CPA FR - Financial Reporting Exam
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Total 80 questions
Question #11 (Topic: )
MacDougal Cereal sold 100 barrels of Cereal No 1 to the Scots Bank, on 30 June 2013 for
$100 per barrel. When Cereal No 1 is mature in two years, it will be worth $500 per barrel.
MacDougal retains custody of the barrels. The sale contract contains a clause requiring
MacDougal to repurchase the barrels on 30 June 2015 for $150 per barrel.
How should this transaction berecognized?
$100 per barrel. When Cereal No 1 is mature in two years, it will be worth $500 per barrel.
MacDougal retains custody of the barrels. The sale contract contains a clause requiring
MacDougal to repurchase the barrels on 30 June 2015 for $150 per barrel.
How should this transaction berecognized?
A. $100 per barrelrecognizedas sales revenue in 2013 and $150 as the value of inventory in 2015.
B. Record $100 per barrel cash received from the bank as loan andrecognizebarrels as inventory. $50 per barrel should be accounted for as loan interest over the two year period.
C. Only record $50 per barrel as the value of inventory in 2015.
D. $100 per barrelrecognizedas sales revenue in 2013 and $500 as the value of inventory in 2015.
Answer: B
Question #12 (Topic: )
Sparrow plc owns a building, currently carried in its accounting records at $800,000. It has
agreed to exchange this building for a building owned by Turner Ltd. The building currently
owned by Sparrow plc has a fair value of $1 million. The building currently owned by Turner
Ltd has a fair value of $1.1 million. Sparrow plc has agreed to pay the legal costs of the
transfer which amount to $10,000.
According to IAS 16 Property, Plant and Equipment, at what value should the building
currently owned by Turner Ltd be recorded initially in Sparrow plc's accounting records?
agreed to exchange this building for a building owned by Turner Ltd. The building currently
owned by Sparrow plc has a fair value of $1 million. The building currently owned by Turner
Ltd has a fair value of $1.1 million. Sparrow plc has agreed to pay the legal costs of the
transfer which amount to $10,000.
According to IAS 16 Property, Plant and Equipment, at what value should the building
currently owned by Turner Ltd be recorded initially in Sparrow plc's accounting records?
A. $800,000
B. $1 million
C. $1.1 million
D. $990,000
Answer: B
Question #13 (Topic: )
Worcester Ltd had a balance of $2 million as its total equity at 1 January 2012. During the
year ended 31 December 2012 the company:
Revalued property with a cost of $2 million and accumulated depreciation of $1,600,000 to
$1.5 million
Issued shares with a nominal value of $500,000 at a premium of $100,000
Made a profit for the year of $750,000
In accordance with IAS 1 Presentation of Financial Statements, what is the closing balance
on total equity in Worcester Ltd's statement of changes in equity for the year ended 31
December 2012?
year ended 31 December 2012 the company:
Revalued property with a cost of $2 million and accumulated depreciation of $1,600,000 to
$1.5 million
Issued shares with a nominal value of $500,000 at a premium of $100,000
Made a profit for the year of $750,000
In accordance with IAS 1 Presentation of Financial Statements, what is the closing balance
on total equity in Worcester Ltd's statement of changes in equity for the year ended 31
December 2012?
A. $4,350,000
B. $4,450,000
C. $4,200,000
D. $3,850,000
Answer: B
Question #14 (Topic: )
The summarised statements of financial position of Track plc and Way plc at 31 December
2012 were as follows:
Track plcWay plc
$000 $000
Total assets 60,000 29,000
Share capital 20,000 10,000
Retained earnings 24,000 4,000
Equity 44,000 14,000
Current liability 16,000 15,000
Total equity and liabilities 60,000 29,000
On 1 January 2013 Track pIc bought all the share capital of Way plc for $17,000,000 in
cash. The carrying amounts of Way plc's assets are considered to be fair values. The
amount of retained earnings to be included in the consolidated statement of financial
position as at 1 January 2013 is __________.
2012 were as follows:
Track plcWay plc
$000 $000
Total assets 60,000 29,000
Share capital 20,000 10,000
Retained earnings 24,000 4,000
Equity 44,000 14,000
Current liability 16,000 15,000
Total equity and liabilities 60,000 29,000
On 1 January 2013 Track pIc bought all the share capital of Way plc for $17,000,000 in
cash. The carrying amounts of Way plc's assets are considered to be fair values. The
amount of retained earnings to be included in the consolidated statement of financial
position as at 1 January 2013 is __________.
A. $21,000,000
B. $24,000,000
C. $25,000,000
D. $28,000,000
Answer: B
Question #15 (Topic: )
Relied Ltd owns a factory with an opening carrying value of $60m. At 1 January 2012 the
directors decided to sell the property, but have continued to use the factory for
manufacturing during the year. As they have made no positive moves towards disposal,
they are well aware that the property is not held for sale.
They wish to classify the building as an investment property and recognise a loss of $10m
in the income statement based on a market value at 31 December 2012 of $50m. It is
estimated that the factory has a remaining life of 20 years and the estimated cost to sells
would be $50,000. Relied Ltd applies the cost model to their other factories.
How should be the factoryrecognizedin the statement of Relied Ltd?
directors decided to sell the property, but have continued to use the factory for
manufacturing during the year. As they have made no positive moves towards disposal,
they are well aware that the property is not held for sale.
They wish to classify the building as an investment property and recognise a loss of $10m
in the income statement based on a market value at 31 December 2012 of $50m. It is
estimated that the factory has a remaining life of 20 years and the estimated cost to sells
would be $50,000. Relied Ltd applies the cost model to their other factories.
How should be the factoryrecognizedin the statement of Relied Ltd?
A. Fair value model should be applied with a loss of $10mrecognizedin the statement of other comprehensive income and $50m in the statement of financial position as at 31 December 2012.
B. Cost model should be applied with a $10m reduction in the revaluation reserve and $57mrecognizedin the statement of financial position as at 31 December 2012.
C. Recognizedunder IAS 16 with a depreciation charge of $3m in the statement of profit or loss and $57m in the statement of financial position as at 31 December 2012.
D. Recognizedunder IFRS 5 property held for sale with $49.95m in the statement of financial position and a charge of $10.05m in the statement of profit or loss for the year ended 31 December 2012.
Answer: C
