Attempt all questions. Working nates should form part of the answ. ers. Use separate answer book for each ion, AK Lid., operates in Nepal and has investments in nw 7 . vo other companies. Th statements of financial position of all three companies as at 31” ‘Ashadh aye ores follows: j { [_Rs. In million | \_Assets: AK Ltd. BK Ltd. TK Ltd. | Non - current assets i | Property plant and equipment 1,440 1,100 1,300 | [ Investments in subsidiaries | {BK Ltd. 1,250 _| { Tk Ld. 310 1,270 | [Financial assets 320 21 rat] | Total non-current assets 3,320 2.391 144 1 Current assets 7 895 68) 150 Total assets 4.215 3.072 1,591 [ Equity and liabilities: | Share capital 1,750 1,210 800 | Retained earnings 1.240 930 350 | Other components of equity 125 80 | 95 | Total equity 3.115 2.220 1,245 Non-current liabilities 985 | 765 150 | [Current liabilities us 87 196 | Total trabiluies 1,100 852 346 | Total equity and liabilities 4.215 | 3.072 | 1,591 | Additional Information: a) On 1" Shrawan 2074, AK 1 td. acquired 14% of the equity interest of TK Ltd. for a cash consideration of Rs. 260 million and BK Ltd. acquired 70% of the equity interest of TK Ltd. for a cash consideration of Rs. 1,270 million. At I" Shrawan 2074, the identifiable net assets of TK Ltd. had a fair value of Rs, 990 million, retained earnings were Rs. 190 million and other components of equity were Rs. 52 million. AU!" Shrawan 2075, the identifiable net assets of TK Ltd. had a fair Value of Rs. 1,150 million, retained earnings were Rs. 240 million and other components of equity were Rs. 70 million. The excess in fair value is due to revaluation of non-depreciable land which has not been accounted for and not changed ti! the reporting date. The fair value of the 14% holding of AK Ltd. in TK [td., which Was classified as fair value through profit or loss, was Rs. 280 million at 32" Ashadh 2075 and Rs. 310 million at 31° Ashadh 2076. However, the fair value of BK Ltd's interest in TK Ltd, had not changed since acquisition. On 1" Shri 2078, AK Lid, acquired 60% of the equity interests of BK Ltd. The cost of investment comprised cash consideration of Rs. 1,250 million, On 1" Shrawan 2078, the fair value of the identifiable net assets acquired was Rs. 1,950 million and retained earnings of BK Ltd. were Rs. 650_million and other component of equity were Rs. 55 million. The excess in fair value is due to revaluation of non-depreciable land which has not been accounted for and not changed till the reporting date. It is the group's policy to measure the non- GFT b@) controlling interest at acquisition at its proportionate sha ‘ subsidiary s net assets He share of the fair value af the ¢) Goodwill of BK Ltd and TK Ltd were tested for impairment at 31" Ashadh and found that there was no impairment relating to TK Lit eee gedit of BK Lid was fully impaired by the reporting date " 4) On 1 Shrawan 2074. AK Ltd acquired office accommodation ata cost of Rs. 90 million with a 30 year estimated useful life. Dunng the year. the property market an the area slumped and the fair value of the accommodation fell ta Rs. 78 million 332” Achadh 2076 and this was reflested.in the financial statements. However. the market unexpectedly recovered quickly due to the announcement ‘of major government investment in the area's transport infrastructure. On 31" Ashadh Sa76, the professional valucr advised AK Ltd. that the office accommodation Ghoul now be valued at Rs 10S milion, AK Ltd. has changed depreciation foe the year but has not taken into account of the upward valuation of the office accommodation. AK Lid. uses the revaluation mafet and records any valuation change when advised to do so £) AK Lid, hat announced 1 plan ie ti redone He capa Wied This joe reatructuring plans during the year, The first ne inf ts smaligr factories, which he redundancy ef 300 employees. eee heen eclected and communicated (9) The costs of this ee million in retraming costs and Le. ei The second plan is to fe-organize the oe eat trepartment over one-year petiod but tt docs The plan will result in 20%» of finance staf faring. The costs of this plan are Rs. 10 million f million. in retraining costs and Rs, 7 million