Acca F7 Answers

117326 WordsApr 22, 2011470 Pages
Fundamentals Pilot Paper – Skills module Financial Reporting (International) Time allowed Reading and planning: Writing: 15 minutes 3 hours ALL FIVE questions are compulsory and MUST be attempted. Do NOT open this paper until instructed by the supervisor. During reading and planning time only the question paper may be annotated. You must NOT write in your answer booklet until instructed by the supervisor. This question paper must not be removed from the examination hall. The Association of Chartered Certified Accountants FOR FREE ACCA RESOURCES VISIT: http://kaka-pakistani.blogspot.com Paper F7 (INT) ALL FIVE questions are compulsory and MUST be attempted 1 On 1 October 2005 Pumice acquired the following…show more content…
The directors wish to incorporate these values into the financial statements. The estimated life of the buildings was originally 50 years and the remaining life has not changed as a result of the valuation. Later, the valuers informed Kala that investment properties of the type Kala owned had increased in value by 7% in the year to 31 March 2006. Plant, other than leased plant (see below), is depreciated at 15% per annum using the reducing balance method. Depreciation of buildings and plant is charged to cost of sales. (ii) On 1 April 2005 Kala entered into a lease for an item of plant which had an estimated life of five years. The lease period is also five years with annual rentals of $22 million payable in advance from 1 April 2005. The plant is expected to have a nil residual value at the end of its life. If purchased this plant would have a cost of $92 million and be depreciated on a straight-line basis. The lessor includes a finance cost of 10% per annum when calculating annual rentals. (Note: you are not required to calculate the present value of the minimum lease payments.) (iii) The loan note was issued on 1 July 2005 with interest payable six monthly in arrears. (iv) The provision for income tax for the year to 31 March 2006 has been estimated at $28.3 million. The deferred tax provision at 31 March 2006 is to be adjusted to a credit balance of $14.1 million. (v)
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