CIMA Financial Reporting Sample Questions:

1. Which of the following would be capitalized as an intangible asset in accordance with IAS 38 Intangible Assets?

A) The cost of assets used in the research and development department.
B) The cost of testing a new process which will create efficiency savings of 10% once implemented.
C) The cost of advertising the launch of a new product.
D) The cost of market research into a new geographical market.

2. An entity purchased an asset for $375,000 on 1 November 20X0 incurring legal fees of $33,000.
Improvements were made to the asset for $65,000 on 1 December 20X2 which qualified as capital expenditure under the local tax rules. The entity also incurred repair costs on the asset on 1 February 20X3 amounting to
$10,000.
The asset was sold for $680,000 on 1 December 20X5 incurring allowable costs on disposal of $15,000.
Indexation on the purchase cost and the improvement are allowable.
The index increased by 20% between November 20X0 and December 20X5,15% between December 20X2 and December 20X5 and 10% between February 20X3 and December 20X5 Calculate the chargeable gain on the disposal of the asset on 1 December 20X5.

A) $90,650
B) $107,250
C) $89,650
D) $100,650

3. If a parent entity is to be exempt from preparing consolidated financial statements it needs to satisfy certain conditions according to IFRS 10 Consolidated Financial Statements.
Which TWO of the following are conditions that need to be satisfied to be exempt?

A) The parent entity has subsidiaries, one or more of which publishes consolidated financial statements.
B) The parent entity is itself a wholly owned subsidiary of another entity.
C) The parent 's investment in its subsidiaries are all below 100%.
D) The ultimate parent of the parent entity publishes consolidated financial statements which are publicly available.
E) The parent entity has no more than 10 subsidiaries or associated entities.

4. An entity has a number of subsidiary and associate investments.
Which of the following must be disclosed in the entity's separate financial statements if it is exempt from presenting consolidated financial statements?

A) A list of all its significant investments in subsidiaries and associates which includes the date of acquisition and the price paid.
B) A list of its top ten shareholdings including number of shares held and their market value.
C) The bases on which significant investments in subsidiaries and associates have been accounted for in those separate financial statements.
D) A copy of the summarised financial statements of each of its subsidiaries.

5. The following data has been extracted from GH's accounting records:

What is GH's average inventory days for the year ended 31 March 20X3?

A) 43 days
B) 39 days
C) 25 days
D) 28 days

Solutions: