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Ifa-I Ass

This document contains an assignment on intermediate financial accounting from BSTL College in Hawassa, Ethiopia. It includes 4 problems and multiple choice questions. Problem 1 asks to calculate ending inventory values using LIFO and FIFO methods. Problem 2 identifies which costs would be included in inventories. Problem 3 provides advice on depreciation policies for different property, plant and equipment assets. Problem 4 discusses property, plant and equipment accounting.

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94 views

Ifa-I Ass

This document contains an assignment on intermediate financial accounting from BSTL College in Hawassa, Ethiopia. It includes 4 problems and multiple choice questions. Problem 1 asks to calculate ending inventory values using LIFO and FIFO methods. Problem 2 identifies which costs would be included in inventories. Problem 3 provides advice on depreciation policies for different property, plant and equipment assets. Problem 4 discusses property, plant and equipment accounting.

Uploaded by

natiman090909
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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BSTL COLLEGE HAWASSA

DEPARTMENT OF ACCOUNTING AND FINANCE


ASSIGNMENT ON THE COURSE: INTERMEDIATE FINANCIAL ACCOUNTING-I
COURSE INSTRUCTOR: TIBEBU YACOB (Msc & MA)
GROUP MEMBERS =Not More than 5 students
Copy from other students make both Groups Result Invalid
የሌሎች ተማሪዎች ቅጂ ሁለቱንም የቡድን ውጤት ልክ ያልሆነ ያደርገዋል

Problem 1:
Use the following information of Barken Co.
A company just starting business made the following four inventory purchases in June 2016:

June 1 150 units Birr 6.60/unit cost Birr. 990


June 10 200 units Birr. 6.30/unit cost 1,260
June 15 200 units Birr. 5.85/unit cost 1,170
June 28 150 units Birr. 5.20/unit cost 780
A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand.
Requirement (a): Using the periodic LIFO inventory method, the value of the ending inventory on June
30 is?
Requirement (b): Using the periodic FIFO inventory method, the amount allocated to cost
of goods sold for June is?
Problem 2:
Identify which of the following costs of a product manufacturer would be included in
inventories:
 Salaries of assembly line workers  Costs to ship raw materials from the
 Raw materials
supplier to the factory
 Salary of factory foreman
 Heating cost for the factory  Electricity cost for the factory
 Miscellaneous supplies used in  Salaries of the sales team
production process
 Salary of the CEO  Depreciation of factory machines
 Salaries of the factory’s janitorial  Property taxes on factory building
staff
 Discounts for early payment of raw
material purchases

Problem 3:
1) Universal Entrepreneurs Plc has the following items on its PPE list:
(i) $1,000,000 – the right to extract sandstone from a particular quarry.
Geologists predict that extraction at the present rate may be continued for ten years.
(ii) $5,000,000 – a freehold property, let to a subsidiary on a full repairing lease
negotiated on arm’s-length terms for 15 years. The building is a new one,
Erected on a Greenfield site at a cost of $4,000,000.
(iii) A fleet of motor cars used by company employees. These have been purchased
under a contract which provides a guaranteed part exchange value of 60% of
cost after two years ‘use.
(iv) A company helicopter with an estimated life of 150,000 flying hours.
(v) A 19-year lease on a property let out at arm’s-length rent to another company.
Required:
Advise the company on the depreciation policy it ought to adopt for each of the above
assets.
(c) The company is considering revaluing its interests in land and buildings, which comprise
freehold and leasehold properties, all used by the company or its subsidiaries.
Required:
Discuss the consequences of this on the depreciation policy of the company and any special
instructions that need to be given to the values.
Problem 4:
a) What is PPE (IAS 16)?
b) How the cost of PPE is determined (IAS 16 and IAS 23)?
c) How depreciation of PPE is computed (IAS 16)?
d) What are the regulations regarding carrying PPE at revalued amounts (IAS 16)?
e) Discuss why IAS 40 Investment Property was produced.
f) How to Value Real Estate Investment Property
MCQ
1) Assets classified as __________ in accordance with IAS 1 Presentation of Financial Stateme nts
_________ they meet the criteria to be classified as held for sale in accordance with IFRS 5.
A) Current; shall be reclassified as non -current assets if
B) Non-current; shall be depreciated if
C) Current; shall not be depreciated unless
D) Non-current; shall not be reclassified as current assets until
2) Under which circumstances shall an entity classify a non -current asset as held for sale?
A) If it’s carrying amount will be recovered principally thr ough continuing use rather than through a sale
B) If it’s carrying amount exceeds its market price
C) If its carrying amount will be recovered principally through a sale transaction rather than through
continuing use D) If its sale price exceeds its carrying amount
3) IFRS 5 provides unconditional requirement that the sale of the non -current asset held for sale should
be expected to qualify for recognition as a completed sale within one year from the date of
classification.
A) True B) False