in termination costs There are no entries made in the financial statements for the above plans have already heen te whe have a 1) The following information relates to the group pension plan of AK Ld Rs, in million 1 Shrawan 31 Ashadh 2075 2076 Fair value of plan assets 28 29 ‘Actuarial value of defined benefit obligation 30 35 The contributions for the period received by the fund were Rs. 2 million and the employee benefits paid in the year amounted to Rs, 3 in, The discount rate to Fe osed in any calculation is 5%, The current service cost for the period based on aera calculations is Rs. { million, The above figures have not been taken inte Secount for the year ended 31° Ashadh 2076 except for the contributions paid aihch have been entered in cash and the defined benefit obligation. Required Prepare the group consolidated statement of financial position of AK Lid. as at shadh 2076 with the notes of any of the issues dealt in the question. 4) DP Lid, availed a tease. The terms of the leave are as under: i) Lease period is 3 yeats, in the beginning of the year 2075/76, for equipment costing Rs. 1,000,000 and has an expected useful life of $ years. ii) ‘The fair market value is also Rs. 1,000,000. ) The property reverts back to the lessor on termination of the lease. iy) The unguaranteed residual yalue is estimated at Rs. 100,000 at the end of the year 2077/78. 4) ‘Three equal annual payments are made at the'end of each year. Consider IRK of 10% and the present value of annuity of Re, 1 due at the end af 3" year at 10% is Rs. 24868 and PV of 3" year is 0.7513. GIT 20 PSGa) Required: i) Calculate annual lease lease. ii) Calculate total tneamed sastalment® recording the lease instalr€ supplied ment and state whether pay' finance incom Lio you by Sag b) The following information ! r the lea: and show Journal entric: (442424: se constitute finance ‘s for urmatha Ltd.: ‘ yen at 15%) ______— | | Financial Leverage 50,000 Securities Premium Ne {20,000 ‘ General Reserve 60,000 Statutory Reserve _ 30% | Income Tax Rate The industry to which Sagarmatha Ltd. belongs 15% dividend to its shareholders. The ordinary to has a practice of paying at least shares are quoted al a premium of 400%, preference shares at Rs. 25 and debentures at a discount of 20%. Required: (4444251 Calculate Economic Value Added (EVA) and Market Value Added (MVA) statements of the company and also explain the reasons for the difference, if any Between the two. ' ° f a) The capital structure of XYZ Ltd. on 31" Ashadh 2076 was as follows: are capital (Rs. 100 cach) 1800,000 ‘apital (Rs. 100 each) 500,000 red debentures (Rs.) 500,000 Reserves (Rs.) $00,000 Profit carned before interest and taxes during the year (Rs.) 720.000 Tax rate 25% Normal rate of retum on equity shares of the industry 15% Subject to; i) The profit after tax covers fixed interest and fixed dividend at least 4 times. ii) The debt equity ratio is at least 2. iii) Yield on shares is calculated at 60% of distributed profits and 10% of undistributed profits. The company has been paying regularly an equity dividend of 15% ‘The risk premium of dividend is generally assumed at 1%, Required. 10 Find out the value of equity shares of the company as on 31" Ashadh 2076. b) Bashu Kshitiz Lid. acquired a block making machine on I" Shrawan 2075. The cost of the machine amounting to Rs. 1,340,000.00 was derived by Finance Office of the company as follows: _Panticulars Amount in '000( Rs.) | | Purchase Price 1,005.00 | Installation Cost 234.50 Performance Deposit 67.00 Delivery Cost 33.50 Total cost 1,340.00 GFT PT.are relevant in relation ta cost of machine above: ase pce is before taking into account trade discount of $24. Vanon was done by employees of machine supplier and Bashu Kshitiz Qe. 87.100 0) of the vwstallation cost included above relates to what the Me supplier pant Hashu Kshiti Ltd for assisting i installation by of Bashu Koti Lid. The company did not pay its employees any onal amount for being involved in installing the new machine. mance deposit relates to a two year Marntenance service to be provided e supplicr It was paid on 1" Shrawan 2075, It is refundable if no works out on the