Mesopotamia Limited - Marks 17

ICAP Spring 2023 (FR220) IAS 16 & IAS 40 & IAS 23

ANSWER:
Mesopotamia Limited
Statement of profit or loss 2022 2021
For the year ended 31 December 2022 Rs.m Rs.m

Fair value gain: Warehouse W1A - 28

Depreciation: Warehouse W1B (29.55) -
Depreciation: Vehicle W2 (39.04) (71.81)
Depreciation: Building W3 (6.18) -
Interest expense W3 - (5.33)
Interest income W3 - 2.17

Mesopotamia Limited
Statement of financial position 2022 2021
As at 31 December 2022 Rs.m Rs.m
Non-current assets
Investment property: warehouse W1A - 344
Property, plant and equipment
Warehouse W1B 364.45 -
Vehicle W2 150.08 189.12
Office building W3 488.05 -

Capital work in progress (building) W3 - 255.17

Current liabilities
Loan from Bank A W3 - 200
Other payables (for building) - 100
Working 1A: Warehouse (Investment property: Fair value model) Rs. m
Cost [1 July 2019] 300
Fair value gain [till 31 December 2020] 16
31 December 2020 316
Fair value gain 28
31 December 2021 344
Note: The amount of rent income is not given in the question for year 2021.

Working 1B: Warehouse (Property, plant and equipment: Cost model) Rs. m
Cost [fair value is deemed transfer value] 344
Development costs 50
394
Depreciation [394 x 10% x 9/12] (29.55)
31 December 2022 364.45
Note: Fair value not used because cost model is applicable for PPE.

Working 2: Vehicle Rs. m

Cost [1 Jan 2020] 360
Depreciation (RBM) [360 x 27.52%] (99.07)
31 December 2020 260.93
Depreciation (RBM) [260.93 x 27.52%] (71.81)
31 December 2021 189.12
Depreciation (SLM) [(189.12 - 72) / 3 years] (39.04)
31 December 2022 150.08

Working 3: CWIP & Building Rs. m

Expenditure 2021 [140 paid + 100 accrued] 240
Borrowing costs: (Jun to Dec) Specific [200 x 16% x 7/12] 18.67
Temp income [60 x 10% x 7/12] (3.50)
255.17
Depreciation [not yet available for use] 0
31 December 2021 255.17
Expenditure 2022 [70 + 160] 230
Borrowing costs: (Jan & Feb) Specific [200 x 16% x 2/12] 5.33
Temp income [no amount left] 0
(Aug & Sep) General [160 x 14% x 2/12] 3.73
494.23
Depreciation [494.23 / 20 years x 3/12] (6.18)
31 December 2022 488.05

In profit or loss: Rs. m

Interest expense (Apr & May 2021) [200 x 16% x 2/12] 5.33

Interest income (April 2021) [200 x 10% x 1/12] 1.67

Interest income (May 2021) [(200-140) x 10% x 1/12] 0.50
2.17