Cima F2 Exam Question No 61

Question No 61:

IAS 18 Interest, royalties and dividends
Interest, royalties and dividends should be recognised when:

• It is probable that economic benefits will flow to the entity
• The revenue can be measured reliably.

Interest and royalties should be recognised on an accruals basis, i.e. when earned rather than received. Dividends should be recognised when the right to receive them is established.

Cima F2 Exam Question No 60

Question No 60:

IAS 18 Rendering of services?

 Revenue from services should be recognised when all of the following criteria have been met:

• The revenue can be measured reliably
• It is probable that economic benefits will flow to the entity (i.e. the buyer will pay for the services)
• The stage of completion of the transaction can be measured reliably
• The costs to the seller can be measured reliably.

The revenue would then be recognised by reference to the stage of completion of the transaction at the reporting date

Cima F2 Exam Question No 59

Question No 59:

LM acquired 15% of the equity share capital of ST on 1 January 20X6 for $18 million. LM acquired a further 50% of the equity share capital of ST for $50 million on 1 January 20X7 when the fair value of ST's net assets was $82 million. The original 15% investment in ST had a fair value of $20 million at 1 January 20X7. The non controlling interest in ST was measured at its fair value of $30 million at the date control in ST was acquired. Calculate the goodwill arising on the acquisition of ST that LM included in its consolidated financial statements at 31 December 20X7. Give your answer to the nearest $ million. $ ? million
Answer: 18, 18000000