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Sample Paper 1Evaluation Test Booklet
(Code IEC)Total No. of Questions : 46 Total no. of printed pages
: 22Maximum Marks : 100 Time allowed : 3 HoursAll the questions are
compulsory, Question no. 1 to 40 carry 1.5 marks each, Question no.
41 to 45 carry 5marks each and Question No. 46 Carry 15
marks.InstructionsPlease read the instructions carefully before
solving the question paper.
1. Roll No. and Membership No. be written with blue/black ball
pen correctly in the space provided on the coverpage and nowhere
else.
2. Check that Booklet contains 46 questions. In case of any
discrepancy, inform the invigilator immediately.3. This paper has
three parts. Part A contains 40 questions carrying 1.5 marks each.
Part B contains 5 questions
carrying 5 marks each. Part C contains a case study carrying 15
marks. All question are compulsory and thereis no negative
marking.
4. Candidates should not use pencil to write the answers.5.
Unless otherwise stated, your answer should be based on IAS/IFRS
issued by IASB as applicable on 1-1-2011.
6. Your answers should be clear and to the point. No marks shall
be awarded for vague answers.
7. There will be options specified under each objective type
question you are required to choose answer whichyou deems to be the
most appropriate and /or correct and write legibly in capital
letter in the box provided in
front of options.8. No over writing or erasing is allowed, if
any correction or change in the answer is to be made, put X on
the
answer given and write the answer outside the relevant box.
9. If a candidate writes his roll no. or makes any
identification mark inside the answer book, it will tantamountto
unfair means.
10. The candidate should not open the booklet until instructed
by the invigilator.
11. Questions from 41 to 46 are subjective types and should
beanswer within the space provided for the same.
12. Use of mobile phone is not allowed during the exam.
13. While handing over question booklet, please ensure that
youhave obtained the signature of the invigilator in the AdmitCard
as a Proof of having submitted / returned the same.
14. The candidates should not leave the examination hall
withoutreturning the booklet to the invigilator
Marks awarded(Infigures)__________________________
Marks awarded(in words)__________________________
Signature of the Examiner________________________
Roll No. _______________________Membership No
________________
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PART A
Choose the most appropriate option and write your answer in the
space provided in the box with each question.
Q 1. The implementation of which of the following IFRS/IFRIC has
been deferred while notifying Ind-AS:(a) IFRS 4(b) IFRS 6
(c) IFRIC 4(d) All of the above
Q 2. Which of the following IAS/IFRIC has not been converged
with in Ind-AS notified by MCA:
(a) IAS 26(b) IAS 41(c) IFRIC 15(d) All of the above
Q 3. An entity buys a plot of land for the construction of
commercial real estate. It designs an office block tobuild on the
land and submits the designs to planning authorities in order to
obtain building permission.The entity markets the office block to
potential buyers and signs with one of them a conditional
agreementfor the sale of land and the construction of the office
block. The buyer cannot put the land or theincomplete office block
back to the entity. The entity receives the building permission and
all agreementsbecome unconditional. The entity is given access to
the land in order to undertake the construction andthen constructs
the office block. The entity separates the agreement into two
components:
(A) A component for sale of land(B) A component for construction
of the office block
Having regard to IFRIC 15, how should the entity recognize
revenue for the two components
(a) Based on IAS 11 for both the components(b) Based on IAS 18
for both the components(c) Apply IAS 18 to sale of land and IAS 11
to construction of office block (d) Apply IAS 11 to sale of land
and IAS 18 to construction of office block
Q. 4 Company P the parent is holding 100 % shares in subsidiary
S .
P has sold off 60 % of its holding in S for consideration of
.........Rs. 600
Fair value of retained portion ( 40 % ) in S is
...............................Rs. 400
Carrying Value of identifiable net assets of subsidiary S was
..Rs. 600
Good will
was.....................................................................................Rs.
100
Gain or loss on interest sold and retained non-controlling
interest.
(a) Rs. 360(b) Rs. 240(c ) Rs. 280
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(d) Rs. 300
Q5. At the beginning of the year, X Ltd. domiciled in UK has a $
1 million foreign currency loan. The interestrate on the loan is 4%
p.a. payable at the end of the period.An equivalent borrowing in
sterling would carryan interest rate of 6% p.a.The spot rate at the
beginning of the year is Sterling 1=$1.55 and at the end of theyear
is Sterling 1=$ 1.50.
