ACCA F7 Practice and Revision kit edition for exams up to ...

ACCA F7 Practice and Revision kit ? edition for exams up to June 2018 Errata

Question 24 ? The question should state: An aircraft requires a planned overhaul every three years at a cost of $5,000.

Question 91 ? The correct answer should be B ? Recognising revenue when a performance obligation is satisfied.

Qn 96 ? There are TWO correct answers here. Work invoiced to date as a % of total contract price is also correct.

Qn 102 ? Option B should be changed to: `The price paid to acquire the asset'. This will be the correct answer to the question.

Qn 142 ? there is an error in the part (a). The answer should be:

(a) Goodwill on acquisition of Sentinel (1/10/X0)

Consideration (((160,000 ? 75%) ? 2/3) ? $4) Fair value of non-controlling interest

Fair value of net assets: Shares Other equity reserve (2,200 ? (400 6/12)*) Retained earnings (158,000 + (66,000 x 6/12)

Goodwill

$'000

160,000 2,000

191,000

$'000 320,000 100,000 420,000

(353,000) 67,000

*Note. Of the $400,000 loss on the investment in equity instruments, half (6/12) is pre-acquisition and goes to the goodwill calculation. The remainder is post-acquisition and goes to the consolidated statement of profit or loss.

Qn 146 ? the correct answer is D: No effect on group inventory. The transaction will be posted as DR Share of profit of associate/CR Investment in associate.

Qn 148 ? the date of the dividend payment should be 1 September 20X3.

Qn 171 ? the payment in advance of $700,000 should be added to the right-of-use asset rather than deducted from the liability. The correct answer is therefore D and the working is:

Initial liability Interest 6% Balance 31.12.X6 Payment

Interest 6% Balance 31.12.X7

$'000 3,300

198 3,498 (700) 2,798

168 2,966

Current Non-current

700 2,266 2,966

Qn 175 ? the correct answer is C. The working is:

Initial liability Interest 10% Payment Balance 30 September 20X4 Interest 10%

$'000 25,000 2,500 (6,000) 21,500 2,150

Qn 179 ? the answer is $124,000. The working is:

Lease interest (340,000 x 10%) Depreciation ((340,000 + 90,000)/5) Short-term lease (18,000 x 2/9)

$'000 34,000 86,000

4,000 124,000

Qn 180 ? the deposit of $120,000 should be added to the right-of-use asset rather than deducted

from the liability. The answer is $36,384. The working is:

$'000

Initial liability

360,000

Interest 12%

43,200

Payment

(100,000)

Bal 31.12.X6

303,200

Interest 12%

36,384

Qn 181 The initial measurement of the lease liability in the question should be $250,000, not $350,000.

Qn 182 ? the answer is correct. The working should show:

$'000

Lease liability

250

Initial payment

100

Initial direct costs

20

Dismantling costs

15

Lease incentives

(7)

378

Qn 184 ? the answer is correct. The working should show:

$'000

Opening liability 1.4.X7

250,000

Interest to 30.9.X7 (250,000 x 10% x 6/12)

12,500

Balance 30.9.X7

262,500

Interest to 1.4.X8 (250,000 x 10% x 6/12)

12,500

1.4.X8 payment

(100,000)

Balance due 30.9.X8

175,000

Question 253 ? the question should refer to `profit before interest and tax' rather than `net profit'

Question 256 ? the calculation of ROE is incorrect as it has been based on profit before tax, rather than profit after tax. The correct ratios are: 20X1: 3,000/9,500 = 31.6% 20X2: 2,500/7,250 = 34.5%

Qn 279 ? the correct answer is $10,000 received, calculated as:

B/f current B/f deferred Charge for the year Received (balance) C/f (current + deferred)

$ 30,000 160,000 10,000 200,000

Mixed MCQ bank:

Q2 - The question and answer should refer to PBIT margin, not net profit margin.

Q15 ? Option D should state; legal action commenced by a supplier in respect of goods delivered after the year end.

Mixed OTQ bank:

Q2 ? the correct answer is: Continue to recognise the receivables and treat the $1.8 million received as a loan.

Q6 ? the question should be: What is the total consideration transferred for the investment in Plank which will appear in the goodwill calculation at 31 December 20X4?

Q8 ? the question should be: What is the total amount which will be charged to profit or loss in respect of this closure?

Q14 ? the correct answer is $195,000 (30,000 x $6.50)

ACCA Study text ? edition for exams up to June 2018

Practice question bank

Question 12 ? Panther

The calculation of NCI (W2) does not take account of the cancellation of interest on the intragroup

loan. The working should be:

PFY

TCI

$'000 $'000

Profit/TCI for the year (610 x 6/12) / (790 x 6/12)

305

395

Less PUP (W3)

(10)

(10)

Add back intragroup interest

20

20

Additional depreciation on fair value adjustment

(5)

(5)

310

400

NCI share (40%)

124

160

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