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Monday, March 25, 2013

New policy of ICAP


New policy of ICAP      
                                           
ICAP introduced a new policy for business administration students. The policy of ICAP is that if any student passed BBA honor from IBA with good grading according to the HEC requirement then can obtain exemption four Module ( A, B, C, D) from ICAP only the student will clear E and F modules with 3.5 year internship from any registered firm, which was registered by the ICAP. This is a long way for student but opportunities for those students want a Chartered Accountant. For the further information visit ICAP official website and contact their help line.

Friday, January 4, 2013

Universities of Azad Kashmir:

Universities of Azad Kashmir:
Mirpur University of Science and Technology
University of Azad Jammu and Kashmir
Al-Khair University (Private)
Mohi-ud-Din Islamic University

Gilgit-Baltistan University:

Karakoram International University
















Qualifications of ACCA

The ACCA offers the following qualifications:

Chartered Certified Accountant (ACCA) - Professional Scheme

The Professional Scheme is the primary qualification of the ACCA and, following completion of up to 14 professional examinations and three years of supervised, relevant accountancy experience, enables an individual to become a Chartered Certified Accountant.
In accordance with ACCA's traditions, there is open access to its examinations.
As part of the Professional Scheme, a Bachelor of Science (Honours) degree in Applied Accounting (after completing Part 2 of the Professional Scheme and submitting a Research project), is offered in association with Oxford Brookes University.
The current syllabus is made up of 14 examinations, although some exemptions are available. The papers are split into two parts, the fundamental level (9 examinations consisting of F1 Accountant in Business, F2 Management Accounting, F3 Financial Accounting,F4 Corporate and Business Law, F5 Performance Management, F6 Taxation, F7 Financial Reporting, F8 Audit and Assurance, and F9 Financial Management) and the Professional level (5 examinations). Within the professional level there are three compulsory papers (P1 Governance, Risk & Ethics, P2 Corporate Reporting, P3 Business Analysis) and four optional papers (P4 Advanced Financial Management, P5 Advanced Performance Management, P6 Advanced Taxation and P7 Advanced Audit and Assurance, of which two must be selected).
Subjects examined include financial accounting, management accounting, financial reporting, taxation, company law, audit and assurance and financial management.

It is ACCA policy to update the examination syllabus on a regular basis. Changes were most recently made in 1994, 2001 and 2007. The revised syllabus updated the qualification for recent developments in the accountancy profession and reorganized the papers within the examination.

The ACCA professional examinations are offered worldwide twice yearly, in June and December.

Certified Accounting Technician (CAT)

This is an introductory qualification for accounting technicians. Although CAT can be obtained as a standalone qualification, it is often the case that individuals study for CAT as an introduction to accountancy prior to starting the Professional Scheme. It usually takes 1–3 years to complete the Certified Accounting Technician exams. However, there is no restriction on the number of papers that can be attempted in one attempt.

Alternatives to the CAT qualification include the Association of Accounting Technicians qualification. ACCA was a sponsor of the AAT before breaking its links in favor of the CAT qualification in the mid 1990s.

Currently, the Certified Accounting Technician qualification (CAT) has been placed on the National Qualifications Framework of the Qualifications and Curriculum Development Agency (QCA), and publicly-funded educational institutions are now eligible for funding to train towards the qualification in United Kingdom.

Under a recent re-structure of its courses, the ACCA has placed the CAT as part of the Foundations in Accountancy suit of qualifications. [1]

Other qualifications:

The ACCA offers other qualifications:
MBA (for ACCA full members, offered in association with Oxford Brooke s University)
BSc(Hons) in Applied Accounting, offered in association with Oxford Brooke s University
MSc in Financial Management, offered in association with He-riot Watt University
Diploma in Financial Management (DipFM). Introduced in the mid-1980s as the Certified Diploma in Accounting and Finance (CDipAF), a financial qualification designed for non-finance managers. This qualification was withdrawn for new registrants at the end of 2010 and will be replaced with Foundations in Accountancy awards at the end of 2011
Diploma in International Financial Reporting (DipIFR)
Certificate in International Auditing (CertIA)
Certificate in International Financial Reporting (CertIFR)

Membership

ACCA Affiliate versus Members

In the first instance, individuals register as student members to undertake the Professional Scheme qualification.

