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AB acquired 10% of the equity share capital of XY for $180 million in 20X4. On 1 January 20X8 AB acquired a further 45% of the equity share capital of XY for $900 million and at that date the original investment had a fair value of $200 million.

Place the correct values in the boxes below in order to complete the consideration transferred element of the goodwill calculation on the acquisition of XY.

Options:

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Question 2

The yield to maturity of a redeemable bond is calculated as the internal rate of return of the relevant cash flows associated with the bond.

Which TWO of the following are considered relevant cash flows in this calculation?

Options:

The annual interest payments net of tax relief.

The redemption value of the bond at the date of redemption.

The market value of the bond now.

The nominal value of the bond now.

The value of the conversion premium on conversion to equity shares.

Question 3

LM are just about to pay a dividend of 20 cents a share. Historically, dividends have grown at a rate of 5% each year.

The current share price is $3.05.

The cost of equity using the dividend valuation model is:

Options:

12.4%

11.9%

7.4%

6.9%

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F2 Exam Dumps : F2 Advanced Financial Reporting

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F2 Advanced Financial Reporting Questions and Answers

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