ACCA paper f7 financial reporting exam kit

Professional Examinations Paper F7 Financial Reporting EXAM KIT P AP ER F 7: F IN AN CI AL RE POR T IN G British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Published by: Kaplan Publishing UK Unit The Business Centre Molly Millar’s Lane Wokingham Berkshire RG41 2QZ ISBN: 978-1-78415-229-1 © Kaplan Financial Limited, 2015 Printed and bound in Great Britain The text in this material and any others made available by any Kaplan Group company does not amount to advice on a particular matter and should not be taken as such No reliance should be placed on the content as the basis for any investment or other decision or in connection with any advice given to third parties Please consult your appropriate professional adviser as necessary Kaplan Publishing Limited and all other Kaplan group companies expressly disclaim all liability to any person in respect of any losses or other claims, whether direct, indirect, incidental, consequential or otherwise arising in relation to the use of such materials All rights reserved No part of this examination may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without prior permission from Kaplan Publishing Acknowledgements The past ACCA examination questions are the copyright of the Association of Chartered Certified Accountants The original answers to the questions from June 1994 onwards were produced by the examiners themselves and have been adapted by Kaplan Publishing We are grateful to the Chartered Institute of Management Accountants and the Institute of Chartered Accountants in England and Wales for permission to reproduce past examination questions The answers have been prepared by Kaplan Publishing ii KA PL AN P U BLI SH IN G CONTENTS Page Index to questions and answers v Analysis of past exam papers xi Exam technique xiii Paper specific information xv Kaplan’s recommended revision approach xix Kaplan’s detailed revision plan xxiii Technical update xxvii Section Objective Test Questions – Section A Practice Questions – Section B Answers to Objective Test Questions – Section A 159 Answers to Practice Questions – Section B 193 51 Specimen exam KA PL AN P U BLI SH IN G i ii P AP ER F 7: F IN AN CI AL RE POR T IN G Key features in this edition In addition to providing a wide ranging bank of real past exam questions, we have also included in this edition: • An analysis of all of the recent examination papers • Paper specific information • Our recommended approach to make your revision for this particular subject as effective as possible This includes step by step guidance on how best to use our Kaplan material (Complete text, pocket notes and exam kit) at this stage in your studies • Enhanced tutorial answers packed with specific key answer tips, technical tutorial notes and exam technique tips from our experienced tutors • Complementary online resources including full tutor debriefs and question assistance to point you in the right direction when you get stuck You will find a wealth of other resources to help you with your studies on the following sites: www.mykaplan.co.uk www.kaplan-exam-tips.com www.accaglobal.com/students/ Quality and accuracy are of the utmost importance to us so if you spot an error in any of our products, please send an email to mykaplanreporting@kaplan.com with full details, or follow the link to the feedback form in MyKaplan Our Quality Co-ordinator will work with our technical team to verify the error and take action to ensure it is corrected in future editions iv KA PL AN P U BLI SH IN G INDEX TO QUESTIONS AND ANSWERS INTRODUCTION Following the revised exam format, and the addition of IFRS 15 Revenue and the November 2013 update to IFRS Financial Instruments, many of the previous ACCA exam questions within this kit have been adapted to reflect updated standards, and the revised exam format If changed in any way from the original version, whether due to updates in the IFRSs or due to changes in exam format, this is indicated in the end column of the index below with the mark (A) The specimen paper is included at the end of the kit KEY TO THE INDEX PAPER ENHANCEMENTS We have added the following enhancements to the answers in this exam kit: Key answer tips All answers include key answer tips to help your understanding of each question Tutorial note All answers include more tutorial notes to explain some of the technical points in more detail Top tutor tips For selected questions, we 'walk through the answer' giving guidance on how to approach the questions with helpful ‘tips from a top tutor’, together with technical tutor notes These answers are indicated with the 'footsteps' icon in the index KA PL AN P U BLI SH IN G v P AP ER F 7: F IN AN CI AL RE POR T IN G ONLINE ENHANCEMENTS Timed question with Online tutor debrief For selected questions, we recommend that they are to be completed in full exam conditions (i.e properly timed in a closed book environment) In addition to the examiner’s technical