CMKT 1.2

Company X entered into a lease of an item of plant on January1st 20X8. The annual

rentals are $2,500,000 with payment made in arrears. The present value of lease

payment is $8,000,000 the interest rate implicit in the lease is 4%per annum. Calculate

the interest charged to be recognized in the statement of profit or loss for the year

ended December 31st 20X9

• 232,800

• 385,000

• 320,000

• 500,000

OnApril 1st 20X8 Xentered into a five-year lease agreement for a machine with an

estimated life of 7 years.Which of the following conditions would require the machine to

be depreciated over 7 years ?

• Xhas the option to extend the lease for 2

  year at a market-rate rental.

• Xhas the option to purchase the asset at

  the end of the lease .

• Xof the assetpassed to Pigeon at the

  end of the lease period

• X’spolicy for purchased assets is to be

  depreciated over 7 years

Cloud obtained a 60%holding in the 100,000 $1 shares of Mist on 1 January20X8, when the retained earnings of Mist were $850,000. Consideration comprised $250,000 cash, $400,000 payable on 1 January20X9 and one share in Cloud for each two shares acquired. Cloud has a cost of capital of 8%and the market value of its shares on 1 January20X8 was $2.30. Cloud measures non-controlling interest at fair value. Thefair value of the non-controlling interest at 1 January20X8 was estimated to be $400,000. What was the goodwill arising on acquisition?

• 139,370

• 169,000

• 130,370

• 119,370

Cloud obtained a 60%holding in the 100,000 $1 shares of Mist on 1 January20X8, when

the retained earnings of Mist were $850,000. Consideration comprised $250,000 cash,

$400,000 payable on 1 January20X9 and one share in Cloud for each two shares

acquired. Cloud has a cost of capital of 8%and the market value of its shares on 1

January20X8 was $2.30. Cloud measures non-controlling interest at fair value. Thefair

value of the non-controlling interest at 1 January20X8 was estimated to be $400,000.

What was the goodwill arising on acquisition?

• An entity shall assess at the end of each

  reporting period whether there is any

  indication that its assets may be impaired

• An entity shall assess at the end of each

  reporting period the recoverable amount

  of its assets

• All of the above

• An entity shall test its assets on

  impairment at the end of each reporting D

  period

TheCaspian Company leased a warehouse with adjoining land for a period of 15 years.

Theland has an indefinite useful life whereas the warehouse has a useful life of 15 years.

Title to the land is not expected to pass at the end of the lease. Under IFRS16 Leases, in

respect of which items should a right-of-use asset and a lease liability be recognised in

the financial statements of Caspian?

• Both the land and the warehouse

• Only the land

• Only the warehouse

• Neither asset

. FigyCoentered into a 4-year lease agreement on 1 January20X5. The agreement meets

the definition of a lease in accordance with IFRS16.An initial payment of $100,000 was

made on 1 January20X5 followed by three annual payments on 1 Januaryof $100,000

each. Therate implicit in the lease is 10%.FigyCoincurred initial direct costs of $20,000

to set up the lease.Whatis the cost of the right-of-use asset asat 1 January20X5?

• 348,685

• 368,685

• 400,000

• 420,

Under IAS36 Impairment of assets is the following statement relating to an active market

true or false? ”Willing buyers and sellers are usually found.”

• TRUE

• FALSE

Trade discounts received must be deducted in measuring cost of inventories

• TRUE

• FALSE

Is the following statement true or false in respect of a lessee accounting for a lease,

according to IFRS16 Leases?

“Any initial direct costs incurred by a lessee are added to the amount of the liability

recognised in the statement of financial position.”

• TRUE

• FALSE

Under IAS16, if the entity applies revaluation model, PPEare revaluated:

• Whenfair values change, or are expected

  to change

• Every 3-5 years

• Annually

• Asrequest of the competent authorities