CAF-05
Property, Plant and Equipment
Lecture 1
Q.1) Following Account Balances are appearing on 1.1.18:
Asset A/C
300,000
Acc. Dep
120,000
Details of additions:
Date of Purchase
Cost
1.March.2018
30,000
1.June.2018
50,000
Details of disposals:
Date of Purchase
Date of sale
Cost
1.October.2015
30.June.2018
40,000
Sale Proceeds
12,000
Required: Prepare Asset, Acc. Dep. & disposal A/Cs as on 31st December 2018 along with relevant journal
entries.
Homework:
Class work question
Lecture 2
Q.1) Following Balances are appearing on 1.1.2017:
Asset A/C
50,000
Acc. Dep A/C
20,000
Additions of Rs. 30,000 took place on 1st September 2017. Further an asset costing Rs. 25,000 which was
purchased on 1st July 2015 is disposed off on 30th September 2017 for Rs. 3,000 only. Rate of depreciation is
20% S.L method.
Required: Prepare Asset, Acc. Dep. & disposal A/Cs as on 31st December, 2017 along with journal entry of
disposal.
Q.2) Following balances are appearing on 1.1.13.
Asset A/C
Acc. Dep A/C
Additions:
Date
1.Mar.2013
Disposals:
D.O.P
D.O.S
1.Apr.09
30.Jun.13
1.Jul.10
30.Sep.13
70,000
20,000
Cost
10,000
Cost
5,000
2,000
Sale Proceeds
1,000
500
Required: Prepare Asset, Acc. Dep. & disposal A/Cs as on 31.12.13 and 14. Rate is 10% S.L.
Umair Sheraz Utra, ACA
Page |1
CAF-05
Property, Plant and Equipment
Homework:
Q.1) Following balances are appearing on 1.7.13.
Asset
280,000
Acc. Dep.
100,000
Additions:
1.apr.14
30,000
Disposal:
D.O.P
D.O.S
Cost
Sale Proceed
1.Apr.2008
31.Dec.13
50,000
12,000
Required: Prepare Asset, Acc. Dep. & disposal A/Cs as on 30th June 14 and 15 along with journal entries of
disposals. Rate is 10% S.L.
Q.2) Following details are provided on 1.1.2010.
Asset A/C
Acc. Dep. A/C
90,000
50,000
An asset costing Rs. 10,000 is added on 1.mar.2010. Further an asset which was purchased on 1.4.2008 costing
Rs. 20,000 is disposed off on 30.6.2010 for Rs. 10,000 only. Dep rate is 10% S.L.
Required: Prepare Asset, Acc. Dep. & disposal A/Cs as on 31.12.10 along with journal entries of disposals.
Lecture 3
Q.1)
Cost of asset
100,000
Residual value
10,000
Useful life
4 years
Date of purchase
1.1.2016
Required:
Calculate depreciation expense for the whole life of asset under both straight line and reducing balance
methods.
Q.2) Following balances are appearing in the books of Rehmat as on 1.1.12.
Asset
900,000
Acc. Dep.
200,000
Additions of Rs.90,000 is made on 1.8.12. Further an asset costing Rs.80,000 as on 1.4.09 is disposed of on
30.6.12 for Rs. 45,000 only. Rate is 10% WDV.
Required: Prepare Asset, Acc. Dep. & disposal A/Cs as on 31.12.12.
Q.3) Following balances are appearing on 1.1.2014.
Plant A/C
400,000
Acc. Dep. A/C
150,000
Addition of Rs.30,000 took place on 1st March 2014. An asset which was purchased on 1st May 2011 costing
Rs.90,000 was disposed off on 30th September 2014 for Rs.12,000 only. Dep rate is 20% WDV.
Required: Prepare Asset, Acc. Dep. & disposal A/Cs as on 31.12.14.
Umair Sheraz Utra, ACA
Page |2
CAF-05
Property, Plant and Equipment
Homework:
Q.1) Following balances are appearing on 1.Oct.13.
Cost
30,000
Acc. Dep.
12,000
Details of Disposal:
D.O.P
D.O.S
Cost
Sale Proceed
1.3.2011
31.12.13
10,000
2,000
1.2.2010
31.3.14
4,000
1,000
Required: Prepare Asset, Acc. Dep. & disposal A/Cs as on 30.Sep.14. Rate is 10% WDV.
Lecture 4
Exchange of Assets.
Q.1) Mr. Qasim owns a mobile nokia 3310 which he purchased on 1.4.2012 for Rs.3,000. On 1.1.14, He went
to Hafeez Center where He saw a Samsung galaxy. He said, “Oh! What a beautiful mobile it is”. It bore a price
label of Rs.50,000. He immediately decided to exchange the old sick mobile with the new one. The value
assigned by the shopkeeper to old mobile was Rs.1200 only. Resultantly, he paid Rs.48,800 for new mobile.
The rate of depreciation is 10%.
Required: Pass the journal entry for exchange on 1.1.2014.
Q.2) On 1.4.2012 we exchanged two old cars with a new car. The cost of one old car is Rs.400,000. These
were purchased 4 years back (1.4.2008). The trade in allowance (exchange allowance) is Rs.180,000 per car.
The cost of new car is 1,200,000. Rate is 10% S.L
Required: Pass the journal entry for exchange.
Q.3) Following ledger balances are appearing on 1.1.15.
Asset
200,000
Acc. Dep.
80,000
i.
Addition of 10,000 took place on 1.3.15
ii.
An old asset costing Rs.50,000 which was purchased on 1.7.2013 is exchanged with a new asset costing
Rs.90,000. The transaction took place on 30th September, 2015 and T.I.A is Rs30,000. Rate is 10% S.L.
Required: Prepare Asset, Acc. Dep. & disposal A/Cs as on 31st December 2015 along with journal entry.
Homework:
Q.1) The following information is available in respect of machines of Akmal Brothers: (September 5, 2018)
(i) The balances of cost and accumulated depreciation of machines as on 1 January 2017 were Rs. 800,000
and Rs. 333,000 respectively.
(ii) A machine acquired on 1 January 2014 having net book value of Rs. 31,935 on 1 January 2017 was sold
for Rs. 34,000 on 30 April 2017. Cost of disposal incurred was Rs. 5,000.
(iii) On 1 July 2017, a machine having fair value of Rs. 40,000 on that date was exchanged for a new
machine. The balance of the purchase price was paid through a cheque of Rs. 80,000. The list price of the new
machine was Rs. 130,000. The old machine had been acquired at a cost of Rs. 65,000 on 1 October 2015.
(iv) Machines are depreciated at 15% per annum using the reducing balance method.
Required:
Prepare the following ledger accounts pertaining to the machines for the year ended 31 December 2017:
(a) Cost
(03)
(b) Accumulated depreciation
(05)
(c) Gain/loss on disposal
Umair Sheraz Utra, ACA
Page |3
CAF-05
Property, Plant and Equipment
Q.2) Following information pertains to three exchange transactions relating to fixed assets:
(i)
(ii)
--------- Rs. in million --------Cash received/(paid)
1.1
(2.1)
Assets given-up:
Original cost
10.3
12.4
Book value
6.4
7.3
Estimated fair value
8.5
6.6
Assets received:
Estimated fair value
7.1
9.0
(iii)
14.5
3.4
4.6
4.1
Additional information:
 In case of transaction (i), fair values of both assets are reliably measurable.
 In case of transaction (ii), fair value of the asset received is clearly more evident.
 In case of transaction (iii), fair value of neither asset is reliably measurable.
Required:
Compute gain or loss on disposal of fixed assets in each of the above transactions. (March 7,2018)
Umair Sheraz Utra, ACA
(06)
Page |4
CAF-05
Property, Plant and Equipment
Lecture 5 & 6
1) Determining date of addition/disposal if asset is purchased or disposed during a month, using an
example in class.
2) Calculation of cost if it is missing in question and book value and date of purchase is given.
3) Determination of cost of new asset in an exchange transaction. (3 scenarios).
 If Fair value of Both Assets or Fair value of only Old Asset is given than:
Cost of new Asset = Fair value of old asset Cash.
 If Fair value of Only New Asset is given than:
Cost of new Asset = Fair value of new Asset.
 If Fair value of both assets is NOT given OR Transaction lacks Commercial substance (Means no
Cash Flow change expected after exchange e.g. Truck for Truck)
Cost of new Asset = Book value of old asset Cash.
Example-1
Old Asset Cost
200
Old Asset Accumulated Depreciation
(80)
WDV
120
Other Information
1. Fair value of Old Asset
2. Fair value of New Asset
3. Cash Paid
200
150
12
Required: Calculate the cost of new Asset under following Scenarios.
4) Change in estimate:
Q.1) Mr. Umar purchased an asset costing Rs.20,000 on 1.1.2012. Life of asset is 10 years and its R.V is
Rs.2,000.
On 1.1.2014 it is estimated that its remaining life is only 6 years / its total life is 8 years.
Required: Calculate depreciation expense for the years ended December 31, 2012-13-14.
Q.2) On 1.12015 an asset costing Rs.90,000 is purchased with an R.V of 10,000 and life of 16 years. On
1.1.2018 it is estimated that total life is 10 years and new R.V is 5,000 only.
Required: Calculate depreciation for the years ended December 31, 2015 to 2019.
Q.3)
D.O.P
Cost
R.V
Rate
1.1.15
100,000
20,000
10% S.L
On 1.1.17 the Dep method is changed to WDV with a new rate of (?). There is no change in R.V.
Required: Calculate Depreciation for the years ended December 31, 2015 to 2018.
Q.4)
D.O.P
Cost
R.V
Rate
1.7.16
200,000
20,000
20% WDV
On 1.7.18 the Dep method is changed to S.L with total life of 10 years (30.6.2016-17-18-19)
Required: Calculate Depreciation for the years ended 30th June 2017 to 2019.
Q.5)
D.O.P
Cost
R.V
Life
1.1.10
50,000
10,000
10 years
Method used is WDV. On 1.1.12 the total life is estimated at 5 years with no change in method and R.V
Requirement: Calculate Depreciation for the years ended December 31, 2010 to 2013.
5) Discussion of share capital and retained earnings with a simple example in class.
Homework:
Umair Sheraz Utra, ACA
Page |5
CAF-05
Property, Plant and Equipment
Lecture 7
1) Revaluation
Q.1) Company X purchased a building costing Rs.100 million on 1.1.2015. Its useful life is 20 years. It is
revalued on 1.1.2016 at Rs.120 million.
Required: Pass journal entries and prepare relevant ledgers.
Q.2) An entity owns following asset:
Cost (1.1.2018)
Rs.500
Life
10 years
Asset was revalued on 1.1.19 at Rs.900.
Required: Pass journal entries and prepare relevant ledgers.
Homework:
Q.1) Details of an asset are:
Cost (1.1.2015)
Rs.800
Life
20 years
Revalued amount on 1.1.17 Rs.1000.
Required: Pass journal entries and prepare relevant ledgers.
Lecture 8
Q.1) Mr. Umer purchased a building costing Rs.500 million on 1.1.15, having life of 10 years.
Revaluations details:
 1.1.16
Rs.900M
 1.1.17
Rs.360M
Required: Pass journal entries and prepare relevant ledgers.
Q.2) Details of an asset are:
D.O.P.
COST
1.1.18
200
Revaluations details:
 1.1.19
Rs.900
 1.1.20
Rs.120
Required: Pass necessary journal entries.
LIFE
20years
Homework:
Q.1) An entity own following asset:
D.O.P.
COST
1.1.10
100M
Revaluations details:
 1.1.12
Rs.120M
 1.1.14
Rs.40M
Required: Pass necessary journal entries.
LIFE
10years
Q.2) Cost of an asset on 1.1.15 is Rs.600. Life of the asset is 6 years. On 1.1.16 asset is revalued at Rs.400
with remaining life of 10 years.
