Question 1 ACE Ltd purchased a new machine for production. The purchase price of the machine excluding VAT was 23,500. The supplier gave ACE Ltd a trade discount of 1,200. Delivery costs were 450 and installation costs were 670. ACE Ltd also purchased a one year servicing contract for 75. ACE Ltd is registered for VAT and the current VAT rate is 20%. What amount should be capitalised for the machine? 24,695 21.255 23.420

28.104

Question 2 At 1 January 2022 Kirin Ltd had issued share capital of 50,000 ordinary shares of 0.10 which had been issued for 0.95 each. On 1 July 2022 they made a 1 for 4 bonus issue. What are the balances on the share capital and share premium accounts at 31 December 2022? Share capital: 50,000; Share premium 42,500 Share capital: 5,000: Share premium 42,500 Share capital: 6,250; Share premium 41,250 Share capital: 5,000: Share premium 41,250

Question 3 In accordance with accounting standards, how should internally generated goodwill be recognised in the financial statements of an entity? It should be expensed. At fair value

At cost It should not be recognised.

Question 4

On 1 July 2021, an entity took out a short-term lease on an office building for a period of 12 months. The monthly rental cost is 5,000. However, after three months, the building was no longer required and was vacated. Under the terms of the lease agreement, the lease is non-cancellable and the building cannot be sub-let. Which of the following statements is correct for the financial statements for the year ended 31 December 2021? A provision of 30,000 can be made as the lease is onerous. The last six months of rental costs are treated as a prepayment. A provision of 45.000 should be made. No provision can be made at the year end as the costs of the lease are avoidable.

Question 5 On 1 January 2021, MSE had 2 million ordinary shares in issue with a nominal value of 0.50 per share and 250,000 5% preference shares. On 1 July 2021, MSE made a 1 for 2 bonus issue of ordinary shares. On 30 September 2021, MSE issued a further 1 million ordinary shares at full market price. MSE had profits attributable to ordinary equity holders of 1.5 million for the year ended 31 December 2021. What is the basic earnings per share for the year ended 31 December 2021 in accordance with IAS 33 Earnings Per Share? 1.00

0.50 0.55 0.46