IAS

A

300

 State the IAS which deals with property, plant and equipment and identify five items which a company can add to the cost price of an asset

IAS16
import duties and taxes
site preparation
delivery and handling costs
installation and assembly
costs of testing/inspection
fees
regularly replaced parts

400

Advise the directors whether or not they should apply the International Accounting Standards
when preparing the published accounts. Justify your answer. [4]

The directors should apply the international standards (1)
So that the information contained within the published accounts is useful and aids making economic decisions (1) is comparable (1), consistent (1), understandable (1), relevant (1) and reliable (1).

500

Assess the implications of a qualified audit report.

A qualified audit report which indicates that the auditor is not satisfied (1) that the financial statements audited present a true and fair view. (1) This is a safeguard of the shareholders interests (1) as it signals that the statements are incorrect in the opinion of the external independent examiner. (1) This may also put potential shareholders off investing in the business (1)

B

300

Explain how the proposed final dividend should be treated in the financial statements for the year ended 31 December 2016.

This is a nonadjusting event (1) as per IAS 10 (1), which is material/significant to the business (1). Thus, it is disclosed in the notes to the financial statements for 2016 (1). It will be recorded in the 2017 financial statements. (1)

400

Explain the following terms in accordance with IAS 37:
(i) Provision
(ii) Contingent liability
(iii) Contingent asset

(i) A provision is a liability (1) of uncertain timing and amount. (1)

(ii) A contingent liability is a possible liability from a past event (1) whose existence will be confirmed by the occurrence or non-occurrence of an uncertain event. (1)

(iii) A contingent asset is a possible asset from a past event (1) whose existence will be confirmed by the occurrence or non-occurrence of an uncertain event. (1)

500

Describe treatments for each of the following:

• 1: On 31 December 2016, Z Limited faced a lawsuit for $29,000, with legal advice indicating a 90% chance of losing [1].
• 
  
• 2: Among trade receivables was a $30,000 debt from P Limited, which was experiencing financial difficulties [1]. Z Limited's directors accepted office equipment to settle 70% of the debt and considered the recovery of the remaining balance highly improbable [1].
• 
  
• 3: Machinery purchased on 1 January 2016 for $50,000 had been depreciated using the straight-line method at a 20% annual rate [1]. By 31 December 2016, its estimated fair value was $32,500 and its estimated value in use was $19,500 [1].

Treatment of compensation (reference IAS 37) (1)
There is a 90% probability(1) of losing the case. Therefore a provision for compensation ($29000) should be shown as a current liability/other payable (1)

Treatment of trade receivables
Z Limited only recovered $21 000 in the form of non-current assets. (1) The remaining $9000 which is irrecoverable debt should be written off as bad debt (or a specific provision) against retained earnings (1). The full $30 000 has been deducted from trade receivables (1).

Treatment of machinery (reference IAS 36) (1)
According to IAS 36, an asset is impaired when its carrying amount ($40000) is more than its recoverable amount ($32 500). (1). Recoverable amount is the higher of its fair value ($32 500) and value in use ($19500)(1). The impaired loss of the piece of machinery is $7500 ($40000-$32 500) which has to been written off against retained earnings. (1)

C

300

Explain the difference between an adjusting event and a non-adjusting event.

(i) Adjusting event is one which requires the accounts of the year to be adjusted (1) as a result of the conditions of the event existing at the statement of financial position date (1).

A non-adjusting event does not require the statements to be adjusted but a note is added (1) as the conditions leading to the event were not present at the statement of financial position date (1).

400

The directors of Plantin plc have recently discovered a material error in the published financial statements for the year ended 31 March 2014. It was discovered that sales of $30000, which had never taken place, had been included in revenue and in trade receivables. State how this error has affected the financial statements for the year ended 31 March 2014. (4)

In this case, revenue (1), profit for the year (1), trade receivables (1) and retained earnings (1) have all been overstated by $30 000.

500

List out all the IAS 

1. Presentation of financial statements

2. Inventories

7. Statement of cash flows

8. Accounting policies

10. Events after the statement of financial position date

16. Property, plant and equipment

36. Impairment of assets

37. Provisions, contingent liabilities and contingent assets

38. Intangible assets 

Very Random

300

Where did Ms.Rohini go on Sunday?

Dubai Run

400

When did Samey dance?(How was it?)

Saturday

500

Who all danced on Saturday?

Ali Shah,Mahtab and Samey

GK-Accounting

300

What word in accounting vocabulary has 3 consecutive sets of double letters. 

Bookkeeping

400

How old is the profession of accounting. (Closest range)

The profession of accounting is over 7,000 years old.

500

Name the Big 4 in Accounting.

KPMG (Klynveld Peat Marwick Goerdeler)

EY (Ernst & Young)

Deloitte 

PwC (PricewaterhouseCoopers)