201.AFA IP.L II December 2020

CMA DECEMBER, 2020 EXAMINATION
PROFESSIONAL LEVEL-II
SUBJECT: 201. ADVANCED FINANCIAL ACCOUNTING-I
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) Briefly explain how and when revenues and expenses are recognized in construction
contract as per IAS-II.
(b) Miracle Construct Inc. is executing a gigantic project of constructing the tallest building in the
country. The project is expected to take three years to complete.
The company has signed a fixed price contract of Tk. 12,000,000 for the construction of this
prestigious tower.
The details of the costs incurred to date in the first year are:
Site labor costs Tk. 10,00,000
Cost of construction materials 30,00,000
Depreciation of special plant equipment used in 5,00,000
contracting to build the tallest building
Marketing and selling costs to get the tallest building in 10,00,000
the country the right exposure
Total: Tk. 45,00,000
Total contract cost estimate to complete Tk. 55,00,000
Required:
Calculate the percentage of completion and the amounts of revenue, costs and profits to be
recognized under IAS-11.
[Marks: (5+12) = 17]
Q. No. 2
(a) What do you understand by a statement of affairs and a Deficiency account? How are these
prepared?
(b) A field his petition for bankruptcy on 31, December 2018. His books showed that he owed
Tk. 50,000 to trade creditors, Tk. 30,000 to creditors holding lien on stock-in-trade for Tk.
8,000; Tk. 10,000 mortgage on works; and Tk. 1,000 for salaries, wages and rates. Bills for
exchange for Tk. 10,000 had been discounted with his bankers; and it was estimated that
there was a liability of Tk. 3,000 in respect of them.
A’s assets were:
Consignment Tk. 20,000 estimated to realise Tk. 2,000; Good book debts Tk. 18,000;
Doubtful debts Tk. 6,000 estimated to realise Tk.3000. Bad debts Tk. 15,650. Work cost Tk.
100,000 (depreciated out of profit and loss to Tk. 75,000) estimated to realize Tk. 50,000.
Furniture and fittings Tk. 2000 estimated to realise Tk. 1,000; Stock-in-trade Tk. 25,000
estimated realize Tk. 8,000; cash Tk. 1,350. He commenced business 1 st January 2014 with
a capital of Tk. 90,000. After charging annually Tk. 5,000 for depreciation on works and Tk.
5,500 for interest on capital, the trading shows a profit Tk. 6,500 in 2014. Tk. 5,000 in 2015
and loses of Tk. 6,000 in 2016 Tk. 7,000 in 2017 and Tk. 9,500 in 2018. He lost Tk. 14,500 in
speculation while his drawings averaged Tk. 4,000 a year.
Required:
(i) Prepare statement of affairs based on the above information.
(ii) Draw up his Deficiency Account.
[Marks: (5+10+8) = 23]
Page 1 of 4
Q. No. 3
(a) State the provision with regard to “Loan Loss Provision” and “Interest Suspense” in a banking
company financial statements
(b) The following is the Trial Balance of City Bank Ltd. As on 31st December 2019:
Particulars Debit Rs. Credit Rs.
Share Capital (3,000 share of Tk.10 each) 300,000
Statutory Reserve 400,000
Deposits - Fixed 278,000
Saving 450,000
Current 374,000
Cash in Hand 290,000
Cash with RBI 420,000
Interest and Discount 300,000
Commission and Brokerage 50,000
Interest on Fixed Deposit 30,000
Interest on Saving Deposit 20,000
Interest on Current Deposit 12,500
Salaries (including Tk. 12,000 to Manager) 131,000
Rent, Insurance and Taxes 4,000
Postages and Telegrams 900
Printing and Stationery 7,000
Audit Fees 4,000
Depreciation 3,300
Investment on Shares 84,000
Loans, Cash Credit and Overdrafts 490,000
Bills Discounted and Purchased 180,000
Governments Bonds 160,000
Furniture 40,000
Premises 300,000
Branch Adjustment Account 24,700
2,176,700 2,176,700
Additional Information:
(1) Rebate on Bills discounted Tk. 27,000
(2) Create Contingency of Tk. 11,000
(3) Acceptances on behalf of customers Tk. 80,000
You are required to prepare Profit and Loss Account for the year ended 31st December 2019
and a unformal Balance Sheet as at December 31, 2019.
[Marks: (5+8+7) = 20]
Page 2 of 4
Q. No. 4
Venus Ltd. a manufacturing business, exports some of its products through its overseas branch
whose currency is' Florins'. The branch carries out the final assembly operations before selling the
goods. The trial balance of the head office and the branch as on 30th June, 2006 were as under.
Particulars Head Office Branch Office