Required: Pass necessary journal entries.
Umair Sheraz Utra, ACA
Page |6
CAF-05
Property, Plant and Equipment
Lecture 9
Q.1)
Asset purchased on
Cost of Asset
Useful life
Revaluation Details:
01-01-14
01-01-16
01-01-18
Required: Prepare Journal entries from 2012 to 2018.
Q.2)
Asset Purchased on
Cost
Useful Life
It is revalued on 1.7.22 at
Required: Prepare note of 2023 (i.e. 30.06.23)
01-01-12
500
20 Years
800
250
600
1-07-08
Rs.600
30 Years
Rs.800
Homework:
Q.1) Shahzad Textile Mills Limited (STML) purchased a plant for Rs. 500 million on 1 July 2010. The plant
has an estimated useful life of 10 years and no residual value.
STML uses revaluation model for subsequent measurement of its property, plant and equipment and
accounts for revaluations on net replacement value method. The details of revaluations performed by an
independent firm of valuers are as follows:
Revaluation date
Fair value
1 July 2011
Rs. 575 million
1 July 2012
Rs. 390 million
1 July 2013
Rs. 380 million
Required: Prepare journal entries to record the above transactions from the date of acquisition of the plant to
the year ended 30 June 2014. (Ignore tax implications)
(15)
{Autumn 2014, Q# 4, CAF-05}
Q.2) ABC Limited purchased a plant for Rs. 350,000 on 1 July 2010. The plant has an estimated useful life of
20 years and no residual value.
ABC uses revaluation model for subsequent measurement of its property, plant and equipment and
accounts for revaluations on net replacement value method. The details of revaluations performed by an
independent firm of valuers are as follows:
Revaluation date
Fair value
30 June 2011
Rs. 475,000
30 June 2012
Rs. 390,000
30 June 2013
Rs. 380,000
Required:
a) Prepare journal entries to record the above transactions from the date of acquisition of the plant to the year
ended 30 June 2013.
(16)
b) Prepare asset and accumulated depreciation account to record the above transactions from the date of
acquisition of the plant to the year ended 30 June 2013.
(08)
c) Assume the plant was sold for Rs. 350,000 on 01 July, 2013. Prepare journal entry to be recorded on
disposal.
(02)
Umair Sheraz Utra, ACA
Page |7
CAF-05
Property, Plant and Equipment
Lecture 10
Fixed asset schedule / Note of PPE / Disclosure of PPE under IAS-16 (Property, Plant and equipment)
1) Started preparing note of PPE using ledgers on handout (without revaluation).
2) Prepared note of PPE of Q#1 of lecture 9.
Homework:
Prepare note of PPE in Q#1 (lecture 7); Q#1 (lecture 8); Q#1 (lecture 9).
Lecture 11
Prepared note without ledgers (i.e. directly from question and revaluation working.)
1) Prepare note of PPE for the year ended December 31, 2016 in Q#1 (lecture 7).
2) Prepare note of PPE for the year ended December 31, 2017 in Q#1 (lecture 8).
3) Prepare note of PPE for the year ended December 31, 2018 in Q#1 (lecture 9).
4) Solve Q#2 (lecture 9).
Homework:
Q.1) Q#2 (lecture 9).
Q.2) The following is an extract from the financial statements of Carly on 31 December 2014.
Property, plant and equipment
Land and
Plant and
Computers
buildings
equipment
Rs.
Rs.
Rs.
Cost
On 31 December 2014
1,500,000
340,500
617,800
Accumulated depreciation
On 31 December 2014
600,000
125,900
505,800
Carrying amount
On 31 December 2014
900,000
214,600
112,000
Total
Rs.
2,458,300
1,231,700
1,226,600
(1) Depreciation is provided at the following rates.
On land and buildings
Over 50 years on straight line basis on buildings only
On plant and equipment
25% reducing balance
On computers
33.33% per annum straight line
(2) On 31 December 2015 the land and buildings were revalued to Rs. 1,750,000. Of this amount, Rs.650,000
related to the land (which had originally cost Rs. 500,000). The remaining useful life of the buildings was
assessed as 40 years.
(3) A machine which had cost Rs. 80,000 and had accumulated depreciation of Rs. 57,000 at the start of the
year was sold for Rs. 25,000 in the first week of the year.
(4) A new machine was purchased on 31 March 2015. The following costs were incurred:
Rs.
Purchase price, before discount, inclusive of reclaimable sales tax of Rs.3,000
20,000
Trade Discount
1,000
Delivery costs
500
Installation costs
750
Interest on loan taken out to finance the purchase 300
(5) On 1 January it was decided to change the method of providing depreciation on computer equipment from
the existing method to 40% reducing balance.
Required: Produce the analysis of property, plant and equipment as it would appear in the financial
statements of Carly for the year ended 31 December 2015.
(ICAP Question bank 7.4)
Umair Sheraz Utra, ACA
Page |8
CAF-05
Property, Plant and Equipment
Lecture 12
Q.1) Moin purchased a plant for Rs. 300 million on 1 January 2010. The plant has an estimated useful life of
10 years and no residual value.
Revaluation date
Fair value
1 January 2011
Rs. 500 million
The plant is sold for Rs. 750 million on March 31, 2011.
Required: Prepare journal entries to record the above transactions.
Q.2) Umer Limited (UL) uses the revaluation model for subsequent measurement of its property, plant and
equipment and has a policy of revaluing its assets on an annual basis using the net replacement value
method.
The following information pertains to UL‟s buildings:
(i)
10 buildings were acquired in same vicinity on 1 January 2015 at a cost of Rs.500 million. The
useful life of the buildings on the date of acquisition was 10 years.
(ii)
AL depreciates buildings on the straight line basis over their useful life.
(iii)
The results of revaluations carried out during the last three years by Expert Valuation Service, an
independent firm of valuers, are as follows:
Revaluation date
Fair value
Rs. in million
1 January 2016
1 January 2017
800
300
1 January 2018
(iv)
On 31 March 2018, 4 buildings were sold for Rs. 80 million each.
600
Required: Prepare a note on “Property, plant and equipment” (including comparative figures) for inclusion in
UL‟s financial statements for the year ended 31 December 2018 in accordance with International Financial
Reporting Standards. (Ignore taxation)
(13)
Homework:
Q.1) Abid Limited (AL) uses the revaluation model for subsequent measurement of its property, plant and
equipment and has a policy of revaluing its assets on an annual basis using the net replacement value
method.
The following information pertains to AL‟s buildings:
(i)
Four buildings were acquired in same vicinity on 1 January 2012 at a cost of Rs.300 million.
The useful life of the buildings on the date of acquisition was 20 years.
(ii)
AL depreciates buildings on the straight line basis over their useful life.
(iii) The results of revaluations earned out during the last three years by Premier Valuation Service,
an independent firm of valuers, are as follows:
Revaluation date
Fair value
Rs. in million
1 January 2013
1 January 2014
323
252
1 January 2015
(iv)
On 30 June 2015, one of the buildings was sold for Rs. 80 million.
272
Required: Prepare a note on “Property, plant and equipment” (including comparative figures) for inclusion in
AL‟s financial statements for the year ended 31 December 2015 in accordance with International Financial
Reporting Standards. (Ignore taxation)
(13)
{Spring-16 CAF-07, Q.2}
Umair Sheraz Utra, ACA
Page |9
CAF-05
Property, Plant and Equipment
Lecture 13
Q.1) Solve CW Question # 2 (Umar limited) of Lecture 12.
Q.2) KL uses the revaluation model for subsequent measurement of its property, plant and equipment.
(i)
5 buildings were acquired in same vicinity on 1 January 2010 at a cost of Rs.200 million. The
useful life of the buildings on the date of acquisition was 20 years.
(ii)
The results of revaluations carried out is as follows:
Revaluation date
Fair value (Rs. in million)
1 January 2016
480
(iii) On 31 March 2016, 3 buildings were sold for Rs. 30 million each.
Required: Prepare a note on “Property, plant and equipment” for the year ended 31 December 2016 in
accordance with International Financial Reporting Standards. (Ignore taxation)
(6)
Homework:
Q.1) Lecture # 12 HW Question # 1 (Abid Limited).
Lecture 14
Q.1) Following information pertains to a building acquired by SK Limited (SKL) on 1 July 2012 for Rs. 360
million:
(i)
The building is being depreciated on straight-line basis over 10 years.
(ii)
SKL uses revaluation model for subsequent measurement of buildings. It accounts for
revaluation on net replacement value method. The details of revaluations as carried out by independent
value are as follows:
Revaluation date
Fair value(Rs. in million)
31 December 2013
323
31 December 2015
208
31 December 2017
167
(iii)
There is no change in useful life of the building.
(iv)
SKL transfers the maximum possible amount from the revaluation surplus to retained earnings on
an annual basis.
(v)
SKL‟s financial year ends on 31 December.
Required: Prepare entries to record revaluation surplus/loss on each of the above revaluation date. (Entries to
record depreciation expense, incremental depreciation and elimination of accumulated depreciation are not
required).
(11)
{Spring 2018, Q #
6(a)}
Homework:
Q.1) Lecture # 9 HW Question # 2 (ABC Limited).
Q.2) Lecture # 11 HW Question # 2 (Carly).
Umair Sheraz Utra, ACA
P a g e | 10
CAF-05
Property, Plant and Equipment
Lecture 15
1) Discussion of test 1 question 2 (FAM).
Lecture 16
Q.1) On 31 December 2018, Omega Chemicals Limited (OCL) changed its valuation model from cost to
revaluation for its buildings. The following information pertains to its buildings as at 31 December 2018:
Estimated useful
life as originally
estimated
Prior to revaluation as at 31-12-2018
Accumulated
Cost
depreciation*
Revalued
amount
-------------------------Rs. In million --------------------Office buildings
20 Years
600
150
800
*Including depreciation for the year ended 31 December 2018
As per the report of the professional valuer, there was no change in estimated useful life of the buildings.
OCL recorded revaluation effect for the office buildings on 31 December 2018 as per the valuation report.
On 1 April 2019, one of the office buildings was sold for Rs. 45 million. On 31 December 2018, written
down value before revaluation and revalued amount of the sold building amounted to Rs. 80 million and
Rs. 95 million respectively.
OCL uses straight line method of depreciation which is charged from the date the asset is available for
use upto the date of disposal. Revaluation is to be accounted for by using net replacement value method.
Required: In the light of the requirements of the International Financial Reporting Standards, prepare
accounting entries from the above information for the year ended 31 December 2019.
(10)
Homework:
Q.1) On 31 December 2013, Omega Chemicals Limited (OCL) changed its valuation model from cost to
revaluation for its buildings. The following information pertains to its buildings as at 31 December 2013:
Prior to revaluation as at 31-12-2013
Estimated useful
Revalued
Accumulated
life as originally
Cost
amount as per
depreciation*
estimated
valuation report
-------------------------Rs. In million --------------------Factory buildings
20 Years
100.00
37.50
No revaluation
required
Office buildings
25 Years
164.50
26.32
149.94
*Including depreciation for the year ended 31 December 2013
As per the report of the professional valuer, there was no change in estimated useful life of the buildings. OCL
recorded revaluation effect for the office buildings on 31 December 2013 as per the valuation report. On 1 July
2014, one of the office buildings was sold for Rs. 30 million. On 31 December 2013, written down value
before revaluation and revalued amount of the sold building amounted to Rs. 27.72 million and Rs. 31.92
million respectively.On 31 December 2014, factory buildings were revalued at Rs. 64 million whereas there
was no change in value of the office buildings.OCL uses straight line method of depreciation which is charged
from the date the asset is available for use upto the date of disposal. Revaluation is to be accounted for by using
net replacement value method.
