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20 views

Test 2

Uploaded by

umarrrshah
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Certificate in Accounting and Finance Stage Examinations

(Test 2) October 21, 2022


40 minutes – 21 marks
Additional reading time – 5 minutes

Financial Accounting and Reporting 1

QUESTION-1
Following information pertains to property, plant and equipment of Tinku Limited (TL):
Office building Warehouse
Acquisition:
• Date of acquisition 1 July 2017 1 July 2018
• Cost (Rs. in million) 96 156
• Estimated useful life (in years) 16 12
Revalued amount:
• 1 January 2019 (Rs. in million) 116 138
• 1 January 2021 (Rs. in million) 80 143
Revised useful life on 1 January 2020 (in years) 9 14
Additional information:
(i) TL uses revaluation model for subsequent measurement and accounts for revaluation on net
replacement value method.
(ii) TL transfers maximum possible amount from the revaluation surplus to retained earnings on
an annual basis.
(iii) The revalued amounts were determined by Saqib Noor Valuers (Private) Limited, an
independent valuation company.
Required:
In accordance with IFRSs, prepare a note on ‘Property, plant and equipment’ (including comparative
information) for inclusion in TL’s financial statements for the year ended 31 December 2021. (Column
for total is not required) (18)
QUESTION-2
Select the most suitable options:
(i) A company revalued its property on 1 April 2009 to Rs.20 million (Rs.8 million for the land).
The property originally cost Rs.10 million (Rs.2 million for the land) 10 years ago. The original
useful economic life of 40 years is unchanged. The company’s policy is to make a transfer to
realized profits in respect of excess depreciation.
What is amount of balance in revaluation surplus account as at 31 March 2010?
(a) Rs.12 million (b) Rs.10 million
(c) Rs.9.8 million (d) Rs.11.8 million (02)
(ii) A building is revalued upwards by Rs.2 million. It was acquired five years ago for Rs.10
million. Its useful life remains same as 20 years. What is the incremental depreciation charge
for the year?
(a) Rs.100,000 (b) Rs.133,333
(c) Rs.166,667 (d) Rs.200,000 (01)

(Good Luck)

1 (FAR-I Test-2: 21 October 2022)

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