CIMA CIMAPRA19-F02-1 Quiz 1 Topic 1 Questions 1-5

Question: 1

When accounting for a finance lease under IAS 17 Leases, which TWO of the following are recognised in the statement of profitor loss?

AFinance cost element of the lease payments

BDepreciationof the leased asset

CLease payments paid

DLease payments payable

ECapital repayment element of the lease payments

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Question: 2

GG's gearing is currently 50% compared to the industry average of 40% (both measured as debt/equity). GG's debt is all in the form of a single bank loan that is repayable in five years' time. The directors of GG are seeking to raise finance for a new project and they are considering an additional bank loan from the same bank.

Which of the following would prevent the bank from lending the finance for the project in the form of a new bank loan?

AA covenant on the existing bank loan that restricts the level of dividend that can be paid.

BA projected decrease in interest cover that would breach a covenant on the existing loan.

CThe revaluation of GG's property that shows an increase in its value since the existing bank loan was taken out.

DA projected lack of profits to be able to claim tax relief on the additional interest arising from the new loan.

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Question: 3

AB, a listed entity, prepared its financial statements to 31 December 20X7, in accordance with international accounting standards.

Which THREE of the following were disclosed as related parties of AB in its financial statements?

AAB's defined benefit pension plan.

BThe wife of the Managing Director of AB, to whom AB sold a motor vehicle in the year to 31 December 20X7.

CST, an entity that was jointly established by AB and CD, and that is accounted for as a joint venture in AB's financial statements to 31 December 20X7.

DAB's bank that provides more than 60% of the entity's loan finance.

EAB's main supplier, GH, who supplies more than 70% of AB's goods for manufacture.

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Question: 4

An entity has declared a dividend of $0.12 a share. The cum dividend market price of one equity share is $1.40.

Assuming a dividend growth rate of 7% a year, what is the entity's cost of equity?

A17.0%

B8.6%

C16.2%

D9.4%

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Question: 5

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:

AA$75,758.

BA$66,667.

CA$150,000.

DA$132,000.

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CIMA CIMAPRA19-F02-1 Quiz:1 Topic:1 Questions:1-5