Upon successful completion of the examinations, student members are automatically transferred to Affiliate status.

"For ACCA affiliates to gain admission to full membership, they must demonstrate, on the application form, that they have obtained a minimum of three years of acceptable, supervised, practical experience in an accountancy role (or roles) and have reached the required standard of competence".

Fellowship

From 2008, Fellowship, or senior membership of ACCA, is awarded automatically based on 5 years' continuous membership, subject to compliance with Continuing Professional Development requirements.

Fellow members of ACCA use the designatory letters FCCA in place of ACCA.

Continuing Professional Development

Before 2005, Continuing Professional Development (CPD) was mandatory only for holders of practising certificates and insolvency licences. From 2005 to 2007, ACCA phased in mandatory CPD requirements for all members.

Legal & mutual recognition

Europe

United Kingdom and Republic of Ireland
The ACCA or Chartered Certified Accountant qualification is fully recognized in the United Kingdom and Republic of Ireland.
Under the Royal Charter granted by Her Majesty the Queen, ACCA works in the public interest.
ACCA is a Designated Professional Body under the Financial Services and Markets Act, business activities.
ACCA is a Recognised Professional Body under the Insolvency Act to issue permits to individual Chartered Certified Accountants to conduct insolvency appointments.
ACCA is also a Recognised Qualifying Body and Recognised Supervisory Body in relation to company auditing under the Companies Act 1989.
ACCA is a member of the Consultative Committee of Accountancy Bodies (CCAB). Members of these bodies are deemed to hold equivalent-level qualifications and advertisements for jobs often state that an organisation is looking for a CCAB-qualified individual.
Full members of CCAB organisations including ACCA can apply for ICAEW membership subject to certain criteria.
Only ACCA, ICAEW, ICAI, ICAS and AIA are able to authorise members to conduct audit, insolvency and investment business work in the United Kingdom and Republic of Ireland.
Outside these countries, legal recognition by government authorities, and mutual recognition by equivalent overseas institutes, varies from country to country. Even where full legal or mutual recognition is not available, ACCA members can sometimes obtain advanced standing in terms of sitting local accountancy examinations. Additionally, in many instances, ACCA's strong global reputation may obviate the need to acquire a local designation.
Similarly, many (although not all) universities and educational providers will recognize ACCA as equivalent to at least a Bachelor degree in accountancy, for the purpose of obtaining credit to acquire a local Masters degree or enter an advanced study program.

The Irish educational regulatory authorities - Higher Education and Training Awards Council (HETAC) has assigned ACCA Qualification to Level 9 of the Irish National Qualifications Framework (NQF) in 2008. Level 9 holds Irish postgraduate qualifications, such as postgraduate diplomas and masters degrees.

In 2011, the Professional Oversight Board published information for the first time about its concerns over self-regulation by particular institutes. Press reports highlighted comments about ACCA, which had implemented recommendations to improve its examination syllabus, but needed to pay greater attention to continuing monitoring of members who had registered as auditors some years ago.

European Union (EU), European Economic Area (EEA) & Switzerland
The ACCA qualification is legally recognized by all member countries of the European Union under the Mutual Recognition Directive. This recognition extends to the European Economic Area nations and Switzerland. For example a holder of the ACCA or Chartered Certified Accountant qualification could practice as an accountant in all member countries of the European Union, European Economic Area and Switzerland, but could only describe him/herself as ACCA or Chartered Certified Accountant rather than local professional accountant qualification. Access to local professional qualifications is based on an aptitude test. However, it is necessary to be a citizen of one of the EEA states or Switzerland to benefit from this Directive.ref// http://www.en.wikipedia.org

Association of Charterd Certified Accountants

Association of Chartered Certified Accountants (ACCA)

Founded in 1904, the Association of Chartered Certified Accountants (ACCA) is the global body for professional accountants offering the Chartered Certified Accountant qualification (Designatory letters ACCA or FCCA). As of April 2010 it is one of the largest and fastest-growing global accountancy bodies with 147,000 members and 424,000 students in 170 countries. The Institute's headquarters are in London with the principal administrative office being based in Glasgow. ACCA work through a network of 83 offices and centers and more than 8,500 Approved Employers worldwide, who provide high standards of employee learning and development.This certificate give the advance knowledge of  Business growth and development.

The term 'Chartered' in ACCA qualification refers to the Royal Charter granted in 1974 by Her Majesty the Queen in the United Kingdom.

Since Chartered Certified Accountant is a legally protected term, individuals who describe themselves as Chartered Certified Accountants must be members of ACCA and, if they carry out public practice engagements, must comply with additional regulations such as holding a practicing certificate, being insured against any possible liability claims and submitting to inspections.A person who certified by ACCA degree can give the new tricks of business of an organization and also can develop the long-term and short-term strategy according to the business nature.

The Association of Authorized Public Accountants (PAPA), one of the British professional bodies for public accountants, has been a subsidiary of ACCA since 1996.

ACCA works in the public interest, assuring that its members are appropriately regulated for the work they carry out and, promoting principles-based approaches to regulation. ACCA as an organisation actively seek to enhance the public value of accounting in society through international research, taking a progressive stance on global issues to ensure accountancy as a profession continues to grow in both reputation and influence. Instead of it a ACCA person can work every field of business sectors where he will work can improvement in business.

History of ACCA

BUSINESS:on the big scale or international scale you can see every company or organization require an intelligent accounting person.Field of accounting is so difficult so an expert of accounting can handle these problems in all international levels.ICAP(institute of charter accounting of Pakistan)make an expert of  accounting.A CA person is analyzer of accounting field.All International companies & organizations want charter accountant.

They give them full facilities.these companies & organizations give them residency, auto mobiles, higher  packages and many others facilities.An expert of accounting can solve complicated accounts problems in the international level.He/she can make country budget and long time families budgets.These persons can run the all accounts fields,all accounts companies.

Almost all progressive and international trader countries demands CA with higher packages.It makes the standards of  life.I,COM,B.COM,ICM,DBA,BBA,MBA & ACCA are also bigger business scales but CA is the most biggest from these scales of business.Then all the good and famous people always move toward the progress.Per motion is most important for successful life.CA give the standard of life.it is not difficult course than the human being.We can say that now a days human beings are most difficult from every things.
If a person want  to make himself,herself Auditor then he    should gain the knowledge of CA.Only this course can give you real knowledge of Auditing with standards-able life.

Importance of CA

BUSINESS:
on the big scale or international scale you can see every company or organization require an intelligent accounting person.Field of accounting is so difficult so an expert of accounting can handle these problems in all international levels. ICAP(institute of charter accounting of Pakistan)make an expert of  accounting.A CA person is analyzer of accounting field.All International companies & organizations want charter accountant.

They give them full facilities.these companies & organizations give them residency, auto mobiles, higher  packages and many others facilities.An expert of accounting can solve complicated accounts problems in the international level.He/she can make country budget and long time families budgets.These persons can run the all accounts fields,all accounts companies.

Almost all progressive and international trader countries demands CA with higher packages.It makes the standards of  life.I,COM,B.COM,ICM,DBA,BBA,MBA & ACCA are also bigger business scales but CA is the most biggest from these scales of business.Then all the good and famous people always move toward the progress.Per motion is most important for successful life.CA give the standard of life.it is not difficult course than the human being.We can say that now a days human beings are most difficult from every things.
If a person want  to make himself,herself Auditor then he    should gain the knowledge of CA.Only this course can give you real knowledge of Auditing with standards-able life.

Past Papers of CA Final Examinations



THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN
Final/Professional Examination   Summer 2003


June 02, 2003

ADVANCED AUDITING            (MARKS 100)

[Module ‘E’ Paper E -14] &  [PE -1 Paper 2)        (3 hours)

Q.1  (a)  The role of external auditors in recent corporate failures has been frequently
questioned. Discuss the impact of major audit failures such as “Enron” and
“World Com” on the audit profession. What in your opinion should bethe
response of the profession to enhance public perception about the profession. (10)

(b)  The Institute of Chartered Accountants of Pakistan has notified a list of
services which external auditors can perform for their listed external audit
clients.What are those services? (05)

Q.2  (a)  Your firm has recently won a new audit of a large manufacturing company.
However, you noted that prior period’s financial statements had not been
audited. You are of the view that for current assets and liabilities and non -current assets and liabilities, you could obtain some audit evidence as part of
the current period’s audit procedures.
As an audit manager, explain your point of view in detail, for the benefit of
your staff.
(06)

