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Which TWO of the following are TRUE in respect of preparing a consolidated statement of cash flows where there has been an acquisition of a subsidiary part way through the year?

• A. Investing activities will include a total cash outflow for the acquisition comprising the cash paid for the subsidiary less the cash held by the subsidiary at the acquisition date.
• B. The year end cash and cash equivalents balance will be reduced by the cash and cash equivalents that were held by the subsidiary at the acquisition date.
• C. Non-controlling interest will arise in relation to the subsidiary and any dividends paid to the non- controlling interest will be shown within financing activities as a cash outflow.
• D. Any shares that were issued on acquisition of the subsidiary will be shown separately on the statement of cash flows within financing activities.
• E. The working capital held by the subsidiary at acquisition will be excluded from the year end figures based on the percentage shareholding in the subsidiary.

MNO has calculated its return on capital employed ratio for 20X4 and 20X5 as 41% and 56% respectively.
Taking each statement in isolation, which would explain the movement in the ratio between the 2 years?

• A. In 20X4 an unused building was sold at a price in excess of its carrying value.
• B. In 20X5 the average interest rate on borrowing decreased compared to 20X4.
• C. In 20X5 the increase in value of MNO's head office was reflected in the financial statements.
• D. In 20X4 an onerous contract was provided for and this provision did not change in 20X5.

Which of the following statements are true regarding consolidated cash flows after the acquisition of a subsidiary?
Select ALL that apply.

• A. Adjustments need to be made to group working capital in light of the working capital acquired from the subsidiary
• B. The subsidiary's cash inflows and outflows become part of the group after purchase
• C. Net cash paid to acquire a subsidiary is shown as a cash inflow within the cash flow from investing activities
• D. Disclosure notes are required to show cash and cash equivalents paid or received, but not details of goodwill, assets and liabilities acquired
• E. Further adjustments are required to cash inflows and outflows after profit has been consolidated
• F. Cash acquired from the subsidiary upon purchase is represented as a cash inflow

GH is a listed entity which holds equity shares in one subsidiary and one associate.
Information extracted from the most recent financial statements is as follows:
What is the interest cover for the year?

• A. 9.6 times
• B. 11.7 times
• C. 10.7 times
• D. 8.5 times

GH issued a 6% debenture for $1,000,000 on 1 January 20X4. A broker fee of $50,000 was payable in respect of this issue. The effective interest rate associated with this debt instrument is 7.2%.
The carrying value of the debenture at 31 December 20X4 is:

• A. $961,400
• B. $958,400
• C. $1,065,600
• D. $1,012,000

Which TWO of the following are TRUE in respect of preparing a consolidated statement of cash flows where there has been an acquisition of a subsidiary part way through the year?

• A. Investing activities will include a total cash outflow for the acquisition comprising the cash paid for the subsidiary less the cash held by the subsidiary at the acquisition date.
• B. The year end cash and cash equivalents balance will be reduced by the cash and cash equivalents that were held by the subsidiary at the acquisition date.
• C. Non-controlling interest will arise in relation to the subsidiary and any dividends paid to the non- controlling interest will be shown within financing activities as a cash outflow.
• D. Any shares that were issued on acquisition of the subsidiary will be shown separately on the statement of cash flows within financing activities.
• E. The working capital held by the subsidiary at acquisition will be excluded from the year end figures based on the percentage shareholding in the subsidiary.

MNO has calculated its return on capital employed ratio for 20X4 and 20X5 as 41% and 56% respectively.
Taking each statement in isolation, which would explain the movement in the ratio between the 2 years?

• A. In 20X4 an unused building was sold at a price in excess of its carrying value.
• B. In 20X5 the average interest rate on borrowing decreased compared to 20X4.
• C. In 20X5 the increase in value of MNO's head office was reflected in the financial statements.
• D. In 20X4 an onerous contract was provided for and this provision did not change in 20X5.

Which of the following statements are true regarding consolidated cash flows after the acquisition of a subsidiary?
Select ALL that apply.

• A. Adjustments need to be made to group working capital in light of the working capital acquired from the subsidiary
• B. The subsidiary's cash inflows and outflows become part of the group after purchase
• C. Net cash paid to acquire a subsidiary is shown as a cash inflow within the cash flow from investing activities
• D. Disclosure notes are required to show cash and cash equivalents paid or received, but not details of goodwill, assets and liabilities acquired
• E. Further adjustments are required to cash inflows and outflows after profit has been consolidated
• F. Cash acquired from the subsidiary upon purchase is represented as a cash inflow

GH is a listed entity which holds equity shares in one subsidiary and one associate.
Information extracted from the most recent financial statements is as follows:
What is the interest cover for the year?

• A. 9.6 times
• B. 11.7 times
• C. 10.7 times
• D. 8.5 times

GH issued a 6% debenture for $1,000,000 on 1 January 20X4. A broker fee of $50,000 was payable in respect of this issue. The effective interest rate associated with this debt instrument is 7.2%.
The carrying value of the debenture at 31 December 20X4 is:

• A. $961,400
• B. $958,400
• C. $1,065,600
• D. $1,012,000