answer, enhanced with key answer tips and tutorial notes in this exam kit, online you can find an answer debrief by a top tutor that: • works through the question in full • points out how to approach the question • how to ensure that the easy marks are obtained as quickly as possible, and • emphasises how to tackle exam questions and exam technique These questions are indicated with the 'clock' icon in the index Online question assistance Have you ever looked at a question and not know where to start, or got stuck part way through? For selected questions, we have produced 'Online question assistance' offering different levels of guidance, such as: • ensuring that you understand the question requirements fully, highlighting key terms and the meaning of the verbs used • how to read the question proactively, with knowledge of the requirements, to identify the topic areas covered • assessing the detail content of the question body, pointing out key information and explaining why it is important • help in devising a plan of attack With this assistance, you should then be able to attempt your answer confident that you know what is expected of you These questions are indicated with the 'signpost' icon in the index Online question enhancements and answer debriefs will be available on MyKaplan at: www.MyKaplan.co.uk vi KA PL AN P U BLI SH IN G IN DE X TO Q UE S T ION S A N D A N S WE R S Page number Question Answer Past exam SECTION A-TYPE QUESTIONS Conceptual framework/International Financial Reporting Standards 159 Statement of cash flows 34 181 Consolidated financial statements 37 183 Interpretation of financial statements 45 189 SECTION B-TYPE QUESTIONS CONCEPTUAL FRAMEWORK/FINANCIAL STATEMENTS 161 Financial statements 51 193 Jun 08 162 Fino 52 196 Dec 07 163 Wardle 52 198 Jun 10 164 Tunshill 53 200 Dec 10 165 Promoil 54 202 Dec 08 166 Waxwork 55 203 Jun 09 167 Darby 55 206 Dec 09 168 Rebound 57 209 Jun 11 169 Borough 58 211 Dec 11 170 Telepath 59 213 Jun 12 171 Lobden 60 214 Dec 12 172 Radar 61 217 Jun 13 173 Laidlaw 62 218 Dec 13 174 Enca 63 220 Jun 14 175 Fundo 64 222 Dec 13 176 Speculate 65 223 Jun 13 177 Bertrand 65 224 Dec 11 178 Shawler 66 226 Dec 12 179 Flightline 67 227 Jun 09 180 Apex 68 229 Jun 10 181 Barstead 68 231 Dec 09 182 Skeptic 69 233 Jun 14 KA PL AN P U BLI SH IN G v ii P AP ER F 7: F IN AN CI AL RE POR T IN G PREPARATION OF SINGLE COMPANY FINANCIAL STATEMENTS Page number Question Answer Past exam 183 Llama 70 235 Dec 07 (A) 184 Dexon 72 239 Jun 08 (A) 185 Cavern 74 245 Dec 10 (A) 186 Candel 76 249 Dec 08 (A) 187 Pricewell 78 254 Jun 09 (A) 188 Sandown 80 258 Dec 09 (A) 189 Highwood 82 262 Jun 11 (A) 190 Keystone 84 267 Dec 11 (A) 191 Fresco 86 271 Jun 12 (A) 192 Quincy 88 275 Dec 12 (A) 193 Atlas 90 279 Jun 13 (A) 194 Moby 92 284 Dec 13 (A) 195 Xtol 94 289 Jun 14 (A) 196 Wellmay 96 291 Jun 07 (A) 197 Dune 98 294 Jun 10 (A) 198 Tourmalet 99 298 Dec 03 (A) 199 Kandy 101 301 Dec 14 200 Minster 102 304 Dec 06 (A) 201 Tabba 104 307 Dec 05 (A) 202 Coaltown 106 311 Jun 09 (A) 203 Monty 108 314 Jun 13 (A) 204 Kingdom 110 317 Dec 13 (A) v ii i KA PL AN P U BLI SH IN G IN DE X TO Q UE S T ION S A N D A N S WE R S BUSINESS COMBINATIONS Page number Question Answer Past exam 205 Premier 112 320 Dec 10 (A) 206 Parentis 114 325 Jun 07 (A) 207 Plateau 116 328 Dec 07 (A) 208 Patronic 117 332 Jun 08 (A) 209 Pedantic 119 336 Dec 08 (A) 210 Pandar 121 340 Dec 09 (A) 211 Picant 123 345 Jun 10 (A) 212 Prodigal 125 348 Jun 11 (A) 213 Paladin 127 353 Dec 11 (A) 214 Pyramid 129 357 Jun 12 (A) 215 Viagem 131 360 Dec 12 (A) 216 Paradigm 132 362 Jun 13 (A) 217 Polestar 134 365 Dec 13 (A) 218 Penketh 136 369 Jun 14 (A) 219 Plastik 137 371 Dec 14 ANALYSING FINANCIAL STATEMENTS Page number Question Answer Past exam 220 Hardy 140 375 Dec 10 (A) 221 Pinto 142 378 Jun 08 (A) 222 Harbin 144 379 Dec 07 (A) 223 Greenwood 146 382 Jun 07 (A) 224 Victular 148 384 Dec 08 (A) 225 Quartile 150 387 Dec 12 (A) 226 Bengal 152 389 Jun 11 (A) 227 Woodbank 154 390 Jun 14 (A) 228 Xpand 156 393 Dec 14 KA PL AN P U BLI SH IN G ix P AP ER F 7: F IN AN CI AL RE POR T IN G x KA PL AN P U BLI SH IN G PAPE R SPE CI FI C I N F OR M A TION • For each question in turn, read the requirements and then the detail of the question carefully Always read the requirement first as this enables you to focus on the detail of the question with the specific task in mind For computational questions: Highlight key numbers/information and key words in the question, scribble notes to yourself on the question paper to remember key points in your answer Jot down proformas required if applicable For multiple choice questions: Read the question extremely carefully All of the choices given are likely to be potential answers people could get if one or more errors are made, so take your time on these For longer questions: Spot the easy marks to be gained in a question and parts which can be performed independently of the rest of the question For example laying out basic