Roll No.

_______________________
Membership No ________________

Sample Paper 1
Evaluation Test Booklet
(Code IEC)
Total No. of Questions : 46
Total no. of printed pages : 22
Maximum Marks : 100
Time allowed : 3 Hours
All the questions are compulsory, Question no. 1 to 40 carry 1.5 marks each, Question no. 41 to 45 carry 5
marks each and Question No. 46 Carry 15 marks.
Instructions
Please read the instructions carefully before solving the question paper.
1.

Roll No. and Membership No. be written with blue/black ball pen correctly in the space provided on the cover
page and nowhere else.

2.

Check that Booklet contains 46 questions. In case of any discrepancy, inform the invigilator immediately.

3.

This paper has three parts. Part A contains 40 questions carrying 1.5 marks each. Part B contains 5 questions
carrying 5 marks each. Part C contains a case study carrying 15 marks. All question are compulsory and there
is no negative marking.

4. Candidates should not use pencil to write the answers.

5. Unless otherwise stated, your answer should be based on IAS/IFRS issued by IASB as applicable on 1-1-2011.
6. Your answers should be clear and to the point. No marks shall be awarded for vague answers.
7.

There will be options specified under each objective type question you are required to choose answer which
you deems to be the most appropriate and /or correct and write legibly in capital letter in the box provided in
front of options.

8.

No over writing or erasing is allowed, if any correction or change in the answer is to be made, put X on the
answer given and write the answer outside the relevant box.

9.

If a candidate writes his roll no. or makes any identification mark inside the answer book, it will tantamount
to unfair means.

10. The candidate should not open the booklet until instructed by the invigilator.
11. Questions from 41 to 46 are subjective types and should be
answer within the space provided for the same.
12. Use of mobile phone is not allowed during the exam.
13. While handing over question booklet, please ensure that you
have obtained the signature of the invigilator in the Admit
Card as a Proof of having submitted / returned the same.

14. The candidates should not leave the examination hall without
returning the booklet to the invigilator

Marks awarded
(In
figures)__________________________
Marks awarded
(in words)__________________________
Signature of
the Examiner________________________

PART A
Choose the most appropriate option and write your answer in the space provided in the box with each question.
Q 1.

Q 2.

Q 3.

The implementation of which of the following IFRS/IFRIC has been deferred while notifying Ind-AS:
(a)
IFRS 4
(b)
(c)

IFRS 6
IFRIC 4

(d)

All of the above

Which of the following IAS/IFRIC has not been converged with in Ind-AS notified by MCA:
(a)

IAS 26

(b)
(c)

IAS 41
IFRIC 15

(d)

All of the above

An entity buys a plot of land for the construction of commercial real estate. It designs an office block to
build on the land and submits the designs to planning authorities in order to obtain building permission.
The entity markets the office block to potential buyers and signs with one of them a conditional agreement
for the sale of land and the construction of the office block. The buyer cannot put the land or the
incomplete office block back to the entity. The entity receives the building permission and all agreements
become unconditional. The entity is given access to the land in order to undertake the construction and
then constructs the office block. The entity separates the agreement into two components:
(A)

A component for sale of land

(B)

A component for construction of the office block

Having regard to IFRIC 15, how should the entity recognize revenue for the two components

Q. 4

(a)
(b)

Based on IAS 11 for both the components

Based on IAS 18 for both the components

(c)
(d)

Apply IAS 18 to sale of land and IAS 11 to construction of office block

Apply IAS 11 to sale of land and IAS 18 to construction of office block

Company P the parent is holding 100 % shares in subsidiary S .

P has sold off 60 % of its holding in S for consideration of .........Rs. 600
Fair value of retained portion ( 40 % ) in S is ...............................Rs. 400
Carrying Value of identifiable net assets of subsidiary S was ..Rs. 600
Good will was.....................................................................................Rs. 100
Gain or loss on interest sold and retained non-controlling interest.
(a)
(b)
(c )

Rs. 360
Rs. 240
Rs. 280

(d)

Q5.