Umair Sheraz Utra, ACA
P a g e | 11
CAF-05
Property, Plant and Equipment
Required: In the light of the requirements of the International Financial Reporting Standards, prepare
accounting entries from the above information for the year ended 31 December 2014 including correcting
entries.
(15)
{Spring-15 CAF-07, Q.2}
Umair Sheraz Utra, ACA
P a g e | 12
CAF-05
Property, Plant and Equipment
Lecture 17
MID OF YEAR REVALUATION
Q.1) Usama Limited (UL) purchased a plant for Rs. 1,000 million on 1st January 2017. The plant has an
estimated useful life of 10 years and no residual value.
UL uses revaluation model for subsequent measurement of its property, plant and equipment and
accounts for revaluations on net replacement value method. The details of revaluations performed by an
independent firm of valuers are as follows:
Revaluation date
Fair value
1st April,2017
Rs. 1,080 million
Required: Prepare journal entries and note on “Property, plant and equipment” for inclusion in UL‟s
financial statements for the year ended 31 December 2017 in accordance with International Financial
Reporting Standards. (Ignore taxation)
Umair Sheraz Utra, ACA
P a g e | 13
CAF-05
Property, Plant and Equipment
Homework:
Abbas Limited (AL) is engaged in the business of manufacturing near the Karachi-Hyderabad Motorway. Its
Property, Plant and Equipment comprises of land and buildings, plant and machinery, and equipment and
fittings.
Details for the period up to 30 June 2018 are as follows:
1. The balances of the Property, Plant and Equipment as at 30 June 2018 are given below:
Gross Carrying Amount
Accumulated Depreciation
Assets
(Rs. Million)
(Rs. Million)
Land
12
N/A
Buildings
125
38
Plant and Machinery
500
300
Equipment
100
36
2. The relevant information pertaining these assets is given below:
Assets
Land
Buildings
Plant and Machinery
Equipment
Depreciation Method
N/A
Straight-line
Units of Production
Written down value
Subsequent Measurement
Model
Fair Value
Cost
Cost
Cost
3. Abbas Limited uses proportionate policy to depreciate its Property, Plant and Equipment.
4. All of the plant and machinery pertains to factory use whereas all the equipment pertains to office use.
However floor areas occupied by factory and office are in the ratio 60:40 respectively.
5. The equipment was purchased on 1 July 2016. No disposals and acquisitions took place in the period up
to 30 June 2018.
6. Until 30 June 2018, 12,000 units had been produced by Abbas Limited in its factory. The plant and
machinery does not have any residual value. No additions or disposals of plant and machinery took place
till this date.
7. The buildings were acquired on 1 July 2014 with a residual value of Rs. 11 million. No additions and
disposals took place till 30 June 2018.
8. The land had actually cost Rs. 15 million on the date of its acquisition.
9. It is assumed that value of land and buildings is spread evenly across the area occupied.
The following information pertains to the year ended 30 June 2019:
1. On 1 July 2018, land was revalued to Rs. 20 million on 1 July 2018. The value was determined by an
independent firm M/s Ashfaq & Co. Chartered Accountants.
2. This year, 5,000 units were produced in the factory of AL.
3. On January 1, 2019, AL disposed 25% of its area comprising of land and buildings at a price of Rs. 90
million. The portion of land was sold at its fair value as determined on 1 July 2018. The legal costs of
drafting transfer agreements were Rs. 0.1 million. It is assumed that this disposal will not affect the
proportion of areas occupied by factory and office.
4. Further equipment costing Rs. 60 million was acquired on 1 November 2018.
5. In the meeting of its board of directors, it was decided to open a new factory premises near LahoreIslamabad motorway. An expenditure of Rs. 20 million was spent on the construction of the factory on 1
December 2018, financed by a loan obtained from the bank at the rate of 12% per annum. The
construction had not been completed at the end of the year.
6. Moreover, the directors also made a contract with M/s UniPower& Co. to purchase plant and machinery
worth Rs. 35 million once the construction of factory building is completed.
Required: (a)
Prepare journal entries to record the revaluation of land and disposal of land and
buildings.
Umair Sheraz Utra, ACA
P a g e | 14
CAF-05
Property, Plant and Equipment
(b)
Prepare the disclosure under IAS 16 in relation to Property, Plant and Equipment in the
notes to the published accounts for the year ended 30 June 2019.
Lecture 18
1) Discussion of Abbas Limited and distribution of its solution.
Lecture 19
1)
2)
3)
4)
Discussion of remaining sub notes of Abbas Limited.
Reading of disclosures from book.
Discussion of cost determination (Initial and subsequent).
Gross replacement method of revaluation: This method involves restating proportionally the cost
account and the accumulated depreciation so that the net carrying amount equals the net replacement
value (fair value).
Example
A Hydroelectric power plant owned by a company is carried at Rs. 30 million (Cost of Rs. 40 million
less accumulated depreciation of Rs. 10 million. The company‟s policy is to apply the revaluation
model to all of its property, plant and equipment. A current valuation of this plant is now Rs. 50
million.
Required: Pass journal entry of revaluation.
Umair Sheraz Utra, ACA
P a g e | 15
CAF-05
Property, Plant and Equipment
Lecture 20
1) Fully depreciated asset concept (PQ 42 page 551 of RISE book)
2) Self-constructed asset (page 518 of RISE book)
Example: Roads International Limited constructed its own specially designed „road bulldozer‟. Details
of related costs incurred are as follows:
Description of cost:
Rs.
Cost of raw materials purchased
500,000
Cost of raw materials used in construction of road bulldozer
100,000
Over head costs incurred on building road bulldozer
40,000
Tests to ensure road bulldozer safe before brought into use
20,000
Factory labour costs
300,000
Additional information:

80% of the total labour costs for the year were incurred on building roads and 20% thereof were
incurred in construction of the road bulldozer.

The road bulldozer was first brought into use on a contract that started on 1 November 20X2,
although it was available for use from 1 October 20X2.

The company uses the straight-line method to depreciate its road bulldozer. This vehicle is
expected to be sold for Rs. 7,000 at the end of its expected useful life of 5 years.
Required: Journalise transactions related to tarring vehicle for the year ended 31 December 20X2.
3) Parts of an asset, Determination of cost, Commencement of depreciation (page 525 of RISE book)
Example: Ancient Waters Limited is a company involved in bottling spring water. The company
purchased a bottling plant on 2 January 20X2. The plant is made up of three significant components, the
cost of which is as follows:
Description of component
Cost price
Residual value Expected useful life
Rs.
Rs.
Engine
1,500,000
500,000
5 years
Conveyor belt and fittings
2,000,000
0
8 years
Other structure
800,000
50,000
3 years
“Other costs” incurred in relation to the bottling plant are as follows:
Description of cost
Rs.
Transaction date
Delivery and installation
783,000
5 January 20X2
Staff training
60,000
16 January 20X2
Other information:

The plant was available for use in production on 1 February 20X2, although production only
began on 1 March 20X2.

The plant was temporarily idle during October 20X2 when the factory closed down for its annual
holiday period.

The company uses the straight-line method when depreciating its bottling plant.

All „other costs‟ are considered to be incurred evenly between the three significant components
of the bottling plant (i.e. where appropriate, a third of the cost is allocated to each component).
Required: Show all related journal entries relating to the bottling plant for the year ended 31 December
20X2 and 31 December 20X3.
Umair Sheraz Utra, ACA
P a g e | 16
CAF-05
IAS 36 : Impairment
Lecture # 1 (IAS 36)
Lecture # 20 (Over All)
CONCEPT OF IMPAIRMENT LOSS
Class example 1:
1) Following data relates to an asset:
Cost of asset (01.01.2011)
Useful life
Fair value (31.12.2017)
Cost to sell (31.12.2017)
Rs.100
10 years
Rs.35
Rs.7
2) Expected Cash flows in next 3 years are as follows:
Annual inflows
Annual outflows
Sale proceeds at end of year 3
Disposal costs at end of year 3
Rs.8
Rs.2
Rs.11
Rs.3
3) Discount rate for present value calculation is 10%
Required:
(a) Calculate impairment loss (if any) in respect of above asset as on December 31, 2017.
(b) Prepare note of PPE for the year ended December 31, 2017.
(c) Calculate depreciation expense for the year ended December 31, 2018.
Question-2
Daewoo Bus has two Buses. Following Information is available for the purpose of impairment testing:
(i)
The remaining useful life of both buses is expected to be 3 years standing on 31.12.12.
(ii)
The fair values and written down values of the plants as on 31 December 2012 were as follows:
Cost Accumulated WDV
Fair value Incremental
Depreciation
Buses
selling cost
--------------Rs. in million-------------300
80
B-1
220
210
7
B-2
200
40
160
150
4
(iii)
(iv)
Expected cash flows from each Buses in next 3 years are as follows:
B-1
B-2
------Rs. in million-----Annual inflows (fare from passengers)
105
55
Annual outflows (driver salary, petrol, token taxes etc.)
11
5
Sale proceeds at end of year 3
8
3
Disposal costs at end of year 3
2
1
Present value factor, based on a pre-tax discount factor of 10%, for year 1, year 2 and year 3 are
0.909, 0.826 and 0.751 respectively.
Required:
Compute impairment (if any) on each Bus as on 31 December 2012.
Umair Sheraz Utra, ACA.
(11)
Page 1
CAF-05
Lecture # 2 (IAS 36)
IAS 36 : Impairment
Lecture # 21 (Over All)
1. Added requirement c in question 1 of lecture 1.
2. Question-1
Solved question 2 of lecture 1.
DETAILED DISCUSSION ON CALCULATION OF VALUE IN USE
Question-2
A company purchased a machine costing Rs. 1,800 on 1 January 20X3. It has a life of 8 years. The fair
value as on 31 December 20X5 is as follows:
Fair value
Incremental selling cost
Machine
800
20
Following future cash flows data is available based on management’s most recently approved budgets:
20X6
Outflows:
Maintenance costs
Operational costs (electricity, water, labour etc.)
Interest on loan payments
Principal payments on loan
Tax payments on profits
Cost of increasing the machine’s capacity
Overhauling cost
Depreciation
Inflows:
Basic inflows
Extra profits resulting from the upgrade
20X7
20X8
100
200(N-1)
10
100
16
0
0
156
120
220
8
100
20
220
30
211
80
240
6
100
28
0
0
211
400(N-2)
0
480
20
560
50
(N-1) It includes payment of expenses of Rs. 30 to be paid in respect of 20X5 accruals
(N-2) It includes debtors of Rs. 20 to be received from credit sale recorded in 20X5
The useful life of the machine is expected to last for 5 years. The growth rate in the business in 20X5 was
an unusual 15% whereas the average growth rate over the last 7 years is:
In the industry
10%
In the business
8%
Discount factor for similar asset is 10%.
Required:
(a) Calculate impairment loss at 31 December 20X5 assuming that a 5-year projection is considered to be
appropriate.
Homework:
1) Example 3 on page 796 of RISE book.
2) Practice set question 1 – 5.
3) Past paper 3.
Lecture # 3 (IAS-16 theory discussion)
Lecture # 22 (Over All)
Concepts Discussed
1. Discussion of Theory of PPE
2. Discussion of Disclosure and Presentation
3. Prepare Disclosure of Abbas Limited
Umair Sheraz Utra, ACA.
Page 2
CAF-05
IAS 36 : Impairment
Lecture # 3 (IAS 36)
Lecture # 23 (Over All)
Concepts Discussed
Discussion of fair value and cost to sell for calculation of recoverable amount
Q.1
Property, plant and equipment as disclosed in the draft financial statements of Apricot Pakistan
Limited (APL) for the year ended 30 June 2018 include a plant having a carrying value of Rs. 610
million. The performance of the plant has been deteriorating since last year which is affecting
APL’s sales.
