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CASE 1: Use the facts below to answer questions 1 to 8

KOA, a public limited company, acquired OOA, a public limited company, on December 31, 2015. OOA
has among its net assets customer lists of information in the form of a database. OOA has two such
databases: one where the nature of the information is subject to national laws regarding confidentiality
and another where the information can be sold or leased. OOA also has contracts for the supply of
maintenance services for computer systems. These contracts have another five years left to run. The
company insures computer systems against potential disasters, and these contracts are renewable every
year.

Additionally, KOA requested an official valuation of the computer equipment of OOA. By the time of the
2015 annual financial statements, the valuation had not been completed and a provisional value for the
assets was included in the financial statements. The final valuation was received on June 30, 2016. On
March 1, 2017, the auditors discover an error in the valuation of property, plant, and equipment as at
December 31, 2015. A piece of equipment had been omitted from the valuation listing.

Required

Which of the following best describes the implications of the preceding information for accounting for
the acquisition of OOA (see questions 1 to 8)?
1. All of these events result in change the number of shares outstanding, without a corresponding
change in resources but not.

a. stock dividend

b. none of the above

c. Bonus element in a rights issue to existing shareholders

d. Reverse share split

2. All the following are valid regarding the computer equipment but not, i, A provisional value will be
placed on the computer equipment, ii, Any adjustment to this provisional value will be made from the
acquisition date and have to be made within 12 months of that acquisition date, iii,The valuation was
received on June 30, as a result, goodwill at December 31, 2015, will be recalculated, iv, In the 2016
accounts, an adjustment will be made to the opening carrying value of the computer equipment less any
depreciation for the period, The carrying value of goodwill will be adjusted for the reduction in value at
the acquisition date, and the 2015 comparative information will be restated to reflect the adjustment, v,
In the 2015 accounts, the financial statements should disclose that the initial accounting for the business
combination has been determined only provisionally and explain why this is so, In the 2016 accounts,
there should be an explanation of what adjustments have been made to the provisional values.

a. i, ii, iv and v

b. i, ii, iii, iv, and v

c. i and ii

d. i, ii, iii and iv

3. All the following issues are relevant for each business combination but not, i, Names and descriptions
of the combining entities, ii, The acquisition date, iii, The percentage of voting equity instruments
acquired, iv, The cost of the combination and a description of the components of that cost, v, Amounts
recognized at the acquisition date for each class of the acquirees assets, liabilities, and contingent
liabilities and the carrying amounts of each of those classes immediately before the acquisition unless
that is impracticable, vi, The amount of any negative goodwill that has been shown in the income
statement, vii, The factors that contributed to the recognition of goodwill.

a. i, iii, vi and vii only

b. i, ii, iv and iii

c. i, ii, iii, iv, v, vi and vii

d. i, ii, v, vii and iv

4. An enterprise need disclose diluted EPS only if it differs from basic EPS by a material amount.

a. True

b. False

5. Basic EPS and diluted EPS are shown with equal prominence on the face of the statement of financial
position for each class of ordinary shares with different rights.

a. partially true

b. partially false

c. False

d. True

6. Control exists when an investor has all three of the following elements, i, power over the investee, ii
exposure or rights to variable returns from its involvement with the investee, iii, exposure rights to fixed
returns from its involvement with the investee, iv, the ability to use its power over the investee to affect
the amount of the investors returns.

a. i, ii and iv

b. i, ii and iii

c. none of the above

d. ii, iii and iv

7. Customer lists i, The customer lists meet the definition of an intangible asset and should be accounted
for separately, ii, However, the customer list that is subject to national laws regarding confidentiality
would not meet the criteria for an intangible asset, as the laws would prevent the entity from
disseminating the information about its customers.

a. i and ii

b. none of the above

c. i only

d. ii only

8. Earnings per share is calculated before accounting for which of the following items?

a. Preference dividend for the period.

b. Taxation.

c. Minority interest.

d. Ordinary dividend.

