FACR MCQ’S

1. Identify the best option from the following in which IAS 12 does not apply:

a. Accounting of income taxes

b. Temporary differences arising from investment tax credits
c. Accounting of foreign taxes
d. Accounting for government grants

REFERENCE:
(https://www.bdo.ca/getattachment/31fbf9f8-5780-4921-99d6-
e9924b84a504/attachment.aspx/)

2. _______________ is defined as original and planned investigation undertaken with

the prospect of gaining new scientific or technical knowledge and understanding.

a. Research (FROM GOOGLE) (https://www.acowtancy.com/textbook/acca-

fa/d6-intangible-non-current-assets-and-amortisation/research-costs-and-
development-costs/notes)
b. Entity-specific value
c. Development
d. Monetary assets

3. In which of the following situations an entity shall not prepare financial

statements on a going concern basis?

a. The destruction of a major production plant by a fire after the reporting period
b. Management has intended to liquidate the entity (FROM GOOGLE)
(https://www.ifrs.org/content/dam/ifrs/publications/pdf-
standards/english/2021/issued/part-a/ias-10-events-after-the-reporting-
period.pdf)
c. Announcing or commencing the implementation of a major restructuring
d. Abnormally large changes after the reporting period in asset prices or foreign
exchange rates

4. Identify the best option from the following which does not represent example
of events that may fall under the definition of ‘restructuring’ as per IAS 37’
Provisions, Contingent Liabilities and Contingent Assets.

a. Sale or termination of a line of business

b. The closure of business locations in a country or region or the relocation of
business activities from one country to another
c. Appointment of new management personnel at strategic level (FROM
GOOGLE) (https://www.masb.org.my/article.php?id=144&page=6)
d. Fundamental reorganizations that have material effect on the nature and focus
of the entity’s operations
5. __________ is referred as ownership interest of investor-owned entities and
owner, member or participant interest.

a. Non-controlling interest
b. Equity interest (FROM GOOGLE)
(https://www.legislation.gov.uk/eur/2009/495/annex)
c. Mutual entity
d. Contingent consideration

6. An acquirer at the acquisition date recognize goodwill acquired in a business

combination as an asset. Goodwill is to be accounted as follow:

a. Write off against retained earnings

b. Recognize as an intangible asset and annually test for impairment or
more frequently if impairment is indicated
c. Recognize as an intangible asset and impairment test when a trigger event
occurs
d. Recognize as an intangible asset and amortize over its useful life

REFERENCE:
(https://ahmadladhani.files.wordpress.com/2008/12/wiley-ifrs-practical-
implementation-guide-and-workbooktqw_darksiderg.pdf)

7. The commencement date for capitalization of borrowing cost is the date when
the entity first meets all of the following conditions, except _______________.

a. Activities necessary to prepare the qualifying asset for its intended use
or sell are compete (FROM GOOGLE)
(https://www.hkicpa.org.hk/ebook/HKSA_Members_Handbook_Master/vo
lumeII/hkas23revised.pdf)
b. It undertakes activities that are necessary to prepare the asset for its intended
use or sell
c. It incurs expenditures for the asset
d. It incurs borrowing cost
8. Deferred tax liabilities are the amounts of income taxes payable in future
periods in respect of ______________.

a. Taxable temporary difference (FROM GOOGLE)

(https://www.accaglobal.com/gb/en/student/exam-support-
resources/professional-exams-study-resources/strategic-business-
reporting/technical-articles/deferred-tax.html)
b. The carry forward of unused tax losses
c. The carry forward of unused tax credits
d. Deductible temporary difference

9. Which one of the following information is not required to be disclosed as per

IAS 38 ‘Intangible Assets’?

a. Fair value of similar intangible assets used by its competitors (FROM

GOOGLE)
(https://www.transtutors.com/questions/which-of-the-following-
disclosures-is-not-required-by-ias-38--569459.htm)
b. Useful lives of intangible assets
c. Reconciliation of carrying amount at the beginning and end of the year
d. Contractual commitments for the acquisition of intangible assets

10. Categories the following descriptions whether they are to be included in the
calculation of the non-current assets, investment income or finance cost.
i. Interest earned on the investment of surplus borrowings before the
construction period begins
ii. Interest incurred during the construction period
iii. Interest incurred after the construction period has ended
iv. Interest earned on the investment on the surplus of borrowings
during the construction period (03)

11. Select the best option from the following which represents example of a non-
adjusting event:

a. The discovery of fraud or error that show the financial statements are
incorrect
b. Decline in fair value of investments between the end of a reporting
period and the date when the financial statement are authorized for issue
(FROM GOOGLE)
(https://www.ifrs.org/content/dam/ifrs/publications/pdf-
standards/english/2021/issued/part-a/ias-10-events-after-the-reporting-
period.pdf)
c. The settlement of a court case after the reporting period that confirms the
company had a present obligation
d. The determination after the reporting period of the cost of assets purchased,
or the proceeds from assets sold, before the end of the reporting period
12. Which one of the following does not represent components of tax expense
(income) as per IAS 12, Income Taxes?

a. Any adjustment recognized in the period for deferred tax of prior period
b. Current tax expense (income)
c. The amount of deferred tax expense (income) relating to the organization and
reversal of temporary differences
d. The amount of deferred tax expense (income) relating to changes in tax
rates or the imposition of new taxes (FROM GOOGLE)
(https://www.saipa.co.za/wp-content/uploads/2018/08/Deferred-tax-
lecture-slides.pdf)

13. If the total external revenue reported by operating segments constitutes less than
__________ of the company’s revenue, additional operating segments shall be
identified as reportable segments until criteria is met.

a. 45 percent b. 50 percent
c. 60 percent d. 75 percent

REFERENCE:
(https://kb.icai.org/pdfs/PDFFile5b28d4e7a56bf4.00600523.pdf)

14. Wahaj Limited accounting record shows the following details for the year ended
March 31, 2020.

Rupees
Income tax payable for the year 120,000
Over provision in relation to the previous year 9,000
Opening provision for deferred tax 5,200
Closing provision for deferred tax 6,400

