ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
(Department of Commerce)
FINANCIAL REPORTING-I (8567)
CHECKLIST
SEMESTER SPRING, 2021
This packet comprises the following material:
1. Text Book (one)
2. Assignment No. 1, 2
3. Assignment Forms ( 2 sets )
In this packet, if you find anything missing out of the above mentioned material,
please contact at the address given below:
The Mailing Officer
Allama Iqbal Open University
Sector H-8, Islamabad
Ph: 051-9057611-12
Muhammad Munir Ahmad
(Course Coordinator)
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
(Department of Commerce)
[
WARNING
1. PLAGIARISM OR HIRING OF GHOST WRITER(S) FOR SOLVING
THE ASSIGNMENT(S) WILL DEBAR THE STUDENT FROM AWARD
OF DEGREE/CERTIFICATE, IF FOUND AT ANY STAGE.
2. SUBMITTING ASSIGNMENTS BORROWED OR STOLEN FROM
OTHER(S) AS ONE’S OWN WILL BE PENALIZED AS DEFINED IN
“AIOU PLAGIARISM POLICY”.
Course: Financial Reporting-I (8567) Semester: Spring, 2021
Level: M. Com/BS Total Marks: 100
Pass Marks: 50
ASSIGNMENT No. 1
Q. 1 Enlist the complete set of financial statements and describe the objectives of them.
Also explain the qualitative characteristics of financial statements. (20)
Q. 2 (a) The total carrying amount of furniture is Rs. 100,000 and the total carrying
amount of land is Rs. 50,000. The company’s materiality limit is Rs.
300,000.
Required: Explain whether or not the furniture and land should be disclosed
as two separate categories. (10)
(b) A company’s materiality limit is Rs. 300,000 and the total carrying amount
of its;
Machinery is Rs. 500,000 including machine A, with a carrying amount of
Rs. 450,000
Office furniture is Rs. 300,000; and
Office equipment is Rs. 310,000. (10)
Required:
(10)
Explain whether or not: Machine A should be separately disclosed from other
machinery based on size; and
Furniture and office equipment should be disclosed as two separate
categories based on the size of the carrying amounts of each category relative
to the materiality limit.
Q.3 (a) Given below is the information extracted from records of PPL Company, you
are required to calculate the value of its closing stock. (10)
Opening Stock, Rs. 16,000; Gross sales, Rs. 86,500;
Purchases, Rs. 76,000; Gross Profit rate, 27% on gross of sales
Sales returned 3.50% of sales Purchases Returned 4.80% of purchases
(b) From the following information extracted from the books accounts of Iqbal &
Company, you are required to calculate the value of cost of goods sold. (10)
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Purchases Rs. 330,000 Purchases discounts 10% Opening inventory
Rs.165,500 closing Inventory Rs.15,350 Freight out Rs.40,000 Taxes 10,500
Q. 4 (a) IAS 8prescribes the criteria for selecting and changing accounting
policies, explain it. Also differentiate between accounting estimates and
accounting policies. (10)
(10)
(b) During 2012, a machine (a non-current asset) with a carrying amount of Rs.
20,000 is sold for Rs. 30,000. (10)
Required: Disclose the above transaction in the statement of comprehensive
income.
(10)
Q. 5 (a) Rehman & co bought a machine on 31 December 2015 that it intended to
keep for 10 years. It cost Rs. 30,000. Before the machine could be brought
into use, it had to be tested: this cost Rs. 5,000. During the testing process,
1,000 widgets were produced, which were all sold immediately at Rs. 10
each. IAS 16 (paragraph 17) requires that the cost of the asset be calculated
after deducting net proceeds from selling any items produced when testing.
Required: Disclose the machine in the statement of financial position as at
31 December 2015. This is the only item of property, plant and equipment
owned by the entity. (10)
(10)
(b) Rehman & co an entity’s nature of business changed in 2017 such that
vehicles that were previously held for use became stock-in-trade (i.e.
inventory). The unadjusted property, plant and equipment balances are as
follows: (10)
2016: Rs. 100,000 (Rs. 60,000 being machinery and Rs. 40,000 being vehicles)
2017: Rs. 150 000 (Rs. 80 000 being machinery and Rs. 70 000 being vehicles).
Required: Disclose the assets in the statement of financial position and notes as at
31 December 2017.
(10)
GUIDELINES FOR ASSIGNMENT # 1
You should look upon the assignments as a test of knowledge, management skills, and
communication skills. When you write an assignment answer, you are indicating your
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knowledge to the teacher:
Your level of understanding of the subject;
How clearly you think;
How well you can reflect on your knowledge & experience;
How well you can use your knowledge in solving problems, explaining situations,
and describing organizations and management;
How professional you are, and how much care and attention you give to what you do.
To answer a question effectively, address the question directly, bring important related
issues into the discussion, refer to sources, and indicate how principles from the course
materials apply. The student must also be able to identify important problems and
implications arising from the answer.
ASSIGNMENT No. 2
Total Marks: 100
Pass Marks: 50
This assignment is a research-oriented activity. You are required to obtain information
from a business/commercial organization and prepare a report of about 1000 words on
the issue allotted to you to be submitted to your teacher for evaluation.
You are required to select one of the following issues according to the last digit of your
roll number. For example, if your roll number is P-3427182 then you will select issue # 2
(the last digit):
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ISSUES:
0- Measurement of cost formulas (inventory movements):Specific identification
method (SIM) with purchases and sales
1- Accountancy involves a process of logical summarization: Items with different
natures, but immaterial size
2- The statement of comprehensive income: Other comprehensive income heads
3- Impact of International Accounting Standard 1 (IAS 1) on Corporate Financial
Reporting: The extent of disclosures, and their relationship to Corporate
Characteristics.
