19 Which of the following statements about intangible assets in company financial statements are correct accordingto international accounting standards?1 Internally generated goodwill should not be capitalised.2 Purchased goodwill should normally be amort

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19 Which of the following statements about intangible assets in company financial statements are correct according

to international accounting standards?

1 Internally generated goodwill should not be capitalised.

2 Purchased goodwill should normally be amortised through the income statement.

3 Development expenditure must be capitalised if certain conditions are met.

A 1 and 3 only

B 1 and 2 only

C 2 and 3 only

D All three statements are correct

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(c) At 1 June 2006, Router held a 25% shareholding in a film distribution company, Wireless, a public limitedcompany. On 1 January 2007, Router sold a 15% holding in Wireless thus reducing its investment to a 10%holding. Router no longer exercises significant influence over Wireless. Before the sale of the shares the net assetvalue of Wireless on 1 January 2007 was $200 million and goodwill relating to the acquisition of Wireless was$5 million. Router received $40 million for its sale of the 15% holding in Wireless. At 1 January 2007, the fairvalue of the remaining investment in Wireless was $23 million and at 31 May 2007 the fair value was$26 million. (6 marks)Required:Discuss how the above items should be dealt with in the group financial statements of Router for the year ended31 May 2007.Required:Discuss how the above items should be dealt with in the group financial statements of Router for the year ended31 May 2007.

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(c) Discuss how the manipulation of financial statements by company accountants is inconsistent with theirresponsibilities as members of the accounting profession setting out the distinguishing features of aprofession and the privileges that society gives to a profession. (Your answer should include reference to theabove scenario.) (7 marks)Note: requirement (c) includes 2 marks for the quality of the discussion.

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第3题

4 The transition to International Financial Reporting Standards (IFRSs) involves major change for companies as IFRSsintroduce significant changes in accounting practices that were often not required by national generally acceptedaccounting practice. It is important that the interpretation and application of IFRSs is consistent from country tocountry. IFRSs are partly based on rules, and partly on principles and management’s judgement. Judgement is morelikely to be better used when it is based on experience of IFRSs within a sound financial reporting infrastructure. It ishoped that national differences in accounting will be eliminated and financial statements will be consistent andcomparable worldwide.Required:(a) Discuss how the changes in accounting practices on transition to IFRSs and choice in the application ofindividual IFRSs could lead to inconsistency between the financial statements of companies. (17 marks)

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第4题

2 Marrgrett, a public limited company, is currently planning to acquire and sell interests in other entities and has askedfor advice on the impact of IFRS3 (Revised) ‘Business Combinations’ and IAS27 (Revised) ‘Consolidated and SeparateFinancial Statements’. The company is particularly concerned about the impact on earnings, net assets and goodwillat the acquisition date and any ongoing earnings impact that the new standards may have.The company is considering purchasing additional shares in an associate, Josey, a public limited company. Theholding will increase from 30% stake to 70% stake by offering the shareholders of Josey, cash and shares inMarrgrett. Marrgrett anticipates that it will pay $5 million in transaction costs to lawyers and bankers. Josey hadpreviously been the subject of a management buyout. In order that the current management shareholders may remainin the business, Marrgrett is going to offer them share options in Josey subject to them remaining in employment fortwo years after the acquisition. Additionally, Marrgrett will offer the same shareholders, shares in the holding companywhich are contingent upon a certain level of profitability being achieved by Josey. Each shareholder will receive sharesof the holding company up to a value of $50,000, if Josey achieves a pre-determined rate of return on capitalemployed for the next two years.Josey has several marketing-related intangible assets that are used primarily in marketing or promotion of its products.These include trade names, internet domain names and non-competition agreements. These are not currentlyrecognised in Josey’s financial statements.Marrgrett does not wish to measure the non-controlling interest in subsidiaries on the basis of the proportionateinterest in the identifiable net assets, but wishes to use the ‘full goodwill’ method on the transaction. Marrgrett isunsure as to whether this method is mandatory, or what the effects are of recognising ‘full goodwill’. Additionally thecompany is unsure as to whether the nature of the consideration would affect the calculation of goodwill.To finance the acquisition of Josey, Marrgrett intends to dispose of a partial interest in two subsidiaries. Marrgrett willretain control of the first subsidiary but will sell the controlling interest in the second subsidiary which will becomean associate. Because of its plans to change the overall structure of the business, Marrgrett wishes to recognise are-organisation provision at the date of the business combination.Required:Discuss the principles and the nature of the accounting treatment of the above plans under International FinancialReporting Standards setting out any impact that IFRS3 (Revised) ‘Business Combinations’ and IAS27 (Revised)‘Consolidated and Separate Financial Statements’ might have on the earnings and net assets of the group.Note: this requirement includes 2 professional marks for the quality of the discussion.(25 marks)

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第5题

5 An enterprise has made a material change to an accounting policy in preparing its current financial statements.Which of the following disclosures are required by IAS 8 Accounting policies, changes in accounting estimatesand errors in these financial statements?1 The reasons for the change.2 The amount of the consequent adjustment in the current period and in comparative information for prior periods.3 An estimate of the effect of the change on future periods, where possible.A 1 and 2 onlyB 1 and 3 onlyC 2 and 3 onlyD All three items

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第6题

9 Which of the following items must be disclosed in a company’s published financial statements (including notes)if material, according to IAS1 Presentation of financial statements?1 Finance costs.2 Staff costs.3 Depreciation and amortisation expense.4 Movements on share capital.A 1 and 3 onlyB 1, 2 and 4 onlyC 2, 3 and 4 onlyD All four items

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第7题

16 Which of the following statements about accounting concepts and conventions are correct?(1) The entity concept requires that a business is treated as being separate from its owners.(2) The use of historical cost accounting tends to understate assets and profit when prices are rising.(3) The prudence concept means that the lowest possible values should be applied to income and assets and thehighest possible values to expenses and liabilities.(4) The money measurement concept means that only assets capable of being reliably measured in monetary termscan be included in the balance sheet of a business.A 1 and 2B 2 and 3C 3 and 4D 1 and 4

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19 Which of the following statements about intangible assets in company financial statements are correct accordingto international accounting standards?1 Internally generated goodwill should not be capitalised.2 Purchased goodwill should normally be amort

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