Subject: FINANCIAL REPORTING

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FR – Nov 2023 – L2 – Q7b – Presentation of Financial Statements (IAS 1)

Lists minimum line items for the statement of financial position and changes in equity as per IAS 1

Question

IAS 1- Presentation of Financial Statements provides a list of line items that, as a minimum, must be shown on the face of the statement of financial position.

Required:

i. Give FIVE examples of minimum line items to be shown on the face of the statement of financial position. (5 Marks)
ii. State FIVE items that should be accounted for in the statement of changes in equity. (5 Marks)

Answer

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Tags: Changes in Equity, Equity Components, IAS 1, Minimum Line Items, Statement of Financial Position
Level: Level 2

Topic: Presentation of Financial Statements (IAS 1)

FR – Nov 2023 – L2 – Q7a – Regulatory Framework for Financial Reporting

Discusses main sources of financial reporting regulations and reasons for regulatory practices.

Question

Within the context of financial reporting and regulatory frameworks:

i. Discuss the main sources of regulations. (3 Marks)
ii. Discuss TWO reasons why financial reporting practice should be regulated. (2 Marks)

Answer

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Tags: Accounting Standards, Company Law, Financial Reporting, Regulations, Regulatory Rationale, Stock Exchange
Level: Level 2

Topic: Regulatory Framework for Financial Reporting

FR – Nov 2023 – L2 – Q6c – Conceptual Framework for Financial Reporting

Discusses areas of financial reporting enhanced by technology, such as data collection, recording, and report distribution.

Question

Discuss TWO areas of financial reporting that could be enhanced by the use of technology. (4 Marks)

Answer

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Tags: Data collection, Data Recording, Report Consumption, Report Distribution, Report preparation, Technology Integration
Level: Level 2

Topic: Conceptual Framework for Financial Reporting

FR – Nov 2023 – L2 – Q6b – Ethical Issues in Financial Reporting

List three types of non-financial information useful to stakeholders for decision-making.

Question

Businesses are increasingly accepting that they are not only accountable to investors and lenders, but also accountable to a much wider group of people or stakeholders to which non-financial information is useful in understanding and taking informed decisions on financial statements of the entities.

Required:
State THREE of such useful non-financial information. (3 Marks)

Answer

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Tags: Decision Making, Financial Statements, Non-financial Information, Stakeholder Accountability
Level: Level 2

Topic: Ethical Issues in Financial Reporting

FR – Nov 2023 – L2 – Q6a – Ethical Issues in Financial Reporting

Identify and discuss techniques for manipulating financial statements under ethical compliance.

Question

The management of an entity experiencing a decline in profits or poor cash flows may use various forms of creative accounting techniques to manipulate the views shown by the financial statements while complying with all applicable accounting standards and regulations.

Required:
Identify and discuss FOUR techniques of creative accounting. (8 Marks)

Answer

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Tags: Accounting estimates, Creative Accounting, Ethical Issues, Financial Manipulation, Window Dressing
Level: Level 2

Topic: Ethical Issues in Financial Reporting

FR – Nov 2023 – L2 – Q5b – Accounting for Income Taxes (IAS 12)

Calculate Shakara Limited's income tax liability, deferred tax balance, and movement of deferred tax.

Question

Shakara Limited was incorporated on January 1, 2022. During the year ended December 31, 2022, the company made a profit before taxation of N18,150,000.

The following capital expenditure were made during the year:

Expenditure	N’000
Plant and machinery	7,200
Motor vehicles	1,800

The depreciation charged for the year amounted to N1,650,000, and capital allowance granted by the Federal Inland Revenue Services (FIRS) for the same period amounted to N2,250,000.

Company income tax rate is 30%, and deferred tax liability brought forward was N1,200,000.

