AAT L4 Financial Statements of Limited Companies 2

Question 1

A limited company acquired 80% of a subsidiary for £640,000. At acquisition, the subsidiary's net assets had a fair value of £700,000. What is the goodwill arising on consolidation?

Accepted Answer

£80,000

Answer

£60,000

Answer

£200,000

Answer

£640,000

Question 2

Under FRS 102, how should a government grant related to the purchase of a non-current asset be presented in the statement of financial position?

Accepted Answer

Either as deferred income or deducted from the asset's carrying amount

Answer

As revenue in the statement of comprehensive income immediately

Answer

As deferred income and released to profit over the asset's useful life

Answer

As a reduction from the cost of the asset only

Question 3

A company has the following items. Which should be classified as a current liability?

I. Bank overdraft repayable on demand
II. Trade payables due in 45 days
III. 5-year bank loan (next instalment due in 3 months)
IV. Debentures maturing in 18 months

Accepted Answer

I, II, and III only

Answer

I and II only

Answer

I, II, III, and IV

Answer

II and III only

Question 4

When preparing consolidated financial statements, intra-group sales of £120,000 were made during the year. At the year end, £30,000 of these goods remained in the subsidiary's inventory. The parent applies a mark-up of 25% on cost. What is the provision for unrealised profit?

Accepted Answer

£6,000

Answer

£7,500

Answer

£30,000

Answer

£24,000

Question 5

Which of the following would appear in the statement of changes in equity?

Accepted Answer

Total comprehensive income for the year

Answer

Revenue from contracts with customers

Answer

Purchase of property, plant and equipment

Answer

Cash received from issuing a bank loan

Question 6

Under the Companies Act 2006, a small company qualifying under the small companies regime:

Accepted Answer

Both B and C

Answer

Is exempt from preparing any financial statements

Answer

Must still prepare full accounts but may file abridged accounts

Answer

Need not have its accounts audited if it meets the audit exemption thresholds