Exam 18: Financial Reporting: Segment Reporting, value Added Statements, highlights Statements and Future-Oriented Financial Information

A company reports the following in relation to the year ended 30/6/2012: Number of ordinary shares issued at 1/7/2011 $\quad10 000$ Number of preference shares issued (paying an annual dividend of $\$ 2.00$ per share) $\quad1800$ On $31 / 3 / 2012$ a further 1000 ordinary shares were issued. Net profit from ordinary activities, after income tax $\quad \$ 20000$ The company's basic earnings per share figure (to the nearest tenth of a cent)is:

A business reports the following in its financial statements: Net profit before tax \ 100 Interest expense 20 Income tax expense 30 Preference dividends paid 10 Ordinary dividends paid 20 Total assets at the beginning of the year 750 Total assets at the end of the year 850 Total liabilities at the beginning of the year 375 Total liabilities at the end of the year 425 Its 'times dividends earned' ratio is:

According to paragraph 19 of AASB 8,after which number of reportable segments should an entity consider whether a practical limit has been reached?

A business reports the following in its financial statements: Net profit before tax \ 100 Interest expense 20 Income tax expense 30 Preference dividends paid 10 Ordinary dividends paid 15 Total assets at the beginning of the year 750 Total assets at the end of the year 850 Total liabilities at the beginning of the year 375 Total liabilities at the end of the year 425 Its rate of return on shareholders' equity is:

A business reports the following in its financial statements: Net profit before tax \ 150 Interest expense 20 Income tax expense 30 Total assets at the beginning of the year 700 Total assets at the end of the year 850 Its rate of return on total assets is:

The presentation of future-oriented financial information in company annual reports:

Many companies,especially larger companies,now include a highlights statement in their annual reports.What are the main items likely to be included in such a statement? What are the perceived benefits of giving this information? Also explain any possible disadvantages of publishing a highlights statement.

The 'current ratio' is usually calculated as:

Henry James Ltd,a large retailing business,reports the following (all in $ millions): Cost of goods sold \ 52.0 Cost of services purchased 16.0 Salaries and wages 12.0 Interest expense 0.2 Depreciation and amortisation 2.0 Dividends paid 1.2 Sales revenue 90.0 The 'gross value added' for this business is:

A company reports the following in relation to its latest financial year: Current assets \ 300 Non-current assets 700 Current liabilities 150 Non-current liabilities 250 Shareholders' equity 600 If the company earns a net profit after tax in the following year of $40,all received in cash,and uses this cash to repay some of its non-current liabilities,and there are no other changes in its balance sheet,its total-debt-to-equity ratio will be:

Reporting by segments of a business is believed to have a number of disadvantages.Which of the following is not likely to be such a disadvantage?

AASB 8 'Operating Segments' requires entities to report:

Which of the following statements relating to AASB 8 is not true?

Explain and illustrate,with simple examples,both the usefulness and any possible dangers in using the: rate-of-return on total assets ratio rate-of-return on equity ratio times dividends earned ratio Why are these described as 'efficiency ratios'?

Which of the following is not a likely benefit of including a highlights statement in the annual report of a business?

A business reports the following in its financial statements: Net profit before tax \ 100 Interest expense 20 Income tax expense 30 Its 'times interest earned' ratio is:

A company reports the following in relation to its latest financial year: Net profit \ 12000 Number of ordinary shares issued 5000 Number of preference shares issued (paying an annual dividend of 50 cents per share) 500 The company's basic earnings per share figure is:

Discuss the benefits of the 'management approach' adopted by AASB 8.

What benefits is an investor likely to gain if a business presents financial information for its various separate major organisational divisions and/or geographical areas of operations? Are there any likely costs (direct or indirect)to the investor from the presentation of this information?

Under the provisions of Australian Accounting Standard AASB 133,a basic earnings per share is calculated as: