THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA JUNE, 2016 EXAMINATION
PROFESSIONAL LEVEL-III
SUBJECT : 301. ADVANCED FINANCIAL ACCOUNTING-II.
Reading Time: 15 minutes
Time: Three hours Full Marks: 100
❖ All questions are to be attempted.
❖ Show computations, where necessary.
❖ Answer must be brief, relevant, neat and clean.
❖ Start answering each question from a fresh sheet.
Q. No. 1.
(a) According to IAS-33 identify the main distinction in treatment of EPS between the exercise
of right issue and exercise of share option.
(b) The following information is provided about a company:
Profit attributable to ordinary equity shareholders of the percent entity
for the year end 20x6…… Tk. 12,00,000
Weighted average number of shares (equity outstanding in 20x6 5,00,000
Average market price of one ordinary share during year 20x6 Tk. 20
Weighted average number of shares under option during 20x6 1,00,000
Exercise price per share under option during year 20x6 Tk. 15
Required:
Calculate the basic and diluted earnings per share.
(c) A company had 8.24 million shares in issue at the start of the year and made no issue of
shares during the year ended June 30, 2015, but that date there were outstanding options
to purchase 9,20,000 shares @ Tk. 1.70 per share. Face value of the share was Tk. 1.00
and the fair value was Tk. 1.80. Earning for the year ended were Tk. 22,08,000.
Required:
Calculate fully diluted EPS as on June 30, 2015 following IAS-33.
[Marks: (6+8+6) = 20]
Q. No. 2.
(a) Briefly describe the Summary of Accounting for Deferred Tax.
(b) At 1 April, 2011 Urban Ltd. had a deferred tax liability brought forward of Tk. 59,360 this
has arisen from temporary differences of PPE and development expenditure.
At 31 March, 2012 the company produces the following information:
(1) The carrying amount of property, plant and equipment in the statement of financial
position is Tk. 560,000 and the tax written down value of the same asset is Tk.
364,000.
(2) The Company has started to amortize some development costs and at 31 March,
2009 the asset in the statement of financial position has fallen to Tk. 32,000.
(3) Urco Plc. has incurred taxable trading losses of Tk. 160,000 in the year. It is
confident that these losses are a one-off event and that the company will be
profitable for the foreseeable future.
(4) The directors have re-valued some land from its original cost of Tk. 80,000 to Tk.
400,000.
Assume a corporation tax rate of 24.75%.
Required:
Calculate the figures that will be included in the financial statement for the year end 31 March,
2012 including the journal entry.
[Marks: (8+12) = 20]
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CMA JUNE, 2016 EXAMINATION
PROFESSIONAL LEVEL-III
SUBJECT : 301. ADVANCED FINANCIAL ACCOUNTING-II.
Q. No. 3.
(a) Describe at least four specific advantages of Business Combination over Internal
Expansion.
(b) Balance sheet of Fizz and SAMMY Limited as on June 2016 one given below:
Liabilities Fizz SAMMY Assets Fizz SAMMY
Ltd. (Tk.) Ltd. (Tk.) Ltd. (Tk.) Ltd. (Tk.)
Share Capital 5,00,000 1,00,000 Buildings 2,00,000 1,00,000
(@Tk.10 each)
General Reserve 2,00,000 60,000 Plant & Machinery 2,30,000 1,00,000
P/L Account 1,20,000 1,40,000 Investments: (8,000
Creditors 80,000 60,000 Share in SAMMY Ltd) 80,000 --------
Bills payable 50,000 20,000 Others 30,000 10,000
Stock 1,40,000 40,000
Debtors 1,60,000 40,000
Bank 1,10,000 90,000
Total 9,50,000 3,80,000 Total 9,50,000 3,80,000
Additional information:
(i) Fizz Ltd. acquired 8000 equity shares in Sammy Ltd. on 01.04.2014. On that date Sammy
Ltd. had Tk. 40,000 in P/L account and Tk. 40,000 in general reserve.