9. Entity A has an ordinary A class, nonvoting share, which is entitled to a fixed dividend of 6% per
annum. The A class ordinary share will.

a. Be included in the calculation of diluted EPS.

b. Not be included in the per share calculation for EPS.

c. Be included in the per share calculation for EPS without adjustment for the fixed dividend.

d. Be included in the per share calculation after adjustment for the fixed dividend.

10. Entity A has an ordinary A class, nonvoting share, which is entitled to a fixed dividend of 6% per
annum. The A class ordinary share will.

a. Be included in the calculation of diluted EPS.

b. Not be included in the per share calculation for EPS.

c. Be included in the per share calculation for EPS without adjustment for the fixed dividend.

d. Be included in the per share calculation after adjustment for the fixed dividend.

11. Equity instrument denotes

a. any contract that evidences a residual interest in the assets of an entity after deducting all of its
liabilities.

b. an equity instrument that is subordinate to all other classes of equity instruments.

c. financial instruments that give the holder the right to purchase ordinary shares, IAS 33.

d. a financial instrument or other contract that may entitle its holder to ordinary shares.

12. Financial instrument denotes.

a. any contract that gives rise to both a financial asset of one entity and a financial liability or equity
instrument of another entity.

b. financial instruments that give the holder the right to purchase ordinary shares, IAS 33
c. any contract that evidences a residual interest in the assets of an entity after deducting all of its
liabilities.

d. a financial instrument or other contract that may entitle its holder to ordinary shares.

13. For complex capital structures, both basic earnings per share and diluted earnings per share are
generally reported.

a. True

b. partially false

c. False

d. partially true

14. IFRS 10 applies to all parent entities that need to present consolidated financial statements, except
for, i, post-employment benefit plans ii, other short term employee benefits plan, iii, other long term
employee benefit plans to which IAS 19 applies, iv, other medium term employee benefit plans to which
IAS 19 applies.

a. i and iii

b. i and iv

c. i and ii

d. none of the above

15. IFRS 3 requires all identifiable intangible assets of the acquired business to be recorded at their fair
values, many intangible assets that may have been subsumed within goodwill must be now separately
valued and identified, Under IFRS 3, when would an intangible asset be identifiable?

a. If it has been recognized under local generally accepted accounting principles even though it does not
meet the definition in IAS 38.

b. Where it has been acquired in a business combination.

c. When it meets the definition of an asset in the Framework document only.

d. When it meets the definition of an intangible asset in IAS 38, Intangible Assets, and its fair value can
be measured reliably.

16. If a bonus issue occurs between the year-end and the date that the financial statements are
authorized, then
a. EPS for the current year only is adjusted.

b. EPS both for the current and the previous year are adjusted.

c. No adjustment is made to EPS.

d. Diluted EPS only is adjusted.

17. If a new issue of shares for cash is made between the year-end and the date that the financial
statements are authorized, then

a. EPS for the current year only is adjusted.

b. Diluted EPS only is adjusted.

c. No adjustment is made to EPS.

d. EPS for both the current and the previous year are adjusted.

18. If a stock option is converted on March 31, 20X1, then.

a. The ordinary shares are not included in the basic EPS but are included in diluted EPS.

b. The ordinary shares are not included in the diluted EPS calculation but are included in basic EPS.

c. The potential ordinary shares or stock option are included in diluted EPS up to March 31, 20X1, and
in basic EPS from the date converted to the year-end, both weighted accordingly.

19. In calculating whether potential ordinary shares are dilutive, the profit figure used as the control
number is.

a. Net profit from continuing operations.

b. Net profit before tax including discontinued operations.

c. Retained profit for the year after dividends.

d. Net profit after taxation including discontinued operations.

20. Options, warrants and their equivalents denote

a. any contract that evidences a residual interest in the assets of an entity after deducting all of its
liabilities.

b. financial instruments that give the holder the right to purchase ordinary shares IAS 33.

c. a financial instrument or other contract that may entitle its holder to ordinary shares.
d. any contract that gives rise to both a financial asset of one entity and a financial liability or equity
instrument of another entity.

