Bl af ngiaol ey aot Faculty of Business Studies B291 Financial Accounting Make-up MTA 2018-2019 / Fall Semester 10" December 2018 Number of Exam Pages: 3 Time Allowed: 2 Hours including this cover sheet) | | Instri 1- Read each question carefully and make sure that you understand it before you begin to answer it. Take about 10 minutes to look through all the questions on the exam and do the ones you are most comfortable with first This exam consists of TWO Mandatory Questions; each question carries 50% of the marks 3- Programmable and financial calculators are not permitted or to share, or pass them between each other in an examination, Also, you are not permitted to use calculators with word processing capabilities 4- In questions that require calculations, credit will be given for showing your workings.Question 1 ‘A- The IASB conceptual framework for the Preparation and Presentation of Financial Statements was developed in 1989 by the [ASC and adopted by the IASB in 2001. The framework is important because it can lead to consistent standards and it prescribes the nature, function, and limits of financial accounting and financial statements.” Required: 1- Briefly explain the following qualitative characteristics of accounting information 2.1. Comparability, 2.2. Relevance. 2- Define what is meant by an asset and a liability [Marks: (16+14) = 30] B. The Delta company uses a periodic inventory system. The beginning balance of inventory and purchases made by the company during the month of October 2018 are given below . October 01: Beginning inventory, 500 units @ $20 per unit. . October 18; Inventory purchased, 800 units @ $24 per unit, : October 25: Inventory purchased, 700 units @ $26 per unit. The Delta company sold 1,400 units during the month of October. Required: Compute inventory on October 31, 2018 and cost of goods sold for the month of October using following inventory costing methods 1 First in, first out (FIFO) method Last in, first out (LIFO) method [Marks: (10+10) = 20]Question 2: ‘A- The relevant accounting standard dealing with tangible assets is IAS 16 defines that the depreciation charge on the revalued asset will be different to the depreciation that would have been charged based on the historical cost of the asset. Required: 1- What is meant by an above statement? In the light of above statement define the two models of depreciation. 2- Discuss the advantages and disadvantages of cost and revaluation model. [Marks: (5 + 10) = 15] B - Orange Company acquired land and buildings for $100,000 on 1 January 2015. The land at that date comprised 20% of the total cost. At that date the estimated useful life of the buildings was 20 years, with $8,000 residual value. Required: 1- Assume that Orange was decided to recognize land and buildings under the cost model, prepare a five-year depreciation schedule for the buildings under both straight-line and the reducing-balance methods. 2- Assume that Orange was decided to recognize land and buildings under the revaluation ‘model, with revaluations taking place every five years. On 1 January 2020, five years later, a surveyor valued the land and buildings at $140,000, of which $30,000 was attributable 10 land. The estimated useful life and residual value of the buildings remained the same. a- Prepare the journal entries required to record these transactions on I January 2020 under the straight-line method. b- Compute and record the depreciation for the year ended 31 December 2020 under the straight-line method. {Marks: (20 + 15) = 35] End of Questions