QUESTION: 85

Which THREE of the following are principles identified by the Code of Ethics?

Professional competence and expertise
Professional behavior
Understandability
Professional competence and due care
Confidentiality
Neutral

Answer(s): B,D,E

Mr K is being pressured by his manager to change figures in his report so that it will improve his manager's bonus.
His manager has promised Mr K a promotion if he agrees to do this.
What threats is Mr K facing?

Intimidation and familiarity
Familiarity and self-interest
Self-review and advocacy
Intimidation and self-interest

Answer(s): D

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QUESTION: 87

UV has recently been having cash flow issues due to its credit customers paying after the credit period they have been granted.
UV is looking into factoring the receivables to a factoring company on a recourse basis to improve its cash flow.
Which TWO of the following will UV encounter as a result of employing the factoring company?

No irrecoverable debts
Reduction in payables days
Reduction in the need for management control
Reduction in bank overdraft charges
Increase in cash sales

Answer(s): C,D

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QUESTION: 88

On 31 March 20X1 OP decided to sell a property. On that date this property was correctly classified as held for sale in accordance with IFRS 5 Non-Current Assets Held For Sale And Discontinued Operations.
In the draft financial statements of OP for the year ended 31 October 20X1 this property has been included at its fair value, which was $520,000 lower than its carrying value. This has resulted in a charge to profit or loss, the result of which is that the draft financial statements show a loss of $450,000 for the year to 31 October 20X1.
When the management board of OP reviewed the draft financial statements it was unhappy about the loss and decided that the property should be reclassified as a non-current asset and reinstated to its original value, despite the fact that its plans for the property had not changed.
In accordance with the ethical principle of professional competence and due care, which THREE of the following statements explain how this property should be accounted for in the financial statements of OP for the year ended 31 October 20X1?

The property should be treated as a non-current asset held for sale from 31 March 20X1.
The property should be treated as a non-current asset held for sale from 1 November 20X1.
The property should not be depreciated after 31 March 20X1.
The impairment of $520,000 should be shown as an expense in the statement of profit or loss.
The property should be depreciated until 31 October 20X1.
The property impairment should not be recorded until the sale has completed.

Answer(s): A,C,D

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