UV has raised $100,000 through the issue of two irredeemable financial instruments:
* 6% debentures with a current market value of $101.50 per $100 nominal value; and
* 8% preference shares with a current share price of $2.20 each.
The corporate income tax rate is 20%
What is the post tax cost of debt for each of these instruments?

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Which TWO of the following are TRUE in respect of preparing a consolidated statement of cash flows where there has been an acquisition of a subsidiary part way through the year?

• A.The working capital held by the subsidiary at acquisition will be excluded from the year end figures based on the percentage shareholding in the subsidiary.
• B.Non-controlling interest will arise in relation to the subsidiary and any dividends paid to the non- controlling interest will be shown within financing activities as a cash outflow.
• C.Investing activities will include a total cash outflow for the acquisition comprising the cash paid for the subsidiary less the cash held by the subsidiary at the acquisition date.
• D.The year end cash and cash equivalents balance will be reduced by the cash and cash equivalents that were held by the subsidiary at the acquisition date.
• E.Any shares that were issued on acquisition of the subsidiary will be shown separately on the statement of cash flows within financing activities.

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Mr D, a CIMA qualified accountant, is working on the preparation of a long term profit forecast required by the local stock market prior to a new share issue of equity shares. At the most recent board meeting the directors requested that the forecast be inflated. In Mr D's view this would grossly overestimate the forecast profit. The board intends to publish the revised inflated forecast.
Which THREE of the following are the ethical options available to Mr D in this situation?

• A.Discuss the situation with his line manager.
• B.Submit the original forecast without the board's approval.
• C.Delegate the work to a subordinate.
• D.Consider resignation of his post as accountant.
• E.Adjust the figures in line with the board's request as this is a forecast and not the financial statements.
• F.Consider reporting the situation to the appropriate authorities.

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RS has issued an instrument with a nominal value of $1 million, at a discount of 2.5%, and a coupon rate of 6%. The terms of the issue are that the instrument must either be redeemed at par, at the option of the holder, in three years' time, or alternatively converted into equity shares in RS.
The characteristics of this instrument taken as a whole indicates that it would be classifed as which of the following?

• A.Equity instrument
• B.Debt instrument
• C.Compound instrument
• D.Discounted instrument

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XY puchased 2% of the equity shares of FG on 1 October 20X3.
XY paid $25,000 for the shares as well as a transaction cost of 2.5% of the purchase price.
The shares are being held for short term trading and XY intend to sell them in December 20X3.
At the year end of 31 October 20X3, the shares in FG could be sold for $28,000.
What is the journal entry to record the subsequent measurement for this investment at 31 October
20X3?

• A.Debit investment in equity shares $2,375 and credit other reserves $2,375.
• B.Debit investment in equity shares $3,000 and credit other reserves $3,000.
• C.Debit investment in equity shares $2,375 and credit profit or loss $2,375.
• D.Debit investment in equity shares $3,000 and credit profit or loss $3,000.

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