Marks Question No. 3 Proposed Time : 38 Min. | Total Marks : 19 (a) Gem & Co., acquired an asset on finance lease. The lease term is for three (3) years at a rental of Rs. 222,635 per half year payable in advance. The lease commences on January 1, 2015 and fair value of the asset is Rs. 1,500,000. A deposit of Rs.300,000 was also payable on January 1, 2015. The Director of Gem & Co., considers that the asset has a useful life of five (5) years. The rate of interest implicit in the lease is 4.5% per half year. It is expected that the assets will be transferred to Gem & Co., at the end of the lease term. Required: Prepare ‘Lease Amortization Schedule’ 05 {b) Qasim Intemational has imported goods during the year. The following expenses are related to these goods: Rupees Invoice amount | 200,000 Import duty and other non-adjustable taxes 65,000 Transportation charges 12,000 Labour handling charges 5,000 ‘The company has acquired a warehouse on rent to store the imported goods until they are sold out. The rent is Rs. 60,000 per annum, The estimated selling expenses are Rs. 15,000. The selling price of the imported goods is Rs. 340,000. Due to rain in the city the goods were affected. The net realizable value of the goods is assessed to be Rs. 275,000. Required: () Calculate the landed cost of the goods. 03 (ii) Show at what amount will the inventories be shown in the Statement of Financial Position in accordance with IAS 2, 02 (c) Friends Company Limited consists of three cash generating units. One of its cash generating units’ assets comprises the following Rs. in million Property, plant and equipment 26 Goodwill 2 Patent rights 1 Inventory 12 Total a. (On December 31, 2015, an exercise with regard to assessment of impairment losses revealed that the recoverable amount of the assets of the cash generating unit is Rs. 35 million, Following information is relevant: +The goods worth Rs. 1 million were destroyed by fire. +The patent rights have no market value. + Revaluation surplus account showing a credit balance of Rs. 1 million as of January 1, 2014 represents an upward revaluation of the property, plant and equipment. Required: ‘As a Management Accountant, you are required to: ()) Allocate the impairment losses to the above-mentioned assets. 06 ‘Account for the same in the books of accounts in accordance with the requirements of IAS 36 by preparing a journal entry 03 FasEal 2015 2oF4Question No. 5 Proposed Time : 36 Min. | Total Marks : 18 {a) Describe the following bases under the Conceptual Framework for the preparation of financial statements: (i) Historical cost (i) Current cost (b) On January 1, 2011, Abrar Enterprises had acquired a franchise of a well-known courier ‘company to offer courier services in ‘Northem Areas’ of Pakistan. It had paid Rs. 5,000,000 being the franchise license fee. A recurring fee of Rs.2,000,000 is payable each year in arrears. Abrar Enterprises had incurred lawyer's fee of Rs. 150,000 for vetting the franchise agreement. The company had also incurred Rs.50,000 and Rs. 100,000 being the franchise documentation charges and staff training expenses respectively. ‘The franchise license was issued for a period of 10 years and is transferable. The company amortizes the license cost on straight-line basis. ‘On December 31, 2015, the market value of the license was Rs. 3,000,000. The company decided to revalue the franchise license cost. Required (i) Compute the franchise license cost in accordance with the requirement of the IAS 38 ‘Intangible Assets’ (i) Prepare journal entries for recording the franchise license cost and revaluation of the franchise license, (©) In January 2014, the management of Faiz Enterprises decided to invest in a new project, which will attract foreign investment and create new jobs in the country. In July 2014, the management acquired assets of Rs. 100 million and hired 80 new employees for this project and started operation. During the year, Faiz Enterprises received a cash grant of Rs, 13,000,000 from the goverment for this project including Rs. 37,500 per new employee for creation of new jobs in the country after fulfilling all requirements, Required Prepare necessary joumal entries for the year ended June 30, 2015. THE END FasEal 2015 4of4 Marks 02 02 04 06 04