RST sells computer equipment and prepares its financial statements to 31 December.

On 30 September 20X5 RST sold computer software along with a two year maintenance package to a customer. The customer is given the right to return the goods within six months and claim a full refund if they are not satisfied with the computer software. The risk of return is considered to be insignificant for RST.

How should the revenue from this transaction and the right of return be recognised in the financial statements for the year ended 31 December 20X5?

F has profit before interest and tax of $400,000 for the year to 30 June 20X4.

Extracts from F ' s statement of financial position at 30 June 20X4 are as follows:

Calculate the gearing (debt:equity) ratio at 30 June 20X4.

Give your answer to the nearest whole percentage.

 ?  %

AB acquired 10% of the equity share capital of XY on 1 January 20X7 for $180,000 when the fair value of XY ' s net assets was $190,000.  On 1 January 20X9 AB purchased a further 50% of the equity share capital for $550,000 when the fair value of XY ' s net assets was $820,000.  

The original 10% investment had a fair value of $200,000 at the date control of XY was gained.  The non controlling interest in XY was measured at its fair value of $300,000 at 1 January 20X9.

Which of the following represents the correct value of goodwill arising on the acquisition of XY that would have been included by AB when it prepared its consolidated financial statements at 31 December 20X9?

YZ issued $100,000 6% convertible bonds at par on 1 January 20X5. The bondholders have the option to convert into equity shares in 3 years ' time or redeem at par for cash on the same date.

Interest is paid annually in arrears and bonds issued by similar entities without conversion rights pay interest at 8%.

What is the value of equity to be recognised in YZ ' s statement of financial position as at 31 December 20X5?

Give your answer to the nearest whole $.

$?

The consolidated statement of profit or loss for VW for the year ended 30 September 20X7 includes the following:

What is VW ' s interest cover for the year ended 30 September 20X7?

Which of the following defines the calculation of interest cover?

GG ' s gearing is currently 50% compared to the industry average of 40% (both measured as debt/equity). GG ' s debt is all in the form of a single bank loan that is repayable in five years ' time. The directors of GG are seeking to raise finance for a new project and they are considering an additional bank loan from the same bank.

Which of the following would prevent the bank from lending the finance for the project in the form of a new bank loan?

LK acquired 100% of the equity shares of TU on 1 January 20X4. LK disposed of 60% of TU for £2,400,000 on 30 September 20X4. The sale proceeds reflected the fair value of TU ' s shares on that date.

The remaining 40% shareholding gave LK the ability to exercise significant influence over the activities of TU. TU reported profit of $1,800,000 for the year ended 31 December 20X4 and this accrued evenly throughout the year.

Calculate the investment in associate that will be presented in LK ' s consolidated statement of financial position as at 31 December 20X4.

Give your answer to the nearest whole $ ' 000.

 $     000

Which of the following best describes the goal of WACC as a measure?

Which of the following actions would be most likely to improve an entity ' s gross profit margin?