ACC567 Financial Accounting 2 Sample exam question
School of Accounting and Finance
Sample Examination
ACC567 Financial Accounting 2
EXAM CONDITIONS:
PERMITTED - Open Book - Materials Specified
Non-programmable calculator permitted
No dictionary permitted
The student may NOT retain the question pape
WRITING TIME: 3 hours plus 10 minutes reading time
Writing is permitted during reading time
MATERIALS SUPPLIED BY UNIVERSITY: 2 x 12 page answer booklets
1 x General purpose answer sheet (GPAS)
MATERIALS PERMITTED IN EXAMINATION:
(No electronic aids are permitted e.g. laptops, phones)
Textbook specified (unannotated):
CAANZ Financial Reporting Handbook 2016 or 2017 (bound version only - loose leaf version not
permitted, unmarked except for highlighting, underlining or tagging. Brief captions allowed on tags
only.)
NUMBER OF QUESTIONS: Part A: 20 Multiple Choice Questions (20 marks)
Part B: 5 Problem Solving Questions (80 marks)
VALUE: 60%
INSTRUCTIONS TO CANDIDATES:
1. Enter your name and student number and sign in the space provided at the bottom of this page
and on each answer booklet.
2. No written material, reference books or notes will be permitted into the examination room,
except for the materials permitted above.
3. This examination consists of two (2) parts. ALL parts must be attempted and answered in the
answer booklets and GPAS provided.
4. Present Value Tables are attached.
STUDENT NAME:…………………………………………STUDENT ID: ………………………
SIGNATURE:
………………………………………………………………………………..…………
CALCULATOR USED (IF ANY):
…………………………………………………………………………………………………………
ACC567 Financial Accounting 2 Sample exam question
PART A [20 marks]
This part consists of 20 multiple choice answer questions. Each question is worth one mark. Select
the most co
ect answer for each question and write down your choice of answers (A, B, C or D) on
the GPAS provided.
1. A Ltd paid $110,000 for 60% of B Ltd. At the date of acquisition B Ltd had share capital of
$100,000 and retained earnings of $50,000. All of the assets and liabilities of B Ltd were
ecorded at fair value. Assuming the partial goodwill method is adopted, A Ltd’s interest in the B
Ltd would be:
A. $90,000
B. $110,000
C. $66,000
D. $60,000
2. The accounting method applied to investments in associates, known as the equity method, is also
known as the:
A. entity method of consolidation.
B. proprietary method of consolidation.
C. multiple line consolidation method.
D. one-line consolidation method.
3. Investor Limited acquired a 30% interest in Investee Limited for $27,000. Investor holds other
equity investments but does not prepare consolidated financial statements. Investee Limited
evalued its buildings class of assets by $10,000 (net of tax) during the cu
ent financial period.
The balance of the investment in associate account at the end of the cu
ent financial period is:
A. $11,100
B. $18,100
C. $27,000
D. $30,000
4. The guidelines to determine that a segment is reportable in accordance with AASB 8 “Operating
Segments” includes:
A. The segment’s external revenue is equal to or greater than 10% of the external sales
of all operating segments.
B. The expenses of the segment that relate to external sales are equal to or greater than
10% of total segment expenses.
C. The segment’s reported revenue, including both sales to external customers and
intersegment sales or transfers, is 10% or more of the combined revenue, internal and
external, of all operating segments.
D. The expenses of the segment that relate to external sales are equal to or greater than
10% of total segment expenses, and the segment’s revenues are 10% or more of the
total segment revenues.
ACC567 Financial Accounting 2 Sample exam question
5. Which of the following characteristics of a segment is not considered reportable in AASB 8
“Operating Segments”?
A. Reported revenue, both external and internal, is 10% or more of the combined
evenue, both external and internal of all operating segments.
B. The absolute amount of its reported profit or loss is 10% or more of the greater, in
absolute amount, of (i) the combined reported profit of all operating segments that did
not report a loss and (ii) the combined reported loss of all operating segments that
eported a loss.
C. Assets are 10% or more of the combined assets of all operating segments.
D. Operating segments that do not meet any of the quantitative thresholds, but
management believes that information about the segment would be useful to users of
the financial statements.