proformas correctly, answer written elements not related to the scenario etc Make sure that you these parts first when you tackle the question Don’t go overboard in terms of planning time on any one question – you need a good measure of the whole paper and a plan for all of the questions at the end of the 15 minutes By covering all questions you can often help yourself as you may find that facts in one question may remind you of things you should put into your answer relating to a different question • With your plan of attack in mind, start answering your chosen section with your plan to hand, as soon as you are allowed to start Always keep your eye on the clock and not over run on any part of any question! DETAILED SYLLABUS The detailed syllabus and study guide written by the ACCA can be found at: www.accaglobal.com/students/ KA PL AN P U BLI SH IN G xv i i P AP ER F 7: F IN AN CI AL RE POR T IN G xv i i i KA PL AN P U BLI SH IN G KAPLAN’S RECOMMENDED REVISION APPROACH QUESTION PRACTICE IS THE KEY TO SUCCESS Success in professional examinations relies upon you acquiring a firm grasp of the required knowledge at the tuition phase In order to be able to the questions, knowledge is essential However, the difference between success and failure often hinges on your exam technique on the day and making the most of the revision phase of your studies The Kaplan complete text is the starting point, designed to provide the underpinning knowledge to tackle all questions However, in the revision phase, pouring over text books is not the answer Kaplan Online knowledge check tests help you consolidate your knowledge and understanding and are a useful tool to check whether you can remember key topic areas Kaplan pocket notes are designed to help you quickly revise a topic area, however you then need to practice questions There is a need to progress to full exam standard questions as soon as possible, and to tie your exam technique and technical knowledge together The importance of question practice cannot be over-emphasised The recommended approach below is designed by expert tutors in the field, in conjunction with their knowledge of the examiner and their recent real exams The approach taken for the fundamental papers is to revise by topic area You need to practice as many questions as possible in the time you have left OUR AIM Our aim is to get you to the stage where you can attempt exam standard questions confidently, to time, in a closed book environment, with no supplementary help (i.e to simulate the real examination experience) Practising your exam technique on real past examination questions, in timed conditions, is also vitally important for you to assess your progress and identify areas of weakness that may need more attention in the final run up to the examination In order to achieve this we recognise that initially you may feel the need to practice some questions with open book help and exceed the required time The approach below shows you which questions you should use to build up to coping with exam standard question practice, and references to the sources of information available should you need to revisit a topic area in more detail KA PL AN P U BLI SH IN G xi x P AP ER F 7: F IN AN CI AL RE POR T IN G Remember that in the real examination, all you have to is: • attempt all questions required by the exam • only spend the allotted time on each question, and • get them at least 50% right! Try and practice this approach on every question you attempt from now to the real exam Previously, the exam format meant that students were able to attempt some form of ‘question spotting’ as there were three large topic areas Following the introduction of multiple choice questions, this will no longer be the case and to pass F7, students will need to understand information from the wide range of topics across the syllabus EXAMINER COMMENTS We have included some of the examiners comments to the examination questions in this kit for you to see the main pitfalls that students fall into with regard to technical content However, too many times in the general section of the report, the examiner comments that students had failed due to: • 'misallocation of time' • 'running out of time' and • showing signs of 'spending too much time on an earlier question and clearly rushing the answer to a subsequent question' Good exam technique is vital xx KA PL AN P U BLI SH IN G THE KAPLAN PAPER F7 REVISION PLAN Stage 1: Assess areas of strengths and weaknesses Review the topic listings in the revision table plan below Determine whether or not the area is one with which you are comfortable Comfortable with the technical content Not comfortable with the technical content Read the relevant chapter(s) in Kaplan’s Complete Text Attempt the Test your understanding examples if unsure of an area Attempt appropriate Online Progress Tests Review the pocket notes on this area Stage 2: Practice questions Follow the order of revision of topics as recommended