F7 MCQs

I'm not surprised that you didn't find the answer there! Why on Earth are you applying time-apportionment to the dividend? At least, I assume that that is what you are doing when you multiply "0.4*400m*3/12" What is "0.4"? Is that meant to be 4 cents per share? Because 0.4 is 40 cents What is the strange "+(0)" in the middle of your calculation? Why is the dividend of 2.5 cents per share expressed as "2.5*100m*1/12" because 2.5 written like this represents $2.50 dividend per share? Why is the 2.5 cent dividend only being paid to the new 100,000,000 shares? Do those original 400,000,000 shares not receive a dividend in November? Here's what I believe your calculation should have been: 400,000,000 x 0.04 = $16,000,000 500,000,000 x 0.025 = $12,500,000 Total dividends paid in the year $28,500,000 OK?

Yes. Thanks Mr. Mike. No time apportionment in dividend payment & 1c= 1/100. Got that in sir! But what and this fin lease question 1/3/14- F.V of plant=390,000, implicit interest rate: 10% 1/3/14- 1st instalment payment of 4 years=120,000 was paid 1/2/15- A payment of 30,000 was made for a 1 yr lease of an item of excavation equip. Qn: Total amt to charge to P or I I had done this: Int rate @ 10%= 39,000 Dep. Chg/ annum=97,500 1 yr contract lease=30,000. All of these totals 166,500 and was told it's actually 154,500

Why is interest 10% of $390,000 when you paid $120,000 of that debt straight away? Surely interest at 10% should only apply to $270,000 = $27,000 Depreciation on that plant would be $97,500 Operating lease payment would be 2/12 x $30,000 (I assume the year end is 31 March, 2015) = $5,000 A total figure for the statement of profit or loss of $27,000 + $97,500 + $5,000 = $129,500 There's something you're not telling me - and it looks like something to do with the operating lease payment But, according to the information that you have given me, the answer looks like it should be $129,500

Many thanks for your effort. The year and is Feb.'2015 and the question expressly States that d 1st lease was a finance lease and the second lease agreement is as described above. I had solved the question the way you did only that I used 1/12×30,000=2,500 and I got N127,000 which I don't think was part of the option. Thanks; by your solution, I've just reconfirmed I need to deduct initial payment of 120,000 from the FV of the plant.

The difference between my (our) $127,000 and the solution that you tell me has been printed is the remainder of the operating lease payment that we have treated as a prepayment (11/12 x $30,000 = $27,500) If we add $27,500 to our figure of $127,000 we arrive at $154,500 and that is, according to you, the printed solution. That is too much of a coincidence that $154,500 IS an option and that $127,000 is NOT an option I'm suspicious!

Alright sir. Many thanks

You're welcome