ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

(Department of Commerce)

FINANCIAL REPORTING-I (8567)

CHECKLIST

SEMESTER: SPRING, 2020

This packet comprises the following material:

1. Textbook (one)
2. Assignment No. 1, 2
3. Assignment Forms ( 2 sets )

In this packet, if you find anything missing out of the above mentioned material,
please contact at the address given below:

The Mailing Officer

Allama Iqbal Open University
Sector H-8, Islamabad
Ph: 051-9057611-12

Muhammad Munir Ahmad

(Course Coordinator)

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 ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
(Department of Commerce)
[

WARNING
1. PLAGIARISM OR HIRING OF GHOST WRITER(S) FOR SOLVING
THE ASSIGNMENT(S) WILL DEBAR THE STUDENT FROM AWARD
OF DEGREE/CERTIFICATE, IF FOUND AT ANY STAGE.
2. SUBMITTING ASSIGNMENT(S) BORROWED OR STOLEN FROM
OTHER(S) AS ONE’S OWN WILL BE PENALIZED AS DEFINED IN
“AIOU PLAGIARISM POLICY”.
Course: Financial Reporting-I (8567) Semester: Spring, 2020
Level: M. Com / BS Total Marks: 100
Pass Marks: 50
ASSIGNMENT No. 1
Q. 1 Write a detailed note on the followings: (20)
a. Difference between IAS and IFRS
b. Component of Financial Statements with reference to IAS 1

Q. 2 Describe and differentiate between two methods of presentation of cash flow

statement with reference to IAS 7. Your answer should be with appropriate
example(s) (20)

Q.3 Choochoo Limited bought a train for Rs. 1,000,000 on 01 January 2018, in cash. It
is considered to have two significant parts, the costs of which have been estimated
as follows:
· Engine: Rs. 250,000
· Carriages: Rs. 550,000
The balance of the train is constituted by various moving parts, non-moving parts and
chairs in some of the carriages. These remaining parts are individually insignificant.
Required: (With reference to Property, Plant and Equipment IAS 16)
a) Show the journal entry to record the purchase of the train.
b) Present the train in Choochoo Limited's detailed statement of financial
position on the date of acquisition. (20)

Q.4 Bilal Limited owns a bus that has a carrying amount of Rs. 80,000 as at 1 January
2019. This bus is depreciated on the straight-line method to a nil residual value
and had a remaining useful life of 10 years on 1 January 2019. A major inspection
of this bus was performed on 1 October 2019 at a cost of Rs. 20 000.

Required:
Show the journal entry relating to the major inspection and present the bus in the
detailed statement of financial position of Mushtaq Limited as at 31 December 2019. (20)

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Q.5 A Private Limited Co. bought a special bread-making plant on 1 January 2016,
details of which follow: (20)
Purchase price (including Tax of 17%) 570,000
Import duties - non-refundable 100,000
Installation costs 30,000
Fuel (incurred when transporting the plant to the factory) 45,000
Administration costs 10,000
Staff party to celebrate the acquisition of the new plant 14,000
Staff training 12,000
Testing to ensure plant fully operational before start of production 10,980
Proceeds from sale of samples and by-products made during testing 13,000
Advertising of the 'special bread' to be made by the new plant 50,000
Initial operating loss 35,000

The initial operating loss was incurred as a result of having to dump unsold 'special
bread' at sea since the advertising had not yet created sufficient demand. The company is
registered as a 'Sales Tax vendor'.

Required
Calculate the cost to be capitalized to the plant account

GUIDELINES FOR ASSIGNMENT # 1

You should look upon the assignments as a test of knowledge, management skills, and
communication skills. When you write an assignment answer, you are indicating your
knowledge to the teacher:

 Your level of understanding of the subject;

 How clearly you think;
 How well you can reflect on your knowledge & experience;
 How well you can use your knowledge in solving problems, explaining situations,
and describing organizations and management;
 How professional you are, and how much care and attention you give to what you do.

To answer a question effectively, address the question directly, bring important related
issues into the discussion, refer to sources, and indicate how principles from the course
materials apply. The student must also be able to identify important problems and
implications arising from the answer.

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 ASSIGNMENT No. 2
Total Marks: 100
Pass Marks: 50
This assignment is a research-oriented activity. You are required to obtain information
from a business/commercial organization and prepare a report of about 1000 words on
the issue allotted to you to be submitted to your teacher for evaluation.

You are required to select one of the following issues according to the last digit of your
roll number. For example, if your roll number is P-3427182 then you will select issue # 2
(the last digit): -

ISSUES:
0- Presentation of financial statements: structure and content: A Study of Pakistani
Firms with reference to IAS 1
1- Recording inventory movement: periodic versus perpetual reference to IAS 2
2- Impact of International Accounting Standard 1 (IAS 1) on Corporate Financial
Reporting on Listed firms in Pakistan
3- Measurement of inventories of any trading business in Pakistan at year-end with
reference to IAS 2
4- Measurement: cost formulas (inventory movements) with reference to IAS 2
5- Revenue Recognition: from Sales and services, earned and unearned revenue with
reference to IAS 18
6- Sales income and interest income, royalty income, dividend income with reference
to IAS 18
7- Events after the reporting period with reference to IAS 10
8- Material errors that occurred in a prior period(s) and Correction of a material
error(s) occurring in a prior period(s)
9- A Comprehensive Study on International Accounting Standard 10 (IAS 10)

The report should follow the following format:

i. Title page
ii. Acknowledgements
iii. An abstract (one-page summary of the paper)
iv. Table of contents
v. Introduction to the issue (brief history & significance of topic assigned)
vi. Practical study of the organization (with respect to the topic)
vii. Data collection methods
viii. Conclusion (one-page brief covering important aspects of your report)
ix. Recommendations (specific recommendations relevant to issue assigned)
x. References (as per APA format)
xi. Annexes (if any)

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GUIDELINES FOR ASSIGNMENT # 2:
 1.5-line spacing
 Use headers and subheads throughout all sections
 Organization of ideas
 Writing skills (spelling, grammar, punctuation)
 Professionalism (readability and general appearance)
 Do more than repeat the text
 Express a point of view and defend it.

