AB, a listed entity, prepared its financial statements to 31 December 20X7, in accordance with international accounting standards.

Which THREE of the following were disclosed as related parties of AB in its financial statements?

A. AB's defined benefit pension plan.

B. The wife of the Managing Director of AB, to whom AB sold a motor vehicle in the year to 31 December 20X7.

C. ST, an entity that was jointly established by AB and CD, and that is accounted for as a joint venture in AB's financial statements to 31 December 20X7.

D. AB's bank that provides more than 60% of the entity's loan finance.

E. AB's main supplier, GH, who supplies more than 70% of AB's goods for manufacture.

The directors of AB want to reduce the entity's gearing ratio in the year to 31 December 20X9.

Which of the following independent actions could the directors take during 20X9 to achieve this?

A. Recognise the valuation surplus on AB's property, plant and equipment.

B. Issue cumulative preference shares.

C. Issue redeemable preference shares.

D. Switch AB's fixed interest bearing borrowing to a lower variable rate borrowing.

On 1 January 20X4 JK had 1,500,000 ordinary shares in issue. On 1 September 20X4 JK issued 600,000 ordinary shares at the market value of $2.50 a share. For the financial year ended 31 December 20X4 the statement of profit or loss shows profit before tax of $625,000 and profit after tax of $500,000.

What is the earnings per share for the year ended 31 December 20X4?

A. 23.8 cents

B. 36.8 cents

C. 26.3 cents

D. 29.4 cents

HJ is currently in dispute with an employee, who is claiming $400,000 in a legal case against them.

HJ's legal advisors have stated that it is probable that they will lose the case and will have to pay the amount claimed.

Also, HJ are claiming $250,000 from a supplier of defective goods and the legal advisors have stated that it is probable that HJ will be successful in this claim.

What is the correct accounting treatment for these two items in HJ's financial statements?

A. Provide for the $400,000 potential outflow and disclose the $250,000 potential inflow.

B. Provide for the $400,000 potential outflow and recognise the $250,000 potential inflow.

C. Disclose the $400,000 potential outflow and disclose the $250,000 potential inflow.

D. Disclose the $400,000 potential outflow and recognise the $250,000 potential inflow.

CORRECT TEXT

The following is extracted from MN's statement of financial position at 30 September 20X1.

Calculate the gearing (measured as debt:equity) ratio of MN at 30 September 20X1.

Give your answer to one decimal place.

%

A. 63.8, 63.78, 63.7, 63.80