These are ACCA F7 (FR) Financial Reporting MCQs for Part-D of the Syllabus “Preparation of financial statements”.

These multiple-choice questions (MCQs) are designed to help ACCA F7 students to better understand the exam format. We aim to instill in students the habit of practicing online for their CBE exams. By doing so, students can reduce exam stress and prepare more effectively.

Please note:

Students should not attempt these MCQs until they have finished the entire chapter.
All questions are compulsory, so please do not skip any.

We hope that these MCQs will be a valuable resource for students preparing for the ACCA F7 (FR) exam.

INFORMATION ABOUT THESE CBE MCQs Test/Quiz

Course:	ACCA – Association of Chartered Certified Accountants
Fundamental Level:	Applied Skills
Subject:	Financial Reporting
Paper:	F7 – FR
Chapter and Topic	10 – Accounting for associates
Syllabus Area:	D – “Preparation of financial statements”
Questions Type:	CBE MCQs
Exam Section:	Section A

Syllabus Area

These Multiple Choice Questions (MCQs) cover the Syllabus Area Part-D of the Syllabus; “Preparation of financial statements” of ACCA F7 (FR) Financial Reporting Module.

Time

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Students will get their F7 CBE MCQs Test results after they finish the entire test. They will also be able to see the correct and incorrect answers, as well as explanations for the incorrect questions.

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MCQs: Choose one from the given options.
Multiple choice: Choose all those answers which seem correct/ or incorrect to you, as per the requirement of the question. Keep your eye on the wording “(select all those which are correct/ or incorrect)“.
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Type numbers: Type your answer in numbers as per the requirement of the question.

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F7 (FR) - Chapter 10 - Part D - MCQs - Accounting for associates

Course: ACCA - Association of Chartered Certified Accountants
Subject: F7 (FR) - Financial Reporting
Syllabus Area: D - Preparation of financial statements
Chapter: 10 - Accounting for associates
Exam Section: Section A
Questions type: MCQs
Time: No Time Limit

INSTRUCTIONS

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1 / 7

Jarvis Co owns 30% of McLintock Co. During the year to 31 December 20X4 McLintock Co sold $2 million of goods to Jarvis Co, of which 40% were still held in inventory by Jarvis at the year end. McLintock Co applies a mark-up of 25% on all goods sold.

What effect would the above transactions have on group inventory at 31 December 20X4?

No effect on group inventory

Debit group inventory $48,000

Credit group inventory $48,000

Debit group inventory $160,000

2 / 7

On 1 February 20X3 Pinot Co acquired 30% of the equity shares of Noir Co, its only associate, for $10 million in cash. The profit for the year of Noir Co for the year to 30 September 20X3 was $6 million. Profits accrued evenly throughout the year. Noir Co made a dividend payment of $1 million on 1 September 20X3. At 30 September 20X3 Pinot Co decided that an impairment loss of $700,000 should be recognised on its investment in Noir Co.

What amount will be shown as 'investment in associate' in the statement of financial position of Pinot Co as at 30 September 20X3?

$10,400,000

$10,200,000

$14,200,000

$12,000,000

3 / 7

Ulysses Co owns 25% of Grant Co, which it purchased on 1 May 20X8 for $5 million. At that date Grant Co had retained earnings of $7.4 million. At the year-end date of 31 October 20X8 Grant Co had retained earnings of $8.5 million after paying out a dividend of $1 million. On 30 September 20X8 Ulysses Co sold $600,000 of goods to Grant Co, on which it made 30% profit. Grant Co had not resold these goods by 31 October.

At what amount will Ulysses Co record its investment in Grant Co in its consolidated statement of financial position at 31 October 20X8?

$5,000,000

$4,855,000

$5,230,000

$5,275,000

4 / 7

On 1 October 20X8 Pacemaker Co acquired 30 million of Vardine Co's 100 million shares in exchange for 75 million of its own shares. The fair value of Pacemaker Co's shares at the date of this share exchange was $1.60 each.

Vardine Co's profit is subject to seasonal variation. Its profit for the year ended 31 March 20X9 was $100 million. $20 million of this profit was made from 1 April 20X8 to 30 September 20X8.

Pacemaker Co has one subsidiary and no other investments apart from Vardine Co.

What amount will be shown as 'investment in associate' in the consolidated statement of financial position of Pacemaker Co as at 31 March 20X9?

$126 million

$78 million

$144 million

$150 million

5 / 7

How should an associate be accounted for in the consolidated statement of profit or loss?

The group share of the associate's profit for the year is recorded as a one-line entry.

The associate's income and expenses are added to those of the group on a line by line basis.

The group share of the associate's income and expenses is added to the group figures on a line by line basis.

Only dividends received from the associate are recorded in the group statement of profit or loss.

6 / 7

Ruby Co owns 30% of Emerald Co and exercises significant influence over it. Emerald Co sold goods to Ruby Co for $160,000. Emerald Co applies a one-third mark-up on cost. Ruby Co still had 25% of these goods in inventory at the year end.

What amount should be deducted from consolidated retained earnings in respect of this transaction? $_______

Note. You are not required to put $ sign nor any coma. (e.g. 1000)