Time allowed: 3 hours Total marks: 60

Section A (20 Marks)

Answer all 10 questions. Each question is worth 2 marks.

1. Under IFRS 9, which business model would result in amortised‑cost measurement of a financial asset?
   1. Held solely to collect contractual cash flows
   2. Held to collect and sell
   3. Held for trading
   4. Designated at FVTPL
2. IFRS 15 requires that revenue be recognised when:
   1. Risks and rewards transfer
   2. Control of goods or services transfers
   3. Cash is received
   4. Performance obligation is agreed
3. IAS 2 permits which of these cost formulas for inventory?
   1. FIFO and LIFO
   2. FIFO, weighted‑average, and specific identification
   3. Weighted‑average only
   4. Any systematic formula
4. IAS 36 requires an impairment test when:
   1. External indicators of decline exist
   2. Carrying amount exceeds recoverable amount
   3. Either (a) or (b)
   4. Only annually for indefinite–life assets
5. Under IFRS 16, the initial lease liability is measured at:
   1. Fair value of the underlying asset
   2. Present value of lease payments
   3. Cost of the right‑of‑use asset
   4. Unexpired lease payments
6. IFRS 2 equity‑settled share‑based payments are expensed:
   1. Immediately in full
   2. Over the vesting period
   3. Only if options are exercised
   4. On grant date without exception
7. IAS 10 adjusting events are those that provide evidence of conditions:
   1. Existing at year end
   2. Arising after year end
   3. Either before or after year end
   4. Only before financial statements are authorised
8. IAS 12 deferred tax assets are recognised only if:
   1. It is probable that taxable profit will be available
   2. Deductible temporary differences exist
   3. Tax losses are unused
   4. They reverse within 12 months
9. IFRS 13 Level 1 inputs are:
   1. Unobservable inputs
   2. Quoted prices in active markets for identical assets
   3. Observable inputs other than quoted prices
   4. Entity’s own valuation model outputs
10. IFRS 7 liquidity risk disclosures require:
    1. Maturity analysis of liabilities
    2. Foreign‑currency sensitivity
    3. Credit‑risk concentration only
    4. None of the above

Section B (25 Marks)

Compulsory: Consolidation Case

Omega Ltd acquires 75% of Sigma Co on 1 Jan 2025 by issuing 2 000 000 shares at $3 each. Sigma’s equity at acquisition is $6 000 000. Fair‑value uplift on plant is $1 200 000 (remaining life 6 years). On 31 Dec 2025 Sigma reports profit before depreciation adjustment of $800 000, dividends paid $200 000, closing inventory includes $150 000 unrealised profit at 25% markup. Intra‑group receivables/payables total $500 000.

1. Calculate goodwill at acquisition (8 marks).
2. Prepare consolidated retained earnings at 31 Dec 2025 (5 marks).
3. Calculate non‑controlling interest at 31 Dec 2025 (3 marks).
4. Extract of consolidated SOFP: Plant (net), Goodwill, Inventory, NCI, Equity attributable to owners (9 marks).

Section C (15 Marks)

Answer ONE question only.

Question 1 – Business Combinations (IFRS 3)

1. Outline the key steps of the acquisition method. (6 marks)
2. Discuss measurement options for NCI and accounting for bargain purchase. (9 marks)

Question 2 – Impairment & Reversals (IAS 36)

1. Describe indicators of impairment and the impairment test procedure. (6 marks)
2. Explain recognition of impairment losses and subsequent reversals for non‑financial assets. (9 marks)

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Mock Examination 9

Time allowed: 3 hours Total marks: 60

Section A (20 Marks)

Answer all 10 questions. Each question is worth 2 marks.

1. IFRS 15 variable consideration is included in the transaction price when:
   1. It is probable that no significant reversal will occur
   2. Customer payment is due
   3. It relates to extended warranty
   4. It cannot be estimated
2. Under IAS 23, borrowing costs may be capitalised when:
   1. They relate to a qualifying asset
   2. They exceed average borrowing rate
   3. Entity elects always to capitalise
   4. They are incurred on any asset
3. Under IFRS 9 the simplified ECL approach applies to:
   1. All debt securities
   2. Trade receivables and contract assets
   3. Held‑to‑maturity investments
   4. Financial guarantee contracts
4. IAS 41 biological assets at end of period are measured at:
   1. Cost less depreciation
   2. Fair value less costs to sell
   3. Lower of cost and NRV
   4. Amortised cost
5. IFRS 5 “held for sale” classification requires that:
   1. Disposal is probable within one year
   2. Asset be available for immediate sale
   3. Management commits to a plan to sell
   4. All of the above
6. IAS 36 reversal of impairment on PPE is:
   1. Prohibited
   2. Recognised in P/L up to original carrying amount
   3. Recognised in OCI
   4. Deferred over remaining life
7. IFRS 13 level 2 inputs are:
   1. Quoted prices in active markets
   2. Observable inputs other than quoted prices
   3. Unobservable inputs
   4. Entity’s own assumptions
8. IAS 38 internally generated brand names are:
   1. Capitalised if future benefits exist
   2. Expensed as incurred
   3. Amortised over 10 years
   4. Recognised at cost of development
9. IFRS 16 subsequent measurement of lease liability includes:
   1. Only interest expense
   2. Interest + payments + remeasurements
   3. Only payments
   4. No interest post‑commencement
10. IAS 2 write‑down of inventory to NRV is reversed when:
    1. NRV increases above original cost
    2. Inventory sold
    3. Replacement cost falls
    4. Never allowed

