Required:
Discuss the principles and practices which should be used in the financial year to 30 November 2008 to account
for:(b) the costs incurred in extending the network; (7 marks)
第1题:
(ii) Explain the accounting treatment under IAS39 of the loan to Bromwich in the financial statements of
Ambush for the year ended 30 November 2005. (4 marks)
第2题:
5 International Financial Reporting Standards (IFRSs) are primarily designed for use by publicly listed companies and
in many countries the majority of companies using IFRSs are listed companies. In other countries IFRSs are used as
national Generally Accepted Accounting Practices (GAAP) for all companies including unlisted entities. It has been
argued that the same IFRSs should be used by all entities or alternatively a different body of standards should apply
to small and medium entities (SMEs).
Required:
(a) Discuss whether there is a need to develop a set of IFRSs specifically for SMEs. (7 marks)
第3题:
(c) Discuss the ways in which budgets and the budgeting process can be used to motivate managers to
endeavour to meet the objectives of the company. Your answer should refer to:
(i) setting targets for financial performance;
(ii) participation in the budget-setting process. (12 marks)
第4题:
(d) Additionally Router purchased 60% of the ordinary shares of a radio station, Playtime, a public limited company,
on 31 May 2007. The remaining 40% of the ordinary shares are owned by a competitor company who owns a
substantial number of warrants issued by Playtime which are currently exercisable. If these warrants are
exercised, they will result in Router only owning 35% of the voting shares of Playtime. (4 marks)
Required:
Discuss how the above items should be dealt with in the group financial statements of Router for the year ended
31 May 2007.
(d) IAS27 paragraph 14, ‘Consolidated and Separate Financial Statements’, states that warrants that have the potential to give
the holder voting power or reduce another party’s voting power over the financial and operating policies of the issuer should
be considered when existence of control is assessed. The warrants held by the competitor company, if exercised, would grant
that company control over Playtime. One party only can control Playtime and, therefore, the competitor company should
consolidate Playtime. In coming to this decision all the facts and circumstances that affect potential voting rights (except the
intention of management and the financial ability to exercise or convert) should be considered. It seems, however, that there
is a prima facie case for not consolidating Playtime but accounting for it under IAS28 or IAS39.
第5题:
4 (a) Router, a public limited company operates in the entertainment industry. It recently agreed with a television
company to make a film which will be broadcast on the television company’s network. The fee agreed for the
film was $5 million with a further $100,000 to be paid every time the film is shown on the television company’s
channels. It is hoped that it will be shown on four occasions. The film was completed at a cost of $4 million and
delivered to the television company on 1 April 2007. The television company paid the fee of $5 million on
30 April 2007 but indicated that the film needed substantial editing before they were prepared to broadcast it,
the costs of which would be deducted from any future payments to Router. The directors of Router wish to
recognise the anticipated future income of $400,000 in the financial statements for the year ended 31 May
2007. (5 marks)
Required:
Discuss how the above items should be dealt with in the group financial statements of Router for the year ended
31 May 2007.
第6题:
(b) Misson has purchased goods from a foreign supplier for 8 million euros on 31 July 2006. At 31 October 2006,
the trade payable was still outstanding and the goods were still held by Misson. Similarly Misson has sold goods
to a foreign customer for 4 million euros on 31 July 2006 and it received payment for the goods in euros on
31 October 2006. Additionally Misson had purchased an investment property on 1 November 2005 for
28 million euros. At 31 October 2006, the investment property had a fair value of 24 million euros. The company
uses the fair value model in accounting for investment properties.
Misson would like advice on how to treat these transactions in the financial statements for the year ended 31
October 2006. (7 marks)
Required:
Discuss the accounting treatment of the above transactions in accordance with the advice required by the
directors.
(Candidates should show detailed workings as well as a discussion of the accounting treatment used.)
第7题:
(c) Wader is reviewing the accounting treatment of its buildings. The company uses the ‘revaluation model’ for its
buildings. The buildings had originally cost $10 million on 1 June 2005 and had a useful economic life of
20 years. They are being depreciated on a straight line basis to a nil residual value. The buildings were revalued
downwards on 31 May 2006 to $8 million which was the buildings’ recoverable amount. At 31 May 2007 the
value of the buildings had risen to $11 million which is to be included in the financial statements. The company
is unsure how to treat the above events. (7 marks)
Required:
Discuss the accounting treatments of the above items in the financial statements for the year ended 31 May
2007.
Note: a discount rate of 5% should be used where necessary. Candidates should show suitable calculations where
necessary.
第8题:
(b) Ambush loaned $200,000 to Bromwich on 1 December 2003. The effective and stated interest rate for this
loan was 8 per cent. Interest is payable by Bromwich at the end of each year and the loan is repayable on
30 November 2007. At 30 November 2005, the directors of Ambush have heard that Bromwich is in financial
difficulties and is undergoing a financial reorganisation. The directors feel that it is likely that they will only
receive $100,000 on 30 November 2007 and no future interest payment. Interest for the year ended
30 November 2005 had been received. The financial year end of Ambush is 30 November 2005.
Required:
(i) Outline the requirements of IAS 39 as regards the impairment of financial assets. (6 marks)
第9题:
(c) At 1 June 2006, Router held a 25% shareholding in a film distribution company, Wireless, a public limited
company. On 1 January 2007, Router sold a 15% holding in Wireless thus reducing its investment to a 10%
holding. Router no longer exercises significant influence over Wireless. Before the sale of the shares the net asset
value of Wireless on 1 January 2007 was $200 million and goodwill relating to the acquisition of Wireless was
$5 million. Router received $40 million for its sale of the 15% holding in Wireless. At 1 January 2007, the fair
value of the remaining investment in Wireless was $23 million and at 31 May 2007 the fair value was
$26 million. (6 marks)
Required:
Discuss how the above items should be dealt with in the group financial statements of Router for the year ended
31 May 2007.Required:
Discuss how the above items should be dealt with in the group financial statements of Router for the year ended
31 May 2007.
第10题:
5 Financial statements have seen an increasing move towards the use of fair values in accounting. Advocates of ‘fair
value accounting’ believe that fair value is the most relevant measure for financial reporting whilst others believe that
historical cost provides a more useful measure.
Issues have been raised over the reliability and measurement of fair values, and over the nature of the current level
of disclosure in financial statements in this area.
Required:
(a) Discuss the problems associated with the reliability and measurement of fair values and the nature of any
additional disclosures which may be required if fair value accounting is to be used exclusively in corporate
reporting. (13 marks)