21. Ordinary shares denote

a. an equity instrument that is subordinate to all other classes of equity instruments.

b. a financial instrument or other contract that may entitle its holder to ordinary shares.

c. financial instruments that give the holder the right to purchase ordinary shares IAS 33.

d. any contract that gives rise to both a financial asset of one entity and a any contract that evidences a
residual interest in the assets of an entity after deducting all of its liabilities.

Question 22

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Select one:

a. The beginning of the accounting period.

b. The date of acquisition.

c. The end of the accounting period.

d. The midpoint of the accounting year.

23. Parent entities are exempted from having to consolidate if, i, the parent is a wholly or partially
owned subsidiary in which all owners do object to non-consolidation, ii, the parents debt or equity
securities are publicly traded; ii, the parent did not file, and is not filing, its financial statements to issue
publicly traded instruments, iii, the ultimate or any intermediate parent of the parent entity produces
IFRS consolidated financial statements that are available for public use.

a. i and ii

b. none of the above

c. ii and iii

d. iii and iv

24. Potential ordinary share

a. a financial instrument or other contract that may entitle its holder to ordinary shares.

b. an equity instrument that is subordinate to all other classes of equity instruments.

c. any contract that gives rise to both a financial asset of one entity and a financial liability or equity
instrument of another entity.

d. financial instruments that give the holder the right to purchase ordinary shares IAS 33

25. Potential ordinary shares issued by a subsidiary should be included in the diluted EPS calculation as
they could potentially have an impact on the net profit for the period and the number of shares to be
included in the calculation.

a. False

b. True

26. Preference dividends deducted from net profit prior to calculation of EPS consist of.

a. none of the above

b. all of the above

c. Preference dividends on non-cumulative preference shares declared in respect of the period

d. The full amount of the required preference dividends for cumulative preference shares for the period,
whether or not they have been declared excluding those paid or declared during the period in respect of
previous periods)

27. The contract-based intangibles i, the contracts for the supply of maintenance services would meet
the definition of an intangible asset,ii, These intangibles will be recognized separately from goodwill,
provided that the fair value can be measured reliably, iii, In deciding on the fair value of a customer
relationship, for example, KOA will consider assumptions such as the expected renewal of the supply
agreement.

a. iii only

b. i only

c. i, ii and iii

d. ii only

Question 28

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Select one:

a. ii and iii

b. i and iii

c. none of the above

d. i, ii and iii

29. The insurance contracts with its customers meet the contractual legal criterion for identification as
an intangible asset and will be recognized separately from goodwill, providing the fair value can be
measured reliably.

a. False

b. True

Question 30

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Select one:

a. completely false

b. completely true

c. none of the above

d. partially true

31. The weighted average number of shares outstanding during the period for all periods other than the
conversion of potential ordinary shares) shall be adjusted for

a. Any new issue of shares for cash.

b. Any prior-year adjustment.

c. Any convertible instruments settled in cash.

d. Any change in the number of ordinary shares without a change in resources.

Question 32

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Select one:

a. completely false

b. partially true

c. none of the above

d. completely true

33. Variable returns as returns are not fixed and have the potential to vary as a result of the
performance of an investee, they can be positive, negative or both IFRS 10, These statements are.

a. none of the above

b. completely true

c. partially true

d. completely false

34. Variable returns as returns are not fixed and have the potential to vary as a result of the
performance of an investee, they can be positive, negative or both IFRS 10, These statements are.

a. none of the above

b. completely true

c. completely false

d. partially true

35. When an enterprise makes a bonus issue or stock split or stock dividend or a rights issue, then.

a. Only the diluted EPS for the previous year is adjusted.

b. The previous years EPS is adjusted for the issue.

c. The previous years EPS is not adjusted for the issue.

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Green Co owns the following investments in other companies:

  Equity shares Non-equity shares held

Violet Co 80%  Nil
Amber Co 25% 80%
Black Co 45% 25% 45%  25%
Green Co also has appointed five of the seven directors of Black Co.

