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F7 Financial Reporting - INT Final Mock December 2010 by KAPLAN Publishing

F7 Financial Reporting - INT Final Mock December 2010 by KAPLAN Publishing

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ACCA Final mock for December 2010 Exams
ACCA Final mock for December 2010 Exams

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Published by: M. Essmaeel Ali Jami on Dec 10, 2010
Copyright:Attribution Non-commercial


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Financial ReportingDecember 2010
Time allowed
Reading and planning: 15 minutesWriting: 3 hoursAll FIVE questions are compulsory and MUST be attempted.
Do NOT open this paper until instructed by the supervisor.During reading and planning time only the question paper may beannotated. You must NOT write in your answer booklet untilinstructed by the supervisor.This question paper must not be removed from the examinationhall.
Kaplan Publishing/Kaplan Financial
   P   a   p   e   r   F   7    (   I   N   T    )
© Kaplan Financial Limited, 2010The text in this material and any others made available by any Kaplan Group company doesnot amount to advice on a particular matter and should not be taken as such. No relianceshould be placed on the content as the basis for any investment or other decision or inconnection with any advice given to third parties. Please consult your appropriateprofessional adviser as necessary. Kaplan Publishing Limited and all other Kaplan groupcompanies expressly disclaim all liability to any person in respect of any losses or otherclaims, whether direct, indirect, incidental, consequential or otherwise arising in relation tothe use of such materials.All rights reserved. No part of this examination may be reproduced or transmitted in anyform or by any means, electronic or mechanical, including photocopying, recording, or byany information storage and retrieval system, without prior permission from KaplanPublishing.
All FIVE questions are compulsory and MUST be attempted
During the year Air, a public listed company acquired share capital in Blade Ltd and RipsawLtd. The financial statements at 31 March 2008 are as follows:
 Air Blade Ripsaw 
$000 $000 $000
Non-current assets
PPE 51,25043,500 47,120Investments 18,7503,750 70,00047,250 47,120
Current assets
Inventory 12,3806,000 9,880Receivables 17,00010,750 18,000Bank 1,5004,750 30,88021,500 27,880100,88068,750 75,000
Ordinary $1 shares 25,00037,500 25,000Share premium 10,0002,500 Retained earnings 13,25010,630 10,00048,25050,630 35,000
8% Loan note 20,0005,250 15,000
Current liabilities
Trade payables 20,6308,620 17,000Bank overdraft 5,620Tax payable 12,0004,250 2,38032,63012,870 25,000100,88068,750 75,000
The following information is relevant:
(i) Air purchased 30,000,000 shares in Blade on 1 April 2007. The purchase was agreed byway of a share exchange of two shares in Air for every three shares in Blade pluspayment of cash at $1 per share purchased, payable in three years from the date of acquisition. The terms of the agreement were such that this cash would only be paid if Blade makes profits of $3 million during that payment period. The directors are notconfident that the profit will be made during that time. The cost of capital of Air is10% and its share price at the acquisition date was $2. The acquisition of Blade has notyet been recorded in the financial statements of Air.

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