The income tax expense that will be shown in the Statement of Profit or Loss the year
ended March 31, 2020 is _____________.

a. Rs. 99,400 b. Rs. 140,600

c. Rs. 122,200 d. Rs. 116,200

15. Rs. (000)

Net credit sales 20,000
Trade Receivables-closing 6,000
Trade Receivables-opening 10,000
Purchases (on credit) 16,000
Trade Payables (closing) 7,600
Trade Payables (opening) 8,000

For the purpose of Statement of Cash Flows under direct method ______________
will be the payment to supplier.

a. Rs. 1.8 million b. Rs. 8 million

c. Rs. 8.2 million d. Rs. 15.6 million
16. On July 1, 2019, Kinza Limited (KL) issued 50,000, redeemable preference shares
of Rs. 10 with a coupon rate at 8% at par. They are redeemable at a premium, which
gives them an effective finance cost of 12% per annum. The amount of non-current
liability that would be reported on Statement of Financial Position of KL as at June
30, 2020 is ____________.

a. Rs. 520,000 b. Rs. 540,000

c. Rs. 560,000 d. Rs. 500,000

17. On January 1, 2019 Zafar Limited (ZL) started construction of a building, which
will have an estimated useful life of 30 years. It purchased the property for Rs. 10
million. The construction of the building cost Rs. 8 million. Company borrowed Rs.
50 million at 9% interest on January 1, 2019 for financing this project, which will be
repaid on June 30, 2020. The construction of the building was completed on October
31, 2019 and it was brought into use on January 1, 2020. The total amount to be
included in the cost of building as at December 31, 2019 is __________.

a. Rs. 68 million b. Rs. 21.75 million

c. Rs. 22.5 million d. Rs. 18 million

18. On July 1. 2019 Habib Limited (HL) entered into a lease arrangement to lease an
item of plant for 5 years. The implicit rate of interest of the lease is 10% and Rs. 12
million will be paid as annual rent on June 30 each year for five years. The present
value of the annual rental payment amounted to Rs. 46 million. _________ will be the
current lease liability in HL’s Statement of Financial Position as at June 30, 2020:

a. Rs. 8.14 million b. Rs. 38.6 million

c. Rs. 12 million d. Rs. 30.46 million

19. The Conceptual Framework describes the objectives and the concepts for general
purpose financial statements and other financial reporting. Explain the purpose of
Conceptual Framework (03)

20. Following are the details of non-current assets owned by Arshad Limited (AL):

Asset Date acquired Cost Useful life

Head office January 1, 2011 20 million 18
Factory January 1, 2015 6 million 10

The company decided to revalue its head office and factory for the first time at
December 31, 2019. A surveyor valued the head office at Rs. 14 million and factory
at Rs. 4 million. The total revaluation gain or loss to be recorded in the other
comprehensive income of AL is __________.

a. Rs. 5 million b. Rs. 4 million

c. Rs. 10 million d. Rs. 18 million
21. On July 1,2019 Bilal Limited (BL) owned a building having carrying amount
of Rs. 8 million and estimated useful life of 20 years under the cost model. On
January 1, 2019 the company decided to sell the property and classified it as
‘held for sale’. On June 30, 2020 fair value less cost to sell the building amounted
to Rs. 7.91 million. The carrying value of the building in BL’s Statement of
Financial Position as at June 30, 2020 is __________________.

a. Rs. 7.6 million b. Rs. 7.5 million

c. Rs. 7.8 million d. Rs. 7.91 million

22. Other costs are included in the cost of inventories only to the extent that they
are incurred in bringing the inventories to their present location and condition.
There are certain types of other costs that are excluded from the costs of
inventories enlist them. (03)

23. Saad Limited has inventory on hand at December 31, 2019 having cost of Rs.
500,000 that it expects to sell in the ordinary course of business for Rs. 600,000.
In order to sell the inventory, the company expects to incur selling costs Rs.
50,000 and expects to incur further cost of Rs. 60,000 to put this inventory into a
saleable condition. The possible written down value of inventory will be
____________

a. Rs. 110,000 b. Zero

c. Rs. 10,000 d. Rs. 490,000

24. Falcon Limited was incorporated on January 1, 2016 and purchased

following non-current assets:

Cost Useful life

Rs. ‘000’ Years
Building 30,000 15
Plant and Machinery 20,000 10
Furniture and fixtures 7,000 7

On January 1, 2019 the company reviewed the useful lives of its non-current
assets for building, plant and machinery and furniture and fixtures as 10 years, 7
years and 5 years, respectively. Revised depreciation of the non-current assets of
Falcon Limited for the year ended December 31, 2019 would be __________.

a. Rs. 5.2 million b. Rs. 4.4 million

c. Rs. 5 million d. Rs. 15 million
25. Omega Limited purchased a property for Rs. 18 million on January 1, 2016.
The land element of the purchase amounted to Rs. 3 million. The expected useful
life of the building was estimated to be 50 years. On December 31, 2017 the
property was revalued to Rs. 21 million, of which the land element was Rs. 3.72
million and the building amounted to Rs. 17.28 million. On December 31, 2019
the property was sold for Rs. 20.4 million. The gain or loss on disposal of
property that would be reported in the Statement of Profit or Loss for the year
ended December 31, 2019 is ______________.

a. Rs. 120,000 Gain b. Rs. 3,720,000 Loss

c. Rs. 3,000,000 Loss d. Rs. 400,000 Gain

26. Farooq Limited purchased a new building amounted to Rs. 10 million on

January 1, 2018. The estimated useful life of building is estimated to be 60 years.
On June 30, 2019 the company rented out this building to a third party on a short
term lease. The company uses fair value model for its investment properties. At
June 30, 2019 the fair value of the property was Rs. 12 million and at December
31, 2019 it was Rs. 12.5 million. The total net amount to be recorded in the
Statement of Profit or Loss in respect of the building for the year ended
December 31, 2019 is _____________.

a. Net income 2,000,000 b. Net income Rs. 416,667

c. Net income Rs. 500,000 d. Net income 2,500,000

27. Tax planning opportunities are actions that the entity would take in order to
create or increase taxable income in a particular period before the expiry of a tax
loss or tax credit carryforward. Enlist the ways in which taxable profit may be
created or increased. (04)

28. The following information has been extracted from the records of Affan
Limited, pertaining to financial year ended March 31, 2020:

1. The company has been sued for the non-payment of end service
compensation and gratuity to 6 employees who were terminated without
giving any notice. The claim amounts to Rs. 3 million. The lawyer of the
company is of the view that the company would have to pay the displaced
employees, but the estimate of the amount that would be payable if
plaintiff succeeds against the company is Rs. 2 million.