Rs. 300

At the beginning of the year, X Ltd. domiciled in UK has a $ 1 million foreign currency loan. The interest
rate on the loan is 4% p.a. payable at the end of the period.An equivalent borrowing in sterling would carry
an interest rate of 6% p.a.The spot rate at the beginning of the year is Sterling 1=$1.55 and at the end of the
year is Sterling 1=$ 1.50.
What part of the exchange difference can be treated as interest by X Ltd.:
(a)
(b)
(c)
(d)

Q 6.

In which of the following situation it would be considered that an entity has retained substantially all the
risks and rewards of ownership are:
(a)
(b)
(c)
(d)

Q 7.

Rs. 21,506
Rs. 12,043
Rs. 9,463
None of the above

an unconditional sale of a financial asset;

a sale of a financial asset together with a put or call option that is deeply out of the money
a securities lending agreement;
None of the above

An asset with a cost of Rs. 100 and a carrying amount of Rs. 80 is revalued to Rs. 150. No equivalent
adjustment is made for tax purposes. Cumulative depreciation for tax purposes is Rs. 30 and the tax rate is
30%. If the asset is sold for more than cost, the cumulative tax depreciation of Rs. 30 will be included in
taxable income but sale proceeds in excess of cost will not be taxable.
If the entity expects to recover the carrying amount by using the asset, the deferred tax liability will be :
(a)
(b)
(c)
(d)

Q 8.

Rs. 24
Rs. 45
Rs. 80
None of the above

The following two statements are made in the context of IAS 20:
I.

The benefit of a government loan at a below-market rate of interest is treated as a government

grant.

II.

The benefit of the below-market rate of interest shall be measured as the difference between the
initial carrying value of the loan determined in accordance with IAS 39 and the proceeds received.

State which of the following is correct:

(a)
(b)
(c)
(d)

I is correct, II is incorrect
II is correct, I is incorrect
Both I & II are incorrect
Both I and II are correct

Q 9.

Which of the following statement is correct:

(a)
(b)
(c)
(d)

Q. 10

If a sale and leaseback transaction results in a finance lease, any excess of sales proceeds over the
carrying amount is recognised as income immediately by a seller-lessee.
If a sale and leaseback transaction results in an operating lease and if the transaction is at fair
value, any profit or loss shall be recognized immediately.
If a sale and leaseback transaction results in an operating lease and if the sale price is below fair
value, any profit or loss will be recognised over the lease term.
All of the above

Entity A is adopting IFRS on 1st April,2010. It has opted for the voluntary exemption for complying with
the requirements of the IFRIC 1.
The Entity had purchased this equipment on 1st April,2005.
The useful life of equipment is 20 years. ( 2005-2025)
The entity is bound to incur decommissioning cost of Rs. 1,000, after useful life of the equipment.
The discounting rate is 5 %. P V factors for 15 years and 20 years respectively, are 0.4810 and 0.3768.
Which of the following journal entries passed by the Entity A on the date of transition is correct ?
a)

Q11.

Property Plant & Equipment

De-commissioning Liability

Dr
Cr.

377
377

b) Property Plant & Equipment

De-Commissioning Liability

Dr.
Cr.

481
481

c)

Property Plant & Equipment

Retained Earnings
De-Commissioning Liability

Dr.
Dr.
Cr.

377
104
481

d) Property Plant & Equipment

Retained Earnings
Accumulated Depreciation
De-commissioning Liability

Dr.
Dr.
Cr.
Cr.