4- Contemporary Challenges in adopting the International Accounting Standards.
5- The notes to the financial statements: Structure of the notes and its need in
financial statements
6- Measurement of cost formulas (inventory movements): First-in-first-out method
(FIFOM) with purchases and sales, Weighted average method (WAM) with
purchases and sales
7- Going concern and Managements’ responsibility
8- Accrual basis of accounting and its impact on income statement and cash flow
statement
9- Presentation of financial statements: a general features and overview with reference
of IAS 1
The report should follow the following format:
i. Title page
ii. Acknowledgements
iii. An abstract (one-page summary of the paper)
iv. Table of contents
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v. Introduction to the issue (brief history & significance of topic assigned)
vi. Practical study of the organization (with respect to the topic)
vii. Data collection methods
viii. Conclusion (one-page brief covering important aspects of your report)
ix. Recommendations (specific recommendations relevant to issue assigned)
x. References (as per APA format)
xi. Annexes (if any)
GUIDELINES FOR ASSIGNMENT # 2:
1.5-line spacing
Use headers and subheads throughout all sections
Organization of ideas
Writing skills (spelling, grammar, punctuation)
Professionalism (readability and general appearance)
Do more than repeat the text
Express a point of view and defend it.
WORKSHOPS
The workshop presentations provide students opportunity to express their communication
skills, knowledge & understanding of concepts learned during practical study assigned in
assignment # 2.
You should use transparencies and any other material for effective presentation. The
transparencies are not the presentation, but only a tool; the presentation is the
combination of the transparencies and your speech. Workshop presentation
transparencies should only be in typed format.
The transparencies should follow the following format:
1) Title page
2) An abstract (one-page summary of the paper)
3) Introduction to the issue (brief history & significance of topic assigned)
4) Practical study of the organization (with respect to the issue)
5) Data collection methods
6) Conclusion (one-page brief covering important aspects of your report)
7) Recommendations (specific recommendations relevant to topic assigned)
GUIDELINES FOR WORKSHOP PRESENTATION:
Make eye contact and react to the audience. Don't read from the transparencies or
from report, and don't look too much at the transparencies (occasional glances are
acceptable to help in recalling the topic to cover).
A 15-minute presentation can be practiced several times in advance, so do that until
you are confident enough. Some people also use a mirror when rehearsing as a
substitute for an audience.
WEIGHTAGE OF THEORY & PRACTICAL ASPECTS IN ASSIGNMENT # 2 &
WORKSHOP PRESENTATIONS
Assignment # 2 & workshop presentations are evaluated on the basis of theory & its
applicability. The weightage of each aspect would be:
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Theory: 60%
Applicability (practical study of the organization): 40%
Note: Assignments and presentation carry 300 Marks:
Assignment 01 100 Marks
Assignment 02 (Submission) 100 Marks
Assignment 02 (Presentation) 100 Marks
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COURSE OUTLINES
Financial Reporting-I 8567
UNIT 1 Regulatory Framework for Financial Reporting in Pakistan
1.1 The regulatory system
1.2 Standards setting process
1.3 Conceptual framework
1.4 Objectives of financial reporting
1.5 Users of financial statements
1.6 Qualitative characteristics
1.7 Elements of financial statements
1.8 True and fair view presentation
UNIT 2 Presentation of Financial Statements (IAS) 1
2.1 Financial statements and their components
2.2 General features of financial statements
2.3 Structure of financial statements
2.4 Contents of financial statements
2.5 Disclosure requirements of IAS 1
UNIT 3 Inventory (IAS) 2
3.1 Accounting for inventory under IAS 2
3.2 Measurement of inventories
3.3 Inventory valuation methods
3.4 Net Realizable Value
3.5 Recognition as an expense
3.6 Disclosures Requirements
UNIT 4 Accounting Policies, Changes in Accounting Estimates and Errors
(IAS) 8
4.1 IAS 8 and accounting policies
4.2 Accounting polices
4.3 Accounting estimates
4.4 Prior period errors
4.5 Underlying assumption
4.6 Disclosure Requirements
UNIT 5 Statement of Cash Flows (IAS) 7
5.1 IAS 7 and cash flow statement
5.2 Presentation of a statement of cash flow
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5.3 Calculation and reporting of net cash flow from operating
activities
5.4 Reporting of cash flow from investing & financing activities
5.5 Comparison of the statement of cash flows and income statement
5.6 Interpretation of statement of cash flows
5.7 Disclosures requirements
UNIT 6 Events after the Reporting Period (IAS) 10
6.1. Understanding events and their accounting
6.2. Adjusting events and their accounting
6.3. Non-adjusting events and their accounting
6.4. Calculation of impact on financial statements
6.5. Disclosures requirements
UNIT 7 Property, Plant and Equipment (IAS) 16
7.1. Property plant and equipment
7.2. Depreciation of non-current assets
7.3. Calculation of depreciation
7.4. Revaluation of non-current assets
7.5. Disclosures requirements
UNIT 8 Revenue Recognition (IAS) 18
8.1. IAS 18 and revenue recognition
8.2. Understanding revenues and their types
8.3. Rules for recognizing revenues
8.4. Financial statements and revenues recognition
8.5. Disclosure requirements
UNIT 9 Borrowing Costs (IAS) 23
9.1 Borrowing costs and their types
9.2 Recognition of borrowing costs
9.3 Commencement, Suspension and Cessation of Capitalization
9.4 Financial statements and borrowing costs
9.5 Disclosures requirements
Recommended Books (Latest Editions)
1. IRFS/IAS s issued by IASB, London.
2. Financial Accounting published by ICMAP, Karachi
3. Gripping IFRS by ICAP, Karachi.
4. Insight into IFRS by Hafiz Mohaiydin Tahir, PAC, Lahore.