What part of the exchange difference can be treated as interest
by X Ltd.:
(a) Rs. 21,506(b) Rs. 12,043(c) Rs. 9,463(d) None of the
above
Q 6. In which of the following situation it would be considered
that an entity has retained substantially all therisks and rewards
of ownership are:
(a) an unconditional sale of a financial asset;(b) a sale of a
financial asset together with a put or call option that is deeply
out of the money(c) a securities lending agreement;(d) None of the
above
Q 7. An asset with a cost of Rs. 100 and a carrying amount of
Rs. 80 is revalued to Rs. 150. No equivalentadjustment is made for
tax purposes. Cumulative depreciation for tax purposes is Rs. 30
and the tax rate is30%. If the asset is sold for more than cost,
the cumulative tax depreciation of Rs. 30 will be included
intaxable income but sale proceeds in excess of cost will not be
taxable.
If the entity expects to recover the carrying amount by using
the asset, the deferred tax liability will be :
(a) Rs. 24(b) Rs. 45(c) Rs. 80(d) None of the above
Q 8. The following two statements are made in the context of IAS
20:
I. The benefit of a government loan at a below-market rate of
interest is treated as a governmentgrant.
II. The benefit of the below-market rate of interest shall be
measured as the difference between the
initial carrying value of the loan determined in accordance with
IAS 39 and the proceeds received.
State which of the following is correct:
(a) I is correct, II is incorrect(b) II is correct, I is
incorrect(c) Both I & II are incorrect(d) Both I and II are
correct
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Q 9. Which of the following statement is correct:
(a) If a sale and leaseback transaction results in a finance
lease, any excess of sales proceeds over thecarrying amount is
recognised as income immediately by a seller-lessee.
(b) If a sale and leaseback transaction results in an operating
lease and if the transaction is at fairvalue, any profit or loss
shall be recognized immediately.
(c) If a sale and leaseback transaction results in an operating
lease and if the sale price is below fairvalue, any profit or loss
will be recognised over the lease term.
(d) All of the above
Q. 10 Entity A is adopting IFRS on 1 st April,2010. It has opted
for the voluntary exemption for complying withthe requirements of
the IFRIC 1.
The Entity had purchased this equipment on 1 st April,2005.
The useful life of equipment is 20 years. ( 2005-2025)
The entity is bound to incur decommissioning cost of Rs. 1,000,
after useful life of the equipment.
The discounting rate is 5 %. P V factors for 15 years and 20
years respectively, are 0.4810 and 0.3768.
Which of the following journal entries passed by the Entity A on
the date of transition is correct ?
a) Property Plant & Equipment Dr 377De-commissioning
Liability Cr. 377
b) Property Plant & Equipment Dr. 481De-Commissioning
Liability Cr. 481
c) Property Plant & Equipment Dr. 377Retained Earnings Dr.
104De-Commissioning Liability Cr. 481
d) Property Plant & Equipment Dr. 377Retained Earnings Dr.
198Accumulated Depreciation Cr. 94De-commissioning Liability Cr.
481
Q11. On March 18, 2009, the management of an entity authorises
financial statements for issue to itssupervisory board. The
supervisory board is made up solely of non-executives and may
includerepresentatives of employees and other outside interests.
The supervisory board approves the financialstatements on March 26,
2009. The financial statements are made available to shareholders
and others onApril 1, 2009. The shareholders approve the financial
statements at their annual meeting on May 15, 2009and the financial
statements are then filed with a regulatory body on May 17,
2009.
Based on IAS 10, what is the date on which the financial
statements will be considered to have beenauthorised for issue:
(a) March 18, 2009(b) March 26, 2009(c) May 15, 2009(d) None of
the above
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For Q 12 & 13, refer to the following facts:A construction
contractor has a fixed price contract for Rs. 9,000 to build a
bridge. The initial amount of revenue agreed in the contract is Rs.
9,000. The contractors initial estimate of contract costs is Rs.
