Certificate in Accounting and Finance Stage Examination

April 20, 2024

1 hour 30 minutes
27 marks
Additional reading time – 10 minutes
Financial Accounting and Reporting-I
Instructions to examinees:
(i) Answer all questions.
(ii) Answer in black pen only.
(iii) Start each question on new page
Disposal Of Fixed Assets
Question 1
A machine was purchased in 1996 for Rs. 640,000. It was expected to last for 5 years and to have a residual value of Rs.
20,000. Depreciation was charged @ 33% p.a. on reducing balance method, with a full year's charge in the year of purchase.
No depreciation is charged in the year of disposal. The machine was sold on March 31, 2000 for Rs. 120,000. The Company's
year-end is Dec. 31.
Required: Calculate the gain or loss on disposal of machine. (04)

Question 2
The following information is available in respect of fixed assets of MJ Enterprises (MJE):
(i) The opening balances of cost and accumulated depreciation of fixed assets as on January 1, 2009 were
Rs. 100,000 and Rs. 33,000 respectively.
(ii) MJE provides for depreciation on the cost of assets at the rate of 10% per annum using the straight line basis.
Depreciation is calculated on a monthly basis.
(iii) On October 1, 2009 MJE transferred to its factory an asset which had been included in its trading stock and which
bore a price label of Rs. 15,400 in the showroom. MJE makes a gross profit of 40% of cost, on sale of such assets.
Required:
Prepare the following ledger accounts for the year ended December 31, 2009:
(a) Fixed assets
(b) Accumulated depreciation (04)
Question 3
A trading organization charges depreciation on its plant and machinery on a reducing balance method @ 15% per annum. On
1 July 2011, the net book value in the ledger stood at Rs. 5,660,000. Movements in the plant and machinery account during
the two years ended 30 June 2013 were as follows:
Date Particulars
1 October 2011 A new machine costing Rs. 80,000 was purchased. A sum of Rs. 30,000
was paid on the same date and the balance was paid on 31 March 2012.
1 December 2011 A machine that was purchased for Rs. 200,000 and installed at a cost of Rs.
10,000 on 1 August 2009 was fully destroyed in an accident.
1 February 2012 Some old machinery (book value on 1 July 2011 Rs. 20,000) was sold for
Rs. 8,000.
30 November 2012 A machine imported on 1 July 2010 was disposed of for Rs. 63,000. The
value of machine was Rs. 70,000 whereas import levies amounted to Rs.
5,000.
Required:
Prepare the plant and machinery account for the years ended 30 June 2012 & 2013. (19)