2. The company is facing litigation due to an alleged breach of contract. The

contract contains a clause that prescribes damages of Rs. 4 million in case
of default. The management has assessed 60% probability that the
damages will have to be paid.

Required:

Discuss how each of the above matter should be dealt with in the financial
statements of Affan Limited for the year ended March 31, 2020. (05)
29. A non-current asset held for sale should be measured of ________________.

a. The higher of the asset’s carrying amount when originally classified as held for
sale and its fair value less costs to sell.
b. The asset’s carrying amount when originally classified as held for sale, less any
accumulated depreciation since that date
c. Fair value less costs to sell.
d. The lower of the assets carrying amount when originally classified as
held for sale and its fair value less costs to sell. (FROM MOCK)
 M4 Financial Accounting And Corporate
Reporting MCQ’S
1. ________________ is defined as original and placed investigation undertaken with
the prospect of gaining new scientific or technical knowledge and understanding.

a. Monetary assets
b. Development
c. Entity-specific value
d. Research (FROM ICMA ORIGINAL BOOK CHAPTER NO 11 PAGE NO 239)

REFERENCE:
Research is original and planned investigation undertaken with the prospect of
gaining new scientific or technical knowledge and understanding.

2. An impairment loss on a revalued asset is recognized in ___________ to the extent

that the impairment loss does not exceed the amount in the revaluation surplus for that
same asset.

a. Other Comprehensive income (FROM GOOGLE PAGE NO 16 Indian

Accounting Standard (Ind AS) 36 Impairment of Assets) URL is
(https://www.mca.gov.in/Ministry/pdf/Ind_AS36.pdf) (Point No 61)
b. Statement of profit or loss
c. Statement of cash flows
d. Statement of financial position

REFERENCE:
61 An impairment loss on a non-revalued asset is recognised in profit or loss.
However, an impairment loss on a revalued asset is recognised in other
comprehensive income to the extent that the impairment loss does not exceed the
amount in the revaluation surplus for that same asset. Such an impairment loss
on a revalued asset reduces the revaluation surplus for that asset.

3. Deferred tax liabilities are the amounts of income taxes payable in future periods
in respect of ___________.

a. The carry forward of unused tax losses.

b. The carry forward of unused tax credits
c. Taxable temporary difference (FROM ICMA ORIGINAL BOOK CHAPTER
NO 17 PAGE NO 379)
d. Deductible temporary difference

REFERENCE:
Deferred tax liabilities are the amounts of income taxes payable in future periods
in respect of taxable temporary differences.
4. Waqas Limited issued Rs. 1 million 5% loan notes on January 1, 2019, incurring,
issue cost amounted to Rs. 30,000. The loan notes are redeemable at a premium. The
effective rate of interest is 8% per annum. The finance cost to be shown in the
Statement of Profit or Loss for the year ended December 31, 2019 would be
___________.

a. Rs 50,000 b. Rs. 970,000

c. Rs. 77,600 d. Rs. 30,000

REFERENCE:

B/f = Rs 1million – Rs 30,000 = Rs 1,000,000 – Rs. 30,000 = Rs. 970,000

Year B/f Interest (8%) Payment (5%) C/f

2019 970,000 77,600 (50,000) 997,600
2020 997,600 79,808

Question is talking about finance cost for 2019 so it is 77,600. If he ask for 2020,
then it will be 79,808.

5. Domination of management by a single person or small group of persons without

compensating controls is a fraud risk factor. Which of the following factor may include as
an indicator of dominant influence exerted by a related party?

(i) Significant transactions are referred to the related party for final approval.
(ii) Transactions under contracts whose terms are changed before expiry.
(iii) Transactions involving the related party are rarely independently reviewed and
approved.

a. Option (i), (ii) and (iii) are correct b. Option (i) is correct
c. Option (ii) and (iii) are correct d. Option (i) and (iii) are correct

REFERENCE:
REFERENCE: (FROM PAGE NO 522,523) (A029 2010 IAASB Handbook ISA 550)
INTERNATIONAL STANDARD ON AUDITING 550 RELATED PARTIES
(Effective for audits of financial statements for periods beginning on or after
December 15, 2009)
Domination of management by a single person or small group of persons without
compensating controls is a fraud risk factor.24 Indicators of dominant influence
exerted by a related party include:
•The related party has vetoed significant business decisions taken by management or
those charged with governance.
•Significant transactions are referred to the related party for final approval.
•There is little or no debate among management and those charged with governance
regarding business proposals initiated by the related party.
•Transactions involving the related party (or a close family member of the
related party) are rarely independently reviewed and approved.
6. ____________ is referred as ownership interest of investor-owned entities and
owner, member or participant interest.

a. Non-controlling interest
b. Equity interest (FROM GOOGLE) (https://eur-lex.europa.eu/legal-
content/EN/ALL/?uri=celex:32009R0495)
c. Mutual entity
d. Contingent consideration

REFERENCE:
equity For the purposes of this IFRS, equity interests is used broadly
interests to mean ownership interests of investor-owned entities and
owner, member or participant interests of mutual entities.

7. Which one of the following does not represent components of tax expense
(income) as per IAS 12, Income Taxes?

a. Current tax expense (income)

b. Any adjustment recognized in the period for deferred tax of prior period
(FROM GOOGLE) (https://www.iasplus.com/en/standards/ias/ias12)
c. The amount of deferred tax expense (income) relating to changes in tax rates
or the imposition of new taxes
d. The amount of deferred tax expense (income) relating to the origination and
reversal of temporary differences

REFERENCE: (READ POINT NO 1, 3 & 4)

8. Which one of the following description defines information that is relevant to
users of financial statements?

a. Information that is free from error, bias and is faithful representation of events
b. Information that has been prudently prepared
c. Information that is comparable from one period to the next
d. Information that influences the decisions of users

REFERENCE:
Information is relevant if it influences the economic decisions of the users.
The other definitions describe good treatment but are not explaining the
concept of relevance.