(ii) Sammy Ltd declared on 01.07.2014 10% dividend for 2013-14 and 15% Dividend on
01.06.2015 for 2014-15. Fizz Ltd. credited its share of both the Dividends to investment in
Sammy Ltd account.
(iii) Further on 01.08.2015 Sammy Ltd. declared stock dividend in the ratio of one for four held
out of balance in General reserve on 01.04.2014. Though Fizz Ltd. rightly treated its share
of bonus dividend in its books of account, Sammy Ltd. has not yet given effect to the
bonus dividend in its accounts.
(iv) On 01.07.2015 Sammy Ltd. purchased Plant & Machinery for Tk. 60,000 from Fizz Ltd.
which yielded a profit of 20% on selling price to Fizz Ltd. Sammy Ltd. Charges 10%
depreciation on its Plant & Machinery.
(v) The entire bills payable of Sammy Ltd. represent bills accepted in favor of Fizz Ltd.
(vi) Liability for expense not given effect in the books of Fizz Ltd. amounts to Tk. 25,000.
Required:
Prepare Consolidated Balance Sheet in the books of Fizz Ltd. on 30.06.2016.
[Marks: (4+16) = 20]
Q. No. 4.
Rush PLc. Manufacture sailing dinghies. During last year it ceased production of its model XII
due to competition from overseas suppliers which could manufacture a similar dinghy at a much
lower price. A new model the RV3 is due into production in the next month. Its classic design is
expected to result in a resurgence of demand for wooden-hulled dinghies. New premises and
equipment were purchased during the year in order to manufacture the RV3.
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CMA JUNE, 2016 EXAMINATION
PROFESSIONAL LEVEL-III
SUBJECT : 301. ADVANCED FINANCIAL ACCOUNTING-II.
Q. No. 4.(cont’d……..)
Rush PLc. has prepared the following draft accounts for the year ended 31 December, 20x8:
Income Statement:
Tk.’000
Revenue 11,563
Cost of sales 5,502
Gross Profit 6,061
Distribution costs 402
Administration expenses 882
Interest payable 152
1436
Profit before tax 4,625
Taxation 2,231
Profit after tax 2,394
Statement of Financial Position:
31 December
20x8 20x7
Tk. 000 Tk. 000
Leasehold premises (net) 6,600 5,700
Plant, machinery and equipment (net) 5,040 3,780
Investment at cost 2,406 2,208
Inventory 2,880 1,986
Receivables 2,586 1,992
Bank - 576
19,512 16,242
Equities & liabilities:
Share capital (25 paisa ordinary) 2,280 1,800
Share premium 2,112 1,800
Retained earnings 9,108 6,714
Debenture (10%) 1,240 1,800
Provision for deferred repairs 1,202 1,016
Payables 1,026 702
Over draft 222 -
Taxation 2,322 2,410
19,512 16,242
The following data is relevant:
(1) The 10% debentures were redeemed at par.
(2) Plant and equipment with a written down value of Tk. 2,76,000 was sold for Tk. 168,000.
New plant was purchased for Tk. 25,00,000.
(3) Lease hold premises capital costs of Tk. 13,00,000 were incurred during the year.
Required:
Prepare the statement of cash flows and all supporting notes in accordance with IAS-7
statement of cash flows for 20x8 for Rush Plc.
[Marks: 25]
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CMA JUNE, 2016 EXAMINATION
PROFESSIONAL LEVEL-III
SUBJECT : 301. ADVANCED FINANCIAL ACCOUNTING-II.
Q. No. 5.
(a) Explain different modes in which a company may be wound up.
(b) Describe what is meant by the ‘substance’ of a transaction and how to determine this
‘substance’.
(c) As per IAS-28, 27 and 31. Cost method, equity method and proportionate method of
investment accounting when adopted and why? Explain.
[Marks: (3+6+6) = 15]
= THE END =
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