An irredeemable loan note that pays interest at 7% a year – Because loan note, redeemable /

irredeemable is classifies as a- LIABILITY!

An equity share which is not redeemable and has no restrictions on receiving loan dividends-
Equity

Convertible loan question 18

Q19
IIE- investment in equity investment
- FVTPL by default
- FVTOCI ( not for trading & irrevocable election)

Financial liability always use ACM

Q20
IIE- investment in shares
Held for long term investment- not for trading + election ( use FVTOCI)
ACM
Transaction costs- capitalize ( $20x 3.20) =$64000 + 1000

FV= 20000 x $3.8 = $76000

Increase of 11000k

If FVTPL 12k (64-76) 12k

Q21

Any revaluation gain on the property is recognize in other comprehensive income and any
revaluation loss is recognized in profit or loss.. if any wrong but 1 st year then statement correct.

Revaluation model criteria.

Consistent and regular
Same class revalue together
FV can me measured reliably.
# not necessary annually.
Q22
Balance on revaluation surplus
Increase of 1m
Dr PPE
Cr OCI RS

Deferred tax of 30m will give rise to DTL

Dr OCI RS 300k
Cr DTL 300k

RS= 1000k – 300k

Loss of revaluation same as impairment loss.

Dr SOPL 100k
Cr PPE

If different asset cannot offset. Regardless both are asset. So different double entry

Q23
IL is 100k
Any impairment loss is allowed for tax purpose. - it is a deductible expense.
Taxable profit will reduce, when it reduce ITE will also reduce by 30%

Q24
Income tax expense- Deferred tax
SOFP- income asset because capitalize

Accounting rule and tax rule

AR will capitalize and TR exp off/deducted. And it will give rise to deferred tax

AB TB
200k > 0
AB more than TB will give rise to TTD and will give rise to DTL of 60k

DTL double entry

DR ITE 60k
CR DTL 60k
Q26
IFRS 16 Leases

Criteria
- Must be an identified assetf
- Lease has control ? + lessor cannot substitute asset

Q27
In arrears use ACM table FC CF
Dr ROU A 4700 ( balancing figure)
Cr LL 4647.5
Cr Cash 37.5
Cr Prov 15

 Dismantle the plant ( D&R)

Q30
T1-Sale
Dr cash 1800
Cr PPE 1000
Cr SOPL-gain on disp 800 is wrong answer is 600
800 not allowed to recognized because can be recognized up to rights transferred.

T2- Leaseback
Dr ROU A (rights retained) 250
Cr LL 450

Formula for rights retained

CA x LL / FV

1000 x 450/1800
= 250

Full gain
800 x. 1350/ 1800. = 600
Q2
Debt instrument- financial asset (IID
In SOFP for IID
3 methods

T1.Contractual cash flow test (CCT)- solely payment of principle and interest.(SPPI)
T2.BMT, business model test- Planning to hold + collect/ hold + collect + sell / to sell

H&C- long term ( ACM)

H&C to S- medium term (FVTOCI)
S- short term(FVTPL)

If T1 not passed, then straight away FVTPL

Q4- group retained earnings ( CRE) HRE+S post RE x H%

URP = selling price x mark up x the unrealized

Dr Post RE of S
Cr Inventory

NCI at FV is full goodwill.

Full goodwill double entry

Dr Post RE of S
Cr Goodwill

Add both green but have to multiply H % if group RE

Q6- IAS 2
Cost (incurred) vs NRV (fv+cts)
= 33600 = (36000+8400/2) -8400
= 31800
Q8

If fair value less costs to sell cannot be determined, then the recoverable amount is the
replacement cost

Recoverable amount
-Fv-cts: if sell asset how much can get
-VIU : how much u can get for continuing to use the asset

FV is an exit value

Replacement costs can be current cost

Replacement costs is an entry value; price to buy

So, replacement cost not used in this case as it used to buy and this scenario uses recoverable
amount as fv-cts

Q9 – common in exam
Only amortize when it is launched or there is income

Q10
Contract asset/liability
Formula
Revenue recog to date 3500
- progress billings 6200
(2700)

Contract value (TCP)

Costs to date ( CITD)

+Estimated costs to completion (further costs)

CITD + cost to completion = TCC

Step 1; to find P/(L) from the contract

TCP-TCC
8k-11k
=-3k loss must be recognized immediately
Step 3 , skip step 2 POC. COS will be CITD in this case
SOPL

Rev 3500
-cos (6500) * work backwards from gp add cos to get revenue
GP (3000)

So the 3500 add it to the formula under revenue recog to date – Progress billing to get a
contract liability because it is a negative figure

 But if it is profit making contract, straight multiply tcp with poc and then minus the
progress billing.

Q11
Sale of goods how to recog revenue at a point in time (PIT)
Keyword is if control is transferred or not
Can recognize revenue as long as control is being transferred.

Indicators
The seller has transferred physical possession of the goods
The customer has legal title of the asset

The customer has paid for the goods ( not an indicator) because sometimes obligation not
fulfilled.

Q13
Formula

Sales Proceed(SP)
-CA of subs@DODisposal

CA of subs= Net asset of S + goodwill - NCI

Goodwill use the DOA value because there is no revaluation of goodwill to a higher amount.

SP 500m
-CA of sub@DOD
NA of S 440m
+ GW 70m
-NCI (90m) (420m)
80m