FR Financial Reporting Questions and Answers

Julie plc has one associated company, Andrew Ltd, in which Julie plc holds 40% of the issued 100,000 $1 ordinary shares. The financial controller of Julie plc is unsure how the following transactions should be reflected in the consolidated statement of cash flows and has asked you to confirm the overall impact.

(1) In the previous accounting period, Julie plc had made a cash advance of $100,000 to Andrew Ltd. During the current accounting period, Andrew Ltd repaid $30,000 of this cash advance.

(2) During the current accounting period, Andrew Ltd sold an item of property, plant and machinery at its carrying amount for $20,000 cash.

(3) During the current accounting period, Andrew Ltd paid a dividend of 20c per share.

In accordance with IAS 7 Statement of Cash Flows, what is the impact of the above cash transactions on Julie plc's consolidated statement of cash flows for the current accounting period?

In 2012 Fiona Co had a basic EPS of 105c based on earnings of $105,000 and 100,000 ordinary $1 shares. It also had in issue $40,000 15% Convertible Loan Stock which is convertible in two years' at the rate of 4 ordinary shares for every $5 of stock. The rate of tax is 30%. In 2012 gross profit of $200,000 and expenses of $50,000 were recorded, including interest payable of $6,000.

What is the dilution in earnings?

One plc has owned 100% of Ten Ltd and 60% of Six Ltd for many years. At 31 December 2012 the trade receivables and trade payables shown in the individual company statements of financial position were as follows.

One plcTen LtdSix Ltd

$000$000$000

Trade receivable 503040

Trade payable 301520

Trade payable are made up as follows

Amount owning to

One---

Ten 2-4

Six 3--

Other suppliers251516

301520

The intra-group accounts agreed after taking into account the following.

1)An invoice for $3,000 posted by Ten Ltd on 31 December 2012 was not received by One pIc until 2 January 2013

2)A cheque for $2,000 posted by One pIc on 30 December 2012 was not received by Six Ltd until 4 January 2013.

What amount should be shown as trade receivables in the consolidated statement of financial position of One plc for the year ended 31 December 2012?

Jerry Co has a defined benefit plan. At the financial year end, the plan has the following values:

$m

Fair value of plan assets65

Present value of pension obligation52.5

Cumulative unrecognizedactuarial losses2

Present value of refunds from the plan and

reductions in future contributions11.5

What is the value of the pension in the statement of financial position?

Which of the following items would appear in the reconciliation of profit before tax to cash generated from operations in a statement of cash flows prepared in accordance withIAS 7 Statement of Cash Flows?

(i)Increase in provision for warranty costs

(ii)Decrease in income tax payable

(iii) Depreciation charge

(iv) Dividends paid

During the year ended 30 June 2013, Emily plc spent $300,000 on the development of a new range of garden machinery. In order to carry out this work, Emily plc purchased some highlyspecializedequipment on 1 July 2012 at a cost of $100,000. The equipment is expected to have a useful life of five years and is to be depreciated over that period by the straight-line method.

According to IAS 38 Intangible Assets, what is the maximum amount that Emily plc can carry forward as development expenditure as at 30 June 2013?

Kia Co produces cellular phone and first-in first-out (FIFO) method valuation is used for its inventories. At the start of January it had 500 units in inventory. These had cost $30 each. During January, the following transactions took place:

ReceiptsIssues

DateUnitsCost per unitDateUnits

5230$327640

15380$3417450

What is the value of Kia Co’s inventory at the end of January?

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?

Arnold Ltd bought an asset on 1 October 20X1 for $200,000. It was being depreciated over 20 years on the straight-line basis. On 1 October 20X3, the asset was revalued to $270,000. Subsequently, on 30 September 20X7 the asset was classified as held for sale. Its fair value was estimated at $190,000 with costs to sell $5,000.

In accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, what should be the lossrecognizedin the statement of profit or loss for the year ended 30 September 20X7?