Required:
i. Calculate the company income tax liability for the year ended December 31, 2022. (3 Marks)

ii. Calculate the deferred tax balance that should be disclosed in the statement of financial position of Shakara Limited as at December 31, 2022. (3 Marks)

iii. Prepare notes showing the movement of deferred tax charged to profit or loss for the year ended December 31, 2022. (3 Marks)

Answer

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Tags: Capital Allowance, Deferred Tax, IAS 12, Income Tax, Tax Liability
Level: Level 2

Topic: Accounting for Income Taxes (IAS 12)

FR – Nov 2023 – L2 – Q5a – Accounting for Income Taxes (IAS 12)

Define deferred tax, permanent differences, and temporary differences per IAS 12.

Question

Explain the following terms in accordance with IAS 12 – Income tax.
i. Deferred tax
ii. Permanent differences
iii. Temporary differences

Answer

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Tags: Deferred Tax, IAS 12, Permanent Differences, Temporary Differences
Level: Level 2

Topic: Accounting for Income Taxes (IAS 12)

FR – Nov 2023 – L2 – Q4a & b – Earnings Per Share (IAS 33)

Discuss diluted EPS and calculate EPS measures for Ebonyi Limited.

Question

IAS 33 requires publicly-traded companies to calculate a diluted Earning Per Share (EPS) in addition to their basic EPS for the current year (with a comparative diluted EPS for the previous year), allowing for the effect of all dilutive potential ordinary shares.

Required: a. Explain the purpose of the dilutive measures and discuss THREE types of dilution. (8 Marks)

b. The statement of financial position (extracts) for Ebonyi Limited for the year ended December 31, 2022 is as follows:

Equity and Liabilities	N’000
Ordinary shares (N1 each)	12,000
Retained earnings	36,000
Equity	48,000
Non-current liabilities:
5% convertible loan notes	4,000

Additional information: i. As at December 31, 2022, there has been no new issue of shares or loan notes for several years.
ii. The loan notes are convertible into ordinary shares in year 2023 or year 2024 at the following rates.
iii. At 30 shares for every N100 of loan notes if converted at December 31, 2023.
iv. At 25 shares for every N100 of loan notes if converted at December 31, 2024.
v. Company income tax rate is 30% on profit.

Required: Calculate the basic EPS and diluted EPS for year 2022. (8 Marks)

c. IAS 33 allows an entity to disclose an alternative measure of EPS in addition to the EPS calculated.

Required: Identify and explain TWO conditions that are required in accordance with IAS 33 to be complied with where an alternative measure of EPS is shown in the financial statements of an entity. (4 Marks)

Answer

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Tags: Contingently Issuable Shares, Convertible Instruments, Dilution, Earnings Per Share, Financial Statements, Options
Level: Level 2

Topic: Earnings Per Share (IAS 33)

FR – Nov 2023 – L2 – Q3b – Property, Plant, and Equipment (IAS 16)

Discuss financial implications of reclassifying investment property under cost and fair value models.

Question

Young Shall Grow Limited with year-end December 31 purchased an office building, with a useful life of 50 years, for N55 million on January 1, 2013. The amount attributable to land was negligible. The company used the building as its head office until December 31, 2017, when the entity moved to a larger premises.

The building was reclassified as an investment property and leased out under a five-year lease. However, owing to a change in circumstances, Young Shall Grow Limited took possession of the building five years later, on December 31, 2022, to use it as its head office once more. At that date, the remaining useful life of the building was confirmed as 40 years.

The fair value of the building was as follows:

At December 31, 2017: N60 million
At December 31, 2022: N75 million

Required:

Discuss how the changes of use should be reflected in the financial statements of Young Shall Grow Limited:

If the company uses the cost model for its investment properties.
If the company uses the fair value model for its investment properties.

Answer

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Tags: Change in Use, IAS 40, Investment Property, Reclassification
Level: Level 2

Topic: Property, Plant, and Equipment (IAS 16)

FR – Nov 2023 – L2 – Q3a – Property, Plant, and Equipment (IAS 16)

Explain reclassification criteria for transferring investment property to PPE.

Question

a. If a property is transferred into or out of the category of property, plant and equipment (PPE), it might be reclassified as investment property or as no longer an investment property.

