BPP Revision Kit

INVENTORY - IAS 2

124- B

IAS 2
Rule
value Inventory at lower of :

Cost
or
NRV ( Estimated Selling price - Est. Selling cost)

A 1000

Cost $ 40
Or NRV $ 47

Valuation (1000 x $40)

B 2500

Cost $ 15
Or NRV $ 21
Valuation (2500 x $15)

C 800
Cost $ 23
Or NRV $ 22
Valuation (800 x $22)

132-

W32 12000

Cost 6 Recorded
or
NRV
Est Selling price 5.4
less Est. SC -0.81 (15% x $5.4)
4.59

Valuation ( 12000 x $4.59)

Alternatively
Valuation at year end (BEFORE)
less
Adjustment (12000 x (6-4.59)
Valuation at year end (AFTER)

Provisions , Contingent Liabilities & Contingent Assets - IAS 37

115-
Provision
Legal or Constructive obligation exists
Arising out of past events
Probable that cash outflow will occur in the future

If these conditions meet then Co. has to recognise a liability

Dr
Expense X
Provision - Liability

Claim 400,000 < 50%

Legal fee 100,000 Only record this fig

122-
Outcome Probability
No fault $ - 80%
Repairs $ 2,000,000 15%
Replaced $ 6,000,000 5%

Or

Note :
Contingent Liabilities and Contingent Assets : Definition

Earnings per share IAS 33

188- $ 1.35

Basic EPS = Profit after tax - Redeemable Preference Dividends

= 7,600,000
 5,642,857

= 1.35

WANS
Date
1-Jan-08
Rights shares ( 1:5) 1-Jun-08 1,000,000

Rights fraction = Market value

T.E.R.P

= $ 1.80
$ 1.75

Equity shares 5 $ 1.80

Rights shares 1 $ 1.50
6

T.E.R.P $ 10.50
6

$ 1.75

189-
Basic EPS = Profit after tax - Redeemable Preference Dividends

= 12,000,000
24,000,000

= 0.50
or 50 c

WANS
Date
1-Oct-06 ($7.5 million / $0.5)
Full market price 1-Jan-07 4,000,000
Bonus issues (1:3) 1-Jan-07 6333333

Bonus fraction

1 +3 = 4
 (4/3)

Revenue - IFRS 15

77-

Cost incurred to date 740,000

Add : profits to date 231000
less : Amounts Invoiced -700,000
Contract Asset 271,000

Profit to date

Revenue 2,800,000
less
Cost to date -740,000
Estimated cost -1,400,000
less
Expected losses 0
Profit 660,000

x 35% 231000

80-
Cost incurred to date 48,000
Add : profits to date 8400
less : Amounts Invoiced -50,400
Contract Asset 6,000

Profit to date

Revenue 120,000
less
Cost to date -48,000
Estimated cost -48,000
less
Expected losses 0
Profit 24,000

x 45% 8400

85-
Cost incurred to date 1,600,000
Add : profits to date 360,000
less : Amounts Invoiced -1,800,000
Contract Asset 160,000

Profit to date

Revenue 5,000,000
less
Cost to date -1,600,000
Estimated cost -2,400,000
less
Expected losses 0
Profit 1,000,000

x 36% (w) 360,000

% completion Amount Invoiced x 100

Contract price

1,800,000 x 100
5,000,000

= 36%

Note :
Revise the Question from Class notes

Leases - IFRS 16

Lease payments that are made in arrears is Examinable

Difference between operating and finance lease is Examinable
Lessee Measurment will be Examinable

Operating Lease vs

Profit & Loss

Average expense ✓
Depreciation of RTUA -
Interest cost (Finance cost) -

SOFP
Prepayments ✓
Cash paid ✓
RTUA -
Lease or Assciated liability ✓
105-

Finance Lease

Rights to Use an Asset

PV -LP
Add Payments at the beg
Less Incentives received
Add Initial
Cost of direct cost /
dimantling
Add removing
Initial Cost 15,462,000

Depreciate the asset

using Initial Cost
UEL (5 years) or Lease term (3 years)

15,462,000
3

5,154,000
31-Mar-08 ( Cost (A) - Acc Dep) 10,308,000

Lease Liability

At the start
PV LP 15,462,000
Add Residual
Probable value
purchase 0
Add option 0
Add Termination penalties 0
15,462,000

Opening Effective Int. rate (8%)

31-Mar-08 15,462,000 1236960
31-Mar-09 10,698,960 855916.8
31-Mar-10 5,554,877 444390.144

31-Mar-08

P/L SOFP

Finance cost 1236960 Non current liability

Current

Total Charge to P/L

Depreciation 5,154,000
Add: Interest cost 1,236,960
6,390,960

112-
Lease Liability

At the start
PV LP
Add Residual
Probable value
purchase
Add option
Add Termination penalties
240,200

Opening Effective Int. rate (12%)

31-Dec-06 240,200 28824
31-Dec-07 169,024 20282.88
31-Dec-08 89,307 10716.8256

31-Dec-07
Finance cost $ 20,283

114-
Right to Use an Asset

PV -LP 100650
Add Payments at the beg
Less Incentives received
Add Initial
Cost of direct cost /
dimantling
Add removing
Initial Cost 100,650

Depreciate the asset

using Initial Cost
UEL (10 years) or Lease term (10 years)

100,650
10

10,065
x 9/12 7,548.75
31-Dec-10 ( Cost (A) - Acc Dep) 93,101

Lease Liability
At the start
PV LP 100,650
Add Residual
Probable value
purchase 0
Add option 0
Add Termination penalties 0
100,650

Opening Effective Int. rate (8%)

31-Dec-10 100,650 8052
31-Dec-11 93,702 7496.16
31-Dec-12 86,198 6895.8528

31-Dec-10

P/L SOFP

Finance cost 8052 Non current liability

Current

Total Charge to P/L

Depreciation 7,549
Add: Interest cost (8052 x 9/12) 6,039
13,588
S

$ 40,000

$ 37,500

$ 17,600

$ 95,100

$ 55,080
 72000

-16920
$ 55,080

Cr
P/L
X SOFP - CL

EV (Outcome x Probability)
$ -
$ 300,000
$ 300,000
$ 600,000

$0.6 million

eference Dividends > Earnings

Weighted avergae no of shares
 (w)

Total shares (A) Period O/S (B) Rights Frac. Adj ( C) Total WANS (A x B x C )
5,000,000 (5/12) (1.80/1.75) 2,142,857
6,000,000 (7/12) 3,500,000
5,642,857

$ 9.00
$ 1.50
$ 10.50

eference Dividends > Earnings

Weighted avergae no of shares

(w)

Total shares (A) Period O/S (B) Bonus Frac. Adj ( C) Total WANS (A x B x C )
15,000,000 (3/12) (4/3) 5,000,000
19,000,000
25,333,333 (9/12) 19,000,000
24,000,000
(w)
Finance Lease

✓
✓

-
✓
✓
✓ (Split it into Non current and Current Liability)
A

Use lowest fig

per year P/L- Expense

NBV SOFP - NCA

Interest paid Closing Liability

-6,000,000 10,698,960
-6,000,000 5,554,877
-6,000,000 -733 Assume it zero

5,554,877
5,144,083
10,698,960
(Initial liability - Deposit)

Interest paid Closing Liability

-100,000 169,024
-100,000 89,307
-100,000 24 Assume it zero

Use lowest fig

(1 Apr - 31 Dec ) P/L- Expense

NBV SOFP - NCA
Interest paid Closing Liability
-15,000 93,702
-15,000 86,198
-15,000 78,094

86,198
7,504
93,702