Following information/estimates relate to the plant for the year ending 30 June 2019:
Rs. in million
Inflows from sale of product under existing condition of the plant
250
Operational cost other than depreciation
25
Depreciation
170
Expenses to be paid in respect of 30 June 2018 accruals
8
Cost of increasing the plant’s capacity
60
Additional inflows (net) expected from the upgrade
40
Interest on finance lease
30
Maintenance cost
15
Tax payment on profits
18
Cash flows from the plant are expected to decrease by 15% each year from 2020 and onward. The
plant’s residual value after its remaining useful life of 3 years is estimated at Rs. 100 million.
An offer has been received to buy the plant immediately for Rs. 570 million but APL has to incur
the following costs.
Rs. in million
Cost of delivery to the customer
45
Legal cost
10
Costs to re-organize the production process after disposal of plant
50
Application discount rate is 9%.
Required:
Calculate the amount of impairment loss (if any) on plant, for the year ended 30 June 2018.
(07)
TREATMENT OF IMPAIRMENT LOSS WHEN ASSET IS CARRIED
AT REVALUATION MODEL
Class work
Q.2
Cost of Asset
Date of Purchase
Revalued Amount
Revaluation Date
Recoverable Amount ( 31 Dec 2015)
Use ful life
Rs 500
1 Jan 2010
800
1 Jan 2015
Rs 450
8 year
Required:
Prepare accounting entries from July 1, 2012 till the year ended June 30, 2015.
Umair Sheraz Utra, ACA.
Page 3
CAF-05
IAS 36 : Impairment
Home work
Q.3
Scientific Pharma Limited (SPL) is a manufacturer of pharmaceutical products. Its plant was
estimated to have a recoverable amount of Rs. 600,000 at June 30, 2015.
Other related information is as under:
(i) Plant was imported at 2,500,000. The payment was made at the time of shipment on July 1,
2012 and was installed on same day. Other charges including installation cost amounted to
Rs. 700,000.
(ii) The company uses straight line method of deprecation. At the time of purchase, the estimated
useful life of the plant was estimated at 15 years whereas the salvage value was estimated at
Rs. 200,000.
(iii) Based on the report of a professional independent valuer, the plant was revalued on July 1,
2013 at Rs. 5,400,000. There was however, no change in estimated useful life of the plant.
Required:
Prepare accounting entries from July 1, 2012 till the year ended June 30, 2015.
Q.3A
(12)
Assume in Q.3 the plant was estimated to have a recoverable amount of Rs. 3,300,000 at June 30,
2015.
Lecture # 4 (IAS 36)
Lecture # 24 (Over All)
Concepts Discussed
1. Indicators of Impairment
2. Discussion of Past paper 3 (page 811)
Home Work
 Past paper 3 (page 811)
Umair Sheraz Utra, ACA.
Page 4
CAF-05
Lecture # 1
IAS 23 : Borrowing Cost
Lecture # 24 (Over All)
Class work
1. Practice Q. 22 (Tipu)
Home work
1. Practice Q. 22 (Tipu)
2. Self-prepared Question (Given below)
Question:
Mr. M obtained a loan of Rs. 200 million on 1.Jan.12 at a markup of 10% per annum. Principal is
payable semi-annual installments of Rs. 20 million each starting from 30 June 12. Year-end is 31
December.
Required:
a. Prepare relevant extracts from SOFP for year ended 31 December 12, 13.
b. Calculate interest expense for the year ended 31 December 12, 13.
Lecture # 2
Lecture # 25 (Over All)
Concepts Discussed
1. Discussed Qualifying Asset
Class work
1. Discussion of home work
2. Basic Practice Q. 1 (Pg. 728 book)
Home work
Question:
Loan obtained
1.March.18
Work Started
1.March.18
Payment details to contractor:
1.March.18
50,000
1.June.18
20,000
1.Nov.18
10,000
Construction is completed on 1.Nov.18. Loan amount is Rs. 80,000 and interest is payable at 12% p.a.
Required:
Prepare P/L and Balance sheet for the year ended 31.12.18 – 31.12.20. Assuming life of building is 10
years and loan is repayable in 2025.
Umair Sheraz Utra, ACA.
Page 1
CAF-05
Lecture # 3
IAS 23 : Borrowing Cost
Lecture # 26 (Over All)
Class work
1. Basic Practice Q. 2 (Pg. 728)
2. Basic Practice Q. 3 (Pg. 728)
3. Basic Practice Q. 4 (Pg. 728)
4. Self-prepared Question (Given Below)
Question:
Loan received on 1.1.15
Rs. 20 million
Project Started on
1.2.15
Payment details to contractor:
Date
Rs. in Millions
1.2.15
8
1.6.15
10
1.10.15
2
Project is completed on 1.10.15.Interest rate is 20% and surplus funds are invested at 15%.
Required:
Calculate borrowing cost to be capitalized and cost of building.
Home work
1. Self-prepared Question above
2. Question:
Loan received on 1.1.17
Rs. 100 million
Project Started on
1.3.17
Payment details to contractor:
Date
Rs. in Millions
1.3.17
50
1.5.17
20
1.11.17
30
Project is completed on 1.11.17. Interest rate is 14% and surplus funds are invested at 8%.
Required:
Calculate borrowing cost to be capitalized and cost of building.
Lecture # 4 (Discussion of test # 2)
Lecture # 27 (Over All)
Discussed Test # 1 (Orchid Ltd.)
Lecture # 4
Lecture # 28 (Over All)
Class work
1. Discussion of Q.4 ( self-prepared question ) of class work of lecture 3
2. Basic Practice Q. 5 (Pg. 729 of book)
Further Concepts Discussed
1. Suspension (Routine and Non-routine)
Homework
1. Abbas Limited ( Note of PPE )
2. Lecture # 3 ( IAS-36) ( Q 1 , Q 3, Q 3A)
3. Lecture 1- 4 (IAS-23)
Umair Sheraz Utra, ACA.
Page 2
CAF-05
IAS 23 : Borrowing Cost
Lecture # 5
Lecture # 29 (Over All)
Concepts Discussed
Discussion of general loans
Class work
1. Basic Practice Q. 6 (Pg. 729 of book)
2. Basic Practice Q. 7 (Pg. 729 of book)
3. Practice Q. 17 (Power Limited)
Homework
1. Practice Q. 12
2. Practice Q.4,8,10
Lecture # 6
Lecture # 30 (Over All)
Concepts Discussed
 Running Finance facility
Class work
1. Past paper Q. 9 (Spin Industries). Also calculated cost of building.
2. Question on page 733 (Mr. Imam) for concept of progressive billing
Home work
1. Past paper Q. 9.
2. Practice Q. 11,14,15.
Umair Sheraz Utra, ACA.
Page 3
CAF-05
Lecture # 7
IAS 23 : Borrowing Cost
Lecture # 31 (Over All)
1. Entries of Question on page 733 (Mr. Imam)
2. Question:
On July 1, 2009, Qureshi Steel Limited (QSL) signed an agreement with Pak Construction Limited for
construction of a factory building at a cost of Rs. 100 million. It was agreed that the factory would be ready
for use from January 1, 2011. The terms of payments were agreed as under:
(i) 10% advance payment would be made on signing of the agreement. The advance paid would be adjusted
at 10% of the quarterly progress bills.
(ii) 5% retention money would also be deducted from the progress bills. Retention money will be refunded
one year after completion of the factory building.
(iii) Progress bills will be raised on last day of each quarter and settled on 15th of the next month.
The under mentioned progress bills were received and settled by QSL as per the agreement:
Invoice date
Amount (Rs.)
September 30, 2009
30 million
December 31, 2009
20 million
March 31, 2010
10 million
June 30, 2010
15 million
On April 30, 2010 an invoice of Rs. 1.5 million was raised by the contractor for damages sustained at the
site, on account of rains. After negotiations, QSL finally agreed to make additional payment of Rs. 1.0
million to compensate the contractor. The amount was paid on May 15, 2010. It is expected that 75% of the
payment would be recovered from the insurance company.
The cost of the project has been financed through the following sources:
(i) Issue of right shares amounting to Rs. 15 million, on September 1, 2009. The company has been
following a policy of paying dividend of 20% for the past many years.
(ii) Bank loan of Rs. 25 million obtained on December 1, 2009. The loan carries a markup of 13% per
annum. The principal is repayable in 5 half yearly equal instalments of Rs. 5 million each alongwith
the interest, commencing from May 31, 2010. Loan processing charges of Rs. 0.5 million were deducted
by the bank at the time of disbursement of loan. Surplus funds, when available, were invested in short
term deposits at 8% per annum.
(iii) Cash withdrawals from the existing running finance facility provided by a bank. Average running
finance balance for the year was Rs. 60 million. Markup charged by the bank for the year was Rs. 9
million
.
Required:
Compute cost of capital work in progress for the factory building as of June 30, 2010 in accordance with
the requirements of relevant IFRSs. (Borrowing costs calculations should be based on number of months)
(18)
{Autumn 2010, Q # 4}
Lecture # 8
Lecture # 32 (Over All)
Class work
Discussion of Assessment Q.2 (Apple Corporation)
Home work
Question 3 of Assessment
Umair Sheraz Utra, ACA.
Page 4
CAF-05
Lecture # 9
IAS 23 : Borrowing Cost
Lecture # 33 (Over All)
Class work
1. Discussion of Assessment Q.3 (Advent)
2. Prepare balance sheet of Question on page 733 (Mr. Imam)
Home work
 Past paper Q.8 (Alpha Trading Limited).
Lecture # 10
Lecture # 34 (Over All)
Class work
 Discussion of past paper Q.8 (Alpha Trading Limited).
 Started discussion on single entry topic.
Home work
 Past paper Q.8 (Alpha Trading Limited).
Umair Sheraz Utra, ACA.
Page 5
CAF-05
Preparation of accounts from incomplete records
Lecture 1
Lecture # 35 (Over All)
Class work
PP 1 (Saud Jawad).
Homework
PP 1 (Saud Jawad); PS 5 (Mr. Ali Abbas).
Revision of some useful concept of ITA.
1. Revision of markup/margin by following examples:
(i)
Cost of goods is Rs.800,000. “Goods are sold at a profit of 20% on cost” or “Goods are sold at
20% above cost” or “Sales are made at cost plus 20%” or “Goods were sold at a markup of
20% on cost/cost of sales” or “Goods are sold at 20% mark-up.”
Required: Calculate sales.
(ii)
Cost is Rs.50,000. Goods are sold at 30% above cost.
Required: Calculate sales.
(iii) Sale is Rs.30,000. Goods are sold at 10% markup.
Required: Calculate cost of sales.
(iv) Cost of goods is Rs.400,000. “Sales were made at a profit of 20% on sales” or “Gross profit is
made at 20% on sales value” or “There was a fixed margin of gross profit of 20% on sales” or
“Sales were effected at a uniform rate of gross profit at 20% on sales” or “Goods are sold at
20% margin.”
Required: Calculate sales.
(v)
Cost is Rs.40,000. Goods are sold at a margin of 25%.
Required: Calculate sales.
(vi) Sale price is Rs.100,000. Goods are sold at a profit of 30% on sale price.
Required: Calculate cost.
(vii) Sales for the year are Rs.600,000. Rs.200,000 of the sales are made at a profit of 10% on cost
while remaining sales are made at a profit of 20% on cost.
Required: What is the cost of sales of the business?
(viii) Sales for the year are Rs.800,000. Goods having sale price of Rs.100,000 are sold at 10%
profit on cost and remaining sales are made at 30% profit on sale price.
Required: Calculate cost of sales.
(ix) Sales for the year are Rs.200,000. Goods costing Rs.50,000 are sold at 10% markup. The
remaining sales are made at 10% margin.
Required: Calculate cost of sales.
(x)
Sales during the year amounted to Rs.800,000. Usually goods are sold at 20% above cost.