A transfer of investment property can only be made where there is a change of use of such property.

Answer

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Tags: Equipment, IAS Compliance, Investment Property, Plant, Property, Reclassification
Level: Level 2

Topic: Property, Plant, and Equipment (IAS 16)

FR – Nov 2023 – L2 – Q7b – Presentation of Financial Statements (IAS 1)

Lists minimum line items for the statement of financial position and changes in equity as per IAS 1

Question

IAS 1- Presentation of Financial Statements provides a list of line items that, as a minimum, must be shown on the face of the statement of financial position.

Required:

Answer

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Tags: Changes in Equity, Equity Components, IAS 1, Minimum Line Items, Statement of Financial Position
Level: Level 2

Topic: Presentation of Financial Statements (IAS 1)

FR – Nov 2023 – L2 – Q7a – Regulatory Framework for Financial Reporting

Discusses main sources of financial reporting regulations and reasons for regulatory practices.

Question

Within the context of financial reporting and regulatory frameworks:

i. Discuss the main sources of regulations. (3 Marks)
ii. Discuss TWO reasons why financial reporting practice should be regulated. (2 Marks)

Answer

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Tags: Accounting Standards, Company Law, Financial Reporting, Regulations, Regulatory Rationale, Stock Exchange
Level: Level 2

Topic: Regulatory Framework for Financial Reporting

FR – Nov 2023 – L2 – Q6c – Conceptual Framework for Financial Reporting

Discusses areas of financial reporting enhanced by technology, such as data collection, recording, and report distribution.

Question

Discuss TWO areas of financial reporting that could be enhanced by the use of technology. (4 Marks)

Answer

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Tags: Data collection, Data Recording, Report Consumption, Report Distribution, Report preparation, Technology Integration
Level: Level 2

Topic: Conceptual Framework for Financial Reporting

FR – Nov 2023 – L2 – Q6b – Ethical Issues in Financial Reporting

List three types of non-financial information useful to stakeholders for decision-making.

Question

Required:
State THREE of such useful non-financial information. (3 Marks)

Answer

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Tags: Decision Making, Financial Statements, Non-financial Information, Stakeholder Accountability
Level: Level 2

Topic: Ethical Issues in Financial Reporting

FR – Nov 2023 – L2 – Q6a – Ethical Issues in Financial Reporting

Identify and discuss techniques for manipulating financial statements under ethical compliance.

Question

Required:
Identify and discuss FOUR techniques of creative accounting. (8 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting estimates, Creative Accounting, Ethical Issues, Financial Manipulation, Window Dressing
Level: Level 2

Topic: Ethical Issues in Financial Reporting

FR – Nov 2023 – L2 – Q5b – Accounting for Income Taxes (IAS 12)

Calculate Shakara Limited's income tax liability, deferred tax balance, and movement of deferred tax.

Question

Shakara Limited was incorporated on January 1, 2022. During the year ended December 31, 2022, the company made a profit before taxation of N18,150,000.

The following capital expenditure were made during the year:

Expenditure	N’000
Plant and machinery	7,200
Motor vehicles	1,800

The depreciation charged for the year amounted to N1,650,000, and capital allowance granted by the Federal Inland Revenue Services (FIRS) for the same period amounted to N2,250,000.

Company income tax rate is 30%, and deferred tax liability brought forward was N1,200,000.

Required:
i. Calculate the company income tax liability for the year ended December 31, 2022. (3 Marks)

ii. Calculate the deferred tax balance that should be disclosed in the statement of financial position of Shakara Limited as at December 31, 2022. (3 Marks)

iii. Prepare notes showing the movement of deferred tax charged to profit or loss for the year ended December 31, 2022. (3 Marks)

Answer

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Tags: Capital Allowance, Deferred Tax, IAS 12, Income Tax, Tax Liability
Level: Level 2

Topic: Accounting for Income Taxes (IAS 12)

FR – Nov 2023 – L2 – Q5a – Accounting for Income Taxes (IAS 12)

Define deferred tax, permanent differences, and temporary differences per IAS 12.

