Question

ACC206: Financial Reporting MCQ

Please help!! urgent, no need for explanations! thanks so much

A. B Ltd exchanged land to get equipment and $3,000 in cash. The book value and the fair value of the land were $104,000 and $90,000, respectively. B Ltd would record equipment at and record a gain/loss of:

1. $104,000 and loss of $5,000 respectively

2. $87,000 and gain of $3,000 respectively

3. $87,000 and loss of $14,000 respectively

4. None of the listed options.

B. FRS 105 Non-current Assets held for sale and Discontinued Operations states that a non-current asset that is to be abandoned shall not be classified as held for sale. The reason is because:

1. It is unlikely that it will be sold within twelve months.

2. It is unlikely that there will be an active market for this asset.

3. It is difficult to value.

4. Its carrying amount will be recovered principally through continuing use.

C. A retailer purchased its inventories at $110 per unit. The import duties was $3.50 per unit. The transportation costs was $1 per unit. The retailer purchased 100 units and a bulk discount of 2% was given. The inventories purchased were held in the warehouse and the storage costs was $200 in total. What is the costs of the inventories purchased?

1. $11,123

2. $10,692

3. $11,221

4. $11,421

D. Which of the following would usually appear in a company’s statement of changes in equity?

I. Total comprehensive income for the year.

II. Amortisation of capitalised development costs.

III. Surplus on revaluation of non-current assets.

1. II and III only

2. I and II only

3. I and III only

4. I, II and III

E. When are transfers from investment property to property, plant and equipment by an entity appropriate under FRS 40 Investment Property?

1. When there is a change in use.

2. Based on the entity’s discretion.

3. When the entity adopts the fair value model under FRS 40 Investment Property.

4. The entity can never transfer property into another classification on the statement of financial position once it is classified as investment property.

F. A retailer purchased its inventories at $100 per unit. The import duties was $7 per unit. The transportation costs was $1 per unit. The retailer purchased 100 units and a bulk discount of 1% was given. The inventories purchased were held in the warehouse and the storage costs was $500 in total. What is the costs of the inventories purchased?

1. $9,900

2. $11,192

3. $10,692

4. $11,221

Answer 1

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Answer a	Amount $
Fair value of the land	90,000.00
Less: Cash received	3,000.00
Value of equipment	87,000.00
Book value of the land	104,000.00
Fair value of the land	90,000.00
Loss to be recorded	14,000.00
So answer is option C.
B. FRS 105 Non-current Assets held for sale and Discontinued Operations states that a non-current asset that is to be abandoned shall not be classified as held for sale. The reason is because:
Its carrying amount will be recovered principally through continuing use.
Answer c	Amount $
Purchase price per unit	110.00
Less: bulk discount at 2%	2.20
Net Purchase price per unit	107.80
Import duty per unit	3.50
Transportation cost per unit	1.00
Total cost of material per unit	112.30
Number of units purchased	100.00
The costs of the inventories purchased	11,230.00
D. Which of the following would usually appear in a company’s statement of changes in equity?
I and III only
E. When are transfers from investment property to property, plant and equipment by an entity appropriate under FRS 40 Investment Property?
When there is a change in use.
Answer F	Amount $
Purchase price per unit	100.00
Less: bulk discount at 2%	1.00
Net Purchase price per unit	99.00
Import duty per unit	7.00
Transportation cost per unit	1.00
Total cost of material per unit	107.00
Number of units purchased	100.00
The costs of the inventories purchased	10,700.00