377
198
94
481

On March 18, 2009, the management of an entity authorises financial statements for issue to its
supervisory board. The supervisory board is made up solely of non-executives and may include
representatives of employees and other outside interests. The supervisory board approves the financial
statements on March 26, 2009. The financial statements are made available to shareholders and others on
April 1, 2009. The shareholders approve the financial statements at their annual meeting on May 15, 2009
and the financial statements are then filed with a regulatory body on May 17, 2009.
Based on IAS 10, what is the date on which the financial statements will be considered to have been
authorised for issue:
(a)
(b)
(c)
(d)

March 18, 2009

March 26, 2009
May 15, 2009
None of the above

For Q 12 & 13, refer to the following facts:

A construction contractor has a fixed price contract for Rs. 9,000 to build a bridge. The initial amount of
revenue agreed in the contract is Rs. 9,000. The contractors initial estimate of contract costs is Rs. 8,000.
It will take 3 years to build the bridge.
By the end of year 1, the contractors estimate of contract costs has increased to 8,050.
In year 2, the customer approves a variation resulting in an increase in contract revenue of 200 and
estimated additional contract costs of 150. At the end of year 2, costs incurred include 100 for standard
materials stored at the site to be used in year 3 to complete the project.
The contractor determines the stage of completion of the contract by calculating the proportion that
contract costs incurred for work performed to date bear to the latest estimated total contract costs. A
summary of the financial data during the construction period is as follows:
Year 1 Year 2 Year 3
Initial amount of revenue agreed in contract

9,000

9,000

9,000

200

200

Total contract revenue

9,000

9,200

9,200

Contract costs incurred to date

2,093

6,168

8,200

Contract costs to complete

5,957

2,032

Total estimated contract costs

8,050

8,200 8,200

950

1,000 1,000

26%

74% 100%

Variation

Estimated profit
Stage of completion

The stage of completion for year 2 (74%) is determined by excluding from contract costs incurred for work
performed to date the 100 of standard materials stored at the site for use in year 3.
Q12.

The amount of revenue to be recognised in year 2 is:

(a)
(b)
(c)
(d)

Q13.

The amount of profit to be recognised in year 3 is :

(a)
(b)
(c )
(e)

Q14.

Rs. 4,468
Rs. 6,808
Rs. 9,200
None of the above

Rs. 1,000
Rs. 1,050
Rs. 260
None of the above

Which of the following may be a qualifying asset for the purpose of IAS 23:
(a)
(b)
(c)
(d)

inventories
intangible assets
investment properties
all of the above

Q 15.

Which of the following is an investment property:

(a)
(b)
(c)
(d)

Q 16.

An entity is computing value in use for the purpose of impairment testing. It expects that a cash flow of
Rs.1,000 may be received in one year, two years or three years with probabilities of 10 per cent, 60 per
cent and 30 per cent, respectively. The expected present value in that situation will be:
(a)
(b)
(c)
(d)

Q 17.

costs of employee benefits arising directly from bringing the asset to its working condition;
costs of testing whether the asset is functioning properly.
costs of conducting business in a new location or with a new class of customer;
all of the above

Cash flows arising from which of the following activities of a financial institution may be reported on a net
basis in a cash flow statement:
(a)
(b)
(c)
(d)

Q.19

Rs. 95.24
Rs. 892.36
Rs. 950.45
None of the above

Which of the following expenditure should not form part of cost of intangible asset:
(a)
(b)
(c)
(d)

Q18.

land held for long-term capital appreciation rather than for short-term sale in the ordinary course
of business.
land held for a currently undetermined future use.
a building owned by the entity (or held by the entity under a finance lease) and leased out under
one or more operating leases.
all of the above

cash receipts and payments for the acceptance and repayment of deposits with a fixed maturity
date;
the placement of deposits with and withdrawal of deposits from other financial institutions; and
cash advances and loans made to customers and the repayment of those advances and loans.
all of the above

In the context of IAS 33, following are the two statements :

1) If the bonus issue, stock dividend, and other similar events occurred after the balance sheet date but
before the financial statements are authorized, then the earnings per share calculations should reflect
these changes. This applies also to prior periods and to diluted earnings per share.
2) Basic and diluted earnings per share are also adjusted for the effects of errors and adjustments
resulting from changes in accounting policies, accounted for retrospectively
Which of the following combinations is correct ?
Statement 1