4) It is a group of assets to be disposed of by sale or otherwise, together as a group in a single


transaction, and liabilities directly associated with those assets that will be transferred in the
transaction.
A) Disposal group. B) Discontinued operation. C) Noncurrent asset. D) Cash generating unit.
5) A noncurrent asset that is to be abandoned shall not be classified as held for sale because
A) The carrying amount is recovered principally through continuing use.
B) It is difficult to value.
C) It is unlikely that the noncurrent asset is sold within twelve months.
D) It is unlikely that there is an active market for the noncurrent asset.
6) Which of the following is a requirement for a component of an entity to be classi fied as discontinued
operation?
A) The activities must permanently cease prior to the financial statements being authorized for issue.
B) The component must be a reportable segment.
C) The asset must have been classified as held for sale in previous financial statements.
D) The component must have been a cash generating unit while being held for use.
7) Which of the following criteria does not have to be met in order for a n operation to be classified as
discontinued?
A) The operation shall represent a separate major line of business or geographical area.
B) The operation is part of a single plan to dispose of a separate major line of business or
geographical area.
C) The operation is a subsidiary acquired exclusively wi th a view to resale.
D) The operation must be sold within three months of the year -end
8) How should the assets and liabilities of a disposal group classified as held for sale be
reported in the statement of financial position?
A) The assets and liabilities shall be offset and presented as a single amount
B) The assets and liabilities shall be presented as a single amount and as a deduction from equity.
C) There should be no separate disclosure of assets and liabilities that form part of a disposal group.
D) The assets of a disposal group shall be reported separately as current assets and the liabilities of
the disposal group shall be reported separately as current liabilities
9. An entity recently moved to a new building. The old buildin g is being actively marketed
for sale and the entity expects to complete the sale in four months. Which statement is
INCORRECT regarding the old building?
A) IT will be reclassified as an asset held for sale.
B) It will be classified as a current asset.
C) It will no longer be depreciated.
D) It will be measured at historical cost.
10) An entity shall classify a noncurrent asset or disposal group as held for sale when
A) The carrying amount of the asset or disposal group is recovered throug h a sale transaction.
B) The carrying amount of the asset or disposal group is recovered through continuing use.
C) The noncurrent asset or disposal group is abandoned.
D) The noncurrent asset or disposal group is idle or retired from active use.
11) An entity shall measure a noncurrent asset or disposal group, classified as held for sale at.
A) Lower of carrying amount and FV less cost of disposal. B) Carrying amount.
C) Higher between FV less cost of disposal and value in use. D) FV less cost of disposal.
12) What is the treatment of any gain on a subsequent increase in the fair value less cost of disposal of a
noncurrent asset held for sale?
A) The gain shall be recognized but in retained earnings.
B) The gain shall not be recognized.
C) The gain shall be recognized but not in excess of the commutati ve impairment losses previously recognized.
D) The game shall be recognized in full.
13) Noncurrent asset or disposal group is classified as held for sale when the asset is
available for immediate sale and the sale is highly probable. For the sale to be highly probable,
which of the following statements is INCORRECT?
A) The asset must be actively marketed for sale at a reasonable price in relation to the current fair value.
B) An active program to locate a buyer and complete the plan must have been initiated.
C) The sale is expected to qualify for recognition as a completed sale within one year from the end of the reporting.
D) Management must be committed to a plan to sell the asset

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