However, during the year some goods having cost of Rs.80,000 are sold at 10% discount.
Required: Calculate cost of sales.
(xi) Sales for the year are 900,000. Normally goods are sold at 20% margin. However, during the
year some goods having sale price of Rs.200,000 are sold at an off season discount of 5%.
Required: Calculate cost of sales.
(xii) Sales for the year are Rs.30,000. Normally goods are sold at a profit of 50% on sale price.
However, goods costing Rs.12,000 are sold at a loss of Rs.2,000 during the year.
Required: Calculate cost of sales.
2. Revision of BRS by following example:
Bank a/c
1.1.12
b/d
200
27.1.12
30.1.12
31.1.12
Creditor M
Creditor X
c/d
60
90
50
Date
1.1.12
29.1.12
31.1.12
Bank statement
Description
Dr.
Opening Balance
Creditor M
60
Closing Balance
Cr.
Bal.
200 Cr.
140 Cr.
140 Cr.
Required: Discuss un-presented cheques and also prepare BRS for the month of January 2012.
Umair Sheraz Utra, ACA
Page |1
CAF-05
Preparation of accounts from incomplete records
3. Revision of accruals and prepayments by following examples:
(i)
Mr. Qasim acquired a shop rent on 1 February 2011. Quarterly rent is Rs.9,000 and rent for
each quarter is paid in advance (i.e. on the 1st day of each quarter).
Required: Prepare rent a/c for the year ended 31 December 2011.
(ii)
Mr. Tayyab took a building on rent on 1 March 2012. Rent for the 12 months ending 28
February 2013 is paid on 1 March 2012. Annual rent is Rs.600,000 and year end is 31
December.
Required: Prepare rent a/c for the year ended 31 December 2012.
(iii) Abubakar acquired a house on rent on 1 June 2016 at an annual rental of 2,000,000 payable in
arrears.
Required: Prepare rent a/c for the year ended 31 December 2016.
(iv) Abdul Basit acquired a property on rent in 2017. Rent for the 1st quarter is paid on 1 January
2017 and rent for the 2nd quarter is paid on 1 April 2017. Then rent for 10 months ending 30
April 2018 is paid on 2 July 2017. Rent per month is Rs.6,000.
Required: Prepare rent a/c for the year ended 31 December 2017.
4. Revision of bad and doubtful debt by following example:
(i)
Following is the data of a business for the 1st year of its operations:
Sales = 10,000; Cash received = 3,000; Provision for doubtful debt rate is 10%;
Year-end is 31 December 2018.
Required: Prepare Debtors a/c and provision for doubtful debts a/c.
(ii)
Continuing from example (i), following data is available for the next year:
Sales = 20,000; Cash received = 8,000; Actual bad debts = 300; Provision for doubtful debt
rate is 10%; Year-end is 31 December 2019.
Required: Prepare Debtors a/c and provision for doubtful debts a/c. Also prepare relevant
extracts of SOFP and SOCI.
Umair Sheraz Utra, ACA
Page |2
CAF-05
Preparation of accounts from incomplete records
Lecture 2
Lecture # 36 (Over All)
Class work
PP 10 (Adnan)
Homework
PP 10 (Adnan): PP 17 (Arshad); Mark Up Margin (Q.1, Q.4, Q.7, Q.8, Q.9)
Lecture 3
Lecture # 37 (Over All)
Class work
1. Discussion of PP 17 (Arshad)
2. PP 09 (Mansoor)
Homework
PP 10 (Adnan); PP 09 (Mansoor); PP 16 (Ashfaq).
Lecture 4
Lecture # 38 (Over All)
Class work
QB 08 (Aslam); Test 4 Discussion
Homework
QB 04 (Tahir); PP 27 (Munira)
Lecture 5
Lecture # 39 (Over All)
Class work
PP 27 (Munira)
Homework
PP 28 (Danish)
Lecture 6
Lecture # 40 (Over All)
Class work
PP 16 (Ashfaq)
QB 04 (Tahir)
PP 28 (Danish)
Homework
Single entry:
1. PP 9 (Mansoor); PP 27 (Munira); PP 28 (Danish); PP 36 (Nezam) in single sitting.
2. PP 18 (Baber);
3. PP 22 (Rahil).
IAS-23 (Borrowing cost)
1. PP 11 (GC).
IAS-36 (Impairment)
1. Lecture # 3 question # 1 (APL).
IAS-16 (PPE)
1. Note of Abbas Limited.
Lecture 7
Lecture # 41 (Over All)
Class work
PP 36 discussed in detail
PP 18 discussed in detail
PP 22 discussed (only external confirmation concept)
Homework
PP 28 (Danish)
PP 22 (Rahil)
PP 18 (Babar)
PP 36 (Nezam)
Umair Sheraz Utra, ACA
Page |3
CAF-05
Preparation of accounts from incomplete records
Lecture 8
Lecture # 42 (Over All)
Concept Discussed
Bank reconciliation Statement
Class work
Started QB 9 (Umer)
Homework
QB 9 (Umer)
QB 6 (Rashid)
Lecture 9
Lecture # 43 (Over All)
Class work
Completed QB 9 (Umer)
Discussed QB 6 (Rashid)
Lecture 10
Lecture # 44 (Over All)
Class work
PP 35 (Alpha Traders)
Homework
PP 35 (Alpha Traders)
Lecture 11
Lecture # 45 (Over All)
Class work
PP 35 remaining discussion
PP 31 (Zafar)
Homework
PP 29 (Tahir)
Lecture 12
Lecture # 46 (Over All)
Class work
Started PP 13 (Mr Asif)
Homework
PP 13 (Asif); PP 29 (Tahir)
Lecture 13
Lecture # 47 (Over All)
Class work
Completed PP 13 (Mr Asif)
Lecture 14
Lecture # 48 (Over All)
Class work
1. PP 29 (Tahir);
2. Discussion of Q:1 of Test 5 (FT) Recent Attempt.
Homework
Q:1 of Test 5 (FT)
Lecture 15
Lecture # 49 (Over All)
Class work
1. Discussion of Q:2 of Test 5 (MCQs);
2. Prepared ‘Defalcation statement’ from PP#22 (Rahil);
3. Discussion of Rule of Sales Return.
Umair Sheraz Utra, ACA
Page |4
CAF-05
Lecture 1
Income & Expenditure
Lecture # 50 (Over All)
Class work
1. Revision of Accruals:
i. Expenses (Q#1 from Revision of Accruals in single entry lecture#1 handout)
ii. Incomes
2. PP# 03 (Karachi Social Club)
Homework
1. Q#1 to Q#5 of Subscription Accounts on Page 145 of RISE Book
2. PP# 04 (Friends Club)
Lecture 2
Lecture # 51 (Over All)
Class work
PP# 10 (Golf Club)
Homework
PP# 06 (Sehat Club)
Lecture 3
Lecture # 52 (Over All)
Class work
PP# 09 (Executive Club)
Homework
PP# 06 (Monarch Sports Club)
Lecture 4
Lecture # 53 (Over All)
Class work
PP# 11 (Seaview Club)
Homework
QB# 02 (Langton Hockey Club)
Lecture 5
Lecture # 54 (Over All)
Class work
PP# 14 (Leisure Club)
Homework
PP# 14 (Leisure Club)
Umair Sheraz Utra, ACA
Page |1
CAF-05
Lecture 6
Income & Expenditure
Lecture # 55 (Over All)
Concept Discussed
1.
2.
Concept of donation income discussed.
Specific fund from own resources.
3. Life membership.
Question: Ghareeb Nawaz Club started its operations on 01.Jan.2018.Sponsers contributed Rs.50,000 towards
general fund at the start of operations and placed the amount in the bank.
Following is the Receipt and Payment summary for the period from 01.Jan.2018.
Receipts
Rs.
Payments
Rs.
0
b/d
Payments for Beverages purchased
1,000
Sponsor’s contribution
50,000 Furniture and fixtures
1,200
Joining fee
20,000 Van
1,500
Subscription fees
26,000 Salaries
1,000
Sale of beverages
1,500 Rent
2,200
Donation
Utilities
570
 General
2,000
Insurance
100
Competition expense
800
 Building construction
5,000
10,000
School
fee
paid
6,000
 Eye-patient
3,000
Legacy from a member
1,000 Eye patient treatment paid
1,000
Competition fee
1,200 Building
4,000
Life membership
5,000 Balance c/d
95,330
114,700
114,700
Additional Information:
1. Subscription fee received during the year includes Rs.5,000 relating to the year ending 31.12.2019. while
Rs.1,000 subscription is outstanding at the year end.
2. Total beverages purchased during the year amounted to Rs. 1,300 and 30% of the purchases remained
unsold at the year end.
3. During the year Rs.1,000 is paid in respect of treatment of eye patients.
4. Life membership of Rs.1,000 each is received from 5 members and their income is amortized over a period
of 5 years.
5. During the year it has been decided by the club to create a specific fund of Rs.18,000 out of general fund for
school fee of needy students. Rs.6,000 school fee is paid for the needy student till the end of current year.
6. 80% of the building was completed and transferred to fixed assets as on 31.12.2018. Fixed assets are
depreciated @ 10%.
Required: Prepare income and Expenditure Account and balance sheet of Ghareeb Nawaz Club for the year
ended 31.Dec.2018.
(15)
Lecture 7
Lecture # 56 (Over All)
Class work
1. Discussion of Homework (Ghareeb Nawaz)
2. PP# 15 (Violin Family Club)
3. PP# 07 (Gulshan Cricket Club)
Homework
1. PP# 15 (Violin Family Club)
2. PP# 18 (Boat Club)
3. PP# 07 (Gulshan Cricket Club)
Lecture 8
Lecture # 57 (Over All)
Class work:
Discussion of Homework PP# 15 (Violin Family Club).
Umair Sheraz Utra, ACA
Page |2
CAF-05
Lecture # 1 (SOCIE)
SOCIE
Lecture # 58 (Over All)
Concepts Discussed:
1. Discussion of ‘Issuance of share capital’ at par/premium/discount.
2. Discussion of ‘dividend’ w.r.t classification of time and nature along with journal entries.
3. Discussion of ‘right Issue.’
4. Preparation of statement of changes in equity using flowing class example:
Class Example:
Company X started a business in January 2017. Following relevant information is available:
(i) Started business with share capital of Rs.50 million.
(ii) Face value is Rs.10 per share.
(iii) Profit after tax 2017: Rs.30 million, 2018: Rs.45 million.
(iv) In March 2018 Final Dividend of 2017 is announced at 15% (cash dividend).
(v) In September 2018 interim dividend is announced as follows:
4% cash dividend;
6% bonus dividend.
(vi) In November 2018 20% right shares were issued at Rs.13 each(1 new share for every 5 held )
(vii) At year end management decided to transfer Rs.12 million from retained earning to general reserve.
Required:
Prepare statement of changes in equity for year ended 31.Dec.2018.
Lecture # 2 (SOCIE)
Lecture # 59 (Over All)
Class work:
1. Completed the class Example of Lecture #1
2. QB #1 Daffodil Limited (DL)
Homework:
1. PQ #2 (MPL)
2. QB #3 (HMK)
Lecture # 3 (SOCIE)
Lecture # 60 (Over All)
Concepts Discussed:
Concept of OCI discussed
Class work:
PQ #2 (MPL)
Homework:
QB #3 (HMK)
Lecture # 4 (SOCIE)
Lecture # 61 (Over All)
Class Work:
Discussion of QB #4
Home work:
QB #2 (MK)
Umair Sheraz Utra, ACA.
Page 1
CAF-05
Statement of Cash Flow
Lecture # 1 (IAS-07)
Lecture # 62 (Over All)
Classwork:
Preparing SOCF using indirect method
Started PP #4 (Junaid Junjua)
Homework:
PP #4 (Junaid Junjua)
Lecture # 2 (IAS-07)
Lecture # 63 (Over All)
Classwork:
Completed PP # 4 (Junaid Junjua)
Homework:
PP # 5; PS # 5.
