Roll No. Total No, of Qué Time Us mn q statements of financial a naa Jagat et and its +t Co. at 31 Ashadh, 2077 are as below: a Co. and Sangat cements of Financial Position as at 31 ‘Ashadh, 2077 Tagat Co. | __ Phagat Co. s."000) Rs."000) Assets Non- current assets Freehold property Plant and machiner Investments, 1,250 1,950 315 795 1,500 4,245 1,625 300 me rs 120 710 2,335 Current assets Inventor Trade receivables Cash 375 Toul assets Equity and liabilities Equity Share capital of R Retained earnings [112% foan st Curentliabiliies | Trade payables Bank overdraft (Total equity and Additional information: i) Jagat Co., acquired for Rs. 1,000,000 when the retained earnings of Phagat Co., were Rs. 200,000. iy Atthe date of acquisition of Phagat Co.,the fair value ofits freehold property was considered to be Rs. 400,000 greater than its value in Phagat Co.’s statement of financial position. Phagat Co., had acquired the property in Shrawan, 2071 and the buildings element (comprising 50% of the total value) is depreciated on cost 600,000 ordinary shares in Phagat Co., on 01 Shrawan, 2071 over 40 years. ii) Jagat Co, acquired 225,000 ordinary shares in Sangat Co. on O1 Shrawan, 2075 for Rs. 500,000 when the retained earnings of Sangat Co. were Rs.150,000. iv) Bhagat Co,, manulactures a component used by both Jagat Co. and Sangat Co Transfers are made by Phagat Co., at cost plus 25%. Jagat Co. held Rs, 100,000 Jnventory of these components at 31 Ashadh, 2077. In the same period Jagat Co., ‘sold goods to Sangat Co., of which Sangat Co., had Rs, 80,000 in inventory at 31 ih, 2077. Jagat Co., had marked these goods up by 25%. ¥) The goodwill in Phagat Co. is impaired and should be fully written off. An impairment loss of Rs, 92,000 is to be recognised on the investment in Sangat Co. TGF PTOvarded 10,000,000 points to various undiscounted (to be redeemed till 31 approached you with the following queries and has asked to state t tment (Journal Entries) under the applicable NAS for these award How should the recognition be done for the sale of goods worth Rs. 1,000,000 ona particular day? How should the redemption transaction be recorded in the year 2076/77? The company has requested you to present the sale of goods and redemption as independent transaction. Total sales of the company is Rs. 500,000,000. How much of the revenue for undiscounted points should be deferred at the year-end (2076/77) because of the estimation that only 80% of the outstanding points will be redeemed? Tn the next year 2077/78, 60% of the outstanding points were discounted Balance 40% of the outstanding points of 2076/77 still remained outstanding. How much of the de! venue should the company recognize in the year 2077/78 and | be the amount of balance deferred revenue? 5 @ | How much revenue will ti eat 2078/79, if | 300,000 points are redeem Required: Give answer to the queries of K: ‘ Co. is in the process of preparing its financial stateme the yeavended Ashadh 2077. The following matters are pending relating to deferred taxation. R's Current income tax rate is 25%. However, this rate will be changed to 20%-with effect from 1 Shrawan 2077, as enacted by the new tax legislation. i) Investment property acquired on 1 Shrawan 2075 for Rs. 26 million has been valued for Rs. 32 million on 31 Ashadh 2077. The valuation does not affect the taxable profit. R measures investment properties at fair value. R depreciates this property over 15 years for tax purposes. If the investment property is sold, a tax rate of 10% would apply on the sale proceeds in excess of the cost. However, reversal of tax depreciation already claimed, will be taxed at the normal income tax rate. R expects to sell this property in the 5! year of its useful life R has motor vehicles amounting to Rs. 50 million. R cannot deduct depreciation allowance on these vehicles for tax purposes, and disposal gains are not taxable fii) R has recognised a provision for product warranty cost, amounting to Rs. 6 million, These costs will not be taxable, until the claims are paid, i Required: ise on the financial reporting treatment based on the requirements of N. ‘Taxes for the year ended 31 Ashadh 2077. BSb) (Rs. in millions) 800 1,000 1,200 ZLAd. also has corporate assets having a remaining useful life of 20 years as below: Corporate Assets | Carrying amount Remarks (Rs. in millions) AU 800 | This amount can be allocated on a reasonable basis to the individual cash generating units. BU 400 | This amount cannot be allocated on a reasonable basis to the