D. A Space in The Building Is Rented To Other Firms

1.
Which of the following elements of financial statements is most closely related to

measurement of performance?
A. Assets.
B. Expenses.
C. Liabilities.
D. Capital.
E. None.
2. A building owned by a firm is most likely to be classified as investment property if:
A. The building is a manufacturing plant or distribution center.
B. The firm uses the building for its corporate headquarters.
C. The firm leased out the building to its subsidiary
D. A space in the building is rented to other firms.
E. The building is intended for sale in the ordinary course of business.
3. BETTO S.A, has recently purchased and installed a new machine for its manufacturing plant.
The company incurred the following costs:
Purchase price $9,800
Freight and insurance $1,100
Installation $500
Administration and other general overhead $2000

costs
Maintenance staff training costs $400
The total cost of the machine to be shown on BETTO’s balance sheet is closest to:
A. $13,400.
B. $13,800.
C. $11,400.
D. $10,900.
E. $12,900.
4. Under normal circumstances, intangible assets with indefinite lives are:
A. Amortized over a reasonable period but not subject to impairment.
B. Amortized over a reasonable period and subject to impairment.
C. Not amortized but subject to impairment.
D. Not reviewed for deeming the useful life of the asset as indefinite.
E. None.
5. A financial analyst at Altai Mountain Rail Company (AMRC) is analyzing the result of the
sale of an equipment for €45,000 on 31 December 2010. The analyst compiles the following
information about the vehicle:
Acquisition cost of the equipment €90,000
Acquisition date 1 January 2007
Estimated residual value at acquisition date €0
Expected useful life 9 years
Depreciation method Straight-line
The result of the sale of the equipment is most likely:
A. a loss of €5,000.
B. a gain of €5,000.
C. a gain of €15,000.
D. a loss of €15,000.
E. a loss of €10,000.
6. A business which comprises a single cash-generating unit has the following assets:
$m
Property 20
Plant and equipment 25
Patent 5
Goodwill 3
Net current assets 3
56
Following an impairment review it is estimated that the value of the patent is $4 million and the
recoverable amount of the business is $43 million.
At what approximate amount should the plant and equipment be measured following the
impairment review?
A. $4 million.
B. $5 million.
C. $13 million.
D. $16 million.
E. $20 million.
7. During inventory valuation, Dobkin Company decides to expense costs that it would have
otherwise capitalized. Compared to capitalizing, expensing these costs will result in:
A. lower asset levels and lower liability levels.
B. lower asset levels and lower equity levels.
C. lower asset levels and higher equity levels.
D. higher asset levels and lower equity levels.
E. higher liability levels and lower equity levels.
8. Zimt AG started business in 2007 and uses the FIFO method. During 2007, it purchased
45,000 units of inventory at €10 each and sold 40,000 units for €20 each. In 2008, it purchased
another 50,000 units at €11 each and sold 45,000 units for €22 each. Its 2008 ending inventory
balance (€ thousands) was closest to:
A. €109.
B. €105.
C. €110.
D. €490.
E. €495.
9. Which step is less likely taken within the consolidation process of statements of financial
positions between companies?
A. The carrying amount of the parent's investment in each subsidiary and the parent's
portion of equity of each subsidiary are eliminated.
B. All intragroup balances and transactions, and the resulting unrealized profits,
should be considered in full.
C. Dividends paid by a subsidiary must be accounted for.
D. Non-controlling interests in the net income of consolidated subsidiaries are adjusted

against group income.
E. Non-controlling interests in the net assets of consolidated subsidiaries should be
presented separately.
10. On 1 January 2005, Tom Co acquired 80% of the equity shares of Jerry Co. Tom Co values
non-controlling interests at fair value and, at the date of acquisition, goodwill was valued at
$18,000. At December 2005, the goodwill was fully impaired.
In reviewing the fair value of Jerry Co's net assets at acquisition, Tom Co concluded that
property, plant and equipment, with a remaining life of five years, had a fair value of $10,000 in
excess of its carrying amount.
Jerry Co has not incorporated any of these adjustments into its individual financial statements.
What is the total charged to group retained earnings at 31 December 2005 as a result of these
consolidation adjustments?
A. $16,000.
B. $20,000.
C. $18,000.
D. $28,000.
E. $8,000.

D. A Space in The Building Is Rented To Other Firms

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1.

Which of the following elements of financial statements is most closely related to

2. A building owned by a firm is most likely to be classified as investment property if:

A. The building is a manufacturing plant or distribution center.

B. The firm uses the building for its corporate headquarters.

C. The firm leased out the building to its subsidiary

D. A space in the building is rented to other firms.

E. The building is intended for sale in the ordinary course of business.

Purchase price $9,800

Freight and insurance $1,100

Administration and other general overhead $2000

Maintenance staff training costs $400

A. Amortized over a reasonable period but not subject to impairment.

B. Amortized over a reasonable period and subject to impairment.

C. Not amortized but subject to impairment.

Acquisition cost of the equipment €90,000

Acquisition date 1 January 2007

Estimated residual value at acquisition date €0

Expected useful life 9 years

Depreciation method Straight-line

The result of the sale of the equipment is most likely:

A. lower asset levels and lower liability levels.

B. lower asset levels and lower equity levels.

C. lower asset levels and higher equity levels.

D. higher asset levels and lower equity levels.

E. higher liability levels and lower equity levels.

C. Dividends paid by a subsidiary must be accounted for.

D. Non-controlling interests in the net income of consolidated subsidiaries are adjusted

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