Lecture # 3 (IAS-07)
Lecture # 64 (Over All)
Class work:
PP # 11 (Quality Enterprises)
Homework:
PP #8, 9
Lecture # 4 (IAS-07)
Lecture # 65 (Over All)
Classwork:
1. Discussion of PP # 8 ( AB Enterprise)
2. Discussion of PP # 14 ( Drum Limited)
3. PP # 13 (Nadir Limited)
Homework:
1. PP #14
2. PP #13
Lecture # 5 (IAS-07)
Lecture # 66 (Over All)
Class Work:
Started PP # 12 (Liaqat Industries)
Homework:
1. PP #12
2. PP #06
Lecture # 6 (IAS-07)
Lecture # 67 (Over All)
Class Work:
1. PP # 12 (Liaqat Industries)
2. Preparing SOCFs using direct method in PP #4 (Junaid Junjua)
Homework:
1. PP #4 using direct method
2. PQ # 3,4,5 using direct method
3. PP #12 using direct method
Umair Sheraz Utra, ACA.
Page 1
CAF-05
Lecture # 7 (IAS-07)
Statement of Cash Flow
Lecture # 68 (Over All)
Question
Following are the extracts from the financial statements of Universal Limited (UL) for the year ended 30
June 2017:
Statement of financial position as on 30 June 2017
2017
2016
2017
2016
Assets
Equity & liabilities
Rs. in ‘000
Rs. in ‘000
Property, plant and equip.
158,500 120,000 Share capital (Rs. 10 each)
175,000 150,000
Stock in trade
58,000
45,000 Retained earnings
54,434
21,500
Trade receivables
68,000
56,000 Revaluation surplus
10,000
Cash
39,434
48,000 Long term loan
18,000
20,000
Interest payable
1,000
2,500
Trade payables
42,000
39,000
Accrued Liabilities
20,000
18,000
Unearned maintenance
2,000
4,000
14,000
Provision for taxation
1,500
323,934 269,000
323,934 269,000
Statement of profit or loss for the year ended 30 June 2017
Rs. in 000
Sales
273,000
Cost of sales
(187,500)
Gross profit
85,500
Operating expenses
(46,766)
Other income
11,200
Profit before interest and tax
49,934
Interest expense
(2,000)
Profit before tax
47,934
Tax expense
(15,000)
Profit after tax
32,934
Additional information:
(i)
60% of sales were made on credit.
(ii)
UL maintains a provision for doubtful receivables at 6%. During the year, trade receivables of
Rs. 7 million were written off.
(iii)
Depreciation expense for the year was Rs. 22.5 million. 70% of the depreciation was charged to
cost of sales.
(iv)
Other income comprises of:
 gain of Rs. 3 million on disposal of vehicles for Rs. 12 million;
 maintenance income of Rs. 8.2 million; and
Required:
Prepare UL’s statement of cash flows for the year ended 30 June 2017 using direct method.
(15)
{Autumn 2017, Q.1, CAF-7}
Umair Sheraz Utra, ACA.
Page 2
CAF-05
Lecture # 8 (IAS-07)
Statement of Cash Flow
Lecture # 69 (Over All)
Classwork
Question: Jalib Industries Limited (JIL) is a listed company. The relevant information contained in the
financial statements for the year ended December 31, 2015 is as follows:
Statement of Financial Position
2015
2014
Rupees in million
Non-current assets
Property, plant and equipment
129.40
100.60
Capital work in progress
22.50
37.00
151.90
137.60
Current assets
Stock in trade
531.80
451.00
Trade debts
28.50
24.70
Prepayments and other receivables
35.20
42.00
Cash and bank
3.00
12.00
607.50
520.70
759.40
658.30
Equity
Issued, subscribed and paid-up capital
396.00
300.00
Share premium
45.00
12.00
Unappropriated profit
142.60
163.00
583.60
475.00
Non-current liabilities
Gratuity payable
38.60
27.50
Long term loans
80.00
100.00
118.60
127.50
Current liabilities
Current portion of long term loans
18.00
20.00
Trade Creditors
20.00
18.00
Accruals and other payables
16.20
16.40
Dividend payable
3.00
1.40
57.20
55.80
759.40
658.30
Statement of profit or loss 2015
Rupees in million
Sales
2,535.00
Cost of goods sold
(1,774.50)
Gross profit
760.50
Operating expenses
(554.00)
Financial charges
(10.50)
Loss on sale of fixed assets
(4.60)
(569.10)
Profit before tax
191.40
Tax expense
(106.80)
Profit after tax
84.60
The following supporting information is available:
a) During the year, an amount of Rs.42 million was transferred from capital work in progress to property,
plant and equipment.
Umair Sheraz Utra, ACA.
Page 3
CAF-05
Statement of Cash Flow
b) The company sold property, plant and equipment having book value of Rs.15 million for Rs.10.4 million.
c) Depreciation for the year amounted to Rs.27.7 million. 60% of the depreciation is charged to cost of sales.
d) Trade debts written off during the year amounted to Rs.1 million. It is the policy of the company to
maintain the provision for doubtful debts at 5% of trade debts.
e) Prepayments and other receivables include advance tax of Rs.1.4 million (2014: Rs.2.2 million).
f) Provision for gratuity made during the year amounted to Rs.15.5 million.
g) Accruals and other payables include accrued financial charges amounting to Rs.5 million (2014: Rs.6
million).
h) On January 15, 2016, the company declared final dividend for the year ended December 31, 2015
comprising 7.5% (2014: 35%) cash dividend and 12.5% (2014:0%) bonus shares, for its ordinary
shareholders.
Required:
Prepare a statement of cash flow for the year ended December 31, 2015 using direct method in accordance
with the requirements of International Accounting Standards. Show all necessary workings.
(23)
{Spring 2009}
Homework:
Question 1: Solve above class question (JIL) using indirect method.
Question 2:
The following statements of financial position relate to Waseem Industries Limited for the years ended
December 31:
2015
2014
Rs. in million Rs. in Million
ASSETS
Non-current assets
Property, plant and equipment
242
182
Capital work-in-progress
20
18
Long term investments
75
100
Long term deposits
13
13
Total non-current assets
350
313
Current assets
Stocks-in-trade
55
48
Trade debts
51
38
Advances, prepayments and other receivables
37
40
Cash and bank balances
11
20
Total current assets
154
146
TOTAL ASSETS
504
459
EQUITY AND LIABILITIES
Shareholders' equity
Share capital
150
125
Share premium
55
80
Unappropriated profit
85
50
290
255
Non-current liabilities
Long term finances – Secured
94
118
Deferred liability - Gratuity (unfunded)
16
12
110
130
Current liabilities
Current portion of long term finances
25
22
Short term finances
13
6
Trade and other payables
66
46
104
74
TOTAL EQUITY AND LIABILITIES
504
459
Umair Sheraz Utra, ACA.
Page 4
CAF-05
Statement of Cash Flow
Other relevant information is as follows:
(i)
An interim bonus issue of one for five ordinary shares was made during the year out of share
premium. The company also approved final cash dividend of 10% (2014: 8%), in its annual general
meeting.
(ii)
During the year, the company provided Rs. 17 million (2014: Rs. 13 million) on account of
depreciation. The details relating to disposal of property, plant and equipment are as follows:
Carrying amount Sale proceeds
Rs. m
Rs. m
Plant and machinery
20
22
Vehicles
3
4
(iii)
Advances, prepayments and other receivables include advance tax of Rs. 10 million (2014: Rs. 7
million).
(iv)
In 2015, the company paid Rs. 6 million on account of gratuity.
(v)
Accrued mark-up on long term finances amounting to Rs. 7 million (2014: Rs. 9 million) is included
in trade and other payables. Financial charges included in the profit and loss account are Rs. 16
million (2014 : Rs. 14 million).
(vi)
Income tax expense for the year 2015 amounted to Rs. 19 million (2014: Rs. 13 million).
Required
Prepare a cash flow statement in accordance with the requirements of IAS 7 Cash Flow Statement” using the
indirect method.
(20)
Lecture # 9 (IAS-07)
Lecture # 70 (Over All)
Classwork
1. Discussed homework question Waseem Industries Limited in detail and solutions provided for
Jalib Industries Limited (Indirect method) and Waseem Industries Limited.
2. Discussed ICAP recent attempt question Sunday Traders Limited.
Homework
ICAP recent attempt question Sunday Traders Limited.
Lecture # 10 (IAS-07)
Lecture # 71 (Over All)
Classwork
1. Discussed ICAP recent attempt question Sunday Traders Limited in detail and provided hand
written solution in the class.
2. Discussed test 8 question 1 Spanish Limited.
Homework
Test 8 question 1 Spanish Limited.
Umair Sheraz Utra, ACA.
Page 5
CAF-05
Lecture # 1
(IAS - 40) Investment property
Lecture # 72 (Over All)
Concept Discussed
Started discussion of investment property (IAS-40).
Class work
1. Discussed Cash flow PP#6 (Rehan);
2. Solved QB#1(Victoria).
Home Work
1. Cash flow PP#9;
2. Investment property QB#1.
Lecture # 2
Lecture # 73 (Over All)
Concept Discussed
1. Initial and subsequent measurement and cost determination of investment property;
2. Transfer to / from investment property.
Home Work
1. Reading of Notes from Rise Book (excluding disclosure requirements);
2. Practice Question# 2, 3, 4.
Lecture # 3
Lecture # 74 (Over All)
Concept Discussed
1. Partly occupied Building;
2. Fair value model selection and its exceptions;
3. Gain/Loss on disposal of investment property.
Class work
1. Example#1 on page 779.
2. Solved Question 3 from following questions:
Question 1:
Fantastic Limited had its head office located in Islamabad. During an “earthquake” on 30 June 20X5, a
building nearby, which it was renting to Unfortunate Limited, was destroyed. As Unfortunate Limited was
a valued customer, Fantastic Limited decided to lease 80% of the head office to them as a ‘replacement’:
 The head office was purchased on the 1 January 20X5 for Rs 600 000 (total useful life: 10 years)
 On the 30 June 20X5, the fair value of the head office was Rs. 800 000. There was no change
in fair value at 31 December 20X5.
Fantastic Ltd uses:
 the fair value model to measure its Investment Property; and
 the cost model to measure its property, plant and equipment.
Required: Provide the journal entries in the books of Fantastic Ltd for the year ended 31
December 20X5. (Use a single account to record movements in the head office’s carrying amount. Ignore
tax.)
Question 2:
Marvelous Limited constructed a building that it intended to lease out to earn rentals. Construction
was completed on the 28 February 20X5 when the fair value was Rs. 250 million. The total cost of
construction to Marvelous Limited was Rs. 45 million, of which Rs. 25 million, being the final costs to
complete construction (all other costs having been incurred in 20X4), were incurred on the 28 February
20X5. Marvelous Limited uses the fair value model to measure its Investment Property
Required: Provide the journal entries for the year ended 31 December 20X5.
Umair Sheraz Utra, ACA
Page |1
CAF-05
(IAS - 40) Investment property
Question 3:
Super Limited owned and leased out a building in Lahore, which was correctly classified as an
investment property on 31 December 20X4.
Due to an earthquake the head office of Super Limited was destroyed, with the result that Super Ltd had
to relocate its head office into Building previously rented out. The tenants of this building were forced to
move out as of 30 June 20X5.
The fair value of the building on 31 December 20X4 was Rs. 200 000.
On the 30 June 20X5 the buildings fair value was Rs. 260 000 and had a remaining useful life of 10 years.
Required:
Provide the journal entries in Super Limited’s records for the year ended 31 December 20X5.