Statement 2

a)

False

False

b)

False

True

Q. 20.

c)

True

True

d)

True

False

On 30th March 2010 , Dil Bahar Enterprises recognised revenue for goods sold for a total sales price of
Rs. 7,20,000.
These goods are to be used by the customer on a long-term basis. The contract of sales obliges Dil Bahar
Enterprise to provide two years servicing to the customer for no additional payment.
The normal selling price of the goods without any agreement to provide servicing would have been Rs.
6,40,000 A service contract of the type being provided by Dil Bahar Enterprises to this customer would
normally produce service revenue of Rs. 80,000 per annum.
In the context of IAS 18, split identifiable transaction, total consideration has to be split into Revenue from
sale of goods and service contract.
Dil Bahar Enterprises has been given following options given by the accountant. Which of them is correct
from the perspective of IAS 18. ?
Ignore discounting.
Revenue
a)
b)
c)
d)

Q21.

6,40,000
5,76,000
7,20,000
8,00,000

1,60,000
1,44,000
Nil
Nil

Under IFRS 8, if revenues from transactions with a single external customer amount to 10 per cent or more
of an entitys revenues, the entity shall disclose the following:
(a)
(b)
(c)
(d)

Q.22

Deferred Income

the total amount of revenues from each such customer

identity of the customer
both (a) and (b)
neither (a) nor (b)

Entity A purchases 100 shares of Entity B with a quoted price of CU 150 each for at total consideration of
CU 15,000. In addition, Entity A incurs transaction costs in the form of broker fees of CU 150 to acquire
the shares. Entity A is contemplating to classify them either as Fair Value through Profit & loss
(FVTPL)Account or As Available for Sale. Which of the following combination of initial measurement is
correct for above categories.
Classification as ------
a)
b)
c)
d)

Q 23.

FVTPL

Available for sale

15,000
15,150
15,000
15,150

15,150
15,000
15,000
15,150

An entity shall measure a non-current asset (or disposal group) classified as held for distribution to owners
at:
(a)

Its carrying amount

(b)
(c)
(d)
Q 24.

An entity shall not apply IFRS 4 to:

(a)
(b)
(c)
(d)

Q25.

Fair value less costs to distribute

lower of its carrying amount and fair value less costs to distribute.
higher of its carrying amount and fair value less costs to distribute.

product warranties issued directly by a manufacturer, dealer or retailer

employers assets and liabilities under employee benefit plans
direct insurance contracts that the entity holds (ie direct insurance contracts in which the entity is
the policyholder).
all of the above

An entity grants 100 share options to each of its 500 employees. Each grant is conditional upon the
employee working for the entity over the next three years. The entity estimates that the fair value of each
share option is Rs.15.
On the basis of a weighted average probability, the entity estimates that 20 per cent of employees will
leave during the three-year period and therefore forfeit their rights to the share options.The remuneration
expense for year 3 will be:
(a)
(b)
(c)
(d)

Q26.

Which of the following is not a financial instrument?

(a)
(b)
(c)
(d)

Q27.

Inter-company trading balances with subsidiaries, associates and joint ventures

Finance lease receivables (recognized by a lessor)
Contingent consideration in a business combination (acquirer only)
Pre- payments- goods and services.

What are the characteristic of Derivatives?

1.
Value changes in response to changes in specified underlying price/ index
2.
requires no or little net investment
3.
Settled at a future date
(a)
(b)
(c)
(d)

Q28.

