Which of the following statements is true in respect of ST's gross profit margin based on the information given?

• A. Gross profit margin has increased as a result of management negotiating a premium price for the contract with the new customer.
• B. Gross profit margin has reduced due to the increased cost of the new contract.
• C. Economies of scale have been achieved from increased revenues resulting in a reduction in the gross profit margin.
• D. The associate's gross profit margin is greater than ST's leading to an overall increase in ST's margin.

Which of the following, in accordance with IFRS 2 Share-based Payments, are only applicable to the accounting treatment of cash settled rather than equity settled share-based payment schemes?
Select ALL that apply.

• A. The credit entry in the financial statements is to equity.
• B. The instruments in the scheme are measured at the fair value at the grant date of the scheme.
• C. The instruments in the scheme are remeasured at the end of each financial year to fair value.
• D. The credit entry in the financial statements is to liabilities.
• E. The expense of the scheme is spread to profit or loss over the vesting period.

MNO is listed on its local stock exchange. It has a high level of gearing compared to the industry average as a result of rapid expansion funded by debt. The directors of MNO would like to reduce the level of gearing by raising equity to fund the next expansion project. The directors are considering whether to use a placing of new shares or a rights issue.
Which of the following statements is true?

• A. The administration costs associated with a placing are usually more expensive than a rights issue because less investors are involved.
• B. The directors must use a placing before offering the rights issue to existing shareholders.
• C. A rights issue would not need to be underwritten because the risk of the shares not being taken up is small compared to a placing.
• D. A placing will increase the proportion of the total number of MNO's shares held by large investors.

FG and RS operate in the same retail sector within the same country and are of a similar size. The following ratios have been calculated based on the financial statements for the year ended 30 September 20X4:

Which of the following factors would limit the usefulness of these ratios as a basis for assessing the comparative performances of FG and RS?

• A. FG has a higher level of deferred tax liabilities than RS.
• B. RS sold a piece of land for a sum much greater than its carrying value.
• C. RS operates at the low margin end of the market whilst FG operates at the high margin end.
• D. RS has a higher level of borrowings and associated finance costs.

RS is a listed entity that has no subsidiaries although its Finance Director is also a director of TU, an unconnected entity.
It is preparing its financial statements to 30 September 20X6.
Which of the following substantial transactions must be disclosed in these financial statements in accordance with IAS 24 Related Party Disclosures?

• A. Pension payments made on behalf of the Managing Director of RS.
• B. Purchase of production materials from TU at a discounted price to the current market value.
• C. Performance related bonus payments made to the office staff for the year.
• D. Sale of finished goods to TU at normal selling price.