Section B (25 Marks)

Compulsory: Borrowing Costs Case

A bridge construction loan of \$5 000 000 at 7% was drawn on 1 Jan 2025. Construction began 1 Apr 2025 and finished 2 years later. Unutilised funds of $500 000 were invested at 5% from 1 Jul 2025 to 31 Dec 2025. Calculate borrowing cost to be capitalised for the year ended 31 Dec 2025 and journal entries. (25 marks)

Section C (15 Marks)

Answer ONE question only.

Question 1 – Revenue Recognition (IFRS 15)

1. Explain the five‑step model. (6 marks)
2. Illustrate allocation of transaction price with a multi‑deliverable arrangement. (9 marks)

Question 2 – Capitalisation of Borrowing Costs (IAS 23)

1. Outline criteria for capitalisation. (6 marks)
2. Discuss treatment of interest income on unutilised funds. (9 marks)

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Mock Examination 10

Time allowed: 3 hours Total marks: 60

Section A (20 Marks)

Answer all 10 questions. Each question is worth 2 marks.

1. Under IFRS 9 SPPI test, an instrument fails if cash flows include:
   1. Principal and interest only
   2. Leverage feature
   3. Time value of money
   4. Consideration for credit risk
2. IFRS 9 derecognition of a financial asset occurs when:
   1. Contractual rights expire
   2. Rights are transferred and risks/rewards largely transferred
   3. Entity defaults
   4. All of the above
3. IAS 32 offsetting financial assets and liabilities is allowed when:
   1. Legal right to set off exists
   2. Entity intends to settle net
   3. Both (a) and (b)
   4. No right of set‑off
4. IFRS 7 credit‑risk disclosure requires:
   1. Allowance for ECL by class of asset
   2. Ageing analysis of receivables
   3. Neither
   4. Both (a) and (b)
5. IAS 21 functional currency is based on:
   1. Parent’s currency
   2. Primary economic environment of operations
   3. Reporting currency
   4. Currency of the largest customer
6. IFRS 13 valuation technique uses:
   1. Market approach
   2. Cost approach
   3. Income approach
   4. Any of the above
7. IAS 12 deferred tax liability on undistributed profits is recognised for:
   1. Investments in subsidiaries subject to control exception
   2. Associates subject to probable reversal
   3. All undistributed profits
   4. None
8. IFRS 16 sale and leaseback – sale component follows:
   1. IFRS 15
   2. IFRS 16
   3. IAS 16
   4. IAS 40
9. IAS 7 statement of cash flows – interest paid may be classified as:
   1. Operating only
   2. Financing only
   3. Either operating or financing
   4. Investing only
10. IFRS 9 lifetime ECL model applies when:
    1. Credit risk increases significantly
    2. Asset is credit‑impaired
    3. Both (a) and (b)
    4. Always

Section B (25 Marks)

Compulsory: Financial Instruments Case

Alpha Bank holds trade receivables of \$20 000 000 at year end. Lifetime ECL allowance is estimated at $1 200 000. It also holds equity securities classified as FVOCI costing $5 000 000 with FV \$4 500 000. Required:

1. Prepare journal entries for ECL allowance and FVOCI adjustment. (10 marks)
2. Explain presentation in SOFP, SOPL, and SOCI. (15 marks)

Section C (15 Marks)

Answer ONE question only.

Question 1 – IFRS 9 Classification & Measurement

1. Distinguish between amortised cost, FVOCI, and FVTPL categories. (7 marks)
2. Discuss criteria and accounting for equity securities under IFRS 9. (8 marks)

Question 2 – Fair Value Measurement (IFRS 13)

1. Compare Level 1, 2, and 3 inputs. (7 marks)
2. Explain valuation techniques for non‑listed assets. (8 marks)

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Mock Examination 11

Time allowed: 3 hours Total marks: 60

Section A (20 Marks)

Answer all 10 questions. Each question is worth 2 marks.

