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ACADEMY OF FINANCE INTERNATIONAL FINANCIAL REPORTING STANDARDS
Code: 01/2021
Time allowed: 3 days
Question 1: (Unit: CU)

Answer and explain to classify the following as an Asset, Liability or Neither, applying the
definition/recognition of each that is given in the Conceptual Framework. 
1. 50,000 spent by a manufacturer on training staff how to operate machinery
2. 10,000 spent by a business to patent its technology
3. 30,000 expected expenditure on redecorating business premises in the upcoming financial year
4. 15,000 that a retailer expects to have to repay to customers that return purchased items within
the 30 statutory return period
5. 100,000 losses expected by a car manufacturer in the upcoming financial year as a result of
economic recession
Pillow Limited was in the process of constructing a building when, due to financial difficulties,
it could not complete the construction thereof.
It has the following options: 
1. Sell the building as is, (Pillow Limited does, on occasion, sell buildings); 
2. Hold the building ‘as is’ for capital appreciation; or
3. Borrow from the bank and complete the building, then lease this building out to a tenant.
Required:
Explain how Pillow Limited should account for the building under the three options above
Rachel co. acquired an old 5-story building of 500,000 at cost and renovated it into a modern office
building. Renovation costs and other details are as follows:
- Renovation costs (i.e. repainting, floor replacing, windows/doors remodeling, …): 20,000
- An elevator installed for the first time: 40,000
- New modern air condition system: 15,000.
The office building was ready for intended use at 01 January 20X7 which being depreciated over
25 years by straight line basis. The elevator has 10 years of estimated life and that of air condition
system is 20,000 operating hours. No residual values are attributed to any of the component parts.
There were several events as following:
(i) In 20X9, Rachel started to extend a new floor at the top of the building for meeting rooms.
Total extension cost was 22,000. This project was finished in 31 December 20X9.
(ii) At 01 September 20Y0, the AC system was partly damaged due to a fire accident and was
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repaired at a cost of 5,000. However, its remaining estimated life was shortened to 4,000 hours.
Records about AC operating hours:
- Accumulated operating hours to 31 August 20Y0: 12,000 hours
- Operating hours from 01 January to 31 August 20Y0: 2,000 hours
- Operating hours from 01 September to 31 December 20Y0: 250 hours.
(iii) Annual maintenance cost for elevator incurred in 20Y0: 2,000.
Required:
1/Show your solutions of PPE recognition and measurement at 01 January 20X7 with explanation?
2/Show your accounting treatments with costs incurred in those events given in the case with
explanation?
3/Calculate the charges to P/L account in respect of the building and its parts for the year ended
31 December 20Y0.
Question 4:
A vendor enters into a contract with a customer to supply a licence for a standard ‘off the shelf’
software package, install the software, and to provide unspecified software updates and technical
support for a period of two years. The vendor sells the licence and technical support separately,
and the installation service is routinely provided by a number of other unrelated vendors. The
software will remain functional without the software updates and technical support.
Required: Provide your own assumption, then show how to recognize revenue in each
circumstance.
1/ Case 1: If the software is delivered separately from the other goods or services, can be installed
by a different third party vendor, and remains functional without the software updates and
technical support.
2/ Case 2: If the software installation service is to be substantially customised in order to add
significant new functionality to enable the software to interface with other software already being
used by the customer. The customised installation service can be provided by a number of
unrelated vendors.
used by the customer. However,
•The vendor is the only supplier that is capable of carrying out the customised installation service
• The software updates and technical support are essential to ensure that the software continues to
operate satisfactorily, and the customer’s employees continue to be able to operate the related IT
systems

Mocy Co acquired a subsidiary on 1 January 20X9 for X1 million. The fair value of the net assets
of the subsidiary acquired were X2 million. Mocy Co acquired 80% of the shares of the subsidiary.
The non controlling interest was fair valued at X3 million.
Required:
1/Give necessary information in X1, X2, X3
2/Calculate goodwill based on the partial and full goodwill methods under IFRS 3 (including
comments on these two methods)