in the revision table plan below and attempt the questions in the order suggested Try to avoid referring to text books and notes and the model answer until you have completed your attempt Try to answer the question in the allotted time Review your attempt with the model answer and assess how much of the answer you achieved in the allocated exam time KA PL AN P U BLI SH IN G xx i P AP ER F 7: F IN AN CI AL RE POR T IN G Fill in the self-assessment box below and decide on your best course of action Comfortable with question attempt Only revisit when comfortable with questions on all topic areas Not comfortable with question attempts Focus on these areas by: • Reworking test your understanding examples in Kaplan’s Complete Text • Revisiting the technical content from Kaplan’s pocket notes • Working any remaining questions on that area in the exam kit • Reattempting an exam standard question in that area, on a timed, closed book basis Note that: The 'footsteps questions' give guidance on exam techniques and how you should have approached the question The 'clock questions' have an online debrief where a tutor talks you through the exam technique and approach to that question and works the question in full Stage 3: Final pre-exam revision We recommend that you attempt at least one three hour mock examination containing a set of previously unseen exam standard questions It is important that you get a feel for the breadth of coverage of a real exam without advanced knowledge of the topic areas covered – just as you will expect to see on the real exam day Ideally this mock should be sat in timed, closed book, real exam conditions and could be: • a mock examination offered by your tuition provider, and/or • the specimen paper in the back of this exam kit, and/or • the last real examination paper (available shortly afterwards on MyKaplan with 'enhanced walk through answers' and a full 'tutor debrief') xx i i KA PL AN P U BLI SH IN G KAPLAN’S DETAILED REVISION PLAN Topic Consolidated statement of financial position Complete Text Chapter Pocket note Chapter Questions to attempt Tutor guidance 17/19 17/19 206 Practice the Kaplan working approach Ensure you get the easy marks available in the question from adding the parent and subsidiary assets and liabilities together 207 211 213 Date attempted Self assessment 216 Consolidated statement of profit or loss and other comprehensive income Consolidated statement of profit or loss and other comprehensive income and statement of financial position KA PL AN P U BLI SH IN G 18/19 18/19 208 210 215 218 205 209 217 219 Watch the dates carefully – is there a mid-year acquisition? If so you have to time apportion the subsidiary company results when adding the parent and subsidiary together Set up your proformas first and get the easy marks by adding the parent and subsidiary results together – then complete the standard statement of financial position workings before moving on to complete the statement of profit or loss and other comprehensive income xx i i i P AP ER F 7: F IN AN CI AL RE POR T IN G Topic Complete Text Chapter Pocket note Chapter Questions to attempt Tutor guidance 2 167 Be clear on initial recognition rules and subsequent measurement for PPE, intangible assets and investment properties Ensure you understand how to deal with assets held for sale Date attempted Self assessment Accounting standards: Non-current assets (IAS 16, IAS 38, IAS 40, IFRS 5) 172 174 179 1–6, 19 IAS 23 2 180 IAS 36 4 170 14–18 IAS 17 9 162 50–57 IAS 37 12 12 165 169 84, 87–89 IAS 10 12 12 166 86 IFRS 15 11 11 171 69–77 xx i v Ensure you know the definition of borrowing costs at the recognition and derecognition criteria Learn the impairment test proforma and the cash generating unit write down rules Be sure you can identify the differences between an operating and a finance lease For IAS 37 the recognition rules are very clear – learn the recognition rules Learn the differences between adjusting and non-adjusting events The different revenue scenarios should be looked at, in particular where revenue is recognised over time KA PL AN P U BLI SH IN G KA PL AN ’S DE T AILE D RE V ISI ON P LA N Topic IAS 32/IFRS 7/IFRS Complete Text Chapter Pocket note Chapter Questions to attempt Tutor guidance 10 10 177 Amortised cost is the core area of financial liabilities here Make sure you can deal with loans issued at a discount & redeemed at a premium You will also need an awareness of the categories of financial asset in accordance with IFRS and the accounting treatment for them 59–66 IAS 2, IAS 8, IAS 41, IFRS 13 8 161 171 42–45 79, 81, 83 Self assessment Each standard is relatively small, but it is key that you learn definitions and the specific rules relating to each IAS 12 13 13 91–93 Learn the definition of a temporary difference and practice its application IAS 33 14 14 168 Learn the formula and apply to share issues 181 Date attempted 94–102 Framework 6/7 6/7 161–163 25–39 Preparation of individual