1. Mock 1 Q1:
A mobile company provides a customer a free handset when they sign a two-year contract for
provision of network services
The stand-alone price of the handset is $300 and the contract is $40/month for the next 2
years
Required:
a) Allocate the transaction price to performance obligation in line with IFRS15
b) Demonstrate how would this transaction be accounted for under IAS 18
2. Mock 1 Q2:
A Co uses revelation model and prepares its financial statements at 31 December each year.
A Co acquired an item of property on January 2017 at a cost of £2m
On 31 Dec 2017, this property was revalued at £2.2m
On 31 Dec 2018, it was revalued at £1.7m
Required:
a) Explain (or show account entries as to) how these revaluations should be
accounted for
b) Explain (or show account entries as to) what would have happened if:
i. On 31 Dec 2017, this property was revalued at £1.7m
ii. On 31 Dec 2018, this property was revalued at £2.2m
c) Explain (or show account entries as to) how your answer to question a) would differ
if the A Co held the asset as IAS 40 Investment Property.
3. Mock 2 Q1:
On 31st of December 2005, P Co acquired 80% of S co (4m shares out of 5m) for $12m cash.
On that day, the fair value of S LTD’s net assets was $9m
a) Assume that it is the group policy to value the non-controlling interest at its
proportionate share of the fair value of the subsidiary’s identifiable assets.
b) Assume that it is the group policy to value the non-controlling interest at fair value.
The market price of the shares held by NCI just before the acquisition was $2.5.
Calculate goodwill on acquisition
Required: Calculate goodwill on acquisition under both non-controlling interest recognition
policy and discuss how goodwill would be affected from both NCI measurement types.
4. Mock 2 Q2:
In 20X7 E Co paid $60,000 in tax on its profits. In 20X8 the company made tax losses of
$30,000. The local authority rules allow losses to be carried back and offset against current
tax paid in prior periods. The tax rate is 30%
Required:
a) Show the tax charge and tax liability for 20X8 if the company carries back its 20X8
losses and claims refund
, b) Show the accounting entries when the company receives tax reimbursement from
the tax man
5. Mock 3 Q1:
In the year to 31 December 2005, S Co has a credit balance brought down on its tax payable
account of $100,000. It agrees with tax authority that the tax due on 2004’s profits is
$95,000, which it pays in February 2005.
It also estimates that its tax due on 2005 profits would be $110,000
Required:
Calculate the amount of current tax expense which should be shown in the statement of
comprehensive income for the year to 31 December 2005
Calculate the amount of current tax liability which should be shown in the statement of
financial position at that date.
6. Mock 3 Q2:
Consider each of the following assets
I. A Machine costs $20,000 and has a carrying amount of $18,000. For tax purposes,
depreciation of $5,000 has already been deducted for the current and prior periods.
II. Interest receivable has a carrying amount of $3,000.
III. Trade receivables have a carrying amount of $10,000.
IV. Trade receivable is shown at £15,000 at the beginning of the year 20X8. Of this
amount, £5,000 has already been received in cash during the year 20X9.
Required:
State the tax base of each asset and determine whether a temporary difference exists with
respect to each asset.
If a temporary difference exists, state whether they are taxable or deductible temporary
differences
A mobile company provides a customer a free handset when they sign a two-year contract for
provision of network services
The stand-alone price of the handset is $300 and the contract is $40/month for the next 2
years
Required:
a) Allocate the transaction price to performance obligation in line with IFRS15
b) Demonstrate how would this transaction be accounted for under IAS 18
2. Mock 1 Q2:
A Co uses revelation model and prepares its financial statements at 31 December each year.
A Co acquired an item of property on January 2017 at a cost of £2m
On 31 Dec 2017, this property was revalued at £2.2m
On 31 Dec 2018, it was revalued at £1.7m
Required:
a) Explain (or show account entries as to) how these revaluations should be
accounted for
b) Explain (or show account entries as to) what would have happened if:
i. On 31 Dec 2017, this property was revalued at £1.7m
ii. On 31 Dec 2018, this property was revalued at £2.2m
c) Explain (or show account entries as to) how your answer to question a) would differ
if the A Co held the asset as IAS 40 Investment Property.
3. Mock 2 Q1:
On 31st of December 2005, P Co acquired 80% of S co (4m shares out of 5m) for $12m cash.
On that day, the fair value of S LTD’s net assets was $9m
a) Assume that it is the group policy to value the non-controlling interest at its
proportionate share of the fair value of the subsidiary’s identifiable assets.
b) Assume that it is the group policy to value the non-controlling interest at fair value.
The market price of the shares held by NCI just before the acquisition was $2.5.
Calculate goodwill on acquisition
Required: Calculate goodwill on acquisition under both non-controlling interest recognition
policy and discuss how goodwill would be affected from both NCI measurement types.
4. Mock 2 Q2:
In 20X7 E Co paid $60,000 in tax on its profits. In 20X8 the company made tax losses of
$30,000. The local authority rules allow losses to be carried back and offset against current
tax paid in prior periods. The tax rate is 30%
Required:
a) Show the tax charge and tax liability for 20X8 if the company carries back its 20X8
losses and claims refund
, b) Show the accounting entries when the company receives tax reimbursement from
the tax man
5. Mock 3 Q1:
In the year to 31 December 2005, S Co has a credit balance brought down on its tax payable
account of $100,000. It agrees with tax authority that the tax due on 2004’s profits is
$95,000, which it pays in February 2005.
It also estimates that its tax due on 2005 profits would be $110,000
Required:
Calculate the amount of current tax expense which should be shown in the statement of
comprehensive income for the year to 31 December 2005
Calculate the amount of current tax liability which should be shown in the statement of
financial position at that date.
6. Mock 3 Q2:
Consider each of the following assets
I. A Machine costs $20,000 and has a carrying amount of $18,000. For tax purposes,
depreciation of $5,000 has already been deducted for the current and prior periods.
II. Interest receivable has a carrying amount of $3,000.
III. Trade receivables have a carrying amount of $10,000.
IV. Trade receivable is shown at £15,000 at the beginning of the year 20X8. Of this
amount, £5,000 has already been received in cash during the year 20X9.
Required:
State the tax base of each asset and determine whether a temporary difference exists with
respect to each asset.
If a temporary difference exists, state whether they are taxable or deductible temporary
differences