Code: 02/2021 Time allowed: 3 days

Identify whether each of the following would be a liability, a provision or a contingent liability,
or none of the above, in the financial statements of company A as at its balance date of 30 June
20X5. Assume that company A’s financial statements are authorized for issue on 24 August 20X5
1. An amount of 35 000 owing to company Z for services rendered during May 20X5.
2. Long‐service leave, estimated to be 500 000, owing to employees in respect of past services.
3. Costs of 26 000 estimated to be incurred for relocating employee D from company A’s head
office location to another city. The staff will physically relocate during July 20X5.
4. Provision of 50 000 for the overhaul of a machine. The overhaul is needed every 5 years and
the machine was five years old as at 30 June 20X5.
5. Damages awarded against Company A resulting from a court case decided on 26 June 20X5.
The judge has announced that the amount of damages will be set at a future date, expected to be
in September 20X5. Company A has received advice from its lawyers that the amount of the
damages could be anything between 20 000 and 7 million.
A company acquired new software for a robot that would revolutionise its manufacturing process.
The costs were:
Original cost of the software X1
Discount provided 5%
Staff training incurred in operating the robot 400
Testing of the software 100
Allocated administrative expenses 50

1. Provide relevant X1 and calculate the cost of this intangible asset?
2. The software was amortised at the rate of 20% using reducing balance method. After three years,
its fair value was X2 and estimated cost to sell was X3. The value in use of the software at that
time was X4. In the year, there was an economic crisis and the company wished to make an
impairment review for its assets.
Required:
Provide relevant information with X2, X3, X4 so that there is an impairment loss of the software.
Calculate and explain your work.

Rachel co. acquired an old 5-story building of 500,000 at cost and renovated it into a modern office
building. Renovation costs and other details are as follows:

- Renovation costs (i.e. repainting, floor replacing, windows/doors remodeling, …): 20,000
- An elevator installed for the first time: 40,000
- New modern air condition system: 15,000.
The office building was ready for intended use at 01 January 20X7 which being depreciated over
25 years by straight line basis. The elevator has 10 years of estimated life and that of air condition
system is 20,000 operating hours. No residual values are attributed to any of the component parts.
There were several events as following:
(i) In 20X9, Rachel started to extend a new floor at the top of the building for meeting rooms.
Total extension cost was 22,000. This project was finished in 31 December 20X9.
(ii) At 01 September 20Y0, the AC system was partly damaged due to a fire accident and was
repaired at a cost of 5,000. However, its remaining estimated life was shortened to 4,000 hours.
Records about AC operating hours:
- Accumulated operating hours to 31 August 20Y0: 12,000 hours
- Operating hours from 01 January to 31 August 20Y0: 2,000 hours
- Operating hours from 01 September to 31 December 20Y0: 250 hours.
(iii) Annual maintenance cost for elevator incurred in 20Y0: 2,000.
Required:
1/Show your solutions of PPE recognition and measurement at 01 January 20X7 with explanation?
2/Show your accounting treatments with costs incurred in those events given in the case with
explanation?
3/Calculate the charges to P/L account in respect of the building and its parts for the year ended
31 December 20Y0.
Question 4:
circumstance.
technical support.

unrelated vendors.
systems
Required:


A company has a contract to purchase one million units of gas at 0.23 per unit giving a contract
price of CU 230 000 and the current market price for a similar contract is 0.16 per unit giving a
price of CU160 000.
Give the appropriate accounting treatment in the following situations
1. The gas will be used in generating electricity and the electricity will be sold at a profit.
2. When the gas is used to generate electricity, the high costs of the gas means that the electricity
is sold at a loss and the entity makes an overall operating loss. Assume that all the gas used by the
entity to generate electricity is purchased under the contract.
3. There is a sales contract to sell the gas on to a third party as it is in excess of the entity’s
requirements. The sales contract is priced at 0.18 per unit. The entity would have to pay CU55 000
to exit the purchase contract.
Required:
Question 3 (Unit: CU)
On 1 June 20X1, Galaxy Co. purchased a new machine for use in its factory. The directors have
capitalised the purchase price but are unsure how to treat the following related costs. 350,000 was
spent on testing whether the machine was functioning properly. During the testing period (June —
October 20X1), samples were produced and sold for a total of 75,000. 400,000 was also spent on
training existing employees how to operate the new machine. The machine is being used to
manufacture a new product, Product C and 1 million was spent on advertising this new product.
Testing was completed and commercial production of Product C commenced on 31 October 20X1.
Required: Advise Galaxy on how the above transactions should be dealt with in its financial
statements for the year ended 31 December 20X1.
Question 4:

circumstance.
technical support.
unrelated vendors.
systems
Required:


