CIMA F2 Exam
Advanced Financial Reporting (Page 7 )

PQ and WX are similar sized entities and operate in the same industry within Country X . Both operate from a single warehouse and have similar levels of non current asset resources. The following ratios have been calculated at 31 October 20X8:



If considered individually, which of the following would limit the usefulness of these ratios in assessing the comparative financial performances of PQ and WX?

RS is a listed entity that has no subsidiaries although its Finance Director is also a director of TU, an unconnected entity.
It is preparing its financial statements to 30 September 20X6.
Which of the following substantial transactions must be disclosed in these financial statements in accordance with IAS 24 Related Party Disclosures?

AB and FG incorporated on 1 January 20X1 in the same country and had similar investment in net assets. Both entities are financed entirely by equity. In the year to 31 December 20X1 both entities generated the same volume of sales.
Which of the following, taken individually, would explain why AB's return on capital employed ratio was lower than that of FG?

AB acquired its one subsidiary, CD, on 1 January 20X1. At this date the fair value of CD's property, plant and equipment was found to be $40 million higher than its carrying value. The relevant items had a remaining estimated useful life of 10 years from the date of acquisition. At 31 December 20X4 AB and CD presented property, plant and equipment of $100 million and $50 million respectively in their individual financial statements. The value of property, plant and equipment presented in AB's consolidated statement of financial position at 31 December 20X4 is:

Which of the following actions would be most likely to improve an entity's gross profit margin?