CPA FR - Financial Reporting Exam
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Total 80 questions
Question #6 (Topic: )
The following statements relate to intangible assets.
1) An intangible asset should beamortizedon a systematic basis over the asset's useful life.
2) Internally generated goodwill may be carried in the statement of financial position if the
value can be determined with reasonable certainty.
3) Internally generated brands can never berecognizedas intangible assets.
Which of the above statements are consistent with IAS 38 Intangible Assets?
1) An intangible asset should beamortizedon a systematic basis over the asset's useful life.
2) Internally generated goodwill may be carried in the statement of financial position if the
value can be determined with reasonable certainty.
3) Internally generated brands can never berecognizedas intangible assets.
Which of the above statements are consistent with IAS 38 Intangible Assets?
A. 1 and 2 only
B. 1 and 3 only
C. 2 only
D. 3 only
Answer: D
Question #7 (Topic: )
Tradus buys a non-current asset on three months credit on 15 December 2012 for 90,000
Roubles. Rates are as follows:
DateRate
15 December 2012$1:10 Roubles
31 December 2012$1:9 Roubles
What are the journal entries to record the transaction at year end?
Roubles. Rates are as follows:
DateRate
15 December 2012$1:10 Roubles
31 December 2012$1:9 Roubles
What are the journal entries to record the transaction at year end?
A. DrIncome statement$1,000 CrPayable$1,000
B. DrPayable$1,000 CrIncome statement$1,000
C. DrRetained earnings$1,000 CrIncome statement$1,000
D. DrReceivable$1,000 CrRetained earnings$1,000
Answer: A
Question #8 (Topic: )
Wolf plc acquired 80,000 $1 ordinary shares in Fox plc on 1 April 20X5 at a cost of
$77,000. Fox plc's retained earnings at that date were $50,000 and its issued ordinary
share capital was $100,000.
What is the amount of the gain on a bargain purchase arising on the acquisition?
$77,000. Fox plc's retained earnings at that date were $50,000 and its issued ordinary
share capital was $100,000.
What is the amount of the gain on a bargain purchase arising on the acquisition?
A. $35,000
B. $43,000
C. $63,000
D. $73,000
Answer: B
Question #9 (Topic: )
Sin plc is considering purchasing Lam Ltd, a subsidiary company of Jim Co. The result of
such decision from the directors of Sin plc was because Lam Ltd produces a technically
advanced computer microchip but unfortunately neither Lam Ltd nor Jim Co was
successful. However, the director of marketing, Mr. Schulze Kidder, presented some
factual areas in the board meeting and requested for further investigation before any final
decisions are made. The areas are:
(i)The terms of trading between the entities to assess how much of the subsidiarys trade is
recurring and whether it is on fair market terms.
(ii)The existence of debt between the parties.
(iii)The level of dividends payable as the subsidiary may have paid large dividends to the
parent which may not be sustainable post sale.
Which of the above area(s) is / are not relevant when considering purchase of a subsidiary
company like Lam Ltd?
such decision from the directors of Sin plc was because Lam Ltd produces a technically
advanced computer microchip but unfortunately neither Lam Ltd nor Jim Co was
successful. However, the director of marketing, Mr. Schulze Kidder, presented some
factual areas in the board meeting and requested for further investigation before any final
decisions are made. The areas are:
(i)The terms of trading between the entities to assess how much of the subsidiarys trade is
recurring and whether it is on fair market terms.
(ii)The existence of debt between the parties.
(iii)The level of dividends payable as the subsidiary may have paid large dividends to the
parent which may not be sustainable post sale.
Which of the above area(s) is / are not relevant when considering purchase of a subsidiary
company like Lam Ltd?
A. (ii) only
B. (i) and (ii) only
C. (i), (ii) and (iii)
D. All are relevant in purchasing a subsidiary
Answer: D
Question #10 (Topic: )
2,000 share options granted to each of 3 directors on 1 January 2010 subject to them being
still employed as at 31 December 2012, the date of vesting.
The fair value of each option on 1 January 2010 was $10.
Options will vest when the share prices reach $14.
The share price as at 31 December 2010 was $8 and is not anticipated to rise in the next
two years and only 2 directors will still be with the company as at 31 December 2012.
What is the appropriate treatment for share options in the financial statement for the year
ended 31 December 2010?
still employed as at 31 December 2012, the date of vesting.
The fair value of each option on 1 January 2010 was $10.
Options will vest when the share prices reach $14.
The share price as at 31 December 2010 was $8 and is not anticipated to rise in the next
two years and only 2 directors will still be with the company as at 31 December 2012.
What is the appropriate treatment for share options in the financial statement for the year
ended 31 December 2010?
A. Cost and equity balance in financial statement at 31 December 2012 is $20,000
B. Cost and equity balance in financial statement at 31 December 2012 is $30,000
C. Cost and equity balance in financial statement at 31 December 2012 is $13,333
D. Cost and equity balance in financial statement at 31 December 2012 is $18,667
Answer: C