36. Green Co also has appointed five of the seven directors of Black Co Which of the following
investments are accounted for as subsidiaries in the consolidated accounts of Green Co Group?

a. Amber only

b. Violet and Black

c. Violet only

d. All of them

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Pink Co acquired 80% of Scarlett’s Co ordinary share capital on 1 January, 2017. As at 31

      December 2017, extracts from their individual statements of financial position showed:

                                                                                         Pink C     Scarlett Co

                                                                                            $                $

Current assets:

Receivables                                                                     50,000      30,000

Current liabilities:

Payables                                                                           70,000     42,000

As a result of trading during the year, Pink Co’s receivables balance included

an amount due from Scarlett of $4,600.

37. What should be shown as the consolidated figure for receivables and payables?

a. 74,000 103,600

b. 75,400 112,000

c. 75,400 107,400

d. 80,000 112,000

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Purple Co acquired 70% of the voting share capital of Silver Co on 1 October

2016.The following extracts are from the individual income statements of the two

companies for the year ended 30 September 2017:

Purple Co Silver Co

$ $

Revenue 79,300 29,900

Cost of sales (54,990) (17,940)

Gross profit 24,310 11,960

Purple Co had made sales to Silver Co during the year of $5,000.

Purple Co had originally purchased the goods at a cost of $4,000. Half of these items

remained in inventory at the year end.

38. Purple Co had made sales to Silver Co during the year of $5,000, Purple Co had originally purchased
the goods at a cost of $4,000. Half of these items remained in inventory at the year end. What should be
the consolidated revenue for the year ended 30 September 2017?

a. $95,230

b. $104,700

c. $108,700

d. $104,200

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CASE STUDY: GROUP CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Akosua Ltd, a public limited liability company in Ghana, operates in the manufacturing sector. Akosua
Ltd has investments in two other Ghanaian companies. The draft statement of financial position as at 31
March 2019 is as follows:

Assets Akosua Nyarko Appiah

Non-current assets GH¢’m GH¢’m GH¢’m
Property plant and equipment 720.00 550.00 650.00
Investments in subsidiaries      
Nyarko Limited 625.00    
Appiah Limited 155.00 635.00  
Financial assets 160.00 10.50 70.50
  1,660.00 1,195.50 720.50
Current assets 447.50 340.50 75.00
Total assets 2,107.5 1,536.0 795.50
Equity and liabilities:         
Share capital 875.00 605.00 400.00
Retained earnings 620.00 465.00 175.00
Other components of equity                  62.50 40.00 47.50
Total equity 1,557.50 1,110 622.50
Non-current liabilities 492.50 382.50 75.00
Current liabilities                  57.50 43.50 98.00
Total liabilities                550.00 426.00 173.00
Total equity and liabilities 2,107.50 1,536.00 795.50

Additional information:

i) On 1 April 2017, Akosua Ltd acquired 14% of the equity interest of Appiah Ltd for a cash
consideration of GH¢130 million and Nyarko Ltd acquired 70% of the equity interest of Appiah Ltd for a
cash consideration of GH¢635 million. At 1 April 2017, the identifiable net assets of Appiah Ltd had a fair
value of GH¢495 million, retained earnings were GH¢95 million and other components of equity were
GH¢26 million. At 1 April 2018, the identifiable net assets of Appiah Ltd had a fair value of GH¢575
million, retained earnings were GH¢120 million and other components of equity were GH¢35 million.
The excess in fair value is due to non-depreciable land. The fair value of the 14% holding of Akosua Ltd in
Appiah Ltd, which was classified as fair value through profit or loss, was GH¢140 million at 31 March
2018 and GH¢155 million at 31 March 2019. However, the fair value of Nyarko Ltd’s interest in Appiah
Ltd had not changed since acquisition.

ii) On 1 April 2018, Akosua Ltd acquired 60% of the equity interests of Nyarko Ltd, a public limited
liability company in Ghana. The cost of investment comprised cash of GH¢625 million. On 1 April 2018,
the fair value of the identifiable net assets acquired was GH¢975 million and retained earnings of Nyarko
Ltd were GH¢325 million and other component of equity were GH¢27.5 million. The excess in fair value
is due to non-depreciable land. It is the group’s policy to measure the non-controlling interest at
acquisition at its proportionate share of the fair value of the subsidiary’s net assets.

