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HKICPA TMA 1: Financial Reporting and Accounting

   

Added on  2019-09-26

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ACT B331F (Summer 2016) TMA 1Question 1(25 marks)a.Please explain in detail some arguments for, and somearguments against the harmonization and adoption of IFRS byHKICPA.(10 marks)ABC Ltd. began trading on 1 January 2016 with capital of $200,000, all of which was immediately spent on buying inventories. On 31 January 2016, 75% of the inventories were sold for $237,500 in cash. There were no other transactions in January 2015.The consumer price index was 100 on 1 January 2016 and
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became 105 on 31 January 2016. The specific price index applicable to the ABC Ltd’s inventories was 100 on 1 January 2016 and 107 on 31 January 2016.Determine the profit of ABC Ltd for January 2016 using twofinancialcapitalmaintenancemethodsandphysicalcapitalmaintenance. Show your workings.(15 marks)Question 2(25 marks)Using applicable HKFRS and Conceptual Framework of Financial Reporting, explain why impairment is moreappropriate than amortize purchased goodwill.(15 marks)State with reasons, how the following expenditure would be dealt with in the financial statement that can satisfy the requirements of HKAS 38:$500,000 on development of a new high speed motor, which, in the opinion of a company has an assured and profitable market. Work has been suspended pending the development of a new material suitable for the construction of the motor.$20,000 spent on a joint project with OUHKinvestigating the use of material Y for the storage ofnuclear waste.(10 marks)
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