Helping Hand Questions for F2

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Question 24

JJ's current share price is $1.80, with a dividend of $0.20 a share just about to be paid.

Dividends have increased at an average annual growth rate of 4.5% and this is expected to continue into the future.

What is JJ's cost of equity?

Options:

17.6%

16.1%

12.5%

11.1%

Question 25

EF acquired a copy machine under a three-year operating lease. EF will pay nothing in year one and then will pay $6,000 in years two and three. The estimated economic useful life of the machine is six years.

Which THREE of the following statements are true in respect of how EF will account for its use of the machine and the associated operating lease payments?

Options:

An asset of $12,000 will be included in EF's property, plant and equipment at the start of the lease.

EF will record no expense in year one in respect of the operating lease charges for this machine.

EF will record a credit to bank of $6,000 in year two.

EF will include an accrual of $4,000 at the end of year one in respect of the lease payments.

EF will charge $4,000 to profit or loss in each of the three years in respect of this operating lease.

EF will include an accrual of $6,000 at the end of year one in respect of the lease payments.

Question 26

On 1 January 20X4 EF grants each of its 125 employees 500 share options on the condition that they remain in employment for 3 years. During the year to 31 December 20X4 10 employees left and It is expected that a further 25 will leave before the end of the vesting period.

The fair value of each share option is $30 on 1 January 20X4 and $45 on 31 December 20X4.

What is the journal entry in respect of these share options in EF's financial statements for the year ended 31 December 20X4?

Options:

Question 27

Following the impairment review of the investment in BC, what would be the carrying value of this associate in KL's consolidated statement of financial position at 31 December 20X9?