File 7 CMKTQT (4)

Winter Co incurred the following cost:
$86,000 developing new techniques that will be put in place shortly to raise the quantity of product made;
$57,000 researching a new process to improve the quality of the standard product;

and $10,000 on market research into the commercial viability of a new type of product. According to IAS 38,

how much should be charged as research and development expenditure in profit or loss? (Ignore amortisation) .......

• $86,000

• $96,000

• $67,000

• $153,000

The Conceptual Framework deals with the qualitative characteristics of financial statements. Is this statement true or false?

• True

• False

At the end of the accounting period, NQD Co had the following non-current assets: Land and buildings at cost $20.8 million

Land and buildings: accumulated depreciation $0.24 million
NQD Co decided to revalue its land and buildings at the year-end to $30 million. What will be the value of the revaluation surplus if the revaluation is accounted for?

• $9,200,000

• $9,440,000

• $8,960,000

• $29,760,000

Which of the following is NOT shown as intangible non-current assets in financial position of PENCo at 31 December 20X1?

• PENCo decided to spend $17,000 on researching a new process to raise the quantity of product made. The research is expected to lead to a new process in 3 years' time.

• PENCo purchased a patent for $500,000

• PENCo spent $40,000 on the development of new techniques that will be put in place shortly to reduce production cost

• A brand name of Summer Co purchased by PENCo for $10 mil

On 30 June 20X5, an entity bought a machine. The invoice showed that: Cost of machine: 105,000

Delivery costs: 1,300
Installation costs: 4,000
One-year maintenance contract: 6,500 Staff training cost: 5,000

At what amount should the machine be capitalized in the entity's records?

• $110,300

• $116,800

• $106,300

• $109,000

On 1 April 2021, ABC company held non-current assets with cost of $400,000 and accumulated depreciation of $100,000 at this date. During the year ended 31 March 2022, ABC disposed non-current assets which had originally cost of $80,000 and carrying amount of $50,000. The company’s policy is to charge depreciation of 20% on the reducing balance basis, with no depreciation charged in the year of disposal. What is the depreciation charge to the statement of profit or loss for the year ended 31 March 2022?

• $60,000

• $50,000

• $54,000

• $70,000

The Fluming Company and The Talgarth Company own 60% and 40% respectively of the equity of The Hoophorn Company. Fluming and Talgarth have signed an agreement whereby all the strategic decisions in respect of Hoophorn are to be taken with the agreement of them both. Are the following statements true or false, according to relevant IFRSS?

1. Fluming should classify its investment in Hoophorn as an investment in a subsidiary.

2. Talgarth should classify its investment in Hoophorn as an investment in an associat

• 1. False 2. False

• 1. False 2. True

• 1. True 2. False

• 1. True 2. True

According to IFRS 16 Leases, which one of the following is not included in the definition of lease payments?

• The exercise price of a purchase option that the lessee is reasonably certain to exercise

• Required payments (fixed and variable) over the lease term

• Penalties for terminating the lease

• Contingent rent

The Kuma Company is being sued for damages. When preparing its 20X5 financial statements the directors took the view that the likelihood of any payments having to be made to the claimant was remote.
In preparing the 20X6 financial statements their view was that it was possible that such payments would have to be made and in preparing the 20X7 statements their view was that such payments were probable.

For the 20X8 statements there was virtual certainty that the payments would have to be made. The payments were made in the 20X8 accounting period.
Under IAS 37 Provisions, contingent liabilities and contingent assets, in which set of financial statements should a contingent liability first be disclosed?

• 20X8

• 20X7

• 20X6

• 20X7

Which one of the following terms best describes financial statements whose basis of accounting recognises transactions and other events when they occur?

• Accrual basis of accounting

• Cash basis of accounting

• Invoice basis of accounting

• Going concern basis of accounting