8,000.It will take 3 years to build the bridge.
By the end of year 1, the contractor s estimate of contract
costs has increased to 8,050.In year 2, the customer approves a
variation resulting in an increase in contract revenue of 200
andestimated additional contract costs of 150. At the end of year
2, costs incurred include 100 for standardmaterials stored at the
site to be used in year 3 to complete the project.
The contractor determines the stage of completion of the
contract by calculating the proportion thatcontract costs incurred
for work performed to date bear to the latest estimated total
contract costs. Asummary of the financial data during the
construction period is as follows:
Year 1 Year 2 Year 3
Initial amount of revenue agreed in contract 9,000 9,000
9,000
Variation 200 200
Total contract revenue 9,000 9,200 9,200
Contract costs incurred to date 2,093 6,168 8,200
Contract costs to complete 5,957 2,032
Total estimated contract costs 8,050 8,200 8,200
Estimated profit 950 1,000 1,000
Stage of completion 26% 74% 100%
The stage of completion for year 2 (74%) is determined by
excluding from contract costs incurred for work performed to date
the 100 of standard materials stored at the site for use in year
3.
Q12. The amount of revenue to be recognised in year 2 is:
(a) Rs. 4,468(b) Rs. 6,808(c) Rs. 9,200(d) None of the above
Q13. The amount of profit to be recognised in year 3 is :
(a) Rs. 1,000(b) Rs. 1,050(c ) Rs. 260(e) None of the above
Q14. Which of the following may be a qualifying asset for the
purpose of IAS 23:
(a) inventories(b) intangible assets(c) investment properties(d)
all of the above
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Q 15. Which of the following is an investment property:
(a) land held for long-term capital appreciation rather than for
short-term sale in the ordinary courseof business.
(b) land held for a currently undetermined future use.(c) a
building owned by the entity (or held by the entity under a finance
lease) and leased out under
one or more operating leases.(d) all of the above
Q 16. An entity is computing value in use for the purpose of
impairment testing. It expects that a cash flow of Rs.1,000 may be
received in one year, two years or three years with probabilities
of 10 per cent, 60 percent and 30 per cent, respectively. The
expected present value in that situation will be:
(a) Rs. 95.24(b) Rs. 892.36(c) Rs. 950.45(d) None of the
above
Q 17. Which of the following expenditure should not form part of
cost of intangible asset:
(a) costs of employee benefits arising directly from bringing
the asset to its working condition;(b) costs of testing whether the
asset is functioning properly.(c) costs of conducting business in a
new location or with a new class of customer;(d) all of the
above
Q18. Cash flows arising from which of the following activities
of a financial institution may be reported on a netbasis in a cash
flow statement:
(a) cash receipts and payments for the acceptance and repayment
of deposits with a fixed maturitydate;
(b) the placement of deposits with and withdrawal of deposits
from other financial institutions; and(c) cash advances and loans
made to customers and the repayment of those advances and loans.(d)
all of the above
Q.19 In the context of IAS 33, following are the two statements
:
1) If the bonus issue, stock dividend, and other similar events
occurred after the balance sheet date butbefore the financial
statements are authorized, then the earnings per share calculations
should reflectthese changes. This applies also to prior periods and
to diluted earnings per share.
2) Basic and diluted earnings per share are also adjusted for
the effects of errors and adjustmentsresulting from changes in
accounting policies, accounted for retrospectively
Which of the following combinations is correct ?
Statement 1 Statement 2
a) False False
b) False True
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c) True True
d) True False
Q. 20. On 30th March 2010 , Dil Bahar Enterprises recognised
revenue for goods sold for a total sales price of Rs. 7,20,000.
These goods are to be used by the customer on a long-term basis.
The contract of sales obliges Dil BaharEnterprise to provide two
years servicing to the customer for no additional payment.
The normal selling price of the goods without any agreement to
provide servicing would have been Rs.6,40,000 A service contract of
the type being provided by Dil Bahar Enterprises to this customer
wouldnormally produce service revenue of Rs. 80,000 per annum.
In the context of IAS 18, split identifiable transaction, total
consideration has to be split into Revenue fromsale of goods and
service contract.
