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  • Aafr Test-2 Q. Paper Mah Final PDF

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    This document contains a 50-mark class test on advanced accounting and financial reporting. It consists of 5 questions. Q1 asks about accounting for share appreciation rights according to IFRS 2. Q2 asks about accounting for share options granted to employees according to IFRS 2. Q3 asks about calculating amounts to record related to a defined benefit pension plan according to IAS 19. Q4 asks about accounting for a sale and leaseback transaction according to relevant IFRS standards. Q5 asks about calculating basic and diluted earnings per share for a company that underwent a rights issue according to relevant IFRS standards.

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    This document contains a 50-mark class test on advanced accounting and financial reporting. It consists of 5 questions. Q1 asks about accounting for share appreciation rights according to IFRS 2. Q2 asks about accounting for share options granted to employees according to IFRS 2. Q3 asks about calculating amounts to record related to a defined benefit pension plan according to IAS 19. Q4 asks about accounting for a sale and leaseback transaction according to relevant IFRS standards. Q5 asks about calculating basic and diluted earnings per share for a company that underwent a rights issue according to relevant IFRS standards.

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    4 views2 pages

    Aafr Test-2 Q. Paper Mah Final PDF

    Uploaded by

    Muhammad Abid Qazi
    This document contains a 50-mark class test on advanced accounting and financial reporting. It consists of 5 questions. Q1 asks about accounting for share appreciation rights according to IFRS 2. Q2 asks about accounting for share options granted to employees according to IFRS 2. Q3 asks about calculating amounts to record related to a defined benefit pension plan according to IAS 19. Q4 asks about accounting for a sale and leaseback transaction according to relevant IFRS standards. Q5 asks about calculating basic and diluted earnings per share for a company that underwent a rights issue according to relevant IFRS standards.

    Copyright:

    © All Rights Reserved
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    of 2

    The Professionals’ Academy of Commerce

    10 May, 2022
    1.5 hour, 50 Marks
    Class Test - 02 Sec (B)

    Advanced Accounting & Financial Reporting


    Q.1 PQR Ltd has granted 50 share appreciation rights to each of its 1000 employees on 1 January 2013 (in
    excess of Rs.22 per share). The rights are due to vest on 31 December 2016, with payment being made on
    31 December 2017. Assume at the end of each year that 75% of the awards vest and actually 75% vest.
    Shares prices were:
    Rs.
    01/01/2013 22
    31/12/2013 27
    31/12/2016 31
    31/12/2017 28
    Required:
    In accordance with IFRS 2, Share Based Payment;
    (i) What liability would be recorded on 31 December 2016 for the share appreciation rights?
    (ii) How would the settlement of the transaction be accounted for on 31 December 2017. (08)

    Q.2 Quality Ltd granted share options to its 300 employees on 1 January 2015. Each employee will receive
    1,000 share options provided they continue to work for Quality Ltd for 3 years from the grant date. The fair
    value of each option at the grant date was Rs. 122.
    The actual and expected staff movement over the 3 years to 31 December 2017 is provided below
    2015: 25 employees left and another 40 were expected to leave over the next two years.
    2016: A further 15 employees left and another 20 were expected to leave the following year
    2017: A further 18 employees left
    Required:
    Calculate the charge to Quality Ltd’s statement of profit or loss for the year ended 31 December 2016 in
    respect of the share options and prepare the journal entry to record this. (08)

    Q.3 Abrar Limited has implemented in full IAS19 ‘Employee Benefits’ in its financial statements.
    Rs. (000)
    Current service cost 5,000
    Interest cost 3,000
    Opening fair value of plan assets 40,000
    Interest income on plan assets 2,200
    Closing fair value of plan assets 45,000
    Opening present value of plan liabilities 42,000
    Closing present value of plan liabilities 44,500
    Past service cost (end of the year) 5,000
    Refund available 300
    Benefits paid during the year 10,000
    Contribution in plan assets 13,500

    Required:
    Calculate the amount to be charged to statement of comprehensive income and extract of statement of
    financial position. (07)
    Advanced Accounting & Financial Reporting |Page 2 of 2
    Q.4 On 1st January 2018, Mudasser Limited (ML) entered into a sale and lease back arrangement with Sarmaya
    Bank (SB) in respect to a machine. The details of machine sold and leased back are as under:
    Rs. in Million
    Carrying value 87
    Sale price to lessor 97
    Fair Market Value 119
    The Terms of the lease agreement are as follows:
    Lease Term 4 Years
    Annual Rental 22
    Implicit rate rate 10%
    Rental are paid in advance and the transfer of machine satisfies requirement of IFRS-15 to be accounted for
    as sale.
    Required:
    a) Prepare Journal entries in the books of ML to record above transaction on 1st January 2018. (04)
    b) Prepare relevant extracts of statement of financial position and comprehensive income and related
    notes for the year ended December 31, 2018. (14)

    Q.5 The profit after tax for Delta Limited for the year ended December 31, 2017 was Rs. 240 million. At
    January 01, 2017, the company had in issue 40 million equity shares and Rs. 100 million 6% convertible
    loan note. The loan note will mature in 2018 and will be redeemed at par or converted to equity shares on
    the basis of 25 shares for each Rs. 1,000 of loan note at the loan note holders' option.
    On April 01, 2017, Delta Limited made a fully subscribed rights issue of 1 new share for every 4 shares
    held at a price of Rs. 32 each. The market price of the equity shares of Delta Limited, just before the issue,
    was Rs. 42. The earnings per share (EPS) reported, for the year ended December 31, 2016, was Rs. 4.
    Applicable income tax rate is 30%.
    Required:
    Calculate the basic EPS for Delta Limited (including comparatives) and the diluted EPS (comparatives not
    required) that would be disclosed for the year ended December 31, 2017. (09)

    (The End)

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