company financial statements KA PL AN P U BLI SH IN G 1, 21 183–185 189–192 195, 199 Learn the key definitions and be able to apply them to various standards You have to learn the accounting standards examinable first and then apply your knowledge to these recommended questions xx v P AP ER F 7: F IN AN CI AL RE POR T IN G Topic Statement of cash flows Complete Text Chapter Pocket note Chapter Questions to attempt Tutor guidance 15 15 201 Learn the proforma Start with calculations in questions 201, 203, and 204 before moving on to analysing cash flows in 221 and 226 203 204 221, 226 Ratio interpretation 20 20 220 222, 225 227–228 Date attempted Self assessment Learn the ratio calculations and practice identifying where you pull the information for the formula out of the financial statements Note that not all of the questions are referred to in the programme above We have recommended an approach to build up from the basic to exam standard questions The remaining questions are available in the kit for extra practice for those who require more questions on some areas xx v i KA PL AN P U BLI SH IN G TECHNICAL UPDATE IFRS 15 REVENUE FROM CONTRACTS WITH CUSTOMERS IFRS 15 Revenue from contracts with customers is a new addition to the F7 syllabus This replaces IAS 18 and IAS 11 While many of the numerical answers within F7 are unlikely to be significantly different, there is now a five step approach to recognising revenue from contracts with customers Identify the contract Firstly, the actual contract needs to be identified This can be verbal or written Revenue can only be accounted for if it is probable that the entity will collect the consideration to which it is entitled Identify the separate performance obligations within the contract A contract may include different performance obligations, some of which will be satisfied at a point in time, and some which will be satisfied over time Determine the transaction price If there is a significant financing component (because the amount will be paid over a prolonged period of time), this should be split out of the initial sale and recognised over time Allocate the transaction price The total transaction price should be allocated to each performance obligation within the contract Any discounts on a bundled product are likely to be allocated across all elements of the transaction, unless any element is specifically sold separately at a discount on a regular basis Recognise revenue If the performance obligation is recognised at a point in time, revenue should be recognised at this point If the performance obligation is satisfied over time, revenue should be recognised over time based on progress towards the obligation being satisfied If you are unsure over IFRS 15, it is important that you go back to chapter 11 in the Kaplan Complete text for a more detailed review of the standard IFRS FINANCIAL INSTRUMENTS IFRS Financial Instruments was updated in November 2013 The principle effect of this on the F7 syllabus is that there is a new category for debt instruments, which can be classed as Fair Value through Other Comprehensive Income (FVOCI) if certain tests are met These are: The business model test – The objectives for holding these instruments involve both collecting contractual cash flows and selling financial assets The cash flow characteristics test – The cash flows arising are solely repayments of the instrument and interest on the instrument If these are satisfied, the instrument can be revalued to fair value each year end, with the gain or loss being shown in Other Comprehensive Income KA PL AN P U BLI SH IN G xx v i i P AP ER F 7: F IN AN CI AL RE POR T IN G xx v i ii KA PL AN P U BLI SH IN G Section OBJECTIVE TEST QUESTIONS CONCEPTUAL FRAMEWORK/INTERNATIONAL FINANCIAL REPORTING STANDARDS IAS 16 Property, Plant and Equipment requires an asset to be measured at cost on its original recognition in the financial statements EW used its own staff, assisted by contractors when required, to construct a new warehouse for its own use Which ONE of the following costs would NOT be included in attributable costs of the non-current asset? A Clearance of the site prior to work commencing B Professional surveyors’ fees for managing the construction work C EW’s own staff wages for time spent working on the construction D An allocation of EW’s administration costs, based on EW staff time spent on the construction as a percentage of the total staff time On July 20X4, Experimenter opened a chemical reprocessing plant The plant was due to be active for five years until 30 June 20X9, when it would be decommissioned At July 20X4, the costs of decommissioning the plant were estimated to be $4 million in years time The company considers that a discount rate of 12% is appropriate for the calculation of a present value, and the discount factor at 12% for Year is 0.567 What is the total charge to the statement of profit or loss (depreciation and finance charge) in respect of the decommissioning