Dr. (Tk.) Cr. (Tk.) Dr.( Tk.) Cr.( Tk.)
Freehold building at cost 14,000 63,000
Debtors/ Creditors 8,900 9,500 36,000 1,560
Sales 1,04,000 4,3,2000
Authorized and issued capital 40,000
Components sent to branch 35,000
Head office / Branch 60,100 5,04,260
Branch - cost of sales 3,60,000
Provision for depreciation on machinery 1,500 56,700
Head office cost of sales
(including goods sent to br.) 59,000
Administration cost 15,200 18,000
Stock on 30th June ,2006 28,900 11,520
Profit and loss account 2,000
Machinery at cost 6,000 1,26,000
Remittances 28,000 2,72,000
Balance at bank 4,600 79,200
Selling and distribution cost 23,300 28,800
2,20,000 2,20,000 9,94,520 9,94,520
The following adjustments are to be made:
(1) The cost of sales figures include a depreciation charge of 10% per annum on the cost of
machinery
(2) A provision of Tk. 300 for unrealized profit in branch stock is to made.
(3) On 26th June, 2005 the branch remitted 16000 Florins. This amount was received by the
head office on 4th July, 2005 and realized Tk. 1,990.
(4) During May, 2005 a branch customer, paid in error the head office for goods supplied. The
amount due was 320 Florins which realized Rs.36. It has been correctly dealt with by the
head office but not yet entered in the branch accounts
(5) A provision has to be made for a commission of 5% of the net profit of the branch after
charging such commission which is due to the branch manager.
(6) The currency rates of exchange were:
(a) At 1st July, 2004 10 Florins = 1 Taka
(b) At 30th June, 2005 8 Florins = 1 Taka
(c) Average for the year 9 Florins = 1 Taka
(d) On the date of purchase of building and 7 Florins = 1 Taka
You are required to prepare the following:
(i) Branch Trial Balance in Head Office currency
(ii) Trading and Profit & Loss Account of the Head Office and that of the branch for the
year ended 30 June 2006
(iii) Combined Balance Sheet of the Head Office and that of the branch as on 30 June 2006
[Marks: (6+7+7) = 20]
Page 3 of 4
Q. No. 5
Trial Balance for the general fund of DSCC as of December 31, 2019 is presented below:
The General Fund
Trial Balance
as at December 31, 2019
Accounts Title Debit Credit
Tk. Tk.
Cash 830,000
Property Tax Receivable 45,000
Estimated uncollectible Taxes 20,000
Due from Trust Fund 50,000
Vouchers Payable 460,000
Reserve for encumbrances 30,000
Unreserved Fund Balance 415,000
925,000 925,000
Transactions for the year ended December 31, 2020, are summarized as follows:
1. The council adopted a budget for the year with estimated revenue of Tk. 735,000 and
appropriation of Tk. 700,000.
2. Property Taxes in the amount of Tk. 590,000 were levied for the current year. It is
estimated that Tk. 24,000 of the taxes levied will prove to be uncollectible.
3. Proceeds from the sale of equipment is the amount of Tk. 35,000 were received by the
General Fund
4. License and fees in the amount of Tk.110,000 were collected.
5. The total amount of encumbrances against fund resources for the year was Tk.
642,500.
6. An amount of Tk. 28,000 was received for goods ordered in 2019. The invoice was
approved for payment.
7. Property taxes amounted to Tk.570,000 were collected
8. Vouchers in the amount of Tk. 475,000 were paid.
9. Tk. 50,000 was transferred to the general fund from the trust fund.
10. The DSCC authorized to write off of Tk. 30,000 uncollectible property taxes
Required:
(i) Prepare Journal entries to record the transactions for the year ended December 31,
2019
(ii) Prepare the closing Trial Balance for the general fund as of December 31, 2019
(iii) Prepare necessary closing entries for the year ended December 31, 2019
(iv) Prepare a Balance Sheet as at December 31, 2019
[Marks: (4 x 5) = 20]
= THE END =
Page 4 of 4

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CMA DECEMBER, 2020 EXAMINATION

Time: Three hours Full Marks: 100

[Marks: (5+8+7) = 20]

Particulars Head Office Branch Office

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