Q1 Suggested Answers (FAR 1 )

Q2
Q3

Q4
 Q5
Journal entries

Debit Credit
Date Particulars
Rs. Rs.
31 Dec 2022 Accumulated depreciation W1 20,000
Asset (PPE) 20,000
Impairment loss (PL) W2 16,000
Asset (PPE) 16,000
31 Dec 2024 Accumulated depreciation W3 16,000

AT A GLANCE
Asset (PPE) 16,000
Asset (PPE) W4 12,000
Reversal of impairment loss (PL) 12,000
W1: Depreciation Rs. 100,000 / 10 years x 2 years = Rs. 20,000
W2: Impairment loss Rs. 64,000 – (100,000 – 20,000) = Rs. 16,000
W3: Depreciation Rs. 64,000 / 8 years x 2 years = Rs. 16,000
W4: Reversal of impairment loss Rs. 16,000 – (16,000/8 x 2 years) = Rs. 12,000 Alternative: (Rs.
100,000 – 100,000/10 x 4 years) – (Rs. 64,000 – 16,000) = Rs. 12,000

Q6

(i) (b) Faithful representation (c) Relevance

(ii) (b) Land held by a company for undetermined future use
(d) Building held by a company for long-term capital appreciation
(iii) (d) retained earnings
(iv) (a) Error of principle
(v) (a) FCM nominal
(vi) (b) Dividend equalization reserve
(vii) (a) same as basic eps
(viii) (d) None is correct
(ix) (b) Rs. 23 million
Q7
Q8
Q9