Identify whether each of the following would be a liability, a provision or a contingent liability,
or none of the above, in the financial statements of company A as at its balance date of 30 June
20X5. Assume that company A’s financial statements are authorized for issue on 24 August 20X5
1. An amount of 35 000 owing to company Z for services rendered during May 20X5.
2. Long‐service leave, estimated to be 500 000, owing to employees in respect of past services.
3. Costs of 26 000 estimated to be incurred for relocating employee D from company A’s head
office location to another city. The staff will physically relocate during July 20X5.
4. Provision of 50 000 for the overhaul of a machine. The overhaul is needed every 5 years and
the machine was five years old as at 30 June 20X5.
5. Damages awarded against Company A resulting from a court case decided on 26 June 20X5.
The judge has announced that the amount of damages will be set at a future date, expected to be
in September 20X5. Company A has received advice from its lawyers that the amount of the
damages could be anything between 20 000 and 7 million.
A company acquired new software for a robot that would revolutionise its manufacturing process.
The costs were:
Original cost of the software X1
Discount provided 5%
Staff training incurred in operating the robot 400
Testing of the software 100
Allocated administrative expenses 50
1. Provide relevant X1 and calculate the cost of this intangible asset?
2. The software was amortised at the rate of 20% using reducing balance method. After three years,
its fair value was X2 and estimated cost to sell was X3. The value in use of the software at that
time was X4. In the year, there was an economic crisis and the company wished to make an
impairment review for its assets.
Required
Provide relevant information with X2, X3, X4 so that there is an impairment loss of the software.
Calculate and explain your work.
Meta often sponsors professional tennis players in an attempt to improve its brand image. At the
moment, it has a three-year agreement with a tennis player who is currently ranked in the world's
top ten players. The agreement is that the player receives a signing bonus of 30,000 paid to the

player on commencement of the contract, provided that the player has competed in all the specified
tournaments for each year. If the player wins a major tournament, she receives a bonus of 30% of
the prize money won at the tournament. In return, the player is required to wear advertising logos
on tennis apparel, play a specified number of tournaments and attend photo/film sessions for
advertising purposes. The different payments are not interrelated.
Required: Discuss how the above items should be dealt with in the financial statements of Meta
Question 4:
circumstance.
technical support.
unrelated vendors.
systems
Required:



May the following items be eligible for capitalisation as intangible assets in accordance with IAS
38 Intangible Assets? (Explain the reason)
1/Goodwill internally generated
2/Software from purchase
3/Copyrights-books, film etc from purchase
4/Development costs internally generated
5/Research costs internally generated

Required:
Question 3 (Unit: CU)
On 1 June 20X1, Galaxy Co. purchased a new machine for use in its factory. The directors have
capitalised the purchase price but are unsure how to treat the following related costs. 350,000 was
spent on testing whether the machine was functioning properly. During the testing period (June —
October 20X1), samples were produced and sold for a total of 75,000. 400,000 was also spent on
training existing employees how to operate the new machine. The machine is being used to
manufacture a new product, Product C and 1 million was spent on advertising this new product.
Testing was completed and commercial production of Product C commenced on 31 October 20X1.
Required: Advise Galaxy on how the above transactions should be dealt with in its financial
statements for the year ended 31 December 20X1.
Question 4:

circumstance.
technical support.
unrelated vendors.
systems
Required:


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ACADEMY OF FINANCE INTERNATIONAL FINANCIAL REPORTING STANDARDS

Question 1: (Unit: CU)

Ghi chú: Cán bộ coi thi không giải thích gì thêm

Ghi chú: Cán bộ coi thi không giải thích gì thêm

Ghi chú: Cán bộ coi thi không giải thích gì thêm

Question 1: (Unit: CU)

Staff training incurred in operating the robot 400

Testing of the software 100

Allocated administrative expenses 50

Question 3: (Unit: CU)

Ghi chú: Cán bộ coi thi không giải thích gì thêm

Ghi chú: Cán bộ coi thi không giải thích gì thêm

Ghi chú: Cán bộ coi thi không giải thích gì thêm

Question 1: (Unit: CU)

Ghi chú: Cán bộ coi thi không giải thích gì thêm

Ghi chú: Cán bộ coi thi không giải thích gì thêm

Question 1: (Unit: CU)

Ghi chú: Cán bộ coi thi không giải thích gì thêm

Ghi chú: Cán bộ coi thi không giải thích gì thêm

Ghi chú: Cán bộ coi thi không giải thích gì thêm

Question 1: (Unit: CU)

1/Goodwill internally generated

2/Software from purchase

3/Copyrights-books, film etc from purchase

4/Development costs internally generated

5/Research costs internally generated

Question 2: (Unit: CU)

Ghi chú: Cán bộ coi thi không giải thích gì thêm

Ghi chú: Cán bộ coi thi không giải thích gì thêm

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