iii) Goodwill of Nyarko Ltd and Appiah Ltd were tested for impairment at 31 March 2019 and found
that there was no impairment relating to Appiah Ltd. However, the goodwill of Nyarko Ltd was fully
impaired by the reporting date.

iv) On 1 April 2017, Akosua Ltd acquired office accommodation at a cost of GH¢45 million with a 30-
year estimated useful life. During the year, the property market in the area slumped and the fair value of
accommodation fell to GH¢37.5 million at 31 March 2018 and this was reflected in the financial
statements. However, the market unexpectedly recovered quickly due to the announcement of major
government investment in the area’s transport infrastructure. On 31 March 2019, the valuer advised
Akosua Ltd that the offices should now be valued at GH¢52.5 million. Akosua Ltd has charged
depreciation for the year but has not taken account of the upward valuation of the offices. Akosua Ltd
uses the revaluation model and records any valuation change when advised to do so.

v) Akosua Ltd has announced two major restructuring plans during the year. The first plan is to reduce
its capacity by the closure of some of its smaller factories, which have already been identified. This will
lead to the redundancy of 500 employees, who have all individually been selected and communicated
to. The costs of this plan are GH¢4.5 million in redundancy costs, GH¢2.5 million in retraining costs and
GH¢2.5 million in lease termination costs. The second plan is to re-organize the finance and information
technology department over a one-year period but it does not commence until two years’ time. The
plan will result in 20% of finance staff losing their jobs during the restructuring. The costs of this plan are
GH¢5 million in redundancy costs, GH¢3 million in retraining costs and GH¢3.5 million in equipment
lease termination costs. There are no entries made in the financial statements for the above plans.

vi) The following information relates to the group pension plan of Akosua Ltd:

  1 April 2018 31 March 2019

  GH¢ million GH¢ million
Fair value of plan assets 14 14.5
Actuarial value of defined benefit obligation 15 17.5

The contributions for the period received by the fund were GH¢1 million and the employee benefits paid
in the year amounted to GH¢1.5 million. The discount rate to be used in any calculation is 5%. The
current service cost for the period based on actuarial calculations is GH¢0.5 million. The above figures
have not been taken into account for the year ended 31 March 2019 except for the contributions paid
which have been entered in cash and the defined benefit obligation.
Required:

Use the case study to determine the following measures (see questions 40 to 72) relating to the group
consolidated statement of financial position of Akosua Ltd as at 31 March 2019.

39. Appiah s Post acquisition fair value adjustment of land.

a. GHS 17.50

b. GHS 0

c. GHS 20

d. GHS 2

40. Appiah s Post acquisition retained earnings is.

a. GHS 120

b. GHS 140

c. GHS 55

d. GHS 175

41. Appiah s Post-acquisition other components is.

Select one:

a. GHS 35

b. GHS 12.5

c. GHS 35

d. GHS 53

42. Consolidated Reserve.

Select one:
a. GHS 677.50

b. GHS 687.50

c. GHS 671.70

d. GHS 678.05

43. Current assets.

a. GHS 447.50

b. GHS 863.00

c. GHS 836.00

d. GHS 340.50

44. Goodwill

Select one:

a. GHS 199

b. GHS 991

c. GHS 919

d. GHS 0

45. Goodwill at acquisition of Appiah is.

a. GHS 199

b. GHS 0

c. GHS 521

d. GHS 40

46. Goodwill at acquisition of Nyarko is.

a. GHS 199

b. GHS 0

c. GHS 40

d. GHS 521
Question 47

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Select one:

a. GHS 199

b. GHS 521

c. GHS 40

d. GHS 0

Question 48

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Select one:

a. GHS 40

b. GHS 0

c. GHS 521

d. GHS 199

Question 49

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NCIs interest in Appiah Limited at the date of acquisition is.