Home Work
1. Reading of Notes from Rise Book (excluding disclosure requirements);
2. Practice Questions # 3; 4.
3. Class assignment # 1; 2.
Umair Sheraz Utra, ACA
Page |2
CAF-05
Lecture# 1
IAS-20 Government Grants
Lecture # 75 (Over All)
Concept Discussed
GOVT. Grant(IAS-20)
Class work
Completion of investment property & Hand written Notes distributed
Example.1 ABC Co. receive a grant of Rs. 40M in 2002 to acquire a water cleaning station. The cost
of station is Rs 100M and its useful life is 8 years. ABC Co. acquire the station on 1-July-2002 and
year end is 31 December.
Home Work
Practice set Question# 2(SOCIE)
Jalib Industries with both method (SOCF)
Practice set Question#3,4(IAS-40)
Class assignment Question# 1,2
Lecture# 2
Lecture # 76 (Over All)
Concept Discussed
GOVT. Grant
1.For the acquisition of fixed asset
2.Reimbursement of Expenses/Cost
Class work
Example.1 complete
Example.2ABC company received a grant of 10M in 2002 to cover the expenses for the environment
measures taken by ABC company during 20002 to 2005. ABC co. assumes to spend Rs. 4M each in
2002,2003&2004 and Rs.2M in 2005(total 14M) .
Home Work
Practice Question # 1(FCC), Question Bak# 1(Katie)
Lecture# 3
Lecture # 77 (Over All)
Concept Discussed
Recognition Criteria(IAS-20)
Reimbursement of expenses (1.For past cash incurred/present, 2.For future cash to be incurred)
Repayment of Govt. Grant
Class work
Discussion of Home work Practice Question # 1(FCC), Question Bak# 1(Katie)
Example. On 1.1.2004 Govt. got NARAZ and Govt. grant become fully repayable
Home Work
Practice set Question# 2,4
Example 5,6 on page#705
Lecture# 4
Lecture # 78 (Over All)
Concept Discussed
Class work
Practice set Question#4(Basit limited) with direct&indirect method
Example#6 discuss
Home Work
Practice set Question #3(potato limit)
Umair Sheraz Utra, ACA
Page |1
CAF-05
Lecture# 1
Introduction to Cost of Production
Lecture # 79(Over All)
Concept Discussed
Discussed disclosure requirements of government grants and government assistances.
Trading Business & Manufacturing Business
Class work
Started manufacturing account in cost of production chapter and started solving following question:
Solved Following Question
NKL Enterprises produces a single product. On July 31, 2008, the finished goods stock consisted of
4,000 units valued at Rs. 220 per unit and the stock of raw materials was worth Rs. 540,000. For the
month of August 2008, the books of account show the following:
Rs.
Raw material purchases
845,000
Direct labour
735,000
Selling costs
248,000
Depreciation on plant and machinery
80,000
Distribution costs
89,560
Factory manager's salary
47,600
Indirect labour
148,000
Indirect material consumed
45,000
Other production overheads
84,000
Other accounting costs
60,540
Other administration overheads
188,600
Other information is as under:
(a) 8,000 units of finished goods were produced during August 2008.
(b) The value of raw materials on August 31, 2008 amounted to Rs. 600,000.
There was no work-in-progress at the start of the month. However, on August 31, the value of workin-progress is approximately Rs. 250,000.
(d) 5,000 units of finished goods were available in stock as on August 31, 2008.
Required: Compute the value of closing stock of finished goods as on August 31, 2008 based on
weighted average cost method.
Home Work
Practice Question# 3(IAS-20),MCQ# 1,2,3(IAS-40),MCQ#1,2,4(IAS-20)
Question# 16 (NKL)
Umair Sheraz Utra, ACA
Page |1
CAF-05
Lecture# 2
Introduction to Cost of Production
Lecture # 80 (Over All)
Concept Discussed
FIFO & AVCO
Class work
Completed Lecture#1 Question (NKL) & Extract of Income statement
Started following question:
Question 1
Soya Fry Limited manufactures Cooking Oil. Following information is available with respect to
purchases and overheads for the year ended 31 December 2014.
Rs. in
Details of purchases:
‘000’
Raw material purchased (including 17% sales tax which is refundable)
60,500
Packing material purchased
2,050
Settlement discount received on raw material purchases
400
Transportation cost relating to raw material (70%) and packing material (30%)
300
Details of overheads:
Rent
Point (i)
2,700
Salaries and wages
Point (ii)
2,500
Other variable overheads
Point (ii)
5,000
Other fixed overheads
(100% production)
1,500
Other information:
(i) The break-up of rent is as follows:
Rs.
in
‘000’
Factory
2,000
Warehouse (50% for raw material, 10% for packing material and 40% for finished
goods)
500
Shelf spacing in super markets
200
(ii) Break-up of salaries and wages, other variable and fixed overheads is as follows:
Allocation between
Manufacturi Administratio
ng
n
Salaries and wages
*60%
40%
Other variable overheads
80%
20%
* Manufacturing salaries includes 70% direct wages to labourers working in the factory which
vary with the level of production.
(iii) Opening and closing inventories are as follows:
1-Jan-2014
31-Dec2014
-----------Rs. in ‘000’---------Packing material
700
285
Raw material
5,000
7,780
Umair Sheraz Utra, ACA
Page |2
CAF-05
Introduction to Cost of Production
Finished goods
2,962
4,162
Work in process
1,950
3,000
(iv) Closing stock of finished goods include goods costing Rs. 75,000 which were damaged due to
flood and can only be sold at 60% of its cost.
Required: Disclose the above information in the note on ‘Cost of goods sold’ as would appear in the
profit and loss account for the year ended 31 December 2014.
(17)
(Spring15 Q.5 CAF-05)
Home Work
Soya limited Question
Lecture# 3
Lecture # 81 (Over All)
Concept Discussed
Disclosures/Notes
Selling cost & Production cost
Class work
Solved soya limited Question complete
Revision of NRV concept
Home Work
Question Bank# 7,8
Lecture# 4
Lecture # 82 (Over All)
Concept Discussed
Class work
Discussion of Home work Question Bank#7,8
Test-9 Discussion & Hand written solution (Snake limited) distributed
Home Work
Lecture# 5
Lecture # 83 (Over All)
Concept Discussed
Fixed cost and Variable cost
Semi Variable cost
Class work
Rise took a trip to Changa Manga.Total bus rent is Rs.15000.Burger cost per student is Rs.800
Following visits took place
Name of
Month
No. of
Students(A)
Total Bus
cost(B)
Total burger
cost(C)
April
30
15000
24000
May
40
15000
32000
June
45
15000
36000
July
60
15000
48000
August
70
15000
56000
Home Work
Reading page 471-473, Example on page 473&474
Umair Sheraz Utra, ACA
Per student
bus
cost(B/A)
500
375
333
250
214
Per student
burger
cost(C/A)
800
800
800
800
800
Total trip
cost
39000
47000
51000
63000
71000
Page |3
CAF-05
Introduction to Cost of Production
Practice Question# a—e Draw graph on page#475
Lecture# 6
Lecture # 84 (Over All)
Concept Discussed
High/Low method
Step Fixed cost
Class work
Example Continue Calculate cost using High/Low Method
Step cost and draw the graph
Name of
Month
No. of
Students(A)
Total Bus
cost(B)
Total burger
cost(C)
Per student
bus
cost(B/A)
500
375
333
250
214
-
Per student
burger
cost(C/A)
800
800
800
800
800
-
Total trip
cost
April
30
15000
24000
39000
May
40
15000
32000
47000
June
45
15000
36000
51000
July
60
15000
48000
63000
August
70
15000
56000
71000
Sep.
90
25000
72000
97000
Oct.
100
25000
80000
105000
Nov.
120
30000
96000
126000
Dec.
130
30000
104000
134000
Jan.
140
30000
112000
142000
Discussion of Home work and Draw graph on page#475
Example.Per unit cost of Raw material is Rs. 2000. If units are purchased in excess of 100 supplier
offer a 40% discount on all purchases.
Home Work
Reading Thoroughly LO.4,5,6
Lecture# 7
Lecture # 85 (Over All)
Concept Discussed
Step cost and Prime cost
Direct and indirect cost
Class work
Reading ,5.2(FC),5.3(VC),5.4(SVC),5.5(SC),6(Direct cost & Indirect cost) on page#471,472,474
Example on page#473
Home Work
LO. 5.1(Cost behaviour),Example on page#474(Step cost)
Two Practice Question on page 476,479 , Reading Full cost
Umair Sheraz Utra, ACA
Page |4
CAF-05
Lecture# 8
Introduction to Cost of Production
Lecture # 86 (Over All)
Concept Discussed
Period cost and Production cost
Classification of cost by Type and Function
Cost Accounting Cycle and Journal Entries
Class work
Practice Question on page#476
Reading LO.7 (Period cost and production cost)
Reading LO.4 (Classification of cost by Type and Function)
Home Work
Example on page#481,Read only LO.4
Past paper Question#1,2,3(Cost Accounting)
Umair Sheraz Utra, ACA
Page |5
CAF-05
IFRS 15:Revenue From Contracts with Customers
Lecture# 1
Lecture # 87 (Over All)
Concept Discussed
The five steps model
Class work
Past paper Question#1,2,3(Cost Accounting)
Revenue Start
Home Work
Reading LO.1, LO.2(Cost Accounting)
Past paper#2,3(Cost Accounting)
Example Page#828 Computer Enterprise,Example#829
Lecture# 2
Lecture # 88 (Over All)
Concept Discussed
Class work
Past paper Question#1(Cost of production)
Past paper Question#2(Cost of production)
Page 828,829 (IFRS-15)
Home Work
Revise example 1&2 on page 828,829(IFRS-15)
Lecture# 3
Lecture # 89 (Over All)
Concept Discussed
Class work
Assessment Question#4(Borrowing cost), Question#1(Cost of production)
Home Work
Assessment Question#3, Question#2
Lecture# 4
Lecture # 90 (Over All)
Concept Discussed
Contract and its identification criteria
Class work
Question#1(Mr.Anjum) on page#877
Home Wor
Assessment Question#3, Question#2
Lecture# 5
Lecture # 91 (Over All)
Concept Discussed
Combination of contract
Modification of Contract
Identify separate performance obligation
Class work
Example# 1,2,3 on page#831
Example# 1,2 on page 832,833
Home Work
Example#3&Examples on page#834
Umair Sheraz Utra, ACA
Page |1
CAF-05
IFRS 15:Revenue From Contracts with Customers
Lecture# 6
Lecture # 92 (Over All)
Concept Discussed
Determine the Transaction price
Factors to be considered while calculating transaction price
Allocate the Transaction price
Class work
Discussion of example on page#835
Example#1(Time value of money)
Examples on page 837,838
Home Work
Variable consideration Example on page#836
Lecture# 7
Lecture # 93 (Over All)
Concept Discussed
Allocation of Transaction price
Record Revenue when purchase option is satisfied
Class work
LO.5,Exmple#1,2 on page#839
Indicators of transfer of control to customer
Home Work
Exampl#1,2,3 on page 842,843
Lecture# 8
Lecture # 94 (Over All)
Concept Discussed
Record revenue over time
Contract Asset/Contract Liabilities
Class work
Example#2 on page#844,Example(Unconditional Rights to Consideration ) on page#850
Home Work
Practice set Question#1(Ayub),2(), 4,8(Cltd)
Past paper Question#1(AL), 3(ECL),5(GT)
Example#1
Lecture# 9
Lecture # 95 (Over All)
Concept Discussed
Constructive Obligation
Class work
Practice Set Question#1(Ayub),2(Dawood)
Past paper Question#1,5(GT)
Home Work
Practice Set Question#4,8
Past paper Question#3,6,7
Umair Sheraz Utra, ACA
Page |1
CAF-05
Lecture# 10
IFRS 15:Revenue From Contracts with Customers
Lecture # 96 (Over All)
Concept Discussed
Contract cost
Class work
Practice Set Question#2 with Entries
Practice Set Question#8
Past paper#7(GW) Discuss
Home Work
Practice Set Question#8
Past paper#7(GW)
Reading from book of contract cost
Lecture# 11
Lecture # 97 (Over All)
Concept Discussed
Time value of money
Contract cost
Class work
Past paper Question#7(b)
Past paper Question#6(RL)
Home Work
Exaple#2(T.V.D.M) on page#837
Question Bank#3
Past paper#4(b),(c)
Past paper#2(b),(c)
Example (Media company) on page#848
Lecture# 12
Lecture # 98 (Over All)
Concept Discussed
Contract cost
Cost to obtain Contract
Cost to fulfill contract
Ratios
Class work
Example Media company on page#848
Past paper#4(b)
Test-9 IFRS-15 Question#1(b)
Question#1(X-Limited) on page#899
Home Work
Test-9 IFRS-15 Question#1(a)
Umair Sheraz Utra, ACA
Page |2
CAF-05
IFRS 15:Revenue From Contracts with Customers
Lecture# 13
Lecture # 99 (Over All)
Concept Discussed
Class work
Revenue
Past paper Question#2(b), 3b(i)
Example.1: Entity A signed a contract with customer B on 1-Mar-12. The terms of which includes
following


Entity A agreed to supply and install a machine before 30-May-12
Customer B agreed to pay Rs 15 Million in advance, on 1-Apr-12
Entity A installed the plant on 10-May-12, on which date customer B obtained control.