machine No maintenance works were provided by plier in the period to Ashadh end 2076. {very cost is simply an estimate of What it would have been charged by chine supplier to deliver the machine The machine was however delivered int) Pes im ne Goverment grant equal to 10% oF its NAS [ona specitic condition that it should remain rant was received by Bashu Kshitiz Ltd. on " machine was ready for its intended use, The depreciation on the machine at an annual rate of 20° on hod (STM) basis veith estimate of nil scrap value would be in iting standards. Also the company is ncome to account for Government rants, Required 10 Line items to be presented in the financial statements of Bashu Kshitiz Ltd. fer t ended \shadh 31. 2076. The calculation should be supported by es on the following: (5351 ‘ced by BFI undergoing NFRS implementation porate Govemance Reporting jenificance of the earnings per share (EPS) figure to the analysis of company performance based on NAS 33. 4) Types of Hedging Relationship rs of Public Expenditure and Financial Accountability (PEFA) snent help in strengthening Public Finance Management on 1" Shrawan 2078 for Rs. 4,600,000. uusiness at that date based on net selling prices: lows: Rs, ‘000 2,400 600 ‘ Trade receivable 200 4 Cash 1,000 ‘Trads payable On Miers li the tempo company had four of ils tempos stolen. The net selling value of four tempos was Rs. 600,000 and because of non-i i losure of GFT6) in ti i company. the tempos were uninsured. As a result of certain risks to the insurance ECORDIZE an impairment loss of Rs. ra 0 ae: BG “i soten temps) due to the ely a evalu tg use inclusive of the loss o| se 4 business. shwin a riv the cash generating wnt, thal is Ne [ey area. It is anticipated that the siness in the same 7 eee, sommenced i reyestaced by 25% leading to a decline in the business revenue of X Itd. 1 : ct present value in use of the pusiness Which is calculated at Rs 3,000,000. The 1 1 o 7 the rival iivense has fallen (0 Rs, $00,000 as a result of joka selling value of the tempo iting value of the other assets have remained the ing tempo operator. The net s€! ‘a as at [ Shrawan 2075 thoughout the period (444-8) Required: hove impaicment of assets in its financial Deseribe how \ Ltd. should treat the 3 es statements Sa 1" Bhadra 2075 and 1" Ashwin 2075. terials on 1 Ashadh 2) Brat Lid, incorporated in Nepal purchased 6,000 kg of ma 2075 to use in their production process. ’ Fata cont The supplicr is located in China where the carrancy ts vient Ee ee 300,000 Yuan and have not been paid at the year end. The re are: 1 Ashadh Re. 1 = 0.05 Yuan 32™ Ashadh Re. 1 = 0.056 Yuan Required: ol How this transaction will be included in the financial statements of 32 — 2075? Also, identify the functional currency and presentation currency oO Lid. b) Progressive Ltd, operates a defined benefit pension plan for its employees. At 1" Shrawan 2075 the fair value of the pension plan assets was Rs. 8,200,000 and the present value of the pension plan liabilities was Rs. 8,500,000. The Actuary estimated that, the service cost for the year to 31" Ashadh 2076 was Rs. 2,100,000, The pension plan paid Rs. $00,000 to retired members and Progressive Lid. paid Rs. 1,900,000 in contributions ta the pension plan in the year to 31° Ashadh 2076. The Actuary estimated that, the relevant discount rate for the year to 31" Ashadh 2076 was 6%, On 31" Ashadh 2076, Progressive Ltd. announced improvements to the benefits offered by the pension plan to all of its members. The Actuary estimated that, the past service cost associated with these improvements was Rs. 2 million. At 31" Ashadh 2076 the fair value of the pension plan assets was Rs. 10,200,000 and the present value of the pension plan liabilities (including the past service costs) was Rs. 12,500,000. Required: (34255) In accordance with NAS 19 Employee Benefits; i) Calculate the net actuarial gain or loss that will be included in Progressive Ltd.'s other comprehensive income for the year ended 31" Ashadh 2076. ii) Calculate the net pension asset or liability that will be included in Progressive Ltd.'s statement of financial position as at 31°" Ashadh 2076, (3+2=5) GFT