WORKSHOPS
The workshop presentations provide students opportunity to express their communication
skills, knowledge & understanding of concepts learned during practical study assigned in
assignment # 2.
You should use transparencies and any other material for effective presentation. The
transparencies are not the presentation, but only a tool; the presentation is the
combination of the transparencies and your speech. Workshop presentation
transparencies should only be in typed format.
The transparencies should follow the following format:
1) Title page
2) An abstract (one-page summary of the paper)
3) Introduction to the issue (brief history & significance of topic assigned)
4) Practical study of the organization (with respect to the issue)
5) Data collection methods
6) Conclusion (one-page brief covering important aspects of your report)
7) Recommendations (specific recommendations relevant to topic assigned)

GUIDELINES FOR WORKSHOP PRESENTATION:

 Make eye contact and react to the audience. Don't read from the transparencies or
from report, and don't look too much at the transparencies (occasional glances are
acceptable to help in recalling the topic to cover).
 A 15-minute presentation can be practiced several times in advance, so do that until
you are confident enough. Some people also use a mirror when rehearsing as a
substitute for an audience.

WEIGHTAGE OF THEORY & PRACTICAL ASPECTS IN ASSIGNMENT # 2

& WORKSHOP PRESENTATIONS
Assignment # 2 & workshop presentations are evaluated on the basis of theory & its
applicability. The weightage of each aspect would be:
Theory: 60%
Applicability (practical study of the organization): 40%

Note: Assignments and presentation carry 300 Marks:

Assignment 01 100 Marks

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 Assignment 02 (Submission) 100 Marks
Assignment 02 (Presentation) 100 Marks

COURSE OUTLINES
Financial Reporting I- 8567
UNIT 1 Regulatory Framework for Financial Reporting in Pakistan
1.1 The regulatory system
1.2 Standards setting process
1.3 Conceptual framework
1.4 Objectives of financial reporting
1.5 Users of financial statements
1.6 Qualitative characteristics
1.7 Elements of financial statements
1.8 True and fair view presentation
UNIT 2 Presentation of Financial Statements (IAS) 1
2.1 Financial statements and their components
2.2 General features of financial statements
2.3 Structure of financial statements
2.4 Contents of financial statements
2.5 Disclosure requirements of IAS 1
UNIT 3 Inventory (IAS) 2
3.1 Accounting for inventory under IAS 2
3.2 Measurement of inventories
3.3 Inventory valuation methods
3.4 Net Realizable Value
3.5 Recognition as an expense
3.6 Disclosures Requirements
UNIT 4 Accounting Policies, Changes in Accounting Estimates and Errors
(IAS) 8
4.1 IAS 8 and accounting policies
4.2 Accounting polices
4.3 Accounting estimates
4.4 Prior period errors
4.5 Underlying assumption
4.6 Disclosure Requirements
UNIT 5 Statement of Cash Flows (IAS) 7
5.1 IAS 7 and cash flow statement
5.2 Presentation of a statement of cash flow
5.3 Calculation and reporting of net cash flow from operating
activities
5.4 Reporting of cash flow from investing & financing activities
5.5 Comparison of the statement of cash flows and income statement
5.6 Interpretation of statement of cash flows

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 5.7 Disclosures requirements

UNIT 6 Events after the Reporting Period (IAS) 10

6.1. Understanding events and their accounting
6.2. Adjusting events and their accounting
6.3. Non-adjusting events and their accounting
6.4. Calculation of impact on financial statements
6.5. Disclosures requirements
UNIT 7 Property, Plant and Equipment (IAS) 16
7.1. Property plant and equipment
7.2. Depreciation of non-current assets
7.3. Calculation of depreciation
7.4. Revaluation of non-current assets
7.5. Disclosures requirements
UNIT 8 Revenue Recognition (IAS) 18
8.1. IAS 18 and revenue recognition
8.2. Understanding revenues and their types
8.3. Rules for recognizing revenues
8.4. Financial statements and revenues recognition
8.5. Disclosure requirements
UNIT 9 Borrowing Costs (IAS) 23
Borrowing costs and their types
9.1 Recognition of borrowing costs
9.2 Commencement, Suspension and Cessation of Capitalization
9.3 Financial statements and borrowing costs
9.4 Disclosures requirements
9.5 Disclosures requirements

Recommended Books (Latest Editions)

1. IRFS/IAS s issued by IASB, London.
2. Financial Accounting published by ICMAP, Karachi
3. Gripping IFRS by ICAP, Karachi.
4. Insight into IFRS by Hafiz Mohaiydin Tahir, PAC, Lahore.

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