Rs. 2,00,000
Rs. 4,00,000
Rs. 6,00,000
None of the above

1 & 3 are correct and 2 is false

1 & 2 are correct and 3 is false
2 & 3 are correct and 1 is false
1, 2 & 3 are correct

A owns a generating facility with a book value of Rs.55 million. B owns 60% voting rights in a power
distribution company C. On 1-4-2010,A sold its generating facility to B and received in exchange Bs
interest in C. The fair value of the generating facility on the date of exchange is Rs.150 million and the net
assets of C on that date is Rs.200 million. Assuming this transaction amounts to business combination
under IFRS 3,compute the goodwill or bargain purchase in the books of A and settlement gain or loss, if
any. A has decided to measure non controlling interest at fair value.
(a)
goodwill Rs. 30 million and settlement gain Rs. 95 million

(b)
(c)
(d)

Q29.

A Ltd. acquired 30% stake in B Ltd. and has a significant influence. The cost of the investment was
Rs.2,50,000.The net assets of B Ltd. are Rs.5,00,000 at the date of acquisition of stake by A Ltd. The fair
value of the assets is Rs. 6,00,000. The difference is attributed to the fact that fair value of Property, Plant
& Equipment (PPE) is higher than the book value by Rs. 1,00,000.The remaining useful life of PPE is 10
years.
The post acquisition PAT of B Ltd. is Rs.1,00,000.It has also paid a dividend of Rs. 9,000.B Ltd. has also
recognized exchange losses of Rs. 20,000 in Other Comprehensive Income.
Compute the value of A Ltd. interest in B Ltd. at the end of the year.
(a)
(b)
(c)
d)

Q 30.

Rs. 100 & Rs. 25

Nil & Nil
Nil & Rs. 25
None of the above

A grocery retailer operates a customer loyalty programme. It grants programme members loyalty points
when they spend a specified amount on groceries. Programme members can redeem the points for further
groceries. The points have no expiry date. In one period, the entity grants 100 points. Management expects
80 of these points to be redeemed. Management estimates the fair value of each loyalty point to be Re. 1
and defers revenue of Rs.100. At the end of the first year, 40 of the points have been redeemed in exchange
for groceries. How much revenue should be recognised by the grocery retailer in year 1:
(a)
(b)
(c)
(d)

Q 33.

Item by item basis

Class of asset basis
Property, plant and equipment as a whole
There is no such option and fair value is mandatory

An entity recognises a liability of Rs.100 for accrued product warranty costs. For tax purposes, the
product warranty costs will not be deductible until the entity pays claims. The tax rate is 25%. The tax base
and deferred tax asset respectively will be:
(a)
(b)
(c)
(d)

Q32.

Rs. 2,50,000
Rs. 2,68,300
Rs. 2,71,300
None of the above

Under IFRS 1, cost or fair value option is available for property, plant and equipment on:
(a)
(b)
(c )
(d)

Q31.

bargain purchase Rs. 30 million and settlement gain Rs. 95 million

bargain purchase Rs. 95 million and no settlement gain or loss
none of the above

Rs. 50
Rs. 40
Rs. 100
None of the above

On 1 January 2010, an entity acquired goods for sale in the ordinary course of business for Rs.100,000,
including Rs.5,000 refundable purchase taxes. The supplier usually sells goods on Cash. However, as a
special promotion, the purchase agreement for these goods provided for payment to be made in full on 31
December 2010. In acquiring the goods transport charges of Rs.2,000 were incurred: these were due on 1
January 2010.
An appropriate discount rate is 10 per cent per year.

The entity shall measure the cost of inventories at:

(a)
Rs.102,000
(b)
Rs.97,000
(c)
Rs.88,364
(d)
None of the above
Q 34.

Which of the following statements is true?

(a)
(b)
(c)
(d)

Q35.

Which of these considerations would not be relevant in determining the entitys functional currency?
(a)
(b)
(c)
(d)

Q36.

The currency that influences sales prices for goods and services
The currency that mainly influences labor, material and other costs of providing goods and
services
The most financially stable currency that is frequently used in business transactions
The currency in which funds from financing activities are generated

In which of the following cases, an entity has retained substantially all the risks and rewards of ownership
(a)
(b)
(c)
(d)

Q37.

