File 7 CMKTQT (2)

Are the following statements regarding the term 'profit' true or false?

1. Profit is any amount over and above that required to maintain the capital at the beginning of the period.

2. Profit is the residual amount that remains after expenses have been deducted from income.

• 1.False & 2.False

• 1.False & 2.True

• 1.True & 2.False

• 1.True & 2.True

How should import duties be dealt with when valuing inventories at the lower of cost and net realisable value (NRV) according to IAS 2 Inventories?

• Ignored

• Deducted from cost

• Deducted in arriving at NRV

• Added to cost

How shall a lessee measure the lease liability after the commencement date?

• By increasing the carrying amount to reflect interest on the lease liability

• By reducing the carrying amount to reflect the lease payments made

• By remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments

• B and C

• All of above

If right-of-use assets relate to a class of property, plant and equipment to which the lessee applies the evaluation model in IAS 16, a lessee may elect to apply that revaluation model to all of the right-of-use assets that relate to that class of property, plant and equipment.

• T

• F

According to IAS 12 Income taxes, deferred tax assets are the amounts of income taxes recoverable in future periods in respect of deductible temporary differences.

• T

• F

On 1 August 20X7 Patronic purchased 18 million of the 24 million $1 equity shares of Sardonic. The acquisition was through a share exchange of two shares in Patronic for every three shares in Sardonic. The market price of a share in Patronic at 1 August 20X7 was $5.75. Patronic will also pay in cash on 31 July 20X9 (two years after acquisition) $2.42 per acquired share of Sardonic. Patronic's cost of capital is 10% per annum. What is the amount of the consideration attributable to Patronic for the acquisition of Sardonic?

• $105 million

• $139.5 million

• $108.2 million

• $103.8 million

The Framework is a reporting standard.

• T

• F

Inventory items should be valued at the lower of cost and net realisable value.

• T

• F

Which of the following is NOT classified as inventory?

• Raw materials

• A car held for resale

• Work in progress

• A plant

The Conceptual Framework should

• Lead to uniformity of financial statements among entities within the same industry

• Eliminate alternative accounting principles

• Guide multi-national corporations in developing countries generally accepted auditing standards

• Define the basic objective, terms and concepts of accounting