Dil Bahar Enterprises has been given following options given by
the accountant. Which of them is correctfrom the perspective of IAS
18. ?
Ignore discounting.
Revenue Deferred Income
a) 6,40,000 1,60,000b) 5,76,000 1,44,000c) 7,20,000 Nild)
8,00,000 Nil
Q21. Under IFRS 8, if revenues from transactions with a single
external customer amount to 10 per cent or moreof an entitys
revenues, the entity shall disclose the following:
(a) the total amount of revenues from each such customer(b)
identity of the customer(c) both (a) and (b)(d) neither (a) nor
(b)
Q.22 Entity A purchases 100 shares of Entity B with a quoted
price of CU 150 each for at total consideration of CU 15,000. In
addition, Entity A incurs transaction costs in the form of broker
fees of CU 150 to acquirethe shares. Entity A is contemplating to
classify them either as Fair Value through Profit &
loss(FVTPL)Account or As Available for Sale. Which of the following
combination of initial measurement iscorrect for above
categories.
Classification as ------ FVTPL Available for sale
a) 15,000 15,150b) 15,150 15,000c) 15,000 15,000d) 15,150
15,150
Q 23. An entity shall measure a non-current asset (or disposal
group) classified as held for distribution to ownersat:
(a) Its carrying amount
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(b) Fair value less costs to distribute(c) lower of its carrying
amount and fair value less costs to distribute.(d) higher of its
carrying amount and fair value less costs to distribute.
Q 24. An entity shall not apply IFRS 4 to:
(a) product warranties issued directly by a manufacturer, dealer
or retailer(b) employers asse ts and liabilities under employee
benefit plans(c) direct insurance contracts that the entity holds
(ie direct insurance contracts in which the entity is
the policyholder).(d) all of the above
Q25. An entity grants 100 share options to each of its 500
employees. Each grant is conditional upon theemployee working for
the entity over the next three years. The entity estimates that the
fair value of eachshare option is Rs.15.
On the basis of a weighted average probability, the entity
estimates that 20 per cent of employees willleave during the
three-year period and therefore forfeit their rights to the share
options.The remunerationexpense for year 3 will be:
(a) Rs. 2,00,000(b) Rs. 4,00,000(c) Rs. 6,00,000(d) None of the
above
Q26. Which of the following is not a financial instrument?
(a) Inter-company trading balances with subsidiaries, associates
and joint ventures
(b) Finance lease receivables (recognized by a lessor)(c)
Contingent consideration in a business combination (acquirer
only)(d) Pre- payments- goods and services.
Q27. What are the characteristic of Derivatives?1. Value changes
in response to changes in specified underlying price/ index2.
requires no or little net investment3. Settled at a future date
(a) 1 & 3 are correct and 2 is false(b) 1 & 2 are
correct and 3 is false
(c) 2 & 3 are correct and 1 is false(d) 1, 2 & 3 are
correct
Q28. A owns a generating facility with a book value of Rs.55
million. B owns 60% voting rights in a powerdistribution company C.
On 1-4- 2010,A sold its generating facility to B and received in
exchange Bsinterest in C. The fair value of the generating facility
on the date of exchange is Rs.150 million and the netassets of C on
that date is Rs.200 million. Assuming this transaction amounts to
business combinationunder IFRS 3,compute the goodwill or bargain
purchase in the books of A and settlement gain or loss, if any. A
has decided to measure non controlling interest at fair value.(a)
goodwill Rs. 30 million and settlement gain Rs. 95 million
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(b) bargain purchase Rs. 30 million and settlement gain Rs. 95
million(c) bargain purchase Rs. 95 million and no settlement gain
or loss(d) none of the above
Q29. A Ltd. acquired 30% stake in B Ltd. and has a significant
influence. The cost of the investment wasRs.2,50,000.The net assets
of B Ltd. are Rs.5,00,000 at the date of acquisition of stake by A
Ltd. The fair
value of the assets is Rs. 6,00,000. The difference is
attributed to the fact that fair value of Property, Plant&
Equipment (PPE) is higher than the book value by Rs. 1,00,000.The
remaining useful life of PPE is 10years.The post acquisition PAT of
B Ltd. is Rs.1,00,000.It has also paid a dividend of Rs. 9,000.B
Ltd. has alsorecognized exchange losses of Rs. 20,000 in Other
Comprehensive Income.Compute the value of A Ltd. interest in B Ltd.
at the end of the year.