Select one:

a. GHS 61.00

b. GHS 253.00
c. GHS 29.70

d. GHS 390.00

50. NCIs interest in Appiah Limited at the reporting date is.

a. GHS 451.00

b. GHS 253.00

c. GHS 282.70

d. GHS 254.00

51. NCIs net asset in the group at the reporting date is.

a. GHS 733.70

b. GHS 479.70

c. GHS 254.00

d. GHS 390.00

52. NCIs net assets in Nyarko Limited at the date of acquisition is.

a. GHS 29.70

b. GHS 390.00

c. GHS 61.00

d. GHS 253.00

53. NCIs net assets in Nyarko Limited at the reporting date is.

a. GHS 254.00

b. GHS 253.00

c. GHS 197

d. GHS 390.00

54. NCIs post acquisition net asset in Appiah Limited is.

a. GHS 390.00
b. GHS 253.00

c. GHS 61.00

d. GHS 29.70

55. NCIs post acquisition net assets in Nyarko Limited is.

a. GHS 61.00

b. GHS 29.70

c. GHS 390.00

d. GHS 253.00

56. Nyarko s Post acquisition fair value adjustment of land.

a. GHS 2

b. GHS 17.50

c. GHS 20

d. GHS 0

57. Nyarko s Post acquisition other components is.

a. GHS 40

b. GHS 27.5

c. GHS 14

d. GHS 12.5

58. Nyarko s Post acquisition profits is.

a. GHS 67.50

b. GHS 87.50

c. GHS 170

d. GHS 152.50

59. Other components of equity

a. GHS 85.50

b. GHS 58.50

c. GHS 85.05

d. GHS 74.55

60. Property plant and equipment.

a. GHS 1978.30

b. GHS 1,937.50

c. GHS 1,957.50

d. GHS 1973.80

61. Share capital.

a. GHS 1,880

b. GHS 400

c. GHS 605

d. GHS 875

62. The NCI interest in Appiah Limited is therefore, i, 100% minus 14% ii, 100% minus 60% iii, 100%
minus 70% iv, 100% minus 44% v, 100% minus 42%

a. iv only

b. i and iv

c. v only

d. i and iii

63. The acquisition date for Appiah Limited is.

a. insufficient information

b. a and b

c. 1/4/18

d. 1/4/17
64. The group and NCIs interest in Nyarko Limited is.

a. 60% and 40%

b. 100%

c. All of the above

d. 40% and 60%

65. The group effective interest in Appiah Limited is i, 14% ii, 60% iii, 70% iv, 44% v, 42%

a. i and v

b. ii and iii

c. none of the above

d. i and iv

66. Total assets.

a. GHS 2,413.80

b. GHS 3,276.80

c. GHS 3,726.80

d. GHS 3,077.80

67. Total non-current asset.

a. GHS 4, 281.30

b. GHS 2,814.30

c. GHS 2,431.80

d. GHS 2,813.80

68. Financial assets.

a. GHS 170.50

b. GHS 230.50

c. GHS 160.00
d. GHS 241.00

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CASE STUDY: CAPITAL RECONSTRUCTION

Bank of Ghana (BoG) earlier last year announced an increase in the minimum capital requirement for
Micro Finance Institutions in the country from the current GH¢500,000 to GH¢2 million by June 2020.
Capital Link, a Micro Finance Company has been affected by the increase in players in the Micro Finance
Industry which has seen a reduction of its loan portfolio and an increase in loan default rate.

A statement of Financial Position recently prepared by Capital Link is as follows:

Statement of Financial Position as at 30th April, 2019                   GH¢                    GH¢

Non-current assets

Goodwill                                                                                                                 450,000

Leasehold building (Carrying Amount)           

750,000                                                                                                          

                                                                                                                             1,200,000

Current assets

Loan Portfolio                                                                                825,000

Investment in Treasury bills

570,000                                                                               

                                                                                                                 1,395,000

Current liabilities

 Interest to depositors                                                                                 885,000

Bank overdraft (secured on Leasehold property)                                       975,000     

                                                                                                                 1,860,000 

Net current liabilities                                      

(465,000)                                                                                                                              

                                                                                                                             735,000

 Financed by:

Share capital                                                                                                            600,000

General reserves                                                                                                       120,000

Retained Earnings                                                                            
15,000                                                                                                                         

                                                                                                                              735,000

Additional information:

Depositors have the information that Capital Link is considering funding options to ensure the survival of
the business. They are however not convinced that Management of Capital Link would be able to raise
the required capital to meet the minimum requirement.

