QUESTION PAPER

Teacher: SIR ADNAN /SIR UMAIR

SECTION: CAF Subject: CAF-05 Test 4
Student Name: ________________ MARKS : 19
DATE: 14-11-2022 TIME :42 Minutes

Question-1
Bahbood Limited (BL) is a Pakistani company that sells bed sheets and fine quality linen dresses. BL incurred
the following transactions in foreign currency:
a) Sold a batch of bed sheets to a British company for GBP 50,000. The order from the British company
was received on 25 April 2015, the sheets were dispatched on 15 August 2015
The bed sheets cost the Pakistani company PKR 40,000.
The British company paid Bahbood Limited as follows:
 GBP 25 000 on 31 October 2015
 GBP 25 000 on 31 January 2016
b) Bahbood Limited imported a container of fine quality linen dresses from a Malaysian company for a
total invoice price of MYR 100,000. The dresses were ordered from the Malaysian company on 25
April 2015, were shipped on 15 August 2015 (customs, insurance and freight basis: CIF) and arrived
in Pakistan on 25 August 2015.
The dresses are to be sold via one of its retail outlets. On 31 December 2015, 80% of the dresses had
been sold (at a mark-up of 20% on cost).
Bahbood Limited paid the Malaysian company on 31 January 2016.
c) On 1 July 2015, Bahbood Limited granted a loan of MYR 20,000 to a foreign company based in
Malaysia, Tinghu Limited.
 The loan is repayable in 10 instalments of MYR 2,500 each (including both principal and
interest), payable annually in arrears.
 Effective Interest rate is 4.28% p.a.

The spot and average exchange rates on the respective dates were as follows:
Date Spot Rate Spot Rate
PKR : GB POUND MYR : PKR
25 April 2015 2.00:1 1.00:1.5
1 July 2015 2.10:1 1.00:1.2
15 August 2015 2.20:1 1.00:1.4
25 August 2015 2.50:1 1.00:1.45
31 October 2015 2.65:1 1.00:1.4
31 December 2015 2.40:1 1.00:1.3
31 January 2016 2.90:1 1.00:1.25
30 June 2016 - 1.00:1.5
31 December 2016 2.80:1 1.00:1.75
Average rates
01 July 2015 to 31 December 2015 - 1.00:1.4
01 January 2016 to 30 June 2016 - 1.00:1.6
01 July 2016 to 31 December 2016 - 1.00:1.7
Required:
Show all related journal entries in the books of Bahbood Limited for its years ended 31 December 2015 and
2016. (16)

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 QUESTION PAPER

Question-2
Solve the MCQ’s:
1. A gain or loss arising on the re-translating of a monetary item should be:
A. Recognised in profit or loss in the period that it arises
B. Not necessary to recognized
C. Recognised in profit and loss in the next year

2. IAS21 make a distinction between:

A) Monetary items, such as trade payables and trade receivables, and non-monetary items,
such as non current assets and inventory
B) Tangible items, such as trade payables and trade receivables, and non-monetary items,
such as non current assets and inventory
C) Intangible items, such as trade payables and trade receivables, and non-monetary items,
such as non current assets and inventory

3. Monetary item definition is:

A. Units of inventory held, or assets and liabilities to be received or paid (in cash), in a fixed
number of currency units
B. Units of payable held, or assets and liabilities to be received or paid (in cash), in a fixed
number of currency units
C. Units of currency held, or assets and liabilities to be received or paid (in cash), in a fixed
number of currency units

(3)

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