the reporting date.
(iii) An intangible asset is a non-monetary item.
A All of the above
B (ii) and (iii) only
C (i) and (iii) only
D (i) and (ii) only

9. Wonder issued $10 million 5% loan notes on 1 January 20X9, incurring issue costs of $400,000. The loan notes
are redeemable at a premium, giving them an effective interest rate of 8%.
What expense should be recorded in relation to the loan notes for the year ended 31 December 20X9?
$______________ ,000

10. For which category of financial instruments are transaction costs excluded from the initial value, and
instead expensed to profit or loss?
A Financial liabilities at amortised cost
B Financial assets at fair value through profit or loss
C Financial assets at fair value through other comprehensive income
D Financial assets at amortised cost

11. The following trial balance relates to Xtol at 31 March 20X4:

$000 $000
Revenue (note (i)) 490,000
Cost of sales 290,600
Distribution costs 33,500
Administrative expenses 36,800
Loan note interest (note (iv)) 2,500
Bank interest 900
Land at cost (note (ii)) 75,000
Plant and equipment at cost (note (ii)) 155,500
Accumulated depreciation at 1 April 20X3:
plant and equipment 43,500
Inventory at 31 March 20X4 61,000
Trade receivables 63,000
Trade payables 32,200
Bank 5,500
Equity shares of $1 each (note (iii)) 66,000
Share premium 15,000
Retained earnings at 1 April 20X3 15,200
5% convertible loan note (note (iii)) 50,000
Current tax (note (iv)) 3,200
Deferred tax (note (iv)) 4,600

722,000 722,000
The following notes are relevant:
(i) Revenue includes $20 million cash sales made through Xtol’s retail outlets during the year on behalf of Francais.
Xtol, acting as agent, is entitled to a commission of 10% of the selling price of these goods. By 31 March 20X4, Xtol
had remitted to Francais $15 million (of the $20 million sales) and recorded this amount in cost of sales.

(ii) Plant and equipment is depreciated at 12½% per annum on the reducing balance basis. All
amortisation/depreciation of non-current assets is charged to cost of sales.

(iii) On 1 April 20X3, Xtol issued a 5% $50 million convertible loan note at par. Interest is payable annually in
arrears on 31 March each year. The loan note is redeemable at par or convertible into equity shares at the option of
the loan note holders on 31 March 20X6. The interest on an equivalent loan note without the conversion rights would
be 8% per annum.

The present values of $1 receivable at the end of each year, based on discount rates of 5% and 8%, are:
5% 8%
End of year 1 0.95 0.93
2 0.91 0.86
3 0.86 0.79
(iv) The balance on current tax represents the under/over provision of the tax liability for the year ended 31 March
20X3. A provision of $28 million is required for current tax for the year ended 31 March 20X4 and at this date the
deferred tax liability was assessed at $8.3 million.

(v) The equity shares and share premium balances in the trial balance above include a fully subscribed 1 for 5 rights
issue at $1.60 per share which was made by Xtol on 1 October 20X3. The market value of Xtol’s shares was $2.50 on
1 October 20X3.

Required:
(a) Prepare the Xtol’s statement of profit or loss for the year ended 31 March 20X4.
(b) Prepare the statement of financial position for Xtol as at 31 March 20X4.
(c) Calculate the basic earnings per share of Xtol for the year ended 31 March 20X4.

Note: Answers and workings (for parts (a) to (b)) should be presented to the nearest $1,000. A statement of
changes in equity is not required.
The following mark allocation is provided as guidance for this question:
(a) 7 marks
(b) 8 marks
(c) 5 marks (Total: 20 marks)

12. On 1 January 20X4, Plastik acquired 80% of the equity share capital of Subtrak. The consideration was satisfied
by a share exchange of two shares in Plastik for every three acquired shares in Subtrak. At the date of acquisition,
shares in Plastik and Subtrak had a market value of $3 and $2.50 each respectively. Plastik will also pay cash
consideration of 27.5 cents on 1 January 20X5 for each acquired share in Subtrak. Plastik has a cost of capital of
10% per annum. None of the consideration has been recorded by Plastik.
Below are the extracts from the draft financial statements of both entities.

Extracts from the statements of profit or loss and other comprehensive income for the
year ended 30 September 20X4
Plastik Subtrak
$000 $000
Revenue 62,600 30,000
Cost of sales (45,800) (24,000)
Finance costs (200) (nil)
Statements of financial position as at 30 September 20X4
Assets Plastik Subtrak
Non-current assets $000 $000
Property, plant and equipment 18,700 13,900
Investments: 10% loan note from Subtrak (note (ii)) 1,000 nil
19,700 13,900
Current assets 9,000 4,000
Total assets 28,700 17,900
Equity and liabilities
Equity
Equity shares of $1 each 10,000 9,000
Revaluation surplus (note (i)) 2,000 nil
Retained earnings 6,300 3,500
18,300 12,500
Non-current liabilities
10% loan notes (note (ii)) 2,500 1,000
Current liabilities
Trade payables (note (iv)) 7,900 4,400
Total equity and liabilities 28,700 17,900

The following information is relevant:

(i) At the date of acquisition, the fair values of Subtrak’s assets and liabilities were equal to their carrying
amounts with the exception of Subtrak’s property which had a fair value of $4 million above its carrying amount. For
consolidation purposes, this led to an increase in depreciation charges (in cost of sales) of $100,000 in the
postacquisition period to 30 September 20X4. Subtrak has not incorporated the fair value property increase into its
entity financial statements.

The policy of the Plastik group is to revalue all properties to fair value at each year end. On 30 September 20X4, the
increase in Plastik’s property has already been recorded, however, a further increase of $600,000 in the value of
Subtrak’s property since its value at acquisition and 30 September 20X4 has not been recorded.

(ii) On 30 September 20X4, Plastik accepted a $1 million 10% loan note from Subtrak.

(iii) Sales from Plastik to Subtrak throughout the year ended 30 September 20X4 had consistently been $300,000
per month. Plastik made a mark-up on cost of 25% on all these sales. $600,000 (at cost to Subtrak) of Subtrak’s
inventory at 30 September 20X4 had been supplied by Plastik in the post-acquisition period.

(iv) Plastik had a trade receivable balance owing from Subtrak of $1.2 million as at 30 September 20X4. This
differed to the equivalent trade payable of Subtrak due to a payment by Subtrak of $400,000 made in September
20X4 which did not clear Plastik’s bank account until 4 October 20X4. Both entities have overdrafts rather than
positive cash balances.

(v) Plastik’s policy is to value the non-controlling interest at fair value at the date of acquisition. For this purpose
Subtrak’s share price at that date can be deemed to be representative of the fair value of the shares held by the non-
controlling interest.

(vi) Assume, except where indicated otherwise, that all items of income and expenditure accrue evenly throughout
the year. Subtrak’s profit for the year ended 30 September 20X4 was $2 million.
Required:
(a) Prepare extracts from Plastik’s consolidated statement of profit or loss for the year ended 30 September
20X4 for:
(i) revenue (ii) cost of sales (iii) finance costs. (5 marks)

(b) Prepare the consolidated statement of financial position for Plastik as at 30 September 20X4. (15 marks)
(Total: 20 marks)