for the year ended 30 June 20X5? A $453,600 B $725,760 C $800,000 D $2,268,000 KA PL AN P U BLI SH IN G P AP ER F 7: F IN AN CI AL RE POR T IN G An entity purchased property for $6 million on July 20X3 The value of the land was $1 million and the buildings $5 million The expected life of the building was 50 years and its residual value nil On 30 June 20X5 the property was revalued to $7 million (land $1.24 million, buildings $5.76 million) On 30 June 20X7, the property was sold for $6.8 million What is the gain on disposal of the property that would be reported in the statement of profit or loss for the year to 30 June 20X7? A Gain $40,000 B Loss $200,000 C Gain $1,000,000 D Gain $1,240,000 A manufacturing entity receives a grant of $1m to purchase a machine on January 20X3 The grant will be repayable if the company sells the asset within years, which it does not intend to The asset has a useful life of years What is the deferred income liability balance at 30 June 20X3? A $900,000 B $800,000 C $875,000 D $750,000 On January 20X1, Sty Co received $1m from the local government on the condition that they employ at least 100 staff each year for the next years On this date, it was virtually certain that Sty would meet these requirements However, due to an economic downturn and reduced consumer demand, on January 20X2, Sty no longer needed to employ any more staff and the conditions of the grant required full repayment What should be recorded in the financial statements on January 20X2? A Reduce deferred income balance by $750,000 B Reduce deferred income by $750,000 and recognise a loss in the financial statements of $250,000 C Reduce deferred income by $1,000,000 D Reduce deferred income by $1,000,000 and a gain in the financial statements of $250,000 Which one of the following properties would be classified as an investment property? A A stately home used for executive training but which is no longer required and is now being held for resale B Purchased land for investment potential Planning permission has not been obtained for building construction of any kind C A new office building used by an insurance entity as its head office which was purchased specifically in the centre of a major city in order to exploit its capital gains potential D A property that has been leased out under a finance lease KA PL AN P U BLI SH IN G OB JE C TI VE TE S T Q UE S TI ON S – SE C TI ON A : S E CT ION An entity has the following loan finance in place during the year: $1 million of 6% loan finance $2 million of 8% loan finance It constructed a new factory which cost $600,000 and this was funded out of the existing loan finance The factory took months to complete To the nearest thousand, what borrowing costs should be capitalised? A $44,000 B $29,000 C $28,000 D $20,000 Which of the following statements is correct? Statement 1: If the revaluation model is used for property, plant and equipment, revaluations must subsequently be made with sufficient regularity to ensure that the carrying amount does not differ materially from the fair value at each reporting date Statement 2: When an item of property, plant and equipment is revalued, there is no requirement that the entire class of assets to which the item belongs must be revalued A Statement only is correct B Statement only is correct C Both statements are correct D Neither statement is correct Which ONE of the following CANNOT be recognised as an intangible non-current asset in GHK’s statement of financial position at 30 September 20X1? A GHK spent $132,000 developing a new type of product Testing proved that the product was successful in June 20X1 but management worried that it would be too expensive to fund The finances to complete the project came from a cash injection from a benefactor received in November 20X1 B GHK purchased a subsidiary during the year During the fair value exercise, it was found that the subsidiary had a brand name with an estimated value of $50,000, but was not recognised by the subsidiary as it was internally generated C GHK purchased a brand name from a competitor on November 20X0, for $65,000 D GHK spent $21,000 during the year on the development of a new product, after management concluded it would be viable in November 20X0 The product is being launched on the market on December 20X1 and is expected to be profitable KA PL AN P U BLI SH IN G ... conditions and could be: • a mock examination offered by your tuition provider, and/or • the specimen paper in the back of this exam kit, and/or • the last real examination paper (available shortly afterwards... the mark (A) The specimen paper is included at the end of the kit KEY TO THE INDEX PAPER ENHANCEMENTS We have added the following enhancements to the answers in this exam kit: Key answer tips All... Past exam SECTION A-TYPE QUESTIONS Conceptual framework/International Financial Reporting Standards 159 Statement of cash flows 34 181 Consolidated financial statements 37 183 Interpretation of financial