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Q.2. FAM had the following tangible fixed assets at 31 December 2014.
Cost Depreciation NBV
Rs. 000 Rs. 000 Rs. 000
Land 500 - 500
Buildings 400 80 320
Plant and machinery 1,613 458 1,155
Fixtures and fittings 390 140 250
Assets under construction 91 - 91
2,994 678 2,316
In the year ended 31 December 2015 the following transactions occur.
(1) Further costs of Rs.53,000 are incurred on buildings being constructed by the company
and a building costing Rs.100,000 is completed during the year.
(2) A deposit of Rs.20,000 is paid for a new computer system which is undelivered at the
year end.
(3) Additions to plant are Rs.154,000.
(4) Additions to fixtures, excluding the deposit on the new computer system, are Rs.40,000.
(5) The following assets are sold.
Cost Depreciation brought forward Proceeds
Rs. 000 Rs. 000 Rs. 000
Plant 277 195 86
Fixtures 41 31 2
(6) Land and buildings were revalued at 1 January 2015 to Rs. 1,500,000, of which land is
worth Rs. 900,000. The revaluation was performed by Messrs Jackson & Co, Chartered
Surveyors, on the basis of existing use value on the open market.
(7) The useful economic life of the buildings is unchanged. The buildings were purchased ten
years before the revaluation.
(8) Depreciation is provided on all assets in use at the year end at the following rates.
Buildings 2% per annum straight line
Plant 20% per annum straight line
Fixtures 25% per annum reducing balance
Required:
Show the disclosure under IAS 16 in relation to fixed assets in the notes to the published accounts
for the year ended 31 December 2015. (18)
Certificate in Accounting and Finance Stage Examinations
School of Test 2 (October 16, 2019)
Accountancy 40 minutes – 21 marks
Additional reading time – 5 minutes
Q.2. The following information pertains to property, plant and equipment of Orchid Limited (OL), a listed
company:
Subsequent
Date of Cost Rs. in Original Depreciation
Description measurement
purchase million useful life method
model
Buildings 1-Jan-15 600 30 years Straight line Revaluation
Plant 1-Jan-15 475 25 years Straight line Cost
Buildings
The revalued amount of buildings as determined by Shabbir Associates, an independent valuer, on 31
December 2015 and 2017 was Rs.700 million and Rs.463 million respectively.
On 30 June 2017 a building having original cost of Rs.66 million was sold to Baqir Limited for Rs.85
million. It was last revalued at Rs.87 million. OL incurred a cost of Rs.2 million on disposal.
OL transfers the maximum possible amount from revaluation surplus to retained earnings on an annual
basis.
Plant
On 31 December 2016 the recoverable amount of the plant was assessed at Rs.360 million with no
change in useful life.
During 2017, OL has decided to change the depreciation method for plant from straight line to reducing
balance. The new depreciation rate would be 10%.
Required:
Prepare following notes (along with comparative figures) to be presented in the financial statements of
OL for the year ended 31 December 2017 in accordance with the requirements of relevant IFRSs and
Companies Act, 2017:
(a) Property, plant and equipment
(b) Change in depreciation method (18)
Certificate in Accounting and Finance Stage Examinations
School of Test 3 (October 23, 2019)
Accountancy 27 minutes – 15 marks
Additional reading time – 3 minute
Q.2 (a) Which TWO of the following could be an indication that an asset may be impaired
according to IAS 36 Impairment of Assets?
(a) Decrease in market interest rates.
(b) Increase in market values for the asset.
(c) Damage caused to the asset.
(d) Management intention to reorganise the business. (01)
Required:
Prepare a statement of profit or loss for the year ended 30 June 2018. (15)
Certificate in Accounting and Finance Stage Examinations
School of November 20, 2019
Accountancy 45 minutes – 24 marks
Additional reading time – 5 minutes
Good Luck
Certificate in Accounting and Finance Stage Examinations
School of November 27, 2019
Accountancy 28 minutes – 16 marks
Additional reading time – 2 minutes
(b) Gigantic Limited opening retained earning balance was Rs.150 million. It made a net
profit for the year ended 31 March 2020 of Rs.30 million. During that year, an ordinary
dividend of Rs.50 paisa per share was paid on 40 million ordinary shares. What was the
retained profit for the year ended 31 March 2020?
(a) Rs.150 million (b) Rs.160 million
(c) Rs.165 million (d) Rs.170 million (01)
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Required: Show the investment property note in snake Limited’s financial statements for the
year ended 31 December 2015. (Ignore tax and comparatives) (15)
Q.2 (a) ABC company receives a government grant of Rs. 500,000 on 1 April 2017 to facilitate
purchase on the same day of an asset which costs Rs. 750,000. The asset has a five-year
useful life and is depreciated on a 30% reducing balance basis. Company policy is to
account for all grants received as deferred income.
What amount of income will be recognised in respect of the grant in the year to 31 March
2019? Rs. ___________ (02)
(b) Which of the following is not a correct treatment of government grants related to an
asset?
(a) Deferred income
(b) Credit to income in period received
(c) Deducting the grant from the carrying amount of the asset
(d) None of the above (01)
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(b) Waseem Industries (WI), entered into a 1-year contract with Alif Noon (AN) on 1st April 2019 to
supply small Generators which are used normally in offices/shops. The contract states that price per
Generator will be adjusted retroactively once customer reaches.
Cumulative annual sales (Generator) Price (Rs.)
0-400 50,000
401-800 47,000
The contract also states that the payment will be made after 10 days of delivery.
Based on past experience and knowledge of customer, WI estimates that sales volume for the year will be
600 Generator. By the end of May, AN purchased only 120 Generator at a price of Rs. 50,000 per
Generator.
On 15 June WI received an order of 250 Genertors to be provided during the June. Now WI estimates that
cumulative sale volume for the year will be more than 800 Generators. WI sent the generators on 28 June.
AN paid the amounts as agreed.
Required:
Pass Date wise journal entries for execution of the contract as per IFRS-15 (07)