QB Questions Flashcards
If there is an opening credit balance on tax payable, is this indicative of an over provision or under provision from prior year?
Over provision
True or false:
A discontinued operation must have been disposed of by the end of the reporting period
False
True or false:
A discontinued operation must be a separate major line of business or geographical area of operation
True
True or false:
A discontinued operation must be clearly distinguished operationally and for financial reporting purposes
True
Does the following classify as a discontinued operation?:
A UK division whose operations are being terminated and transferred to another UK division producing the same product
Could be a discontinued operation as a geographical area of operations is being sold
Does the following classify as a discontinued operation?:
A division which is the sole operator in South America has its business being sold externally to the group
Not a discontinued operation as a a separate line of business is not being terminated- production is shifting from one division to another
Does the following classify as a discontinued operation?:
Activity W (part of division Z) has its operations closed down. W’s results have not been reported separately
Not discontinued as it cannot be separately distinguished for financial reporting purposes
If there is additional depreciation arising from a revaluation, is this added or deducted to retained earnings?
Added
Does the following classify as a related party relationship?
Albert plc and James plc each have a board containing five directors, four of whom are common. There are no common shareholdings
Yes; together, there is a clear majority of the board, and they can control both of them
Does the following classify as a related party relationship?
James plc has two associated companies, Hector Ltd and Frances Ltd
James plc had significant influence but not control. Hector ltd and Frances ltd would not normally be regarded as related parties of each other
Does the following classify as a related party relationship?
Giprock ltd controls Jasper plc. Giprock ltd also exerts influence over Kendal plc
Kendal plc is an associate of Giprock ltd and Jasper plc is a member of the Giprock Group, so Kendal plc and Jasper plc are related parties per IAS 24.9
Should stamp duty be capitalised as part of the cost of a PPE asset, per IAS 16?
Yes
If given two loans of different rates and asked to calculate capitalised borrowing costs, how should the loans be treated?
Use a weighted average
True or false
Each significant part of an item of PPE must be depreciated separately
True
Information is a _______ ______ of the performance and position of the entity if it sis complete, neutral and free from error
Faithful representation
In accordance with IAS38, how should the following type of expenditure be treated in the financial statements:
Tangible assets acquired in order to provide additional secure facilities for research and development activities
Capitalised under IAS16
In accordance with IAS38, how should the following type of expenditure be treated in the financial statements:
Legal costs in connection with the registration of a patent
Capitalise as part of the cost of an internally generated intangible
In accordance with IAS38, how should the following type of expenditure be treated in the financial statements:
Salaries of personnel solely engaged in finalising a new product
Capitalised as part of the cost of an internally generated intangible
In accordance with IAS38, how should the following type of expenditure be treated in the financial statements:
Costs of searching for possible alternative products
Written off to PL as research expenditure
Would the following be included in the cost of finished goods inventories?
Expenses paid to the firm’s lorry-drivers for transporting parts from the distribution centres to customers
No
Depreciation is charged based on the shorter of lease term and ______ life
Useful
Right-of-use asset relating to rights retained equation: the initial measurement of a right-of-use asset in respect of a sale and leaseback transaction is as follows:
Right-of-use asset = carrying amount * PVFLP / ____
FV
Information is _______ if it can influence the economic decisions of users. This is achieved if the information has a confirmatory or _____ value (or both).
Relevant, predictive
How does IFRS 16 requiring a separate disclosure for right-of-use assets aid understandability of financial statements?
Because it clearly distinguishes them from owned assets
For a contract to constitute a lease, the contract must cover a defined period of ______, or be based upon the production of the asset, such as the number of units produced
Time
Where are equity dividends recognised?
In the statement of changes in equity
True or false
Equity dividends declared after the year-end are a liability at the end of the reporting year so are recognised
False
True or false
Dividends on redeemable preference shares are classed as a liability and are recognised in the profit and loss as a finance cost
True
Show the journal entry for the following:
100,000 of equity shares are reacquainted at a price of £2.15 per share
DR Treasury shares: 215,000
CR cash: 215,000
A customer in a foreign country is experiencing cash flow problems. Their currency has weakened against yours.
For the loans you have given them, what two primary risks are there?
- Credit risk (the risk that the entities whom it has advanced a loan will be unable to repay the money)
- Market risk (the risk of an exchange loss on the transaction, for here)