individual cash generating units oa Required: i) Allocate corporate assets to CC and determine carrying amount. ii) Calculate the impairment toss, if any, of XYZ Ltd. Y Ltd. acquired a filling station fi 1d. under a five - year lease agreement commencing on 1 Shrawan 2076. The filling station was leased by S Ltd immediately after its completion. This was because the company decided to abandon its plans to venture into oil marketing business. The agreement costs Y Ltd. Rs. 150,000 in legal fees and other arrangement related costs, The lease: agreement provides for annual lease rentals of Rs. 3,000,000 for four years and Rs. 5,000,000 in year five. Further, the agreement states that the asset will be transferred to Y Ltd. at the gnd of the lease period. The lease agreement does not contain an implicit interest rate. However, Y Ltd. has a weighted average cost of capital of 12%-4n addition, review of the risk associated with investing in ¥ Lid. established that the company is now able to borrow at an annual interest rate of 10% which was 8% previously. The filling station has an economic useful life of ten years after which, ¥ Ltd. piles ee to dismantle it and restore the site to its original state, This Ce Advise Y Lid. on how it should account for the lease a ‘financial statements for the year to 31 Ashadh 2077.ist D th the system. There is a 25% chance but a 75% chance that Dorjee n . Dorje is covered by insurance ce and a claim will be made as soon as the outcome of the case is cont accounting has taken place because the claim is expected t0 exactly offset agains the damages payable. Advise Dorjee about accounting treatment 4) Define Public Financial Management (PFM) system. Explain the problems of the PEM and budgetary policies of Nineties in Nepal and state some initiatives taken by the Government of Nepal to improve overall financial system of the Government. Himpiri Ltd, grants 250 stock options to cach of its 800 employees on I Shrawan, 2075, conditional upon the employee remaining in the company for 2 years. The fair value of the option is Rs. Gin the grant date and the exercise price is Rs. 70 per share, The number of employees expecteso satisfy service condition are 720 in the first year and 670 in the second seams vees left the company in the first year of service and/200) employees have actually completed second year vesting period. The profit of the company before amortization of the ‘compensation eost on account of employees stock option (ESOP) is Rs. 5,865,000 for FY 2075/76 and Rs. 7,645,000 for FY 2076/77. The fair value of shares for these years were Rs, 90 and Rs. 100 respectively. The company has $00,000 shares of Rs. 10 each outstanding at the end of both years Required: Calculate basic and diluted EPS for both ¢ taxation impacts. Saptari Lid, holds 35% of total equity shares of Mustang Ltd., an associate company. The value of investments in Mustang Ltd. on 31 Ashadh, 2076 is Rs. 30 millions in the consolidated financial statements of Saptari Ltd Saptari Ltd. sold goods worth Rs. 350,000 to 1g Ltd. The cost of goods sold is Rs, 300,000. Out of these, goods costing Rs, 100,000 to Mustang Ltd. were in its closing stock. During the year ended 31 Asadh, 2077 the profit and loss statement of Must Ltd. showed a loss of Rs. 10 millions. ae Required i) What is the value of investment in Mustang Ltd. as on 3] Ashadh, 2077 in the consolidated financial statements of Saptari Ltd., if equity method is adopted for valuing the investments inassociates? ii) Will your answer be different if Mustang Ltd. had earned fi ‘i Is id, ha a profit of Rs. 1 millions and declared a dividend of Rs. 7.5 anes He ec ee shareholders of the company? 3 pee oe Shrawan 2076 the fair value of the assets of a defined benefit plan were value at Rs, 1,100,000 and the present value of the defined benefit obligation was Rs. 1,250,000. On 31 Ashadh, 2077, the plan received contributions of RS. 490,000 from the employer and paid out benefits of Rs, 190,000, 4 The current service cost for the year was Rs, 360, 000 and a n e yea 0 ve to be applied to the net liability/(asset), ond a discount oa ie gigs aneastions: the fair value of the plan asset as at 31 Ashadh, 2077 was 500, ie present value of ch Peet Pp alue of the defined benefit obligation was Rs. Required Calculate the gain or loss on re-measurement through OCI and the asset, and illustrate how this plan willbe teated inthe statement of profi and other comprehensive income and statement of financial position for the ‘ended 31 Ashadh, 2077. ae