6. On 1 September 2018 Antique Furniture Importers acquires furniture from a supplier in Europe.
The furniture is shipped FOB Brussels on 1 September 2018. The cost of the furniture is
€500,000. The amount has not been paid at 30 September 2018. Exchange rates are as follows:
1 September 2018 $A1.00 = €0.52
30 September 2018 $A1.00 = €0.58
What is the amount payable at 1 September and 30 September 2018 in Australian dollars?
A. 1 September 2018 $260,000; 30 September 2018 $290,000
B. 1 September 2018 $1,041,667; 30 September 2018 $1,190,476
C. 1 September 2018 $961,538; 30 September 2018 $862,069
D. 1 September 2018 $240,000; 30 September 2018 $210,000
7. Gunawan Limited acquired a 20% share in Juliano Limited for $ XXXXXXXXXXGunawan Limited has
no other investments. At the date on which it became an associate, Juliano Limited had the
following equity:
Share capital $50,000
Retained earnings $40,000
At the end of the financial year following the investment, Juliano Limited generated a profit of
$6,000 after tax. After applying the equity method of accounting, Gunawan Limited will have the
following ca
ying amount for the investment:
A. $19,200
B. $18,000
C. $16,800
D. $9,200
8. Potential costs of providing segment information include:
A. Management taking extra risks in order attempting to generate increased returns in its
segment.
B. Allowing cu
ent or potential investors to identify that the entity is earning low profits
in a segment.
C. Disclosing that a segment is making a loss. This may lead to take-over bids by other
organisations.
D. Allowing cu
ent or potential competitors to identify that the entity is earning high
profits in a segment. This may increase competition through new entrants or an
attempt to replicate the factors leading to the entity’s success.
ACC567 Financial Accounting 2 Sample exam question
9. The new accounting standard for leases, AASB 16, has introduced::
A. a single lessee accounting model for all leases with a term of more than 12 months.
B. a multi lessee accounting model for all leases with a term of more than 12 months.
C. a single lessee accounting model for all leases with a term of less than 12 months.
D. a multi lessee accounting model for all leases with a term of less than 12 months.
10. The preface to AASB 16 Leases states that the new standard will:
A. enhance disclosures required of entities.
B. provide a greater transparency of a lessee’s financial leverage and capital employed.
C. result in a more faithful representation of a lessee’s assets and liabilities.
D. all of the above options.
11. Which of the following is not a step in the recognition of revenue?
A. Recognise revenue when the entity satisfies a performance obligation.
B. Allocate the buying price to the goods or services.
C. Identify the performance obligation.
D. Determine the transaction price.
12. Consolidation worksheet adjusting journal entries are recorded:
A. in the general ledger of the parent entity.
B. in the general ledger of the subsidiary.
C. in the consolidation working papers.
D. none of the above.
13. Goodwill on acquisition is recorded when:
A. the cost of the acquisition of the subsidiary is less than the fair value of the subsidiary
equity.
B. the cost of the acquisition is more than the fair value of the subsidiary equity.
C. the cost of the acquisition is equal to the fair value of the subsidiary equity.
D. none of the above.
14. A parent company owns 80% of the issued capital of its subsidiary. On consolidation, a sale of
inventories between parent and subsidiary will be eliminated as follows:
A. 20% of sale amount
B. 80% of sale amount.
C. 100% of sale amount.
D. not eliminated.
15. A subsidiary which is 75% owned by its parent company pays a dividend of $100,000. On
consolidation the amount to be eliminated is:
A. $75,000
B. $100,000
C. $25,000
D. Not eliminated
ACC567 Financial Accounting 2 Sample exam question
16. Which of the following factors indicate that the functional cu
ency of a foreign operation is that
of the reporting entity?
A. The activities of the foreign operation are ca
ied out as an extension of the activities
of the reporting entity rather than being ca
ied out with a significant degree of
autonomy.
B. Transactions with the reporting entity are a high proportion of the activities of the
foreign operation.
C. The day-to-day financing of the foreign operation is supplied by the reporting entity
and the cash flows of the foreign operation directly affect the cash flows of the reporting
entity.
D. All of the above.
17. World Consulting has the following data available:
Sales $2,000,000