Which of the following would cause a deferred tax balance to be included in the statement of financial position for an entity?

• A.Impairment of goodwill that arose on the acquisition of a subsidiary entity.
• B.The acquisition of plant and equipment a year ago where the tax depreciation rate is different to the accounting depreciation rate.
• C.The acquisition of land for which there is no tax depreciation.
• D.Expenses in the statement of profit or loss which are not allowable for tax creating a permanent difference.

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KL acquired 75% of the equity share capital of MN on 1 January 20X8. The group's policy is to value non- controlling interest at fair value at the date of acquisition. MN acquired 60% of the equity share capital of PQ on 1 January 20X9 for $360 million.
At 1 January 20X9 the fair value of the non-controlling interest in PQ was $220 million and the fair value of the net assets of PQ at 1 January 20X9 were $320 million.
Calculate the goodwill arising on the acquisition of PQ at 1 January 20X9.
Give your answer to the nearest million.
$ ? million

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Information from the financial statements of RST for the year ended 30 April 20X9 is as follows:

At 30 April 20X9 the ordinary shares are trading at $4.75.
What is the price earnings (P/E) ratio for RST at 30 April 20X9?

• A.10.56
• B.9.31
• C.7.92
• D.15.83

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AB and EF are located in the same country and prepare their financial statements to 31 October in accordance with International Accounting Standards. EF supplies AB with a component that is vital to AB's product range. AB is considering acquiring a controlling interest in EF by 31 December 20X4 in order to guarantee future supply. The Board of EF has indicated that such an approach would be postively considered. AB would use its control to make AB the sole customer of EF.
The Finance Director of AB has been granted access to EF's management accounts and has conducted some initial analysis from the financial press. The results togther with comparisons for AB for the year to
31 October 20X4 are presented below:

AB and EF are forecasting revenues of S1,500,000 and $700,000 respectively for the year ended 31 October 20X5.
AB's Finance Director met with one of the directors of EF to discuss the potential impact of the acquisition.
Which of the director's statements below is correct?

• A.Redundancy costs arising from reorganisation following acquisition will be provided for by charging EF's profit for the year ended 31 October 20X4.
• B.The P/E ratio of EF will increase to 12 after acquisition in line with that of AB.
• C.The gross profit margin of EF will increase if AB's bargaining power is used to negotiate lower material costs for the whole group.
• D.Dividend yield for both entities will be identical after the acquisition.

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Which THREE of the following actions should improve the cash position of an entity?

• A.Revising the depreciation policy of non-current assets.
• B.Revaluing all non-current assets.
• C.Substituting a bonus issue for the final dividend.
• D.Selling non current assets and leasing them back under operating leases.
• E.Offering extended credit terms to existing customers.
• F.Implementing an efficient inventory ordering system.

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