F2 Free Exam Questions & Answers PDF Updated on Dec-2021
Latest F2 Exam Dumps Recently Updated 212 Questions
NEW QUESTION 103
CD has 200,000 equity shares with a current market value of $2.50 each. The annual dividend of $0.50 a share is about to be paid.
CD also has redeemable debt with a nominal value of $100,000.
This is currently trading at $90 for each $100 of nominal value.
The cost of equity is 20% and the post tax cost of debt is 6%.
What is CD's weighted average cost of capital?
Give your answer in % to one decimal place. ? %
Answer:
Explanation:
17.4, 17.42, 17.43, 17.40
NEW QUESTION 104
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:
Which of the following is the correct application of IAS 21 The Effects of Changes in Foreign Exchange Rates in translating FG's statement of financial position into the presentation currency of CD for consolidation purposes at 31 December 20X7?
- A. * Goodwill at historic rate.
* Assets and liabilities at closing rate. - B. * Monetary assets and liabilities at closing rate.
* Non monetary assets and liabilities at historic rate. - C. * Goodwill at closing rate.
* Assets and liabilities at closing rate. - D. * Monetary assets and liabilities at historic rate.
* Non monetary assets and liabilities at closing rate.
Answer: C
NEW QUESTION 105
UV entered into a five year non-cancellable operating lease for an asset two years ago. Lease payments are settled annually in arrears.
At the year end, UV no longer requires this leased asset as they have decided to discontinue the product line that it was used for.
At this date UV had made two out of the five lease payments.
Which of the following statements about the unavoidable lease payments is true in accordance with IAS
37 Provisions, Contingent Liabilities and Assets?
- A. The amount of the unavoidable lease payments should be ignored in the financial statements.
- B. A provision should be recognised for the unavoidable lease payments with a corresponding charge to other comprehensive income.
- C. The amount of the unavoidable lease payments should be disclosed in the financial statements with no corresponding accounting entry.
- D. A provision should be recognised for the unavoidable lease payments with a corresponding charge to profit or loss.
Answer: D
NEW QUESTION 106
FG has a weighted average cost of capital of 12% based on its existing:
* level of gearing of 30% (measured as debt/(debt + equity)); and
* business operations.
This would be used as an appropriate discount factor to assess which of the following significant projects?
- A. A project in an industry in which FG does not currently operate, funded 30% with debt and 70% with equity.
- B. A project to extend FG's existing operations, funded 30% with debt and 70% with equity.
- C. A project in an industry in which FG does not currently operate, funded wholly by equity.
- D. A project to extend FG's existing operations, funded wholly by debt.
Answer: B
NEW QUESTION 107
Ratios have been produced below for EF for the year to 31 March:
Which TWO of the following could explain the movement in both gearing and ROCE?
- A. A revaluation upwards on the head office property on 1 April 20X2.
- B. A debt issue on 31 March 20X3.
- C. A bank loan to purchase new machinery on 31 March 20X3.
- D. A rights issue on 31 March 20X3.
- E. A bonus issue of shares on 1 April 20X2.
Answer: A,D
NEW QUESTION 108
MS Group's total profit for period on their consolidated income statement is £31,000. This includes adjusting for their share of joint venture JV2. Calculate the share of joint venture MS Group received based on the following information.
MS operating profit £41,000
Dividend from JV2 £5,000
Finance cost £3,000
Tax £11,000
- A. £9,000
- B. £1,000
- C. £5,000
- D. £6,000
- E. £4,000
- F. £7,000
Answer: E
NEW QUESTION 109
An investor owns 75 shares values at $1.50 each. If the shares increase in value to $1.75, how much money will the investor have made through this capital gain?
- A. $187.50
- B. $131.25
- C. $112.50
- D. $26.25
- E. $18.75
- F. $15
Answer: E
NEW QUESTION 110
Which of the following would cause a deferred tax balance to be included in the statement of financial position for an entity?
- A. Impairment of goodwill that arose on the acquisition of a subsidiary entity.