(b)  As a result of audit of the manufacturing company mentioned above, you
were unable to obtain sufficient appropriate audit evidence on the opening
balance of inventory. You were, however able to obtain sufficient appropriate
evidence with regard to the closing balance of theinventory. You are required
to draft your opinion, including the qualification, if any. Do not write the
whole report but just draft the qualification, if any and opinion paragraph. (05)


Q.3  (a)  When is the auditor’s assessment of materiality and a udit risk expected to be
different? Include in your answer the reason for the same together with an
example in support thereof. (06)

(b)  Why would the auditor in planning the audit work intentionally set the
acceptable materiality level at a lower level than is intended to be used to
evaluate the results of the audit? (03)

Q.4  (a)  What is the responsibility of the external auditor regarding assessment and
disclosure of a change in accounting policy made by his client. (05)

(b)  It is often said th at working papers should possess certain characteristics. List
some of these characteristics. (05)

Q.5  You are relaxed that the financial statements of MNOP Corporation have finally
been issued by its Board of Directors together with auditor’s report, w hen, all of a
sudden, the concerned Audit Manager barged in your room to inform you that he
has just become aware of a material fact related to the financial statements of the
MNOP Corporation, which existed at the date of your report and which if known to
you at that date may have caused you to modify your report.
You immediately got on your feet and started wondering about your course of
action.

Describe the course of action you will follow in the above referred situation. (10)
(2)

Q.6  During  y our audit of the financial statements of Triple AAA Insurance Company
Limited for the year ended December 31, 2002, you noted that the company had not
complied with the requirements of S.R.O. 938, issued during the current year by the
Securities and Exchan ge Commission of Pakistan, insofar as the valuation of
“available for sale” investments in the financial statements was concerned. The
company had stated such investments at cost, as opposed to valuing these at the
lower of cost or market value (market val ue to be taken as lower if the fall is other
than temporary), as required in the above S.R.O. As a result, you noted that
provision amounting to Rs.131. 036 million required for valuing such investments
on this basis had not been made by the company in thefinancial statements of the
company.
Further, you noted that although the company had made a provision of Rs.28.929
million for claims “Incurred But Not Reported” (IBNR) in the above referred
financial statements, the same fell short by Rs.57.859 million,as a result of which
provision in the required amount of Rs.86.788 million was not made on this
account.
Given the materiality of the amounts involved and their effects on the financial
statements of the Company, you have decided to express qualificationswith regard
to these matters in your report.
Draft qualifications in respect of the above matters in your Report on the financial
statements of the Triple AAA Insurance Company Limited, together with the
related appropriate wording in the opinion paragraph of your Report. Do not
attempt to write the whole report. Draft qualifications and the related wordings of
the opinion paragraph. (10)

Q.7  (a)  State the obligations of Chartered Accountants with regard to the
Confidentiality of client’s information or employer’s affairs. (03)

(b)  Is Confidentiality only a matter of disclosure of information?  (02)

Q.8  Discuss the role of audit committees in the light of the requirements laid down in
the Code of Corporate Governance. (10)

Q.9  Sputnik Loan Company has 100 branch loan offices. Each office has a Manager
and four or five Subordinates, employed by the Manager. Branch Managers prepare
the weekly payroll, including their own salaries, and pay employees from cash on
hand. The employees signs the payroll sheet signifying receipt of his salary. Hours
worked by hourly personnel are inserted in the payroll sheet from time cards
prepared by the employees and approved by the Manager.
The weekly payroll sheets are sent to the Head Office along with other accounting
statements and reports. The Head Office compiles employees earnings records and
prepares all tax salary reports from the weekly payroll sheets.
Salaries are established by Head Office job evaluations schedules. Salary
adjustments,  promotions and transfers of full time employees are approved by a
Head Office salary committee based upon the recommendations of Branch
Managers and Area Supervisors. Branch Managers advise the salary committee of
new full - time employees and terminations.   Part- time and temporary employees are
hired without referral to the salary committee.

(a) Based upon your review of the above referred payroll system, how
might payroll funds be diverted?