Question

Explain the following terms in accordance with IAS 12 – Income tax.
i. Deferred tax
ii. Permanent differences
iii. Temporary differences

Answer

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Tags: Deferred Tax, IAS 12, Permanent Differences, Temporary Differences
Level: Level 2

Topic: Accounting for Income Taxes (IAS 12)

FR – Nov 2023 – L2 – Q4a & b – Earnings Per Share (IAS 33)

Discuss diluted EPS and calculate EPS measures for Ebonyi Limited.

Question

Required: a. Explain the purpose of the dilutive measures and discuss THREE types of dilution. (8 Marks)

b. The statement of financial position (extracts) for Ebonyi Limited for the year ended December 31, 2022 is as follows:

Equity and Liabilities	N’000
Ordinary shares (N1 each)	12,000
Retained earnings	36,000
Equity	48,000
Non-current liabilities:
5% convertible loan notes	4,000

Required: Calculate the basic EPS and diluted EPS for year 2022. (8 Marks)

c. IAS 33 allows an entity to disclose an alternative measure of EPS in addition to the EPS calculated.

Answer

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Tags: Contingently Issuable Shares, Convertible Instruments, Dilution, Earnings Per Share, Financial Statements, Options
Level: Level 2

Topic: Earnings Per Share (IAS 33)

FR – Nov 2023 – L2 – Q3b – Property, Plant, and Equipment (IAS 16)

Discuss financial implications of reclassifying investment property under cost and fair value models.

Question

The fair value of the building was as follows:

At December 31, 2017: N60 million
At December 31, 2022: N75 million

Required:

Discuss how the changes of use should be reflected in the financial statements of Young Shall Grow Limited:

If the company uses the cost model for its investment properties.
If the company uses the fair value model for its investment properties.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Change in Use, IAS 40, Investment Property, Reclassification
Level: Level 2

Topic: Property, Plant, and Equipment (IAS 16)

FR – Nov 2023 – L2 – Q3a – Property, Plant, and Equipment (IAS 16)

Explain reclassification criteria for transferring investment property to PPE.

Question

a. If a property is transferred into or out of the category of property, plant and equipment (PPE), it might be reclassified as investment property or as no longer an investment property.

A transfer of investment property can only be made where there is a change of use of such property.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Equipment, IAS Compliance, Investment Property, Plant, Property, Reclassification
Level: Level 2

Topic: Property, Plant, and Equipment (IAS 16)

Subject: FINANCIAL REPORTING

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FR – Nov 2023 – L2 – Q7b – Presentation of Financial Statements (IAS 1)

Lists minimum line items for the statement of financial position and changes in equity as per IAS 1

You're reporting an error for "FR – Nov 2023 – L2 – Q7b – Presentation of Financial Statements (IAS 1)"

FR – Nov 2023 – L2 – Q7a – Regulatory Framework for Financial Reporting

Discusses main sources of financial reporting regulations and reasons for regulatory practices.

You're reporting an error for "FR – Nov 2023 – L2 – Q7a – Regulatory Framework for Financial Reporting"

FR – Nov 2023 – L2 – Q6c – Conceptual Framework for Financial Reporting

Discusses areas of financial reporting enhanced by technology, such as data collection, recording, and report distribution.

You're reporting an error for "FR – Nov 2023 – L2 – Q6c – Conceptual Framework for Financial Reporting"

FR – Nov 2023 – L2 – Q6b – Ethical Issues in Financial Reporting

List three types of non-financial information useful to stakeholders for decision-making.

You're reporting an error for "FR – Nov 2023 – L2 – Q6b – Ethical Issues in Financial Reporting"

FR – Nov 2023 – L2 – Q6a – Ethical Issues in Financial Reporting

Identify and discuss techniques for manipulating financial statements under ethical compliance.

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FR – Nov 2023 – L2 – Q5b – Accounting for Income Taxes (IAS 12)

Calculate Shakara Limited's income tax liability, deferred tax balance, and movement of deferred tax.