An entity must correct a prior period error retrospectively in the first financial statements
authorised for issue after its discovery.
To the extent practicable, an entity must correct a prior period error prospectively in the first
financial statements authorised for issue after its discovery.
When an entity discovers an error in its financial statements of a prior period, it must immediately
withdraw those financial statements and reissue them with the error corrected.
To the extent practicable, an entity must correct a prior period error retrospectively in the first
financial statements authorised for issue after its discovery.

a sale and repurchase transaction where the repurchase price is a fixed price or the sale price plus
a lenders return;
a sale of a financial asset together with a total return swap that transfers the market risk exposure
back to the entity;
a sale of short-term receivables in which the entity guarantees to compensate the transferee for
credit losses that are likely to occur
all of the above

Given below are few statements in respect of subsidiaries, associates and joint ventures:
(i)

(ii)

(iii)

(iv)

The equity method is a method of accounting whereby the investment is initially recognised at
cost and adjusted thereafter for the post-acquisition change in the investors share of net assets of
the investee. The profit or loss of the investor includes the investors share of the profit or loss of
the investee.
Joint control is the contractually agreed sharing of control over an economic activity, and exists
only when the strategic financial and operating decisions relating to the activity require the
unanimous consent of the parties sharing control (the venturers).
Separate financial statements are those presented by a parent, an investor in an associate or a
venturer in a jointly controlled entity, in which the investments are accounted for on the basis of
the direct equity interest rather than on the basis of the reported results and net assets of the
investees.
Significant influence is the power to govern in the financial and operating policy decisions of the
investee.

Which of the above statements are correct?

(a)

(i),(ii) , (iii) & (iv)

10

(b)
(c)
(d)
Q38.

A Ltd. sells 85% interest in B Ltd., its wholly owned subsidiary. After the sale, A Ltd. recognizes its
residual interest in B Ltd. as available for sale investment.Net assets of B Ltd. before the sale of stake are
Rs.5,00,000 and the cash proceeds from the sale of 85% interest are Rs. 7,50,000.The fair value of the
remaining stake held by A Ltd. is Rs. 1,30,000. What is the amount of gain on loss of control over B Ltd.
that should be recognized by A Ltd.?
(a)
(b)
(c )
(d)

Q39.

(i) and (ii)

(i) and (iii)
(i),(ii) and (iii)

Rs. 3,25,000
Rs. 3,80,000
Nil
None of the above

An entity is the defendant in a patent infringement lawsuit. The entitys lawyers believe there is a 30 per
cent chance that the court will dismiss the case and the entity will incur no outflow of economic benefits.
However, if the court rules in favour of the claimant, the lawyers believe that there is a 20 per cent chance
that the entity will be required to pay damages of Rs.200,000 (the amount sought by the claimant) and an
80 per cent chance that the entity will be required to pay damages of Rs.100,000 (the amount that was
recently awarded by the same judge in a similar case). Other outcomes are unlikely.
The court is expected to rule in late December 2010. There is no indication that the claimant will settle out
of court. A 7 per cent risk adjustment factor to the probability-weighted expected cash flows is considered
appropriate to reflect the uncertainties in the cash flow estimates. An appropriate discount rate is 10 per
cent per year.
At 31 December 2009 the entity recognises a provision for the lawsuit measured at:
(a)
(b)
(c)
(d)

Q 40.