In a Stakeholders meeting, Management of Capital Link proposed two possible options for the
company’s future.

Scheme 1- Close Down Mission

Unity Capital Ltd has made a firm offer of GH¢600,000 for the company’s leasehold property. Total loan
portfolio is conservatively valued at GH¢592,500 in a forced sale.

Investments in Treasury bills is GH¢465,000. Liquidation expenses are estimated at GH¢30,000 and
interest to depositors is GH¢330,000.

Scheme 2- Rescue Mission

Management of Capital Link propose to implement a scheme which includes a cheap loan of GH
¢600,000 from a distress fund set up by an NGO, Business Rescuers. The following terms have been
arranged:

GH¢375,000 would be reserved to pay for the loan from the NGO when the first instalment falls due.
The NGO has been asked to accept 20% debenture in exchange for the balance remaining due. The
debenture would be repayable in four annual instalments of GH¢150,000, commencing 28 February
2019, with the interest due for the preceding year, paid on the same date.

Assume that:

§ The current rate of interest on all borrowing is 14%

§ The calculations are being made on 30th April, 2019 and either scheme could be put onto effect
immediately.
The present value of GHS 1 recoverable at the end of each year is:

  Year 1 Year 2 Year 3 Year 4

14% 0.88 0.77 0.67 0.59
20% 0.83 0.69 0.58 0.48

Required:

Use the case study to evaluate how much the key players would recover from each scheme by
answering the following questions 71 to 79.

Question 69

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Question text

Select one:

a. i, iii, vi and vii only

b. i, ii, v, vii and iv

c. i, ii, iii, iv, v, vi and vii

d. i, ii, iv and iii

70. Assets not covered by IAS 36 include all but not.

a. Biological assets carried at cost

b. Inventories and Assets arising from construction contracts

c. Financial assets dealt with under IAS 39 and Investment property carried at fair value

d. Deferred tax assets and Assets arising from employee benefits

71. IAS 36 applies to which of the following assets?

a. Inventories and Financial assets.

b. Choice a and c

c. Financial assets and Assets held for sale.

d. Property, plant, and equipment.

72. The Bank will receive,under scheme 1.

a. GHS 600,000

b. GHS 875,000

c. GHS 818,250

d. GHS 881,250

73. Total proceeds from the rescue operation under scheme 2.

a. GHS 1,044,030

b. GHS 1,044,300

c. GHS 1,044,003

d. none of the above

74. Variability is assessed based on the substance of the arrangement regardless of legal form, for
example, contractually fixed interest payments could be highly variable if credit risk is high, Asset
management fees that are contractually fixed could nevertheless be subject to variability if the investee
has a high risk of non performance. These statements are.

a. completely false

b. partially true

c. none of the above

d. completely true

75. Earnings per share is calculated before accounting for which of the following items?

a. Minority interest.
b. Taxation.

c. Ordinary dividend.

d. Preference dividend for the period.

76. In May 2020, IASB issued amendment of IFRS 16 Leases to tackle exactly the rent concessions
provided to lessees as a response to the COVID-19 pandemics.

a. False

b. True

77. The main message of this amendment is that you have to account for the rent concession as for the
lease modification.

a. False

b. True

78. The new amendment to IFRS 16, if any, is a practical expedient and it is mandatory.

a. True

b. False

79. The title of the new amendment is Covid-19-related rent concession and you can download the full
text of that on the official website of ICAG.

a. True

b. False

80. Which of the following accounting methods must be applied to all business combinations under IFRS
3, Business Combinations?

a. Purchase method

b. Proportionate consolidation

c. Equity method

d. Pooling of interests method