Customer B paid promised consideration on 30-Apr-12 (i.e before installment but after due
date)
Required: Prepare all journal entries in the books of Entity A assuming that:a) Contract is non-cancellable
b) Contract is cancellable in the event of non-performance
Past paper Question Autumn-2019(Thursday Enterprise) Available at end of book Hand& Hand
written solution distributed
Ratios
Question#1(X-Limited) continue on page#899 2 & 3 ratio
Home Work
Past paper Question Autumn-2019(Thursday Enterprise)
Umair Sheraz Utra, ACA
Page |1
CAF-05
IFRS 15:Revenue From Contracts with Customers
Lecture# 14
Lecture # 100 (Over All)
Concept Discussed
1.Variable consideration
 Expected Value method
 Most likely value method
2.Sale and repurchase Agreement
Class work
Revenue
Discuss Past paper Question Autumn-2019 Discuss(Thursday Enterprise)
Example1: Significant Financing sComponent (Arrears):Pink Limited signed a contract with a customer on 1 January 20X1 to transfer goods to the
customer (transfer takes place on 1 january 20X1) in exchange for promised consideration of
Rs.121,000 ,payable on 31 December 20X2.After careful consideration of facts , it was
decided:

That the payment terms constitute a significant financing component in terms of IFRS
15.

The implicit interest rate 10% is an appropriate discount rate in terms of IFRS 15
Required: Prepare all related journals for Pink Limited, using its general journal.
Example2: Significant financing component (Advance)
Blue limited signed a contract with a customer on 1 january 20x1 to transfer goods to the
customer (transfer take place on 31 dec 20x2) in exchange for consideration of Rs.100,000
payable on 1 january 20x1 or Rs.121000 on 31 dec 20x2 .The customer chooses to make a
payment of Rs.100,000 on 1 january 20X1.
The payment terms are considered to constitute a significant financing component in terms of
IFRS 15.
The implicit interest rate of 10% is considered to be an appropriate discount rate in terms of
IFRS 15.
Required: Prepare all related journals for Blue Limited ,using its general journal.
Past paper Question#4(a)
LO.9 OTHER ASPECTS Example.1 on page#852
Ratios
Question#1(X-Limited) Continue on page#899
4.Asset turn over ratio
Home Work
Past paper Question#4(a)
Example#2 on page#852
Past paper Question#2(c)
Umair Sheraz Utra, ACA
Page |2
CAF-05
IFRS 15:Revenue From Contracts with Customers
Lecture# 15
Lecture # 101 (Over All)
Concept Discussed
Impairment of contract cost &Reversal of impairment
Class work
Revenue
Impairment Example on page#849
Ratio
Question#1(X-Limited) continue on page#899
Debtor turnover days , Inventory turnover days, Creditor turn over days
Cash operating cycle/Working capital cycle
Lecture# 16
Lecture # 102 (Over All)
Concept Discussed
Difference between Ration in times and Ratio in days
Class work
Question#1(X-Limited) continue on page#899
Working capital ratios and Liquidity ratio
Home Work
Ratio
Question#2 on page#901
Past paper Question#1, 2, 4(b)
Lecture# 17
Lecture # 103 (Over All)
Concept Discussed
Ordinary share capital/Dividend
Preference Share Capital/Dividend
Class work
Question#1(X-Limited) continue on page#899
Debt ratio
Discuss Past paper Question#6(Boom Limited)
Home Work
Question Bank Question#3
Past paper Question#4(a)
Past paper Question#6(Boom Limited)
Lecture#20 (IAS-16) Hand out
 Ancient Waters
 Roads international limited
Umair Sheraz Utra, ACA
Page |3
CAF-05
Lecture# 18
Lecture # 104 (Over All)
Concept Discussed
User of Ratios and their needs
Class work
Discuss Question Bank Question#3
Discuss Past paper Question#6(Boom Limited)
Ancient Waters Lecture#20 (IAS-16) Hand out
Home Work
Past paper Question#3,4(a)
Past paper Question#7, 8
Lecture# 19
Lecture # 105 (Over All)
Concept Discussed
Output method / Sum digit method to calculate depreciation
Capital maintance concepts
Class work
Notes to the Financial Statement Question Ancient Waters Lecture#20 (IAS-16) Hand out
Interest coverage ratio
Limitation of ratio
Vertical and Historical analysis
Example.1
A company purchased plant on 1.5.15 for Rs. 10000 having a residual valu of Rs.1000. The plant is
capacity to produce 1500 units during its useful life.
The production was as Follows.
2015=200 Units
2016=900 Units
2017=400 Units
Requirement. Calculate Depreciation for all 3 years using output method.
Example.2
A company purchased a Vehicle on 1.3.15 costing Rs.15000 with a residual value of Rs.3000.Useful
life of machine is 3 years.
Requirement: Calculate Depre ciation for all for all the years using sum of years digit method
Question Bank Question#1.3(Carrie star)
Home Work
Reading Chapter#1 ICAP BOOK
Umair Sheraz Utra, ACA
Page |1
Revision classes (CAF-05)
Revision Plan (FAR-1)
Topics
Ratios
Revenue
(IFRS-15)
Impairment
B.cost
Cost
accounting
PPE (IAS16)
Cashflow
Single entry
SOCIE
Regards:AWAIS Ali
Description
For
Students
1. Redeemable / irredeemable preference shares affecting ROCE and
Asset turnover ratio.
2. Limitations and interpretations (possible reasons of differences)
distributed in handouts.
3. Interest cover ratio.
4. Horizontal / vertical analysis.
5. MCQ 2; 16; 26.
1. Examples for discount voucher and customer loyalty programme.
2. MCQ 2; 4; 11; 29
1. Impairment loss on an asset previously having surplus
1. LO6 Disclosure.
1. Output method and sum of year digit method
2. Cost of self-constructed asset (example: Roads Int. Ltd.).
3. Significant cost components (example: Ancient Waters Ltd.) with
note.
4. Fully depreciated asset discussion.
5. MCQ 25
1. MCQ 8; 25; 34.
2. Demand deposit
1. MCQ 22; 25.
1. Redemption.
2. TCI
3. Transaction costs.
4. MCQ 26
Accounting
and
reporting
concepts.
Umair Sheraz Utra, ACA
Regards:AWAIS Ali
Revision classes (CAF-05)
. Limitations of ratio analysis
1. Inflation may distort
2. Different accounting policies
3. The ratios are only as good
4. The accounting information
5. Changes in accounting policies from year to
6. Financial statements on which ratios are based only reflect the financial information but not the complete
picture of business conditions.
2. Some possible reasons of variations in different ratios
1.
Ratio name
ROCE
2.
ROE
3.
ROA
4.
Asset turnover
5.
Gross profit ratio
6.
Net profit ratio
7.
Debtor days
8.
Creditor days
9.
Inventory days
10. Working capital cycle
11. Current ratio
12. Quick ratio
13. Gearing ratio
14. Interest cover
Umair Sheraz Utra, ACA











High ratio
Higher profitability
Efficient funds management
Higher profitability
Efficient funds management
Higher profitability
Efficient asset management
Efficient utilization of asset
High productivity of asset
Increase in selling price
Reduction in cost
Undervaluation of opening stock
or overvaluation of closing stock
Low ratio
 Lower profitability
 Inefficient funds management
 Lower profitability
 Inefficient funds management
 Lower profitability
 Inefficient asset management
 Inefficient use of asset
 Low productivity


















Efficient operating expenses
Low finance cost
Inefficient collection
Longer credit periods
Less discounts offered
Late payments to supplier
Less credit worthiness
Less discounts availed
Inefficient inventory management
Lower sales
Lower inventory turnover
Poor control over debtors
Timely payments to suppliers
Better liquidity position
Larger inventories
Less credit purchase
Better liquidity position
Longer debtors credit period
 Higher debts
 Less risk shared by owner





















Uncontrolled expenses
High finance cost
Efficient collection
Shorter credit periods
More discounts offered
Timely payments to supplier
Credit worthiness
More discounts availed
Efficient inventory management
Higher sales
High inventory turnover
Better control over debtors
Late payments to suppliers
Financial liquidity
Lower inventories
Longer creditors credit period
Financial difficulty
Lower inventories
Shorter debtors credit period
Lower debts
more risk shared by owner








better solvent position
Lower profitability
More use of debts
Less credit worthiness
Less solvent business
Higher profitability
Less use of debts
Ability to take further debts
 Decrease in selling price
 Increase in cost
 Overvaluation of opening stock or
undervaluation of closing stock
Revision classes (CAF-05)
Example 1
Option accounted for as a separate performance obligation
An entity signed a contract selling a vehicle for Rs. 800,000. This contract includes a clause stating that if
this customer entered into a further contract to buy a trailer, the trailer s selling price would be Rs. 100,
000. The option expires on 28 February 20X1. The entity normally sells trailers for Rs. 250,000 but, as
part of a marketing campaign, it is offering trailers to the public for Rs. 180,000 during this period.
The customer paid and obtained control of the vehicle on 5 January 20X1 and then purchased the trailer
on 20 February 20X1 for cash.
Required: Show the journal entries for the above.
Example 2
Option involves customer loyalty programme (entity = principal)
An entity offers a customer loyalty programme (CLP) in which customers earn 1 loyalty point for every
Rs. 50 spent in the store. Each point may be redeemed for a Rs. 10 discount on future purchases at the
store. Sales during 20X1 by customers who had registered for the CLP totalled Rs. 500,000. The entity
estimates that 90% of these points will be redeemed.
Required: Show the journal entries:
a)
b)
c)
for 20X1 assuming that, by the end of 20X1, 2,000 of these points had been redeemed and that the
estimation that 90% of the points would be redeemed remained the same
for 20X2 assuming that, by the end of 20X2, a further 3,000 of these points had been redeemed and
that the estimation that 90% of the points would be redeemed remained the same
for 20X2 assuming that, by the end of 20X2, a further 3,000 of these points had been redeemed and
that the estimation that 90% of the points would be redeemed had changed to 95%.
Regards:AWAIS Ali
Umair Sheraz Utra, ACA