- B. The acquisition of plant and equipment a year ago where the tax depreciation rate is different to the accounting depreciation rate.
- C. Expenses in the statement of profit or loss which are not allowable for tax creating a permanent difference.
- D. The acquisition of land for which there is no tax depreciation.
Answer: B
NEW QUESTION 111
XY owned 80% of the equity share capital of AB at 1 January 20X5. XY disposed of 20% of AB's equity share capital on 31 December 20X5 for $200,000. The non controlling interest was measured at
$140,000 immediately prior to the disposal.
What was the amount of the credit to retained earnings that XY will process in respect of this disposal when it prepares its consolidated financial statements at 31 December 20X5?
- A. $60,000
- B. $140,000
- C. $80,000
- D. $200,000
Answer: A
NEW QUESTION 112
RS has issued an instrument with a nominal value of $1 million, at a discount of 2.5%, and a coupon rate of 6%. The terms of the issue are that the instrument must either be redeemed at par, at the option of the holder, in three years' time, or alternatively converted into equity shares in RS.
The characteristics of this instrument taken as a whole indicates that it would be classifed as which of the following?
- A. Compound instrument
- B. Discounted instrument
- C. Equity instrument
- D. Debt instrument
Answer: A
NEW QUESTION 113
Which of the following statements is true in respect of ST's gross profit margin based on the information given?
- A. Gross profit margin has increased as a result of management negotiating a premium price for the contract with the new customer.
- B. Gross profit margin has reduced due to the increased cost of the new contract.
- C. Economies of scale have been achieved from increased revenues resulting in a reduction in the gross profit margin.
- D. The associate's gross profit margin is greater than ST's leading to an overall increase in ST's margin.
Answer: A
NEW QUESTION 114
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:
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 $000.
Answer:
Explanation:
14, 14000, 13636, 13637
NEW QUESTION 115
JKL measure gearing as debt:equity, based on book values. At 31 December 20X5 the ratio is 2:3 and JKL would like this to be 2:5.
Which of the following transactions individually would achieve this?
- A. Issue of redeemable preference shares at par.
- B. Revaluation of investment property to an increased fair value.
- C. Repayment of a 6 year term loan with the issue of 5 year redeemable debentures.
- D. Bonus issue from the share premium account.
Answer: B
NEW QUESTION 116
A group presents its financial statements in A$.
The goodwill of its only foreign subsidiary was measured at B$100,000 at acquisition. There have been no impairments to this goodwill.
Exchange rates (where A$/B$ is the number of B$'s to each A$) are as follows:
The value of goodwill to be included in the group's statement of financial position in respect of its foreign subsidiary for the year ended 31 December 20X4 is:
- A. A$75,758.
- B. A$150,000.
- C. A$132,000.
- D. A$66,667.
Answer: A
NEW QUESTION 117
Which of the following is NOT an example of an unconsolidated structured entity as defined in IFRS12 Disclosure of Interests in Other Entities?
- A. A post-employment benefit plan
- B. A securitisation vehicle
- C. An investment fund
- D. An asset-backed financing scheme
Answer: A
NEW QUESTION 118
ST has in issue unquoted 7% debentures which were issued at par and are redeemable in 1 year's time.
These debentures cannot be traded. The yield to maturity on these debentures has been calculated at
5%.
Which of the following would explain why the yield to maturity is lower than the coupon?
- A. The debentures will be redeemed at a discount to their par value.
- B. The debentures will be redeemed at their par value.
- C. ST will benefit from the tax relief on the interest payment.
- D. The market value of the debentures must be higher than their par value.
Answer: A
NEW QUESTION 119
Information from the financial statements of an entity for the year to 31 December 20X5:
The gearing ratio calculated as debt/equity and interest cover are:
- A. gearing of 16% and interest cover of 4.
- B. gearing of 15% and interest cover of 4.
- C. gearing of 16% and interest cover of 6.
- D. gearing of 15% and interest cover of 6.
Answer: D
NEW QUESTION 120
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