1. IAS 19 actuarial gains and losses are recognised in:
   1. Profit or loss
   2. Other comprehensive income
   3. Retained earnings
   4. Equity
2. IAS 28 equity method requires recognition of:
   1. Share of profit only
   2. Share of OCI only
   3. Both profit and OCI
   4. Dividends only
3. IFRS 3 contingent consideration at acquisition is measured at:
   1. Cost when paid
   2. Fair value at acquisition
   3. Pro rata share of equity
   4. Nil unless probable
4. IFRS 10 control exists when investor has:
   1. Majority voting rights
   2. Power, returns, and ability to affect returns
   3. Significant influence
   4. Joint control
5. IFRS 12 disclosure of unconsolidated subsidiaries requires:
   1. Name only
   2. Nature, risks, and financial effect
   3. Investment cost
   4. None
6. IAS 11 (historical) revenue from construction contracts used:
   1. Completed contract
   2. Percentage of completion
   3. Cost recovery
   4. Installment method
7. IAS 36 goodwill impairment losses are:
   1. Reversible
   2. Non‑reversible
   3. Recognised in OCI
   4. Recognised against retained earnings
8. IAS 23 borrowing costs cease capitalisation when:
   1. Asset is ready for use
   2. Qualifying asset sold
   3. Borrowing repaid
   4. Construction halted
9. IAS 2 replacement cost is:
   1. A basis for lower‑of‑cost test
   2. Permitted method of cost measurement
   3. Never used
   4. Only for agricultural produce
10. IAS 37 restructuring provisions are recognised when:
    1. Management approves detailed plan
    2. Obligation communicated
    3. Both (a) and (b)
    4. Immediately when plan drafted

Section B (25 Marks)

Compulsory: Share‑Based Payment Case

Beta Plc grants 100 000 employee share options on 1 Jan 2025. Grant‑date fair value per option is \$6; vesting over 3 years with no market conditions. Prepare journal entries for 2025–2027, and show liability if cash‑settled instead. (25 marks)

Section C (15 Marks)

Answer ONE question only.

Question 1 – IFRS 2 Equity vs Cash‑Settled

1. Contrast accounting for equity‑settled and cash‑settled schemes. (7 marks)
2. Discuss treatment of modifications and cancellations. (8 marks)

Question 2 – Employee Benefits (IAS 19)

1. Outline defined benefit plan accounting, including remeasurements. (9 marks)
2. Explain recognition of past‑service cost and curtailments. (6 marks)

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Mock Examination 12

Time allowed: 3 hours Total marks: 60

Section A (20 Marks)

Answer all 10 questions. Each question is worth 2 marks.

1. IAS 41 produce harvested from biological assets is measured at:
   1. Cost
   2. Fair value less costs to sell
   3. Lower of cost and NRV
   4. Amortised cost
2. IAS 20 grants related to income are recognised:
   1. Over the periods to match costs
   2. Immediately in equity
   3. Deferred always
   4. Only if unrestricted
3. IFRS 5 non‑current assets held for sale must be measured at the lower of:
   1. Carrying amount and fair value
   2. Carrying amount and fair value less costs to sell
   3. Cost and NRV
   4. Cost and fair value
4. IAS 37 contingent liabilities are:
   1. Recognised as provisions
   2. Recognised as liabilities
   3. Disclosed only
   4. Eliminated on consolidation
5. IFRS 8 reportable segments are identified based on:
   1. Products and services
   2. Chief operating decision‑maker’s resource allocation
   3. Geographical areas only
   4. Legal structure only
6. IAS 24 related‑party disclosures require:
   1. Key management compensation
   2. Transactions with related parties
   3. Both (a) and (b)
   4. No disclosure if immaterial
7. IAS 10 events after reporting period that did not exist at year end:
   1. Adjust the FS
   2. Disclose only
   3. Ignore
   4. Adjust only equity
8. IAS 1 OCI items are:
   1. Presented in profit or loss
   2. Presented outside profit or loss
   3. Recycled through equity
   4. Recognised when realised
9. IAS 8 change in accounting estimate is applied:
   1. Prospectively
   2. Retrospectively
   3. In the year of change only
   4. After disclosure
10. IAS 34 interim reporting requires:
    1. Full disclosures as annual FS
    2. Condensed FS and selected notes
    3. No comparative information
    4. Only statement of financial position

Section B (25 Marks)

Compulsory: Segment Reporting Case

Delta Group operates three divisions: A, B, and C. The CODM allocates resources and assesses performance based on segment profit before tax and segment assets. Prepare the segment report including revenue, profit before tax, assets, and reconciliation to group totals from the table provided. (Assume segment data logically.)

Section C (15 Marks)

Answer ONE question only.

Question 1 – Segment Reporting (IFRS 8)

1. Discuss criteria for identifying reportable segments. (7 marks)
2. Explain disclosure requirements and reconciliation. (8 marks)

Question 2 – Consolidation Disclosures (IFRS 12)

1. List key disclosures for interests in subsidiaries, associates, and joint ventures. (9 marks)
2. Explain the significance of each disclosure for users. (6 marks)

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