Reference no: EM133018479

Questions -

Q1. Blum Ltd was registered as a company on 1 Dec 2020. On 8 Dec 2020, Blum Ltd issued a prospectus offering 200 000 ordinary shares at an issue price of $5.00 each, payable $4.00 on application and $1.00 on allotment. Applications closed on 1 March 2021 with the company having received applications for 220 000 shares. After application but prior to allotment, the balance in the application account would be:

A. $980 000 credit

B. $880 000 credit

C. $880 000 debit

D. $980 000 debit

Q2. Gold bangles are sold in Chinatown. These are the following information available for a gold bangle:

Price = $300, Transaction Cost = $50, Transport Cost = $15

What is the fair value of a gold bangle based on the above information?

A. $300

B. $235

C. $250

D. $285

Q3. According to AASB 116, the revaluation surplus included in equity in respect of an item of property, plant and equipment may be transferred directly to retained earnings when the asset is derecognised. This may involve transferring_________________ when the asset is retired, or disposed of.

A. loss

B. no surplus

C. part of the surplus

D. the whole of the surplus

Q4. Doudna Ltd has recently acquired a plant that cost $30 000. The plant normally remains productive for six years. It is expected to continue in the production process at Doudna Ltd for eight years due to the excellent maintenance and operating policies in place at Doudna Ltd. The plant has the capacity to produce 20 000 units over a six-year life and 29 000 units over an eight-year life. Its salvage value after six years is expected to be $2 500 and after eight years $2 000. What depreciation would be charged in the first year of the plant's operation when 4 000 units were produced (rounded to the nearest dollar)?

A. $3 862

B. $4 138

C. $4 148

D. $3 500

Q5. Balibaba Ltd's share capital consists of 50 000 ordinary shares issued at $2 and paid to $1 per share. On 1 September, a first call of 50c was made on the ordinary shares. By 5 October, call money was received on 45 000 shares. On 6 November, the shares on which calls were outstanding were forfeited. The company's constitution provided for any surplus on resale to be retained as reserves whose shares were forfeited. The entry to record the forfeiture of shares is:

Group of answer choices

A. Dr. Share capital 7 500

Cr. Forfeited shares reserve 7 500

B. Dr. Share capital 7 500

Cr. First call - ordinary shares 5 000

Cr. Forfeited shares liability 2 500

C. Dr. Share capital 7 500

Cr. First call - ordinary shares 2 500

Cr. Forfeited shares liability 5 000

D. Dr. Share capital 7 500

Cr. First call - ordinary shares 2 500

Cr. Forfeited shares reserve 5 000