ACCA f1 with answers

21 D22 B 23 B 24 A 25 C Section B Income statement for the year ended 30 September 2002 Working 1 5,800 Sundry administrative expenses Bad and doubtful debts Depreciation of office equip

Answers

Part 1 Examination – Paper 1.1(INT)

Section A

1 B $400 debit which should have been credited – correction will bring trial balance into agreement

Rent Receivable

3 C $2,500 + $7,500 + $9,000 + $9,000 + $6,000

One month in advance = $3,000 Cr

$

76,840

5 D –$36,840 + $51,240 – $43,620 = $29,220 overdrawn

8 B $952,500 × 100/60 = $1,587,500

730,000

516,000

10 C

11 C

12 A

13 C

14 A

15 D 5c × 10,000,000 + 8% × $500,000

16 A

17 D

18 A

19 B

20 C

17

21 D

22 B

23 B

24 A

25 C

Section B

Income statement for the year ended 30 September 2002

Working 1

5,800

Sundry administrative expenses

Bad and doubtful debts

Depreciation of office equipment

2 (a) Journal entries

Correction for carriage outwards balance omitted from trial balance

Correction of discount totals

Wrong discount amount posted to the wrong side

Correction of error in recording issue of shares – $300,000 wrongly credited to ordinary share capital account

Suspense Account

(b)

Consolidated balance sheet as at 30 June 2002

838,800

1,228,800

1,078,800

1,228,800

19

Cost of control

Accumulated profits 80% pre-acq 48,000

Minority interest

Accumulated profits

Minority interest

Cost of control

4 (a) The values of the land and the buildings need to be separated, because the land would not normally require depreciation

The revalued amount of the buildings should be depreciated over the estimated remaining useful economic life at the time of the revaluation The straight-line method is usually adopted, but other methods such as the reducing balance method may

be used

(b) Development costs should be amortised, using a method that reflects the pattern in which the economic benefits of the costs are consumed by the enterprise If this pattern cannot be determined reliably, the straight-line method should be used

If the circumstances justifying the deferral of the expenditure cease to apply at any time, the expenditure should be written off to the extent that it is no longer recoverable

(c) Investments of this kind do not depreciate, though they may fluctuate in value Accordingly no depreciation is provided for them

5 (a) IAS 10 Events after the Balance Sheet Date classifies this type of event as non-adjusting – no change to the figures in the

financial statements is required but there should be a note to ensure that the financial statements are not misleading The note should state the amount of the loss and the extent of the insurance cover

(b) A provision should be made for the estimated amount of the liabilities under warranties, as required by IAS 37 Provisions, Contingent Liabilities and Contingent Assets The provision will appear as a liability in the balance sheet and the operating profit will be reduced by the amount of the allowance

(c) This is an adjusting event according to IAS 10 Events after the Balance Sheet Date The closing inventory should be reduced

by $40,000 in the balance sheet and in cost of sales, thus reducing operating profit by this amount, unless it could be shown that the deterioration had taken place after the balance sheet date

(d) The goods have to be treated as trading inventory at September 2002, applying generally accepted accounting principles The effect on the income statement and balance sheet will be:

(i) Sales and trade receivables both reduced by $100,000

(ii) Closing inventory increased by $80,000

Part 1 Examination – Paper 1.1(INT)

Preparing Financial Statements (International Stream) December 2002 Marking scheme

Administrative expenses:

Bad and doubtful debts 11/2

91/2

11/2

21/2

11/2

Suspense account

31/2

9

3

Calculation of accumulated profits

Consolidated balance sheet – format

21/2

11

21

Available Maximum

Revalued amount for buildings depreciated over the

2

2

2

Adjustments to:

10