(b) Prepare a payroll audit program to be used in the home office to audit
the branch office payrolls of the Sputnik loan company.
(08)
(12)
                                                          (THE END)



THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN
Final Examination   Summer 2003
June 03, 2003
ADVANCED ACCOUNTING & FINANCIAL REPORTING  (MARKS 100)
Module ‘E’ Paper E -15               (3 hours)

Q.1  Following is the Balance Sheet and an extract from the Profit and Loss account of A Limited for the
year ended June 30, 2002.
BALANCE SHEET

2002       2001

Rupees    Rupees
Share capital           2,565,000    2,565,000
Capital reserve             160,000    160,000
Revenue reserves        6,144,100    5,837,800
________    ________
8,869,100    8,562,800
Long term loans        744,200    1,304,700
Deferred taxation          299,000    474,000
Current liabilities   
Current maturity of long terms loans  536,100    545,000
Short term finance  1,650,000    0
Creditor, accrued and other liabilities  2,359,800    1,320,300
Taxation [ net of advance tax]  511,900    509,900
Proposed dividend  513,000    1,026,000
5,570,800    3,401,200
_________  _________
15,483,100     13,742,700
=========  =========
Fixed assets          2,307,500    3,072,800
Capital work in progress      12,200    5,000
Long term Investment        3,406,300    3,211,800
Long term loans and advances          34,000    27,100
Long term deposit, prepayments and
deferred costs              161,500    159,200
Current Assets  
Stores and spares  1,242,700    1,144,900
Stock in trade    68,000    140,800
Trade debts  769,100    704,900
Loans, advances, deposits,
Prepayments and other receivables
990,000 520,000
Short term investments  4,825,000    3,485,400
Cash and bank balances  1,666,800    1,270,800
9,561,600     7,266,800
________     ________
15,483,100     13,742,700
========        ========
(2)
EXTRACTSFROM PROFIT AND LOSS ACCOUNT
Rupees
Profit before financial charges and
other income        3,757,100
Financial charges      333,100
________
3,424,000
Other Income        1,089,600
Other charges        (323,700)
_________
Net profit before tax       4,189,900
Provision for taxation      1,546,000
_________
Profit after tax         2,643,900
Unappropriated profit b/f    337,800
_________
2,981,700
Appropriation
Transfer to general reserve   700,000
Interim dividend  1,539,000
Final dividend  513,000
2,752,000
_________
229,700
========
During the year loss of Rs.285,600 arising from valuation of investment in associated undertaking at
fair market value was debited directly to  revenue  reserve account.
Short-term finance is in the nature of overdraft and is payable on demand.
Creditors, accrued and other liabilities include following:
2002   2001
Accrued markup on loans      57,200    63,000
Unclaimed dividend      550,600    52,900
Depreciation for the year was Rs.889,600. During the year assets having  book value of Rs.3,900
were sold for Rs.10,300
Other income include exchange gain on foreign currency investments  of Rs.134,600, exchange gain
on foreign currency deposits with bank Rs.3,000, income on loans and investments including
markup charged to associated undertaking Rs.924,200.
Duri ng the year provision of Rs.41,000 was made for slow moving and obsol ete spares for the first
time i n the history of the company.
Loan advances deposits and prepayments include following:
2002    2001

Due from associated undertakings  702,400     212,700
Accrued income on investment and
bank deposits        206,600    196,100
(3)
Short term investment include Pak rupees Bonds purchased 15 days prior to year end with following
maturities
2002    2001
Maturing on July 15      250,000    200,000
Maturing on September 30    200,000    300,000
Maturing on October 31      200,000    100,000
Financial charges include exchange gain of Rs.23,300 on long terms loans obtained by the
company.
Deferred cost amortized during the year was Rs.68,500
Required:
Prepare Cash F lowStatement providing al l the information /notes required under IAS 7    (20)
Q. 2  a)  F Limited has branches in many countries. Whilstpreparing the annual accounts for
the year ended June 30, 2002the accountant of the company observed the
following:
I.  UK branch has  an inventory as on June 30, 2002valued at Pound Sterling
1,000,000. The exchange rate of one pound sterling on the date of purchase of
inventory w as Rs. 90 and on June 30, 2002was Rs. 80. The net realizable value of
inventory as on June 30,2002was pound sterling 1,100,000.