Rs.100,000.
Rs.89,880.
Rs.81,709
None of the above

Y Ltd. buys a printing machine which was priced at Rs. 50 lakhs. If Y Ltd. pays within 30 days of delivery
they will receive a 8% discount on the invoice price. Y Ltd. plans to take advantage of the discount. The
supplier also charged an assembling fee of Rs.5 lakhs (to which the discount does not apply). At what
amount should Y Ltd. initially recognise this machine?
a)
b)
c)
d)

Rs. 50 lakhs
Rs. 55 lakhs
Rs. 51 lakhs
None of the above

11

PART B
The answer to each question should not exceed 5 to 8 sentences.
Q.41 In the context of IAS 1, define re-classification adjustments and also give 2 examples of reclassification
adjustments.
5 marks
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_______________________________________________________________________________________
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Q42.
An entity issues 2,000 convertible bonds at the start of year 1. The bonds have a three-year term,
and are issued at par with a face value of Rs.1,000 per bond. Interest is payable annually in arrears at a
nominal annual interest rate of 6 per cent. Each bond is convertible at any time up to maturity into 250
ordinary shares. When the bonds are issued, the prevailing market interest rate for similar debt without
conversion options is 9 per cent. You are requested to compute the amount of :
(a)

liability component

(b)

equity component

5 Marks

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12

Q43. In the context of IFRS 3 , The acquirer has to measure the identifiable assets acquired and the
liabilities assumed at their acquisition-date fair values. IFRS 3 provides limited exceptions to its
recognition and measurement principles.
In this context, briefly describe the cases which are the exceptions to both the recognition and
measurement principles?
5 Marks
_______________________________________________________________________________________
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Q44. Explain the concept of Effective Interest Rate with the help of an example.
5 Marks
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13

Q. 45 Under what circumstances the carrying amount of deferred tax assets and liabilities may
change even though there is no change in the amount of the related temporary differences?
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14

Case Study
Q. 46. Draft accounts for Speakwell a listed company, for the year ended 31 December 2010 include the
following amounts:
Description

CU

Revenue
Cost of sales and expenses, (including interest payable of CU 25,000)

525,000
410,000

-----------

Profit before tax

Tax

115,000
34,500

----------

Profit after tax

Dividends Distributed

80,500
32,000

Additional information
(1) The company has been following local GAAP until 2009. On and from 2010 it decided to prepare
accounts according to IFRSs. In light of differences between the rules in local GAAP and those in IAS 38
Intangible Assets the directors have decided to change the companys accounting policy for development
costs from one of capitalisation and amortisation to immediate write-off of all expenditure as incurred. At
present, development costs are included in the draft figures as follows:
Description
As at 1 January 2010
Cost Incurred \ Amortisation
Balance .

Cost
50,000
8,000
--------58,000
=====

Amortisation
20,000
5,000
-------25,000
=====

(2) On 1 January,2010 the company revalued its building which had originally cost CU 30,000 to CU
58,000. Accumulated depreciation at the date of revaluation was CU 12,000. At the date of revaluation, the
remaining useful economic life of the building was twelve years and depreciation has been charged on the
revalued amount for the year on straight line basis. Ignore impact of deferred tax.
(3) The Cost of sales include following expenses on account of a contract received by the Speakwell on 1
January,2010. This contract is for two years, and the company has completed 50 % work of the contract and
expects to finish the contract well on time by the end of 2011. The Contract was awarded for a total sum of
CU 100,000. Revenue figure given in the draft account of the Speakwell includes revenue from contract to
the tune of CU 40,000, which the accountant feels should be recognised as per the invoice raised by the
Speakwell on the customer on account of the said contract.

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Following expenses has been debited to cost of sales.

CU
Labour Cost

5,000

Material

10,000

Machinery exclusively used for the contract

(useful life 2 years)

30,000

Total

-----------45,000
=======

The Speakwell expects to incur following cost on account of the contract during the year 2011.
CU
Labour cost

10,000

Material

15,000
-----------25,000
=======

Total

(4) At 1 January,2010 capital and reserves comprised

CU

Ordinary share capital

Revaluation surplus (relating to land)
Retained earnings

320,000
50,000
278,000
----------Total 6,48,000
======
For the year ended 31 December 2010 ,based on information available , you are requested to :(i) Prepare Statement of Comprehensive Income
(ii) Statement of changes in equity.
Give suitable working notes.
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ROUGH SPACE

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