9. Select the best option from the following which can be classified as an
intangible asset.

a. Legal costs paid to intellectual property lawyers to register a patent

(FROM GOOGLE) (https://pdfcoffee.com/qdownload/-intangible-assets-
pdf-free.html)
b. Advertising and promotion on the launch of a huge product
c. Operating losses during the initial stages of the project
d. University fees paid to employees who decide to enroll in an executive M.B.A
program while working with the company

REFERENCE:
Which of the following items qualify as an intangible asset under PAS 38?
a. Advertising and promotion on the launch of a huge product
b. College tuition fees paid to employees who decide to enroll in an executive
M.B.A. program at Harvard University while working with the company
c. Operating losses during the initial stages of the project
d. Legal costs paid to intellectual property lawyers to register a patent

10. Which of the following statements about IAS 20 Accounting for Government
Grants and Disclosure of Government Assistance are true?

a. A grant related to the purchase of an asset must be deducted from the carrying
amount of the asset in the statement of financial position
b. A grant related to the purchase of an asset should be recognized in profit or
loss over the life of the asset (FROM GOOGLE)
(https://www.acowtancy.com/textbook/acca-fr/b11-government-
grants/government-grants-part-1/exam)
c. Free marketing advice provided by government department is included in the
definition of government grant
d. Required repayment of a government grant received in an earlier reporting period is
treated as prior period adjustment
11. Arham Limited (AL) began construction of a qualifying asset on January 1, 2019
for which the company has utilized general borrowings. The company had Rs. 15
million 7% loan on March 1, 2019, Rs. 8.5 million 5% loan on May 1, 2019 and a 19
million 10% loan on July 1, 2019, the company did not make any repayments during
the year ended December 31, 2019. The weighted average cost of borrowing for AL
will be ___________.

a. 10% b. 8.6% c. 5.43% d. 7.5%

REFERENCE:
Weighted average borrowing cost
= [(15M x 7%)+(8.5M x 5%)+(19M x 10%)]/15+8.5+19
=7.9%

12. On March 1, 2019 Sameer Limited received Rs. 8 million from local government
on the condition that they employ at least 80 staff each year for the next 4 years. Due
to an economic downturn on March 1, 2020 the company no longer needed to employ
any more staff and the condition of the grant required full repayment. Identity the best
option from the following that should be recorded in the financial statements as on
March 1, 2020:

a. Reduced deferred income balance by Rs. 6 million

b. Reduced deferred income by Rs. 6 million and recognize a loss of Rs. 2 million
c. Reduced deferred income balance by Rs. 8 million
d. Reduced deferred income by Rs. 8 million and recognize a loss of Rs. 2 million

REFERENCE: B (SAME AS THE ABOVE QUESTION EXCEPT VALUES

ARE DIFFERENT ONLY) (SEE BELOW QUESTION WITH REFERENCE)
On 1 January 2021 Aim Limited (AL) received Rs. 1,000,000 from the
local government on the condition that they employ at least 150 persons
each year for the next 4 years. Due to an economic downturn and
reduced consumer demand on 1 January 2022, AL no longer needed to
employ any more staff and the conditions of the grant required full
repayment. What should be recorded in the financial statements on 1
January 2022?
(a) Reduce deferred income balance by Rs. 750,000
(b) Reduce deferred income by Rs. 750,000 and recognize a loss of Rs.
250,000
(c) Reduce deferred income by Rs. 1,000,000
(d) Reduce deferred income by Rs. 1,000,000 and recognize a gain of Rs.
250,000
B Answer
This is a grant related to income and would therefore be released to the
statement of profit or loss over the 4 year life. By the end of year one,
Rs. 250,000 would have been credited to the statement of profit or loss,
leaving Rs. 750,000 held in deferred income. At this point the amount is
repaid, meaning that the deferred income is removed, as well as the Rs.
250,000 income previously recorded.
13. Fareeha Limited (FL) started development project related to a new mobile phone
which was completed on September 30, 2019. Rs. 15 million had been spent up to
that point. The mobile is expected to have a useful life of 3 years. Rs. 150,000 was
spent on marketing the mobile. The expense that should be recorded in the Statement
of Profit or Loss of (FL) for the year ended December 31, 2019 is ___________.

a. Rs. 1.2 million b. Rs. 0.15 million

c. Rs. 1.4 million d. Rs. 1.25 million

REFERENCE:
Exapense will be = (15M/3 x 3/12) + 150,000 = 1.4M

14. On July 1, 2019, Tariq Limited (TL) had property, plant and equipment with a
carrying amount of Rs. 3,600,000. During the year company disposed of assets with a
carrying amount of Rs. 1,200,000 for Rs, 1,000,000. TL revalued the building from
Rs. 1,500,000 to Rs. 2,000,000 and charged depreciation for the year amounting to
Rs. 400,000. At June 30, 2020, the carrying amount of property, plant and equipment
was Rs. 5,000,000. The amount that will be reported in the Statement of Cash flows
for the year ended June 30, 2020 under the head ‘Cash flows from investing activities’
is ___________.

a. Rs. 2500,000 outflow b. Rs. 1500,000 outflow

c. Rs. 1,000,000 inflow d. Rs. 2,100,000 outflow

15. Anam (Pvt.) Limited entered into a sale and repurchase agreement for its factory
on January 1, 2019 with a bank and sold it for Rs. 8 million. At this date the factory
had a fair value amounted to Rs. 10 million and a carrying value amount to Rs. 7.5
million. The company will continue to use its factory for the next 3 years and has
option to buy it back for Rs. 12 million. The effective interest rate is 10% for the next
3 years. The net amount to be shown in the Statement of Profit or Loss for the year
ended December 31, 2019 is __________.