II.   US branch has  an inventory as on June 30, 2002valued at US $ 1,000,000. The
exchange rate of one US dollar on the date of purchase of inventory was Rs. 60 and
on June 30, 2002  was Rs.65. The net realizable valueof inventory as on June
30,2002was US $ 950,000. The branch has recorded the inventory at net realizable
value in its financial statements.
You are required to explain how the above  positions  shall be reflected in the financial statements of
the branch and the financial statements of F Limited.               (06)
b)  Financial statements ofLBS Limited showing following financial i nstruments:
I.  Investment in Term Finance Certificates quoted on stock exchanges carrying
markup @ 17% per annum payable semiannually.
II.   Long terms loans obtained from a financial institution carrying markup @ 2%
above the State Bank of Pakistan’s discount rate.
III.   Foreign currency long-term loans provided by the company to  one of its associated
concern carrying interest @ 2 %above London Inter Bank Market Rate.(LIBOR)
You are required to classify the above financial instrument into following financial risk sas required
under IAS 32 (Financial Instrument: Disclosure and Presentation)
1.  Exposed to interest rate price risk
2.  Exposed to interest rate cash flow risk
3.  Exposed to currency risk                 (06)
(4)
Q.3  Foreign investment Ltd., has    “Investment Held for Trading”   in 1,000 shares of Y Ltd. which was
purchased at Rs.20. The fair value of shares on Jan 01, 2002 was Rs.30 and on Dec 31, 2002was
Rs.35. The shares were indicated at cost in the accounts  for the year ending Dec 31, 2001. The
shares weresold at Rs.32 on March 27, 2003.
Show the workingin the boo ks for the year ending Dec 31, 2002and on disposal in accordance with
IAS 39. Explain the term “Held for Trading” and describe the disclosure in the financial statements
for the year ending Dec 31, 2002.                 (10)
Q.4  Foreign Investment Ltd., owns a building which is given on rent. The historical cost    in the
financial statement for the year ending December 31, 2000  is included in the f ixed assets at Rs.30
million. The fair value of the plaza on Jan 01, 2001 was Rs.300    million and on December 31, 2001
Rs.302 million
Show the working byadopting fair value model under IAS 40.  Indicate how these transactions
would be disclosed in the financial statements for the year ending Dec 31, 2001.    (10)
Q.5  Southern Ltd has  recently decided to introduce a  Non-Contributory Defined Benefit Pension
Scheme to cover all of its full-time employees. A separate pension fund has now been set up.
The following information has been obtained from various sources including the results of actuarial
calculations.
(i)  on the recommendations of the actuary, the company intends to make payments to trustees
in respect of regular pension costs. Payments to be made on December 31, 2000 and 2001
amount to Rs 350,000 and Rs 410,000 respectively.
(ii)  in addition , the company agrees to make four annual payments of Rs 200,000 each year
(payments to be made on December 31, 2000, 2001, 2002 and 2003 respectively). These
payments relate to retroactive changes in benefi ts (past service costs) as no pension scheme
previously existed.
You ascertain that the expected average remaining service lives of employees in the scheme is ten
years.
Required:
(a)  State the main assumptions required in order to determine an appropri ate charge to profit
and loss account under a Defined Benefit Scheme.          (05 )
(b)   Explain and justify the treatment in respect of the past service costs referred to
in (ii ) above.                       (04)
(c)  Provide therelevant extracts from the balance sheets for 2000 and 2001.    (04)
(5)
Q.6  It was agreed that, with effect from 1 January 2001, Nexus Ltd would acquire the whole of the net
assets of Forte Ltd and the fixed assets,  stocks and goodwill of Motiwala & Palkiwala, a
partnership, by the issue of ordinary shares of Rs 10 each fully paid at their then market value of Rs
12.50 per share.
In computing the number of shares to be issued for each business:
(a)  The fixed assets were to be taken at the value placed on them by an independent valuer.
(b )  Stocks were to be taken at book value subject to a deduction of Rs. 2,000 from the stocks of
Motiwala & Palkiwala for obsolete stock.
(c)  In the case of Forte Ltd, debtors, credit ors and balance at bank were to be taken at book
value less Rs 3,000 in respect of a bad debts.
(d )  Goodwill was to be valued at two years’ purchase of the average profits of the last three
years subject only to the following adjustments:
In the case of Forte Ltd:
(i)  The directors’ remuneration charged in each year was to be reduced by  Rs 5000.
(ii)   The depreciation charged in each year on ‘other fixed assets’ was to be substituted
with depreciation on those assets calculated at 10% of cost on a straightline basis.
In the case of Motiwala & Palkiwala:
(i)   Notional salaries of Rs 10,000 pa, in total, are to be charged for the partners.
(ii)  Rs 4,000, being an exceptional items of expense, was to be added back to the
profits in the year to 31 December 2000.
The summarized balance sheets of the three businesses at 31December 2000were:
Nexus
Ltd
Rs
Forte
Ltd
Rs