You're reporting an error for "FR – Nov 2023 – L2 – Q5b – Accounting for Income Taxes (IAS 12)"

FR – Nov 2023 – L2 – Q5a – Accounting for Income Taxes (IAS 12)

Define deferred tax, permanent differences, and temporary differences per IAS 12.

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FR – Nov 2023 – L2 – Q4a & b – Earnings Per Share (IAS 33)

Discuss diluted EPS and calculate EPS measures for Ebonyi Limited.

You're reporting an error for "FR – Nov 2023 – L2 – Q4a & b – Earnings Per Share (IAS 33)"

FR – Nov 2023 – L2 – Q3b – Property, Plant, and Equipment (IAS 16)

Discuss financial implications of reclassifying investment property under cost and fair value models.

You're reporting an error for "FR – Nov 2023 – L2 – Q3b – Property, Plant, and Equipment (IAS 16)"

FR – Nov 2023 – L2 – Q3a – Property, Plant, and Equipment (IAS 16)

Explain reclassification criteria for transferring investment property to PPE.

You're reporting an error for "FR – Nov 2023 – L2 – Q3a – Property, Plant, and Equipment (IAS 16)"

FR – Nov 2023 – L2 – Q7b – Presentation of Financial Statements (IAS 1)

Lists minimum line items for the statement of financial position and changes in equity as per IAS 1

You're reporting an error for "FR – Nov 2023 – L2 – Q7b – Presentation of Financial Statements (IAS 1)"

FR – Nov 2023 – L2 – Q7a – Regulatory Framework for Financial Reporting

Discusses main sources of financial reporting regulations and reasons for regulatory practices.

You're reporting an error for "FR – Nov 2023 – L2 – Q7a – Regulatory Framework for Financial Reporting"

FR – Nov 2023 – L2 – Q6c – Conceptual Framework for Financial Reporting

Discusses areas of financial reporting enhanced by technology, such as data collection, recording, and report distribution.

You're reporting an error for "FR – Nov 2023 – L2 – Q6c – Conceptual Framework for Financial Reporting"

FR – Nov 2023 – L2 – Q6b – Ethical Issues in Financial Reporting

List three types of non-financial information useful to stakeholders for decision-making.

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FR – Nov 2023 – L2 – Q6a – Ethical Issues in Financial Reporting

Identify and discuss techniques for manipulating financial statements under ethical compliance.

You're reporting an error for "FR – Nov 2023 – L2 – Q6a – Ethical Issues in Financial Reporting"

FR – Nov 2023 – L2 – Q5b – Accounting for Income Taxes (IAS 12)

Calculate Shakara Limited's income tax liability, deferred tax balance, and movement of deferred tax.

You're reporting an error for "FR – Nov 2023 – L2 – Q5b – Accounting for Income Taxes (IAS 12)"

FR – Nov 2023 – L2 – Q5a – Accounting for Income Taxes (IAS 12)

Define deferred tax, permanent differences, and temporary differences per IAS 12.

You're reporting an error for "FR – Nov 2023 – L2 – Q5a – Accounting for Income Taxes (IAS 12)"

FR – Nov 2023 – L2 – Q4a & b – Earnings Per Share (IAS 33)

Discuss diluted EPS and calculate EPS measures for Ebonyi Limited.

You're reporting an error for "FR – Nov 2023 – L2 – Q4a & b – Earnings Per Share (IAS 33)"

FR – Nov 2023 – L2 – Q3b – Property, Plant, and Equipment (IAS 16)

Discuss financial implications of reclassifying investment property under cost and fair value models.

You're reporting an error for "FR – Nov 2023 – L2 – Q3b – Property, Plant, and Equipment (IAS 16)"

FR – Nov 2023 – L2 – Q3a – Property, Plant, and Equipment (IAS 16)

Explain reclassification criteria for transferring investment property to PPE.

You're reporting an error for "FR – Nov 2023 – L2 – Q3a – Property, Plant, and Equipment (IAS 16)"

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