a. Rs. 10,908,000 b. Rs. 9,012,000

c. Rs. 800,000 d. Rs. 750,000

16. Reena Pharmaceutical Limited (RPL) started development of a drug for its new
medicine on April 1, 2019 and spent Rs. 60,000 per month until the project was
completed on September 30, 2019. The management was confident for the success of
the project on June 1, 2019. The drug has an estimated useful life of five years. The
amortization of development cost that will be charged to Statement of Profit or Loss
of RPL for the year ended December 31, 2019 would be _____________.

a. Rs. 120,000 b. Rs. 15,000

c. Rs. 240,000 d. Rs. 48,000

REFERENCE: SAME AS MCQ NO 17 EXCEPT AT THE STARTING NAME

IS,CHANGED,(FROMGOOGLE)(https://www.acowtancy.com/exams/accafr/pa
per-question/dec-2014-specimen mc4)
17. Deeba Pharmaceutical Limited (DPL) started development of a drug for its new
medicine on April 1, 2019 and spent Rs. 60,000 per month until the project was
completed on September 30, 2019. The management was confident for the success of
the project on June 1, 2019. The drug has an estimated useful life of five years. The
amortization of development cost that will be charged to Statement of Profit or Loss
of DPL for the year ended December 31, 2019 would be ___________.

a. Rs. 240,000 b. Rs. 48,000

c. Rs. 120,000 (SEE PICTURE BELOW) d. Rs. 15,000

REFERENCE:
(FROM GOOGLE) (https://www.acowtancy.com/exams/accafr/paper-
question/dec-2014-specimen mc4)
Rs
Write off to 1 April 2019 to 31 May 2019 (2 x Rs 60,000) 120,000
Amortization 240,000 (i.e. 4 x 60,000)/5 years x 3/12 (June to September) 12,000
132,000
18. The following information relates to a construction contract of Sabahat Limited
(SL):

Contract price Rs. 9,000,000

Costs to date Rs. 5,200,000
Estimated costs to complete Rs. 1,200,000
Estimated stage of completion 35%

The costs that should be recognized in Statement of Profit or Loss of SL for the year
ended June 30, 2020 is _____________.

a. Rs. 6,400,000 b. Rs. 5,200,000

REST OF THE OPTION ARE NOT GIVEN IN PICTURE ACCORDING TO
ICMA ORIGINAL BOOK READ CHAPTER NO 4 PAGE NO 92 VALUES
ARE DIFFERENT ONLY ACCORDING TO ME THE ANSWER IS 2,240,000
OR 5,200,000

19. Categories the following items into operating, investing and financing activities:
(3 Marks) (Question)
• Issuance of 10% loan notes (FINANCING ACTIVITY) (READ
ORIGINAL ICMA BOOK CHAPTER NO 16 PAGE NO 337)
REFERENCE: cash proceeds from issuing debentures, loans, notes,
bonds, mortgages and other short or long-term borrowings;
• Increase in warranty provisions (OPERATING ACTIVITY) (READ
ORIGINAL ICMA BOOK CHAPTER NO 16 PAGE NO 374) (It is
written increase in provision)
• Disposal of non-current assets (INVESTING ACTIVITY) (READ
ORIGINAL ICMA BOOK CHAPTER NO 16 PAGE NO 374) (It is
written increase in provision)
• Equity dividends paid (FINANCING ACTIVITY) (READ ORIGINAL
ICMA BOOK CHAPTER NO 16 PAGE NO 375) (It is written dividend
paid)

20. Ananya Limited (AL) is a manufacturer of automobiles spare parts. Following

are the details of sales and purchases made by the company:

1. The company purchases its raw material from Rida Limited (RL) only, due to
high quality of material that RL has provided over the last ten years. AL has
never purchased from any other supplier. Thus, it may be considered
economically dependent on RL.
2. AL sells 70% of its output to a company owned by a Director of AL and
remaining to be an associated company in which AL owns 35% of its share
capital.

Required:
Identify which transaction is required to be disclose as related party transaction
under IAS 24 ‘Related Parties’. (05 Marks)
 21. Exquisite Limited signed a contract leasing a vehicle to Excellent Limited.
Following are the details of terms of lease contract.
• The lease commenced on January 1, 2019 for a period of four years.
• Rs. 500,000 are payable in arrears in respect of lease payments
• There is no option of renewal of the lease agreement and its purchase
• The interest rate in the lease is 10%
• The fair value of the vehicle amounted to Rs. 1,585,000 on January 1,
2019 and the useful life is estimated to be 5 years.
• The lease does not transfer ownership of the vehicle to Excellent Limited.

Required:
Discuss whether the lease contract should be classified as a finance or operating lease.
(03)

22. The following information has been extracted from the records of Affan Limited,
pertaining to the financial year ended March 31, 2020:

1. The company has been sued for the non-payment of end service compensation
and gratuity to 6 employees who were terminated without giving any notice.
The claim amounts to Rs. 3 million. The lawyer of the company is of the view
that the company would have to pay to the displaced employees, but the
estimate of the amount that would be payable if plaintiff succeeds against the
company is Rs. 2 million.
2. The company is facing litigation due to an alleged breach of contract. The
contract contains a clause that prescribes damages of Rs. 4 million in case of
default. The management has accessed 60% probability that the damages will
have to be paid.

23. Bareera Limited (BL) received a grant of Rs. 120 million to compensate it for
costs it incurred in planting trees over a period of five years. The company will incur
the cost in the following manner:

Year Costs
Rupees, ‘000’
1 4,000
2 8,000
3 12,000
4 16,000
5 20,000
Total cost incurred will aggregate to Rs. 60 million while grant received is Rs. 120
million.

Required:
Discuss how the grant would be account for over a period of five years in the books of
BL. 03
 Investment Property

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CAF 7 Fixed Time Table through out the session only at KnS
MCQs , Past Papers of ICAP , ACCA , CA south Africa and QB done in Class only by
Sir Hassaan Khanani for Subjects CAF 7 and CAF 5
Hassaan Khanani Helping you to Clear CA in first attempt
 IFRS 15

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CAF 5 and CAF 7 Both Papers will be offered Online(Live and Recorded) and Physical for
March 21 attempt IA by SIr Hassaan Khanani
CAF 7 (physical) No Clash with Leading Faculty of Karachi for CAF 8 and CAF 9
CAF 6 (Taxation) Online Classes for March 21 By Sir Hassaan

Hassaan Khanani Helping you to Clear CA in first attempt

 A
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CAF 7 Fixed Time Table through out the session only at KnS
MCQs , Past Papers of ICAP , ACCA , CA south Africa and QB done in Class only by
Sir Hassaan Khanani for Subjects CAF 7 and CAF 5
Hassaan Khanani Helping you to Clear CA in first attempt
 A
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Fixed Time Table Only in

ar

KnS
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Hassaan Khanani Helping you to Clear CA in first attempt

 IAS 23

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 A
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Answer is 105,000

Hassaan Khanani Helping you to Clear CA in first attempt

 Answer is 500,000

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Hassaan Khanani Helping you to Clear CA in first attempt

 Impairment

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Hassaan Khanani Helping you to Clear CA in first attempt

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Hassaan Khanani Helping you to Clear CA in first attempt

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Hassaan Khanani Helping you to Clear CA in first attempt

 A
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Hassaan Khanani Helping you to Clear CA in first attempt

 A
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Hassaan Khanani Helping you to Clear CA in first attempt

 A
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Hassaan Khanani Helping you to Clear CA in first attempt

 A
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Hassaan Khanani Helping you to Clear CA in first attempt

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Hassaan Khanani Helping you to Clear CA in first attempt

FINANCIAL ACCOUNTING PAST PAPERS THEORY

BLISTERING THEORY
ICMAP PAST PAPERS

FEB 2020 (FALL 2019)

Q4

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FINANCIAL ACCOUNTING PAST PAPERS THEORY

Q6

AUG 2019 (WINTER 2019)

APRIL 2019 (SUMMER 2019)

Q5 (b)

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FINANCIAL ACCOUNTING PAST PAPERS THEORY

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FINANCIAL ACCOUNTING PAST PAPERS THEORY

APRIL 2019 (SUMMER 2019)

Q3

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FINANCIAL ACCOUNTING PAST PAPERS THEORY

ANSWERS

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FINANCIAL ACCOUNTING PAST PAPERS THEORY

Q4

ANSWERS

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FINANCIAL ACCOUNTING PAST PAPERS THEORY

Q5

Q6

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FEB 2019 (FALL 2018)

Q4

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Q5

Q6

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FINANCIAL ACCOUNTING PAST PAPERS THEORY

NOV 2018 (WINTER 2018)

Q2

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FINANCIAL ACCOUNTING PAST PAPERS THEORY

Q3

Q6

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FINANCIAL ACCOUNTING PAST PAPERS THEORY

AUG 2018 (SPRING 2018)

Q6

MAY 2018 (SUMMER 2018)

Q2

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FINANCIAL ACCOUNTING PAST PAPERS THEORY

Q6

FEB 2017 (FALL 2016)

Q2

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Q4

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FINANCIAL ACCOUNTING PAST PAPERS THEORY

AUG 2016 (SPRING 2016)

Q4

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Q5

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FEB 2016 (FALL 2015)

Q5

AUG 2015 (SPRING 2015)

Q4

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Q5

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FEB 2015 (FALL 2014)

Q5

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AUG 2014 (SPRING 2014)

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FINANCIAL ACCOUNTING PAST PAPERS THEORY

AUG 2013 (SPRING 2013)

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FINANCIAL ACCOUNTING PAST PAPERS THEORY

NOTE: FOR MORE EDUCATIONAL CONTENT YOU CAN CONTACT ME:

NAME: SYED SHAHBAZ RAZA ZAIDI

CONTACT NO: 03122580232

EMAIL ADDRESS: rshahbaz069@gmail.com

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ICMA FEB 2021

FINANCIAL ACCOUNTING MOCK

MCQS

Question No: 1

Economic consequences of accounting standard-setting means that

___________.

Standard-setters must ensure that no new costs are incurred when a new standard is issued.

Standard-setters must give first priority to ensure that companies do not suffer any adverse effect as
a result of a new standard.

Accounting standards can have detrimental impacts on the wealth level of providers of financial
information.

The objective of financial reporting should be politically motivated to ensure acceptance by the
general public.

Question No: 2

A non-current asset held for sale should be measured at______________.

The higher of the asset's carrying amount when originally classified as held for sale and its fair value
less costs to sell.

The asset's carrying amount when originally classified as held for sale, less any accumulated
depreciation since that date

Fair value less costs to sell.

The lower of the assets carrying amount when originally classified as held for sale and its fair value
less costs to sell.

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ICMA FEB 2021

Question No: 3

Identify the best option from the following that does not indicate a borrowing of
funds in connection with IAS 23 “Borrowing Cost”.

Interest expense calculated using the effective interest rate method.

Interest in respect of lease liabilities

Exchange differences arising from foreign currency borrowings to the extent that they are regarded
as an adjustment to interest costs.

Actual or imputed cost of equity

Question No: 4

In accordance with IFRS 3 ‘Business Combinations’, an entity shall account for

each business combination by applying the acquisition method, this method
requires to fulfil the following requirements, except:

Recognizing and measuring goodwill or a gain from a bargain purchase

Determining the acquisition date

Recognizing revenues from external customers

Identifying the acquirer

Question No: 5

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ICMA FEB 2021

IFRS 16 ‘Leases’ is applicable on all types of leases

including______________.

Leases of biological assets

Leases to explore for or use minerals, oils, natural gas and similar non-regenerative resources

Leases of right-of-use assets in a sublease

Licenses of intellectual property granted by a lessor

Question No: 6

Sameera Limited (SL) purchased an intangible asset on January 1, 2012

amounted to Rs. 331,500 that was to be amortized over 17 years. On July 1,
2019 the company incurred legal costs amounted to Rs. 171,000 to
successfully defend the patent. The amount of amortization expense that SL
should record for the year ended December 31, 2019 is___________.

Rs. 37,500

Rs. 29,565

Rs. 28,500

Rs. 19,500

Question No: 7

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ICMA FEB 2021

Masroor Limited (ML) has cash collections from customers amounting to Rs.
780,000. Payments to suppliers through banking channel amounted to Rs.
250,000, cash payments to employees amounted to Rs. 25,000 and other cash
payments amounted to Rs. 12,000. The cash generated from operations of ML
under direct method is__________.

Rs. 743,000

Rs. 518,000

Rs. 530,000

Rs. 493,000

Question No: 8

Hamid Limited received a loan amounted to Rs. 15 million on January 1, 2019

at the rate of 10%. The loan was raised specifically to finance the construction
of a factory which is a qualifying asset. The construction began on March 1,
2019 and was not yet completed at December 31, 2019. The amount of interest
to be capitalized to the cost of factory for the year ended December 31, 2019
is___________.

Rs.1,250,000

Rs.1,125,000

Rs.1,500,000

Rs. 13,500,000

Question No: 9

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ICMA FEB 2021

Rs. 347,000

Rs.357,000

Rs.317,000

Rs. 387,000

Question No: 10

Rs. 99,400

Rs. 140,600

Rs.122,200

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ICMA FEB 2021

Rs. 116,200

Question No: 11

Yousuf Limited reported profit before tax amounted to Rs. 5 million after
accounting for depreciation of Rs. 400,000. During the year non-current assets
were purchased for Rs. 3 million, receivables increased by Rs. 50,000,
inventories decreased by Rs. 60,000 and trade payables increased by Rs.
120,000. The increase in cash and bank balances during the year amounted to
___________.

Rs. 2,530,000

Rs. 5,530,000

Rs. 5,170,000

Rs. 2,170,000

Question No: 12

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ICMA FEB 2021

Rs. 1.8 million

Rs. 8 million

Rs. 8.2 million

Rs. 15.6 million

Question No: 13

Which of the following cost are not included in the carrying amount of an item of
property, plant and equipment?

Initial operating losses

Cost incurred while an item capable of operating in the manner intended by management has yet to
be brought into use or is operated at less than full capacity

Costs of relocating or reorganizing part or all of an entity’s operations

All of these

Question No: 14

In accordance with IAS 38, ‘Intangible Assets’, ______________ are money

held and assets to be received in fixed or determinable amounts of money

monetary assets

intangible assets

residual value

entity-specific value

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ICMA FEB 2021

Question No: 15

Which one of the following properties owned by Sahir Limited (SL) would be
classified as an investment property?

A stately home used for executive training

A new office building used as SL’s head office, purchased specifically in order to exploit its capital
gains potential

Land purchased for its investment potential for which permission has not been obtained for
construction of any kind.

A property that had been leased to a tenant but which is no longer required and is now held for being
resale

Question No: 16

Market and technical knowledge may give rise to future economic benefits. In
which of the following ways knowledge is protected by legal rights?

Copy rights

A restraint of trade agreement

Legal duties on employees to maintain confidentiality

All of these

Question No: 17

Which one of the following description defines information that is relevant to

users of financial statements?

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ICMA FEB 2021

Information that influences the decisions of users

Information that is comparable from one period to the next

Information that has been prudently prepared

Information that is free from error, bias and is faithful representation of events

Question No: 18

Rs. 2,240,000

Rs. 6,400,000

Rs. 5,200,000

Rs. 4,000,000

Question No: 19

Reena Pharmaceutical Limited (RPL) started development of a drug for its new
medicine on April 1, 2019 and spent Rs. 60,000 per month until the project was
completed on September 30, 2019. The management was confident for the
success of the project on June 1, 2019. The drug has an estimated useful life of
five years. The amortization of development cost that will be charged to

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ICMA FEB 2021

Statement of Profit or Loss of RPL for the year ended December 31, 2019
would be _________.

Rs. 120,000

Rs. 15,000

Rs. 240,000

Rs. 48,000

Question No: 20

Waqas Limited issued Rs. 1 million 5% loan notes on January 1, 2019,

incurring issue cost amounted to Rs. 30,000. The loan notes are redeemable at
a premium. The effective rate of interest is 8% per annum. The finance cost to
be shown in the Statement of Profit or Loss for the year ended December 31,
2019 would be _________.

Rs. 50,000

Rs. 970,000

Rs. 77,600

Rs. 30,000

ANSWERS
1. C
2. D
3. B
4. B
5. C
6. C
7. C
8. A
9. C
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ICMA FEB 2021

10. C
11. A
12. D
13. D
14. A
15. C
16. D
17. A
18. A
19. B
20. C

DESCRIPTIVE
Question No: 21

Question No: 22

Question No: 23

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ICMA FEB 2021

Question No: 24

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ICMA FEB 2021

Question No: 25

Question No: 26

Question No: 27

Question No: 28

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ICMA FEB 2021

Question No: 29

Other costs are included in the cost of inventories only to the extent that they
are incurred in bringing the inventories to their present location and condition.
There are certain types of other costs that are excluded from the costs of
inventories. Enlist them. (03)

Question No: 30

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ICMA FEB 2021

NOTE: FOR MORE EDUCATIONAL CONTENT YOU CAN CONTACT ME:

NAME: SYED SHAHBAZ RAZA ZAIDI

CONTACT NO: 03122580232

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SYED SHAHBAZ RAZA ZAIDI
 Financial Accounting and
Corporate Reporting (FACR)
DESCRIPTIVES and MTQs
Note: These questions are from different students so
multiple questions can be repeated too.

OCT AND EARLIER (2022)

Descriptive:
• IFRS held for sale
• inventory valuation
• temporary difference
• adjusting event
• increase in technology what impact on non current
assets and company report in the financial statement.

