Financial Reporting v6.0

IAS 17 Leasesstandardizesthe accounting treatment and disclosure of assets held under lease. IAS 17 Leases requires a lessee tocapitalizea finance lease at the amount of the

Rochester pIc has entered into a fixed price contract for the provision of services to Adele
Ltd. The contract commenced in September 2012 and will be completed in 2013. The contract price is $2 million and costs are recoverable as incurred. At 31 December 2012,
Rochester plc's year ends, costs of $500,000 have been incurred.
The contract has been assessed as 30% complete; however, costs to complete cannot be estimated reliably.
In accordance with IAS 18 Revenue, how much revenue should be included in Rochester plc's statement of comprehensive income for the year ended 31 December 2012 in respect of this contract?

Gene Ltd has the following assets and liabilities at 31 December 2005.
Note$
Fixtures and fittings at carrying amount(1)10,000

Receivables(2)8,000 -

Cash and cash equivalents1,000 -
Payable(5,000)
14,000

Notes -
(1) The fixtures and fittings have been held for three years and had an estimated useful life of six years. If the fixtures and fittings were to be sold on 31 December 2005 they would realise $14,000
(2) If Gene Ltd was to cease trading it is estimated that an allowance against receivables of
$500 would need to be made
At what amount would the net assets be stated in the statement of financial position of
Gene Ltd at 31 December 2005 under the breakup basis?

Veronica plc prepares its financial statements to 31 December. During 2012 Veronica plc made sales of $850,000 and incurred costs of $610,500. At the beginning of 2012 customers owed
$125,500 and at the end of the year they owed $135,400. At the beginning of 2012
Veronica plc owed $45,500 to its suppliers and employees and at the end of the year it owed $35,700.
During 2012 Veronica plc received interest of $14,500 and paid interest of $500.
In accordance with IAS 7 Statement of Cash Flows, what was Veronica plc's net cash from operating activities under the direct method for the year ended 31 December 2012?

Bony plc purchased equipment on 1 April 2010 for $100,000. The equipment was depreciated using the reducing balance method at 25% per annum. Bony plc prepares accounts to 31 March annually. Depreciation was charged up to and including 31 March
2012. At that date, the recoverable amount of this equipment was $42,000.
According to IAS 36 Impairment of Assets, what was the impairment loss on this equipment calculated on 31 March 2012?

Parrot Ltd had the following balances in its accounts at 30 April 2006 and 30 April 2007.
30 April 200630 April 2007
$$

Cash in hand1,0001,100 -
Bank overdraft41,627-

Cash at bank-21,932 -

Long term bank loan50,00025,000 -
In accordance with IAS 7 Statement of Cash Flows, what amount should be shown under net change in cash and cash equivalents in the company's statement of cash flows for the year ended 30 April 2007?

Measurement of the elements of financial position is the process of determining the monetary amounts at which the elements of the financial statements are to berecognizedand carried in the statement of financial position and statement of comprehensive income. There are number of basis of measurement that companies use in preparing financial statements.
Which of the following best explains the current cost accounting?

Harriet Ltd has proposed the following changes to its current accounting practices to be used in its next financial statements.
(i)Motor vehicles have always been depreciated on a straight-line basis. The company has now decided to change to the reducing balance basis as it now believes that this better reflects the consumption of economic benefits.
(ii)In preparing its statement of comprehensive income, Harriet Ltd has previously classified depreciation on motor vehicles as administrative expenses. These depreciation charges are now to be classified under cost of sales as the company now believes that this gives a more reliable and relevant presentation.
According to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors - which, if any, of these changes represent a change in accounting policy?

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 Cos inventory at the end of January?

On 1 July 2012 Verity Ltd entered into a finance lease agreement. The terms of the agreement provided for annual payments of $5,000 on 1 July each year. The asset had a fair value at the inception of the lease of $25,000. $750 of interest in relation to this agreement was paid and charged to the income statement in the year ended 30 June 2013.
In addition to the above transaction, on 1 October 2012 Verity Ltd purchased a machine for cash of $6,500.
In accordance with IAS 7 Statement of Cash Flows, how should the above transactions be reflected in Verity Ltd's statement of cash flows for the year ended 30 June 2013?

According to the IASB's Conceptual Framework for Financial Reporting, which one of the following statements represents the underlying assumption relating to financial statements?

For the year to 31 December 2012, the profit or loss statement of Little Co shows a profit before tax of $150,500 after charging depreciation of $55,000 and interest of $12,200. The company does not hold any inventory and companys policy is not to grant credit to customers. Trade payables at 31 December 2012 were $15,200 greater than the amount owed at 31 December 2011. During the year the taxation liability of $9,500 was paid. No interest was owed at 31 December 2011 and at 31 December 2012.
What should be the Net cash from operating activities in the cash flow statement for the year to 31 December 2012?

POXITplc controls another entity, DOBE Ltd, owning 60% of that company's ordinary share capital. At the group's year end, 31 December 2012, DOBE Ltd included $6,000 in its receivables in respect of goods supplied to POXIT plc. However, the payables of POXITplc included only $4,000 in respect of amounts due to DOBE Ltd. The difference arose because, on 31 December 2012, POXITplc sent a cheque for $2,000 to DOBE Ltd, which was not received by DOBE Ltd until 3 January 2013.
Which of the following sets of consolidation adjustments to current assets and current liabilities is correct?

All of the gains and losses that affect the plan obligation and plan asset must berecognized. The components of defined benefit cost must berecognizedas follows in the statement of profit or loss and other comprehensive income except: