A.

Oceana Global Limited Consolidated Statement of Financial Position As of March 31, 2011

ADVANCED ACCOUNITNG & FINANCIAL REPORTING Suggested Answers Final Examinations Summer 2011 2011 Rs. in million

Assets Non-current assets Property, plant and equipment {700+200+(35 10)} Goodwill Current assets (350+150 1.2515) Equity and liabilities: Capital and reserves Share capital Retained earnings

W-1

Non-controlling interest W-1

Non-current liabilities (150+40) Current liabilities (182+130 15)

W-2 W-3

925.00 21.00 946.00 483.75 1,429.75 300.00 564.31 864.31 78.44 942.75 190.00 297.00 1,429.75

W-2

Goodwill Fair value of 10% equity interest as of October 1, 2010 Purchase consideration for further acquisition of 45% equity Fair value of non-controlling interest Total purchase consideration IGL identifiable net assets on acquisition date of Oct. 1, 2010 (100+60+35-10)

W-3 W-4

Retained earnings OGL Balance as of 31-3-2011 Cost incurred during the year for acquisition of 45% equity in RGL Fair value reserve - transferred to PL on deemed disposal of 10% equity in RGL Increase in fair value of 10% equity as of October 1, 2010 (28-23) Post acquisition profit share in RGL (80 60 1.25) 55% Non-controlling interest in RGL Fair value of NCI as of October 1, 2010 NCI share in post acquisition profit (80 60 1.25 ) 45%

28.00 108.00 70.00 206.00 (185.00) 21.00

550.00 (4.00)

3.00 5.00 10.31 564.31

Unrealized profit on inter company stock in hand (30 25) 25%

70.00 8.44 78.44 1.25

Page 1 of 6

A.2

Kahkashan Limited Statement of Comprehensive Income For the year ended March 31, 2011

ADVANCED ACCOUNITNG & FINANCIAL REPORTING Suggested Answers Final Examinations Summer 2011 2011 Rs. in million 800.000 (640.000) 160.000 3.000 (32.000) (20.600) (10.591) 2.500 102.309 (35.183) 67.126
PV at 14% discount Rs. in million

(i)

Additional finance cost on redeemable TFC 31-Mar-2011 31-Mar-2012 31-Mar-2013 31-Mar-2014 31-Mar-2014 Date

Sales Cost of sales Gross profit Other operating income [13-9(ii)-1(iii)] Selling and distribution expenses Administrative expenses [15+5(iv)+0.6(iv)] Financial charges [10+0.591(i)] Share of profit of associates - net of tax Profit before taxation Taxation Profit for the year Other comprehensive income, net of tax Share of other comprehensive income of associates Total comprehensive income for the year PV of 2nd. Year payment of interest PV of 3rd. Year payment of interest PV of 4th. Year payment of interest PV of redemption of TFC Liability component
PV of 1st. Year payment of interest (50*12%)

(v)

(iii) (iii)

Cash outflow

0.500 67.626

(ii) (iii)

Interest cost for the year on liability component (47.078*14%)

Interest cost paid Additional finance cost to be booked

Profit on sale and lease back of plant Profit accounted for on disposal of plant Profit to be booked Profit to be deferred over the remaining period of lease

(50.00*12%)

6.00 6.00 6.00 6.00 50.00

0.877 0.769 0.675 0.592 0.592

5.262 4.614 4.050 3.552 29.600 47.078 6.591 6.000 0.591

(iv)

Income from associates Dividend income from associate undertaking previously credited to other operating income now credited to investments 25% Share of for the year profit of associates, net of tax 25% Share of other comprehensive income of associates, net of tax Impairment of plant Carrying value as of October 1, 2010 Recoverable amount (Higher of NRV at Rs. 12 and value in use at Rs. 16) Impairment loss Depreciation to be booked Apr. 1, 2010 to Sept. 30, 2010 Depreciation to be booked Oct. 1, 2010 to Mar. 31, 2011 For the year deprecation ignoring valuers report Additional depreciation to be booked

53-43 (10/5*0.5) (10*25%) (2*25%)

(30/15*10.5) (30/15*0.5) (16/5*0.5) (30/15)

(1.000) 2.500 0.500 2.000 21.000 16.000 5.000 1.000 1.600 2.600 (2.000) 0.600
Page 2 of 6

10.000 1.000 9.000

(v)

Taxation Taxable income Profit before tax Additional finance cost on TFCs (i) Deferred profit on sale of the plant 25% Share of profit of associates excluded as taken net of tax Accounting depreciation on finance lease asset (53/5*0.5) Finance charges included in lease installment {(53 7)*13.507/2} Lease installment Impairment of the plant Additional accounting depreciation due to damage to the plant Total business income Current years tax expense Tax at 35% on business income Tax at 10% on dividend income of Rs. 1.000

ADVANCED ACCOUNITNG & FINANCIAL REPORTING Suggested Answers Final Examinations Summer 2011
102.309 0.591 9.000 (2.500) 5.300 3.127 (7.000) 5.000 0.600 116.427 6.000 40.749 0.100 40.849 1.470

Prior years tax expense Liabilities outstanding for more than three years added to income Payment of liabilities outstanding for more than 3 years added to income in prior years allowable during the year

Deferred tax credit Additional finance cost on TFCs Profit on sale and leaseback of the plant deferred over the lease period Assets / liabilities subject to finance lease (5.3 +3.127 7) Impairment of the plant Additional accounting depreciation on the plant Balance of liabilities outstanding for more than three years added to income in prior years (6 1.8) Tax credit at 35% Deferred tax expense Tax on the difference between share of profit of associate and the dividend received from the associate (2.500 1.000)*10%

(1.800) 4.200

4.200 20.818

0.591 9.000 1.427 5.000 0.600

(7.286) 35.183 0.150

A.3

31-03-11 PL Account (Depreciation exp) 70,000/8 Accumulated depreciation PL Account (Unwinding of discount) Site restoration liability (Unwinding of discount) Revaluation surplus (Incremental depreciation) Retained earnings (Incremental depreciation) PL account (Excess of increase in site restoration cost over revaluation balance) 2.542-1.843 Revaluation surplus (Increase in site restoration cost) Site restoration liability (Increase in site restoration cost)

A-6 Journal entry Date

Net tax expense

Particulars

Ref.

1 1 1 1 2 2

2.542 12.434 12.434

Dr. Cr. Rs. in million 8.750 8.750 0.681 0.681 0.461 0.461 0.699

1.843

Page 3 of 6

01-04-05 PV of site restoration cost of Rs. 10 million at 10% discount rate 31-03-06 Unwinding at 10% 31-03-07 Unwinding at 10% 31-03-07 Carrying value of the plant (80+3.855)*8/10 31-03-07 Revalued amount of the plant 31-03-08 Unwinding at 10% / Incremental dep. (2.916/8) 31-03-09 Unwinding at 10% / Incremental dep. 31-03-09 Increase / (decrease) in liability / revaluation surplus on revision of discount rate to 12% 31-03-09 PV of site restoration cost of Rs. 10 million at 12% discount rate 31-03-10 Unwinding at 12% / Incremental dep. (2.765/6) 31-03-11 Unwinding at 12% / Incremental dep. 31-03-11 Increase / (decrease) in liability relating to site restoration costs
A.4

WORKING

ADVANCED ACCOUNITNG & FINANCIAL REPORTING Suggested Answers Final Examinations Summer 2011

10/(1.1)10 67.084 70.000

Ref. restoration

liability

Site

3.855 0.386 0.424

Revaluation surplus

10/(1.12)6

5.0665.645

31-03-11 PV of site restoration cost of Rs. 14 million at 12% discount rate

Rahat Limited Notes to and forming part of the financial statements For the year ended March 31, 2011 1 1.1 Earnings per share:

14/(1.12)4

8.897-

6.355

1 2

(0.579) 5.066# 0.608 0.681 6.355 8.897

0.467 0.513 5.645

2.916 (0.365) (0.365) 2.186 0.579

2.542

2.765 (0.461) (0.461) 1.843 (1.843) -

Basic earnings per share Profit after taxation Dividend on 15% convertible preference shares (19,000*15%) / (20,000*15%) Profit attributable to ordinary shareholders Weighted average number of ordinary shares in issue Basic earnings per share Diluted earnings per share Profit after taxation Weighted average number of shares in issue Conversion of 10,000 cumulative preference shares on July 1, 2010 (10*7)/12*3 Adjustment for potential ordinary shares on conversion of 15% cumulative preference shares (190*7)/(200*7) Weighted average number of shares for diluted earnings Diluted earnings per share

2011 2010 Rs. / Shares in '000 150,000 (2,850) 147,150

1.2

W1 Rs. W1

150,000 5,638.28 1,330.00 17.50

5,638.28 26.10

(3,000) 107,000 Restated 5,170.36 20.69 110,000 5,170.36 -

110,000

1.3

During the year the company has issued 1 million right ordinary shares at Rs. 12 per share against the prevailing market price of Rs. 15 per share. This has resulted in restatement of basic and diluted earnings per share for the year ended March 31, 2010.

Rs.

6,985.78 21.47

1,400.00 Restated 6,570.36 16.74

Page 4 of 6

ADVANCED ACCOUNITNG & FINANCIAL REPORTING Suggested Answers Final Examinations Summer 2011
W-1 Weighted average ordinary shares outstanding for 'Basic EPS'
Balance Conversion of 10,000 cumulative preference shares Weighted average shares Right issue Description Date of issue 01-0410 01-0710 01-1010 Actual No. of shares 5,000 70 5,070 1,000 6,070 Time 2011 3/12 3/12 6/12 1.034072 1.034072 Bonus factor (W-2)

Actual Weighted No. of average shares shares 1,292.59 1,310.69

5,000

2010 (Restated) Bonus Weighted factor average (W-2) shares 1.034072

5,170.36

W-2

A.5

Galaxy Textiles Limited Notes to the financial statements For the year ended March 31, 2011 Gratuity Fund 1

Calculation of theoretical ex-right value per share and bonus adjustment factor: Outstanding shares before the exercise of rights at fair value 5,070 Exercise of rights issued at Rs. 12 per share 1,000 6,070 Theoretical ex-right value per share 88,050/6,070 Bonus adjustment factor 15/14.50576

3,035.00 5,638.28

15.0 12.0

1.1

The amounts recognized in the statement of financial position are as follows: Present value of defined benefit obligation 1.1 Fair value of plan assets 1.2 Unrecognized actuarial losses W.1 Changes in the Present value of the defined benefit obligations are as follows: Opening defined benefit obligation Current service cost Interest cost Benefits paid to the employees Actuarial losses (balancing amount) Closing defined benefit obligation Changes in the fair value of plan assets are as follows: Opening Fair value in plan assets Expected return on plan assets Contribution by employer Benefits paid to the employees Actuarial losses (balancing amount) Closing fair value of plan assets

2011 Rs. in million

76,050 12,000 88,050 14.50576 1.034072

5,170.36

166.00 (120.00) 46.00

1.2

1.3

1.3 W-1

The amounts recognized in profit or loss are as follows Current service cost Interest on obligation Net actuarial loss recognized in the year Expected return on plan assets Unrecognized actuarial losses Opening net actuarial losses For the year actuarial losses on plan obligation

114.00 14.00 17.32 (6.00) (19.32) 120.00

133.00 15.00 16.00 (6.00) 8.00 166.00

W-2 1.1

15.00 16.00 0.32 (14.00) 17.32

Page 5 of 6

19.00 8.00

W-2

A.6

A-One Asset Management Fund Limited Statement of Movement in Unit Holders' Fund For the year ended March 31, 2011 Net assets at the beginning of the year Issue of 100 million units Redemption of 95 million units

For the year actuarial losses on plan assets 1.2 Actuarial losses adjusted during the year W-2 Closing in net actuarial losses Unrecognized loss adjusted during the year (Based on 10% corridor) Cumulative actuarial loss as at April 1, 2010 10% of greater of: the present value of the defined benefit obligations of Rs. 133 million; and the fair value of plan assets of Rs. 114 million Actuarial losses exceeding 10% Unrecognized loss adjusted during the year (5.70/18 years)

ADVANCED ACCOUNITNG & FINANCIAL REPORTING Suggested Answers Final Examinations Summer 2011

19.32 (0.32) 46.00 (13.30) 5.70 0.32 19.00

Element of income and capital gains included in prices of units issued / redeemed transferred to income statement Net unrealized appreciation of re-measurement of investments classified as available for sale (1,800-1,200-480) Capital gains Net unrealized appreciation on re-measurement of investments classified as financial assets at fair value through profit or loss (2,500-2200) Other net income for the year Final distribution for the year ended March 31, 2010 at Rs. 4 per unit (900*4) Net assets at the end of the year (The End)

2011 Rs. in million 27,000 3,500 (3,277) 223 27,223 (173) 120 400

300 3,000 (3,600) 100 27,270

Page 6 of 6