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F2 Exam Dumps : F2 Advanced Financial Reporting

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F2 Advanced Financial Reporting Questions and Answers

Question 1

LM are just about to pay a dividend of 20 cents a share. Historically, dividends have grown at a rate of 5% each year.

The current share price is $3.05.

The cost of equity using the dividend valuation model is:

Options:

A.

12.4%

B.

11.9%

C.

7.4%

D.

6.9%

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Question 2

RST sells computer equipment and prepares its financial statements to 31 December.

On 30 September 20X5 RST sold computer software along with a two year maintenance package to a customer. The customer is given the right to return the goods within six months and claim a full refund if they are not satisfied with the computer software. The risk of return is considered to be insignificant for RST.

How should the revenue from this transaction and the right of return be recognised in the financial statements for the year ended 31 December 20X5?

Options:

A.

Recognise 100% of the revenue from both the sale of goods and the maintenance contract and create a provision for the anticipated level of returns.

B.

Do not recognise any revenue from the sale of goods or the maintenance contract and do not create a provision for the anticipated level of returns.

C.

Recognise 12.5% of the revenue from both the sale of goods and the maintenance contract and do not create a provision for the anticipated level of returns.

D.

Recognise 100% of the revenue from the sale of goods,12.5% of the revenue from the maintenance contract and create a provision for the anticipated level of returns.

Question 3

Entity A entered into a 3 year operating lease on 1 April 20X3.  The rentals are £5,000 a year payable in advance with an additional payment of $1,800 payable on 1 April 20X3. 

The rental expense to be included in the statement of profit or loss for the year ended 31 December 20X3 will be:

   

Options:

A.

$4,200

B.

$5,000

C.

$6,800

D.

$5,600