It is multiple choice q/a. Give correct option only . No solution required.

1 An asset with a fair value of $170 is leased. The lease agreement is for 4 payments made in advance of $50 each year. Calculate the implicit interest rate if there is no residual. Initial recognition?

a. 20%

b. None of the answers given

c. 10%

d. 18%

2 David Ltd purchases a 100 per cent interest in Roger Ltd. The cost of the acquisition is $1 500 000 plus associated legal costs of $80 000. As at the date of acquisition, the statement of financial position of Roger Ltd shows net assets $5,000,000.

Determine, for accounting purposes, the amount of goodwill that has been acquired by Roger Ltd.

a.None of the answers given

b. $40000

c. $35000

d. $30000

3 Lease payments are amounts the lessee pays to the lessor during the period of the lease include

a.

Unguaranteed residual

b.

Penalties for termination

c.

Maintenance, insurance, taxes

d.

None of the answers given

4 On 1 July 2021 the directors of XYZ decided to forfeit the 12,000 shares in respect of which the call of $2.50 was not made. The shares were cancelled and reissued as fully paid to $5 per share on payment of $4 per share. Costs of $800 were incurred to reissue the shares.

What journal entry needs to be recorded for cancellation of forfeited shares?

a.

Cash (Dr) Forfeited shares liabilities (Cr) Share capital (Cr)

b.

Cash (Dr) Forfeited shares liability (Dr) Share capital (Cr)

c.

Forfeited shares liability (Dr) Cash (Cr)

d.

None of the answers given

5 ABC Ltd purchases a 100 per cent interest in XYZ Ltd. The cost of the acquisition is $1 600 000 plus associated legal costs of $80 000. As at the date of acquisition, the statement of financial position of XYZ Ltd shows total assets $2,000,000 and total labilities $1,000,000.

Calculate the net assets of XYZ Ltd.

a.

$1,000,000

b.

$500,000

c.

None of the answers given

d.

$2000,000