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MC Question 7

At 31 March 2015, Jasim had shareholders’ funds (equity) of $200,000 and debt of $100,000.

Which of the following transactions would increase Jasim’s gearing compared to what it would have been had
the transaction NOT taken place?

Gearing should be taken as debt/(debt + equity). Each transaction should be considered separately.

A

During the year a property was revalued upwards by $20,000

B

A bonus issue of equity shares of 1 for 4 was made during the year using other components of equity

C

A provision for estimated damages was reduced during the year from $21,000 to $15,000 based on the most
recent legal advice

D

An asset with a fair value of $25,000 was acquired under a finance lease on 31 March 2015

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