QUESTION: 29

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:

$174 million
$190 million
$150 million
$134 million

Answer(s): A

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QUESTION: 30

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

Negotiating with trade suppliers for a bulk purchase discount
Offering increased credit to customers
Reducing administrative expenses by 10%
Writing down the value of obsolete inventories

Answer(s): A

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QUESTION: 31

Which of the following would limit the effectiveness of analysis performed on the operating profit margins of two separate entities with the same total revenue over a12 month period?

Different accounting estimates in respect of depreciation of property, plant and equipment.
Different approaches to allocating expenses to cost of sales, administration expenses and distribution costs.
Different interest rates on loan finance available to the entities.
Different pattern of monthly revenues caused by seasonality.

Answer(s): A

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QUESTION: 32

On 1 January 20X1 KL acquired 75% of the equity shares of PQ. Goodwill arising on the acquisition was $480,000. On 31 December 20X3 KL sold the full investment of PQ to XY Group for $2,000,000. On this date the net assets of PQ were $1,340,000 and the non-controlling interests stood at $410,000.
What is the gain on disposal to be recognised in the consolidated statement of profit or loss of KL?

$590,000
$180,000
$660,000
$635,000

Answer(s): D

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QUESTION: 29

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QUESTION: 32

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