(a) Rs. 2,50,000(b) Rs. 2,68,300(c) Rs. 2,71,300d) None of the
above
Q 30. Under IFRS 1, cost or fair value option is available for
property, plant and equipment on:
(a) Item by item basis(b) Class of asset basis(c ) Property,
plant and equipment as a whole(d) There is no such option and fair
value is mandatory
Q31. An entity recognises a liability of Rs.100 for accrued
product warranty costs. For tax purposes, theproduct warranty costs
will not be deductible until the entity pays claims. The tax rate
is 25%. The tax baseand deferred tax asset respectively will
be:
(a) Rs. 100 & Rs. 25(b) Nil & Nil(c) Nil & Rs. 25(d)
None of the above
Q32. A grocery retailer operates a customer loyalty programme.
It grants programme members loyalty pointswhen they spend a
specified amount on groceries. Programme members can redeem the
points for furthergroceries. The points have no expiry date. In one
period, the entity grants 100 points. Management expects80 of these
points to be redeemed. Management estimates the fair value of each
loyalty point to be Re. 1and defers revenue of Rs.100. At the end
of the first year, 40 of the points have been redeemed in
exchangefor groceries. How much revenue should be recognised by the
grocery retailer in year 1:
(a) Rs. 50(b) Rs. 40(c) Rs. 100(d) None of the above
Q 33. On 1 January 2010, an entity acquired goods for sale in
the ordinary course of business for Rs.100,000,including Rs.5,000
refundable purchase taxes. The supplier usually sells goods on
Cash. However, as aspecial promotion, the purchase agreement for
these goods provided for payment to be made in full on 31December
2010. In acquiring the goods transport charges of Rs.2,000 were
incurred: these were due on 1January 2010.
An appropriate discount rate is 10 per cent per year.
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The entity shall measure the cost of inventories at:(a)
Rs.102,000(b) Rs.97,000(c) Rs.88,364(d) None of the above
Q 34. Which of the following statements is true?
(a) An entity must correct a prior period error retrospectively
in the first financial statementsauthorised for issue after its
discovery.
(b) To the extent practicable, an entity must correct a prior
period error prospectively in the firstfinancial statements
authorised for issue after its discovery.
(c) When an entity discovers an error in its financial
statements of a prior period, it must immediatelywithdraw those
financial statements and reissue them with the error corrected.
(d) To the extent practicable, an entity must correct a prior
period error retrospectively in the firstfinancial statements
authorised for issue after its discovery.
Q35. Which of these considerations would not be relevant in
determining the entitys functional currency?
(a) The currency that influences sales prices for goods and
services
(b) The currency that mainly influences labor, material and
other costs of providing goods andservices(c) The most financially
stable currency that is frequently used in business transactions(d)
The currency in which funds from financing activities are
generated
Q36. In which of the following cases, an entity has retained
substantially all the risks and rewards of ownership
(a) a sale and repurchase transaction where the repurchase price
is a fixed price or the sale price plusa lenders return;
(b) a sale of a financial asset together with a total return
swap that transfers the market risk exposureback to the entity;
(c) a sale of short-term receivables in which the entity
guarantees to compensate the transferee forcredit losses that are
likely to occur
(d) all of the above
Q37. Given below are few statements in respect of subsidiaries,
associates and joint ventures:
(i) The equity method is a method of accounting whereby the
investment is initially recognised atcost and adjusted thereafter
for the post- acquisition change in the investors share of net
assets of the investee. The profit or loss of the investor includes
th e investors share of the profit or loss of the investee.
(ii) Joint control is the contractually agreed sharing of
control over an economic activity, and existsonly when the
strategic financial and operating decisions relating to the
activity require theunanimous consent of the parties sharing
control (the venturers).
(iii) Separate financial statements are those presented by a
parent, an investor in an associate or aventurer in a jointly
controlled entity, in which the investments are accounted for on
the basis of the direct equity interest rather than on the basis of
the reported results and net assets of theinvestees.
