Sok Chea - F3 Final Exam

1.Company M bought a machine for $5000 on 1 Jan 20x1, which had an expected useful life of four years and an expected residual value of $1000; the asset was to be depreciated on the straight-line basis. The firm's policy is to charge depreciation in the year of disposal. On 31 Dec 20x3, the machine was sold for $1600.

What amount should be entered in the 20x3 Statement of Profit or Loss and Other Comprehensive Income for Profit or Loss on Disposal?

2.       Complete the following statement by selecting the appropriate wording from the choice available.

When accounting for intangible assets using the revaluation model, movements in the carrying amount are…………………………

3. Dudu Purchased a patent on 30 Nov 20x3 for $25000, expect to use for next 10 years, after which it will be valueless. What is the value of the patent in SoFP at 30 Nov 20x5 according to IAS 38?

4.M paint shop has suffered bad publicity as a result of a customer claiming to be suffering from skin rashes as a result of using M’s paint. The customer launched a court action against M in Nov 20x3, claiming damage $5,000. M’s lawyer advised that the most probable outcome is M will have to pay $3,000.

What amount should M include as provision in his accounts for the year ended 31 Dec 20X3?

5.       An item of inventory was purchased for $500. It is expected to be sold for $1200 although $250 will need to be spent on it in order to achieve the sale. To replace the same item of inventory would cost $650. At what value should this item of inventory be included in the financial statements? (amount in $)

(a)  

6.In the statement of financial position at 31 December 20x5, Yanlin had net receivables of $12,000. During 20x6 Yanlin made sales on credit of $125,000 and received cash from credit customers amounting to $115,500. At 31 December 20x6, Yanlin decided to write off debts of $7,100 and increase the specific allowance for receivables by $950 to $2,100. What was the net receivables figure reported in Yanlin's statement of financial position at 31 December 20x6?

7.A business compiling its accounts for the year to 31 Jan each year pays rent quarterly in advance on 1 Jan, 1 Apr, 1 Jul, and 1 Oct each year. After remaining unchanged for some years, the rent was increased from $24,000/ year to $30,000/ year as from 1 Jul 20X0.

•Which of the following is the rent expense which should appear in the SoPL for year ended 31 Jan 20X1?

8.A trial balance of a business shows a total of debits of $347,800 and a total of credits of $362,350. Following an investigation, the following errors were identified.

1. A credit sale of $3,670 was incorrectly entered in the sales day book as $3,760.

2. A non-current asset with a carrying amount of $7,890 was disposed of for $9,000. The only accounting entry was to debit cash.

3. The allowance for receivables was increased from $8,900 to $10,200. The allowance account was debited in error.

After adjusting for the errors above, what is the balance on the suspense account?

9. The trial balance of Tirath does not balance. Which TWO of the following errors could explain this, assuming that Tirath maintains control accounts for receivables and payables within the double entry system?

1. The sales day book was undercast by $100.

2. Discounts received were credited to sales revenue account.

3. An opening accrual was ommitted from the rent account.

4. The debit side of the cash account was undercast.

10. At 1 January 20x8 Tom Co acquired 80% of share capital of Jerry Co for $100,000. At that date the share capital of Jerry Co Consisted of 50,000 equity shares of $1 each and its reserves were $30,000. At 31 December 20x9 the reserves of Tom Co and Jerry Co were as follows: Tom Co $400,000. Jerry Co $50,000. In the consolidated statement of financial position of Tom and its subsidiary Jerry at 31 December 20x9, what amount should apear for group reserve?