Descriptives:
• Define grant related to assets and grant related to
income?
• List factors for the impairment of financial instrument
• inventory ki NRV testing
McQ:
• treatment for accounting estimate IAS 8
• Multiple Numerical question
• borrowing cost,
• PPE
• deferred tax,
• leases
• intangibles
• Consolidation

Descriptives:
• 3 question ifrs 15 s th
• lease k 1 sawal th
• temporary difference
• ppe s boht th
• ias 40 or ias 2 k ek sawal th
• ifrs 5 k ek sawal th
• finance cost k ajeeb question aye th boht
MTQ:
• A company borrowed 7.5 million from local bank at
interest rate of 10% on January 1 the construction also
 started at January 1 2019 . The company paid evenly 6
million from 1st march to December and no remaining
loan were paid during the year.excess amount were
invested at 6% return from July 2019 what will be the
amount of borrowing cost to be capitalized at Dec
2019 ?

Descriptive
• Ifrs held for sale
• inventory valuation
• temporary difference
• adjusting event
• increase in teachnology what impact on non current
asset and company report in the financial statement
MCQS
• operating segment external revenue 75%
• lease k intial cost
• borrowing cost 2 mcqs each 4 marks
• impairment recoverable amount
 DEC (2022)
• An entity purchased a property 15 years ago at a cost
of Rs. 100000 and have been depreciating it at a rate
of 2% per annum, on the straight line basis. The entity
has had the property professional revalued at Rs.
500,000 . What is the revaluation surplus that will be
the recorded in the financial statements in respect of
this property?

• An entity purchased property for Rs. 6 million on 1 July

1 2013. The land element of the purchase was Rs 1
million. The expected life of the building was 50 years
and its residual value nil. On June 30 2015 the property
was revalued to Rs 7 million, of which the land element
was Rs. 1.24 m and the buildings Rs 5.76 m . On 30
June 2017, the property was sold for Rs 6.8 million.
What is the gain on disposal of the property that would
be reported in SOPL for the year ended 30 June 2017?

• Waris Co. purchased a machine on 1st july 2014 for

Rs .500000. It is being depreciated on a straight line
 basis of ten years. Residual value is estimated at
Rs.20000. On 1st January 2015, following a legislation
change in , Waris Co. fitted a safety guard to the
machine . The safety guard cost 25000 and has a useful
life of five years with no residual value. What amount
will be charged to Profit and Loss Statement ?

• Cool Limited accquired a building with a 40 year life for

its investment potential for Rs.8 million on 1 January
2013. At Dec 13 2013, the fair value of property was
estimated at Rs.9 million with costs to sell estimated at
Rs.200000 . If Cool limited uses the fair value model for
investment properties, what gain should be recorded
in SOCI ?

• An 8% convertible loan note was issued on 1st April

2005 at par. Interest is payable in arrears on 31 March
each year. The loan note is redeemable at par on 31st
March 2008 or convertible into equity shares at the
option of the loan notes holders on the basis of 30
shares for each 100 of loan. A similar instrument
 without the conversion option would have an interest
rate of 10% per annum.The present value of 1
receivable at the end of each year based on discount
rates of 8% nd 10% are: Refer the tables. What amount
will be credited to equity on 1st April 2005 in respect
of financial instrument?

FEB (2023)
Descriptives:
• A damage that impact asset
• Change in legal and economic conditions
• Situations in which there are changes in deferred tax
asset and liability even if there are no changes in
taxable temporary difference
• Intangible assets recognized in business combination
(ifrs 3)
• Condition of contract being recognized as asset
• Lease
• Impairement
• Limitations of retrospective change
Mcqs:
• Tax
• Intangible assets
• Leases
• Impairment
• cash flows from investing activities
• revenue from customers

Descriptives
• 1 sawal es tara be aya tha k intangible assets ka
upward revalidation hota hai ya nahi?
• Explain how the terms 'Provision' and 'Contigent
Liability' can distanguish from each other?
• If government grant becomes repayable than account
for as a a change in?

Descriptives:
• accounting policies
• Estimate
• Material error
• Immaterial error
MCQS:
• When a gain on a bargain purchase (Negative goodwill)
arises,Ifrs 3 Business Combination requires an entity to
first of all review the measurement of the assets,
liabilities and consideration transferred in respect of
the combination. When a bargain purchase is
confirmed, how is it then recognised?
• What is the primary reason why discontinued
operations are presented separately within financial
statement.
• Which of the following explains the value that relevant
information contains?
• A company receives a grant of 1 M toward the
purchase of a machine on January 2003. The grant will
be repayable if the entity sells the asset within 4 yrs,
which it does not intend to do so. The asset has a life
of 5 yrs. What is deferred income liability balance at 30
June 2003.
• Which of the following statements about provision is
correct.
A) Future operating losses cannot be provided for
B) Provision should be accounted for prudently,
reflecting the maximum that could possibly be paid out
 C) Changes in provision should be applied
retrospectively, adjusting the prior years financial
statement
MTQs
• Cost which does not include in the cost of inventory.
• Criteria for the non current assets held for sell
• Deffered tax solve question
• Ways to reduce taxable profits
• Conceptual framework
• Financial liabilty,assets and equity instruments
defination.
• Cash flow items diye hoe thy batana tha konsi activity
ma aty hain for ex investing activities etc.
• Humza ka sale and lease back aya tha.
Descriptive:
Mr zahid is currently selling 400000 units into the market
and operating at 80% capacity! Zahid bhai is now want to
sell access capacity through supermarket but super
market will use its own label to sell product! Comment
on decision which will be taken by MR zahid (
Descriptive:
• aapka intangible asset ka Aaya hua tha intangible asset
ki patni kaun kaun se point puche gaye the
• value in use ka tha
• ek goodwill ka thaa

Descriptives:
• Temeporay difference kya arise hota ha aur uski 3
example
• Aik provision ka case aya tha kae company nae fault
product sold ki ha aur customer nae case kardya ha
company kae lawyer bol rahae han kae 80% chance
han kae customer jeet jye ga batna tha kae kya amount
recognize hoga SOFP mae
• Aik ifrs 3 kae aya tha Kae categorize karo ye Intangible
Asset kyn ha aur kha record hoga
• impairment
• financial instrument ka tha finance cost ki amount
batni thi

For any other Study material (PDFs of notes, past

papers, MCQs) of any course from OL-1 to SL-2,
contact on:

Name: Arib Sarfaraz

Phone: 03352232888