(iv) Significant influence is the power to govern in the
financial and operating policy decisions of theinvestee.
Which of the above statements are correct?
(a) (i),(ii) , (iii) & (iv)
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(b) (i) and (ii)(c) (i) and (iii)(d) (i),(ii) and (iii)
Q38. A Ltd. sells 85% interest in B Ltd., its wholly owned
subsidiary. After the sale, A Ltd. recognizes itsresidual interest
in B Ltd. as available for sale investment.Net assets of B Ltd.
before the sale of stake areRs.5,00,000 and the cash proceeds from
the sale of 85% interest are Rs. 7,50,000.The fair value of
theremaining stake held by A Ltd. is Rs. 1,30,000. What is the
amount of gain on loss of control over B Ltd.that should be
recognized by A Ltd.?
(a) Rs. 3,25,000(b) Rs. 3,80,000(c ) Nil(d) None of the
above
Q39. An entity is the defendant in a patent infringement
lawsuit. The entitys lawyers believe there is a 30 percent chance
that the court will dismiss the case and the entity will incur no
outflow of economic benefits.
However, if the court rules in favour of the claimant, the
lawyers believe that there is a 20 per cent chancethat the entity
will be required to pay damages of Rs.200,000 (the amount sought by
the claimant) and an80 per cent chance that the entity will be
required to pay damages of Rs.100,000 (the amount that wasrecently
awarded by the same judge in a similar case). Other outcomes are
unlikely.
The court is expected to rule in late December 2010. There is no
indication that the claimant will settle outof court. A 7 per cent
risk adjustment factor to the probability-weighted expected cash
flows is consideredappropriate to reflect the uncertainties in the
cash flow estimates. An appropriate discount rate is 10 percent per
year.At 31 December 2009 the entity recognises a provision for the
lawsuit measured at:
(a) Rs.100,000.(b) Rs.89,880.(c) Rs.81,709(d) None of the
above
Q 40. Y Ltd. buys a printing machine which was priced at Rs. 50
lakhs. If Y Ltd. pays within 30 days of deliverythey will receive a
8% discount on the invoice price. Y Ltd. plans to take advantage of
the discount. Thesupplier also charged an assembling fee of Rs.5
lakhs (to which the discount does not apply). At whatamount should
Y Ltd. initially recognise this machine?
a) Rs. 50 lakhs
b) Rs. 55 lakhsc) Rs. 51 lakhsd) None of the above
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PART B
The answer to each question should not exceed 5 to 8
sentences.
In the context of IAS 1, define re-classification adjustments
and also give 2 examples of reclassificationadjustments. 5
marks
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Q42. An entity issues 2,000 convertible bonds at the start of
year 1. The bonds have a three-year term,and are issued at par with
a face value of Rs.1,000 per bond. Interest is payable annually in
arrears at anominal annual interest rate of 6 per cent. Each bond
is convertible at any time up to maturity into 250ordinary shares.
When the bonds are issued, the prevailing market interest rate for
similar debt withoutconversion options is 9 per cent. You are
requested to compute the amount of :
(a) liability component
(b) equity component 5 Marks
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Q43.
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Following expenses has been debited to cost of sales.
CU
Labour Cost 5,000
Material 10,000
Machinery exclusively used for the contract 30,000(useful life 2
years)
------------Total 45,000
=======
The Speakwell expects to incur following cost on account of the
contract during the year 2011.CU
Labour cost 10,000
Material 15,000
------------Total 25,000
=======
(4) At 1 January,2010 capital and reserves comprised CU
Ordinary share capital 320,000Revaluation surplus (relating to
land) 50,000Retained earnings 278,000
-----------Total 6,48,000
======For the year ended 31 December 2010 ,based on information
available , you are requested to :-
(i) Prepare Statement of Comprehensive Income(ii) Statement of
changes in equity.
Give suitable working notes.
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8/12/2019 27909 if Rs March 2012
18/21
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8/12/2019 27909 if Rs March 2012
19/21
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8/12/2019 27909 if Rs March 2012
20/21
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8/12/2019 27909 if Rs March 2012
21/21