Motiwala &
Palkiwala
Rs
Freehold premises at cost    100,000    36,000    24,000
Other fixed assets at costs less depreciation    316,000    74,000    40,000
Stocks at cost    270,000    36,000    22,000
Debtors    246,000    86,000    42,000
Balance at bank    42,000    24,000    11,000
974,000    256,000    139,000
Ordinary shares of Rs 10 each, fully paid    600,000    100,000  
Capital account:           
Motiwala             61,000
Palkiwala             22,000
Profit and loss account    244,000    52,000  
Creditors    130,000    104,000    56,000
974,000    256,000    139,000
(6 )
You ascertain:
Nexus
Ltd
Rs
Forte
Ltd
Rs
Motiwala
&
Palkiwala
Rs
(a)  The depreciation deducted from the cost of
other fixed assets at 31 December 2000 124,000 50,000 20,000
(b)   The independent valuations at 31 Dec. 2000
were:
Freehold premises      120,000    50,000
Other fixed assets      66,000    42,000
(c)  The profits for the last three years ending
on:
31 Dec. 1998      18,000    18,000
31 Dec. 1999      24,212    13,000
31 Dec. 2000      26,200    19,000
after charging depreciation amounting to
(fo r the years ending):
31 Dec. 1998      10,500
31 Dec. 1999      8,916
31 Dec. 2000      9,072
(d)   The other fixed assets at 31 Dec. 2000at
cost were:
before 31 Dec. 1997      104,000
purchased 1 Jan. 1999      20,000
(e)  Forte Ltd has disposed of ‘other fixed assets’ on 1 Jan. 2000which had cost   Rs 16,000 on
1 Jan. 1997.
Required:
(a)  a statement showing the number of shares to be issued by Nexus Ltd to pay for the
acquisition; and
(b)   the balan ce sheet, as far as the required information is available, of Nexus Ltd on  1 Jan.
2001after giving effect to the issue of shares for the acquisitions.      (21)
Q.7  Kamal Associates won first contract of the financial y ear on April 1, 2001for destruction of a group
of ten buildings of similar size and technical specification for a price of Rs 2 million. The work was
to be completed within six months of an award of the contract failing that a penalty of 6% per
annum of the contract price would be paid to the customer for the delay.
Following information w as available as at June 30, 2001; the date on which Kamal Associates close
their financial year. On that date five buildings were demolished.
(7)
Site labour Rs 2 00,000; site supervision Rs 150,000; material used Rs 250,000; depreciation on
plant used at site Rs 100,000; general and administration costs Rs 50,000; research and development
costs Rs 25,000; selling costs Rs 25,000: Other construction overheads Rs 200,000.
The management of Kamal Associates compared above information with budgeted cost of the
contract and was satisfied with performance except that it would require four months to complete
the rest of the contract. Due to delay in completion and inflati on, cost over run would be as follows:
Increase in wages of site labour by 10%. Escalation in material cost by 20%. Other construction
overhead would increase by 20%. Research and development cost to go down by Rs 5,000.
Subsequent to June 30, 2001Kamal Associates was notified of a claim of Rs 50,000 from third
party for damage done to a building next to the one demolished by Kamal Associates. Kamal
Associates accepted the claim.
Required :
Prepare contract account clearly indicating profit earned orloss incurred as at the close of  financial
year on June 30, 2001in accordance with IAS 11 (revised 1993) Construction Contracts.    (14)
                                                     (THE END)