The 3,000 skirts should therefore be included at cost $40,000, and the jackets should be valued at net realisable value: $ ––––––– 41,200 ––––––– b IAS 37 Provisions, Contingent Liabilit
Trang 1Answers
Trang 2Part 1 Examination – Paper 1.1 (INT)
Section A
A 16,000 + 14,600 – 18,000
B 18,000 + 14,600 – 16,000
C 18,000 + 14,600 + 16,000
D 16,000 + 14,600
B 16,690 – 9,160 – 3,860
C 16,690 + 3,860 – 9,160
D As B but overdrawn
A C + 2 x $3,660 discounts allowed
B C + 2 x $1,800 bad debts written off
4,920 179,790 800
D C + $1,600 (contras)
A 483,700 – 38,400 + 14,800 + 400 – 1,800
B 483,700 + 38,400 – 14,800 + 400 – 1,800
C 483,700 + 38,400 – 14,800 – 400 + 1,800
D 483,700 – 38,400 + 14,800 – 400 + 1,800 (Correct)
10 D
11 B
A $181,600 x 40% = 72,640 – 67,600 = $5,040
B $114,000 x 10/6 = $190,000 – 181,600 = $8,400 (correct)
C $181,600 – (114,000 + 40%)
12 B
A P (340,000 – 20,000)/2 + 170,000/2
B P 180,000 + 90,000 – 20,000 (Correct)
13 B
14 D
15 C
16 C
17 D
18 C
Trang 319 C
20 D
21 B
A All rights issue proceeds added to share capital
Bonus issue 75,000
B 125,000 + 62,500 + 37,500; 100,000 + 187,500 – 37,500 (correct)
C As B, but bonus issue added to share premium
D Bonus issue does not allow for previous issue
22 D
A $80,000 + 7% x $500,000 x 3/12
B As D but including 7% x $500,000 x 6/12instead of 3/12
C As D but excluding 7% x $500,000 x 3/12
D 8% x $1m x 3/12+ 8% x $750,000 x 9/12+ 7% x $500,000 x 3/12
23 A
24 A
25 A
Trang 4Section B
Balance sheet as at 31 December 2002
Non-current assets
Property, plant and equipment (W1) 3,000,000
––––––––––
Current assets
–––––––––– 10,380,000 –––––––––– Equity and liabilities
Capital and reserves
–––––––––– 7,980,000 Curent liabilities
–––––––––– ––––––––––
10,380,000 –––––––––– Workings
less: depreciation at 31 December 2001 1,000,000
–––––––––– 4,000,000
–––––––––– 3,000,000 ––––––––––
–––––––––– 3,000,000
–––––––––– 2,910,000 ––––––––––
$
3 Accumulated profit
less: Depreciation 1,000,000
5,780,000 ––––––––––
Trang 5$ Movements on deferred development expenditure during year
–––––––––
670,000
–––––––––
–––––––––
Total expenditure on research and development charged in income statement
–––––––––
185,000 –––––––––
1 JulyRevaluation 400,000
––––––––––
2,000,000
Office building – accumulated depreciation
Revaluation reserve
1 July Office building – cost 400,000
1 JulyOffice building – depreciation 320,000
––––––––– 720,000
2003
Trang 6Plant and machinery – accumulated depreciation
2003
Plant and machinery – disposal
Workings
1 Depreciation of office building
$2m/40 (remaining useful life) = $50,000
2 Depreciation of plant and machinery
25% x ($840,000 – $240,000 + $200,000) = $200,000
Accumulated profits – goodwill amortised 4/5 x $5,000 4,000
Minority interest
Accumulated profits
Cost of control
Trang 7Eagle Group Consolidated balance sheet as at 31 October 2003
$
––––––––
901,000 ––––––––
––––––––
778,000
––––––––
901,000 ––––––––
4 (a) The basic principle for the valuation of inventory according to IAS 2 Inventories is to take the lower of cost and net realisable
value
The 3,000 skirts should therefore be included at cost $40,000, and the jackets should be valued at net realisable value:
$
–––––––
41,200 –––––––
(b) IAS 37 Provisions, Contingent Liabilities and Contingent Assets requires contingent liabilities of this kind and degree of probability be disclosed by note, detailing the nature of the contingent liability and an estimate of the financial effect The $100,000 should therefore be removed and the note substituted Provision should be made for legal expenses to be incurred
(c) IAS 10 Events after the Balance Sheet Date classifies this as a non-adjusting event but a note giving details of the event and its financial effect (a loss of $180,000 plus $228,000 = $408,000) is required as the item is material enough to influence
a reader of the financial statements
5 (a) (i) Profit on a sale is calculated by taking the difference between historical cost and sale proceeds When prices are rising,
as they usually are, the ‘holding gain’ arising while the goods were held in inventory is included as part of the profit, ignoring the fact that it will cost more to replace the item
(ii) Depreciation based on the historical cost of assets understates the real value of the benefit obtained from the use of these assets if prices have risen since the assets were acquired Profit is thus overstated
(iii) The retention of historical values for non-current assets in the balance sheet understates their actual value This can mislead shareholders when the balance sheet value of the business is used when calculating return on capital employed
(b) (i) It is simple and cheap
(ii) Figures used are objective and verifiable
(iii) Lack of a sound and acceptable alternative
Trang 8Part 1 Examination – Paper 1.1 (INT)
Marks
––– 81/2 max 8
(b) Movements in deferred development expenditure
12
–––
2 (a) Office building
accumulated depreciation:
–––
(b) Plant and machinery
–––
12
–––
–––
Trang 94 (a) Inventory
IAS 2Valuation 2 x 1/2 1
(b) Contingent liability
(c) Event after the balance sheet date
–––
9
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