Business School

Discipline: Intermediate accounting I

Fall Semester 2023: Final Examination
Duration: 150 minutes (2 hours and 30 minutes)
The overall score is 40 points

Lecturer Aktleuova K.

Dean of Business School

Mukashev E.

Approved by protocol №4 of the 24th of November, 2023

Examination instructions
1. Do not open this question paper until instructed by the Lecturer.
2. All books, materials, papers, notes, magazines, journals, bags, brief cases and other materials
must be placed in the designated area.
3. Candidates may not borrow anything from other candidates.
4. Taking to anyone other than the invigilator in the examination room is regarded as cheating.
5. No questions may be asked after the examination is commenced.
6. All communications, in any form or looking at each other’s papers are strictly prohibited and
is regarded as cheating.
7. This question paper must not be removed from the examination hall.
8. Time allowed: 2 hour 30 minutes
9. 9. Section A (10 marks) – objective test questions. ALL 5 MCQ questions are compulsory
Section B (10 marks) – objective case questions. ALL 5 MCQ questions are compulsory
Section C (20 marks) – one open ended question is compulsory
10. 10. You must round the answer to the nearest two digits.
11. 11. Cheating is an academic offence and will be investigated according to the University
procedures.
12. Zero grade for the course will be awarded in case of cheating.

I have read and understood the examination rules, and I take the full responsibility of the consequences
of violating these rules.

Signature: ________________
Section A - MCQ

1. Gilbert took out a $7.5 million 10% loan on 1 January 20X6 to build a new warehouse during the
year Construction of the warehouse began on 1 February 20X6 and was completed on 30
November 20X6. As not all the funds were needed immediately, Gilbert invested $2 million in
4.5% bonds from 1 January to 1 May 20X6. What are the total borrowing costs to be capitalized
in respect of the warehouse? Show your calculations.

___________

2. An entity purchased a property 15 years ago at a cost of $100,000 and have been depreciating it at
a rate of 2% per annum, on the straight line basis. The entity have had the property professionally
revalued at $500,000. What is the revaluation surplus that will be recorded in the financial
statements in respect of this property?
A. $400,000
B. $500,000
C. $530,000
D. $430,000

3. To which of the following items does IAS 41 “Agriculture apply”?

(i) A change in fair value of a herd of animals relating to the unit price of the animals.
(ii) Logs held in a wood yard.
(iii) Farm land which is used for growing vegetables.
(iv) The cost of developing a new type of crop seed which is resistant to tropical diseases.

A. All four
B. (i) only
C. (i) and (ii) only
D. (ii) and (iii) only

Section B - MCQ

The following scenario relates to questions 1–5

Flightline is an airline which treats its aircraft as complex non‐current assets, accounted for under the
historical cost model. The cost and other details of an aircraft are:
$000 Estimated life
Interior cabin fittings – installed 1 April 20X5 25,000 5 years
Engine – installed 1 April 20X5 9,000 36,000 flying hours

In the year ended 31 March 20X9, the aircraft flew for 1,200 hours for the six months to 30 September
20X8.

On 1 October 20X8 the aircraft suffered a ‘bird strike’ accident which damaged the engine beyond
repair. This was replaced by a new engine with a life of 36,000 hours at cost of $10.8 million.

Flightline’s year end is 31 March 20X9.

1. What is the depreciation to be charged in respect of the engine for the 6 month period to 1 October
20X8?
$__________ ,000
2. Which of the following explains the correct accounting treatment of the engine?
A. Write off the damaged engine, capitalize the new engine and depreciate over 24,000 hours
B. Treat the $10.8 million as a repair to the damaged engine and continue to depreciate the engine
as in the first 6 months
C. Capitalize $6 million to replace the damaged engine, expense the other $4.8 million
D. Write off the damaged engine, capitalize the new engine and depreciate over 36,000 hours

3. A wing was also damaged, but was repaired at a cost of $3 million. The accident also caused
cosmetic damage to the exterior of the aircraft which required repainting at a cost of $2 million.

Identify the correct treatment for the $3 million repair costs to the wing and the $2 million repainting
of the aircraft
Capitalize Expense
$3 million repair of the wing
$2 million repainting of the exterior

4. As the aircraft was out of service for some weeks due to the accident, Flightline took the
opportunity to upgrade its cabin facilities at a cost of $4.5 million. This did not increase the
estimated remaining life of the cabin fittings, but the improved facilities enabled Flightline to
substantially increase the air fares on this aircraft.

What is the carrying amount of the cabin fittings as at 31 March 20X9?

A. $8,600,000
B. $8,000,000
C. $5,000,000
D. $7,250,000

Section C – open ended questions

1. The following trial balance relates to LLP “Timur” at 31 March 2021:

DR CR
$000 $000
Equity shares of $1 each 50,000
Other components of equity 15,000
10% loan note (note iii) 10,000
Retained earnings at 1 April 2020 25,400
Intangible assets – at cost (note (ii)) 55,000
Plant and equipment – at cost (note (ii)) 66,500
Accumulated depreciation – 1 April 2020 – intangible assets 7,000
– plant and equipment 22,500
Investments at fair value through profit or loss (note (iii)) 22,500
Inventory at 31 March 2021 48,000
Trade receivables 50,700
Bank 10,500
Trade payables 42,000
Revenue 300,000
Cost of sales (note 1) 154,000
Distribution costs 30,400
Administrative expenses 31,000
Dividend paid 8,000
Loan note interest paid 400
Investment income 1,500
Income tax expenses 9,000
Current tax 12,600
486,000 486,000

The following notes are relevant:

(i) Non‐current assets:
The company use strait-line depreciation/amortization method for its intangible assets and
Plant & equipment. Useful life of intangible assets is 10 years, while for plant & equipment
it is 25 years.
No depreciation/amortization has yet been charged on any non‐current asset for the year
ended 31 March 2021. Depreciation, amortization and impairment charges are charged as
following: cost of sales - 70%, administrative expense - 30%.

(ii) The investments at fair value through profit or loss had a fair value of $18 million on 31
March 2021. There were no purchases or disposals of any of these investments during the
year.
(iii) The 10% loan note was issued on 1 April 2019 and it is repayable in five years.

Required:
A. Prepare the statement of profit or loss for LLP “Timur” for the year ended 31 March 2021,
B. the statement of financial position for LLP “Timur” as at 31 March 2021.

2. Preparation of a Statement of Cash Flows and a Statement of Financial Position. Chekov

Corporation’s statement of financial position at the end of 2021 included the following
items.

The following information is available for 2022.

1. Net income was $55,000.
2. Equipment (cost $20,000 and accumulated depreciation $8,000) was sold for $9,000.
3. Depreciation expense was $4,000 on the building and $9,000 on equipment.
4. Patent amortization was $2,500.
5. Current assets other than cash increased by $25,000. Current liabilities increased by $13,000.
6. An addition to the building was completed at a cost of $27,000.
7. A long-term investment in debt securities was purchased for $16,000.
8. Bonds payable of $50,000 were issued.
9. Cash dividends of $25,000 were declared and paid.
10. Treasury shares were purchased at a cost of $11,000.

Instructions
Prepare a statement of cash flows for 2022.