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/ Practice Exam (S2 2020)
ACCG3008 Corporate
Accounting and
Business Advisory
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Select one:
A.
B.
C.
D.
Under Australian AASB accounting
standards and IFRS, which of the
following statements is true:
Select one:
A. Companies have an option of using
the partial or full goodwill method.
B. The full goodwill method has been
popularly used world-wide since 1967.
C. The full goodwill calculation method
puts a value on the subsidiary’s shares
that were not acquired during the
takeover; but that value must be the same
per share as those that were
acquired during the takeover.
D. All of the statements in this list are
true.
Where the investor is not a parent, the
investor applies:
Select one:
A. the equity method to its associates
and subsidiaries in the consolidated
financial statements.
B. the cost method to its associates in
its own accounting records.
C. the fair value method to its
associates in its own accounting records.
D. the equity method to its associates in
its own accounting records.
Cecil Ltd owns 100% of the issued
ordinary share capital of Hills Ltd. Hills
has 100 million ordinary shares on issue.
During the year ended 31 March 20X1,
Hills Ltd declared and paid a dividend of
$0.30 per share from post-acquisition
profits. What is the consolidation
elimination entry for this financial year?
Select one:
A.
B.
C.
D.
Short essay question
You have to type your answers in the white
space underneath.
In the real exam, you will be told about how
much time to spend and about how many
words to write. You will be provided with a
scenario and asked questions about the
scenario. A prior year exam scenario is
provided below as a sample.
Scenario: T-shirt Transformers
You are an aspiring entrepreneur looking to
create a new business. So far, you have
written the following business idea:
Many people have T-shirts in their closet
which are in good condition, but have
messages or designs that are now
boring. T-shirt Transformers is a service
whereby people can bring in these Tshirts and we can re-dye the shirts and
return their old shirts with a new design
later that day. Customers can choose
from a wide variety of designs or provide
their own. We will equip a van with a
printing machine and the business model
will be to sell via temporary stalls at
markets (such as O-Week at Macquarie)
and transfer the shirts to and from the
van, which will be in a nearby carpark.
Since there are no materials required
apart from ink, the ‘transformed’ t-shirts
can be provided at much lower cost than
a store-bought shirt, and designs can be
changed immediately so that they are
always ‘on trend.’ It is anticipated that the
shirts will be sold for $25. To launch the
business, a competition will be run on
Facebook whereby people send in
photos of themselves in their new Tshirts and every month a prize will be
awarded for the best shirt. To launch the
business, the major investments will be
the van, a new printing machine and a
portable power generator.
Required:
Question 1: What is a ‘megatrend’ and why
are megatrends important to setting
business strategy? Provide an example
of one megatrend and explain how it
might affect the business idea. (4 marks)
Question 2: Define the ‘Four P’s’ and how
each applies in this case. Also, briefly
describe four of the five possible
organisational structures. What would be
most appropriate in this case and why?
(7 marks)
Question 3: You want to pitch your idea to a
wealthy relative. What are two important steps
to take beforehand in order to prepare a
compelling pitch? (4 marks)
Question 4: Your relative agrees to fund
your venture, but you are wondering if
you should seek venture capital funding
as well as (or instead of) your relative.
Briefly explain the research findings of
Dutta and Folta (2016) and how this
might influence your decision. (5 marks)
Please label your answer to each
question clearly, e.g., “Question 1
answer” etc.
| ! “ # $ % & # ‘ # # ( ) * + , |
Select one:
A. 6150
B. 5790
C. 5040
D. 3540
Odom Ltd purchased a 30% shareholding in
Bryant Ltd on 1 Jan 2017 for $60 000. This
purchase resulted in Odom Ltd having
significant influence over Bryant Ltd. Bryant’s
assets were recorded at fair values and its
owners’ equity, totalling $180 000, was:
share capital $80 000
reserves $60 000 and retained profits
$40 000
During 2017 Bryant Ltd reported profit of
$100 000, from which a dividend of $60 000
was paid. Also during the year, Bryant Ltd
revalued its assets upwards by $50 000.
Odom Ltd is a non-parent entity.
For year 2017, when Odom accounts for its
investment in Bryant, what is the net increase
to the account of Revenue from associate?
Select one:
A. $30000
B. $12000
C. The amount is zero.
D. $18000
Which of the following events can cause a
change in the substitution elimination entry
subsequent to acquisition date?
I Transfers to post-acquisition retained
earnings.
II Depreciation on non-current assets.
III Transfers from pre-acquisition retained
earnings.
IV Bonus dividends paid from pre-acquisition
equity.
Select one:
a. III and IV only
b. I, II, III and IV
c. I, III and IV only
d. II and III only
Sample question for journal entry type
question.
Please be reminded that in the real exam, the
topic for the journal entry question could be
from any Module 2 week(s).
| ! “ # $ % & # ‘ # # ( ) * + , |
Warriors Limited acquired a 20% share in
Tomkins Limited for $36 000. Warriors Limited
has no other investments. At the date on
which it became an associate, Tomkins
Limited had the following equity:
– share capital $100 000
– retained earnings $80 000.
At the end of the financial year following the
investment, Tomkins Limited generated a
profit after tax of $12 000. After applying the
equity method of accounting, Warriors Limited
will have which of the following carrying
amounts for the investment?
Select one:
A. $38 400
B. $33 600
C. $36 000
D. $18 400
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