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Sample of ICAN SKILL EXAM PAST QUESTIONS AND ANSWERS MAY/NOV DIET 2014-2017
SECTION C: YOU ARE REQUIRED TO ANSWER ANY TWO OUT OF THREE QUESTIONS IN THIS SECTION (30 MARKS)
QUESTION 5 The difference between debt and equity in an entity‟s statement of financial position is not easily distinguishable for preparers of financial statements. Debts and equity financial instruments may have similar characteristics, which may lead to inconsistency of reporting.
Required: a. Discuss the main distinguishing features in the presentation of debt and equity under International Financial Reporting Standards (IFRS) with clear examples. (10 Marks) b. Explain why it is important for entities to understand the impact of the classification of a financial instrument as debt or equity in the financial statement. (5 Marks) (Total 15 Marks
Question 7 a. After initial recognition in the Financial Statements, Financial Assets are measured, either at fair value or amortised cost according to the provisions of IAS 39-financial Instruments; Recognition & Measurement. Required: Briefly explain how fair value and amortised costs of financial assets are determined and give one example each of the class of financial assets that can be measured using the methods. (6 Marks) b. Anifowose Plc issued a debt instrument at it fair value of N100million on January 1, 2013. The debt instrument is to mature in 2017. It has a principal amount of N125million and carries fixed interest rate of 4.72% 12 that is paid annually. The effective interest rate is 10% and on December 31, 2015 had a fair value of 105 for every N10 nominal value. The company makes up its accounts to December 31, every year. Required: i. Show your computation schedule for the amortised cost of the financial liability up to December 31, 2015 on the assumption that the financial liability is valued at amortised cost. ii. What is the value of the financial liability as a December 31, 2015, if the fair value option is adopted by Anifowose Plc? (9 Marks) (Total 15Marks)