In academic

affiliation with

GULF COLLEGE – MUSCAT – SULTANATE OF OMAN

UNDERGRADUATE BUSINESS PROGRAMME

ACADEMIC YEAR: 2017-2018

SECOND SEMESTER

EXAM

Module Title: Financial Reporting

Module Code:GAC5001

Method of Assessment :Examination

Weighting: 50% Module Credits: 20

Level: 5 Semester/Teaching block: 1

Morning/Evening Session: Both Examiner: Dr. Mohammad Aymen

Time Allowed: Examination duration 2 hours and 15 minutes

Module Title Module JACS Subject Code(s) ASC Category(ies)
Number and % of each subject

Financial Reporting GAC5001 N422 7

Level (3-8) Credits ECTS Module Value % Taught in Welsh Module Type

5 20 10 1.0 0% Taught

Teaching Period Pre-requisites

Semester 1

Module Leader School(s) Campus

Mr. Abdul Rauf Aga Gulf College Mabaila, Oman

Assessment Methods

Assessment Type Duration/Length of Weighting of Approximate Date of

Assessment
Assessment Type Submission

WRIT1 - Coursework 3,000 words equivalent 50% Mid-module

EXAM1 - Examination 2 hours plus 15 minutes 50% End of module

reading time

Aim(s)

This module aims to build on the knowledge, the written and the numerical problem solving skills gained in
financial accounting. It aims to provide an understanding of the theory and the regulatory environment of
financial reporting and of the contents and requirements of the principal accounting standards.

Learning Outcomes

On successful completion of the module, students should be able to:

 Analyse and demonstrate their knowledge of the social, ethical and legal contexts of accounting,
including company law and accounting standards in the context of financial reporting (Assessed via both
methods).
 Calculate and analyse the effect of applying different accounting policies (Assessed via both methods).

 Manipulate financial and other numerical data for both single entity and consolidated financial
statements (Assessed during exam).

 Present quantitative and qualitative information with appropriate analysis and commentary (Assessed
during exam).

Learning and Teaching Delivery Methods

Lectures 24 hours

Seminars 24 hours

Student-centred learning 152 hours

Total 200 hours

Indicative Content

Introduction

Objectives and limitations of financial statements and the qualitative characteristics of financial information.

Ethical and Judgement issues in Accounting.

The need for and the development of accounting regulation.

The standard setting process in the UK and international bodies.

Principal differences between IFRS and UK GAAP, both for single entity and consolidated financial
statements, including extracts of UK GAAP.

Basic Concepts and Theory

Positive and normative accounting concepts.

Cash and accrual basis accounting.

What is meant by 'conceptual framework' and UK GAAP.

Realised and unrealised profits.

Sources of Regulation

The role of the International Accounting Standards Board, UK GAAP and company law.
Preparation of financial statements for limited companies.

Not-for-profit regulation and accounting framework, including the preparation and completion of accounts.

Preparation of Financial Statements

IAS 1 Presentation of Financial Statements

IAS 2 Inventories

IAS 7 Statements of Cash Flow

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

IAS 10 Events after the Balance Sheet Date

IAS 16 Property, Plant and Equipment

IAS 20 Accounting for Government Grants

IAS 23 Borrowing Costs

IAS 36 Impairment of Assets

IAS 37 Provisions, Contingent Liabilities and Contingent Assets

IAS 38 Intangible Assets

Techniques of consolidation

IFRS 3 Business Combinations

IFRS 5 Non-current assets held for sale and discontinued operations

IAS 27 Consolidated and Separate Financial Statements

Recommended Reading & Required Reading

Required Reading

 Elliot and Elliot (2013), Financial Accounting and Reporting, Pearson Education

All students require access to a calculator eg Casio fx-82 which must include the following functions: powers;
roots; brackets; memory; sign change.
Suggested Reading

 ACA Financial Accounting and Reporting Study Manual (latest edition) Polestar Wheatons

 ACCA Paper F7 Study Text Financial Reporting (latest edition) BPP Learning Media

 Atrill and McLaney (2012), Accounting and Finance for Non-Specialists, (8th ed) Pearson Education

 Fraser L. &Ormiston A. Understanding Financial Statements (latest edition) Pearson Education

 Godfrey et al (2010), Accounting Theory (7th Ed), Wiley

 Hirst D. &McAnally M. Cases in Financial Reporting; (latest edition) Pearson Education

 Woods F. (2012), Business Accounting (12th ed), Prentice Hall

Key websites:

 www.ifrs.org

 www.accaglobal.co.uk

 www.cimaglobal.com

 www.icaew.com

Further information

Access to Specialist Requirements

Gulf College – Faculty of Business and Management Studies – In academic

Affiliation with CARDIFF SCHOOL OF MANAGEMENT

Financial Reporting

Examination

Question 1(30Marks)

From the balance sheets and information given below, prepare a Consolidated
Balance Sheet:

(a) All the profits of S Ltd. have been earned since the shares were acquired by
H Ltd. but there was already the Reserve of Rs. 6, 00,000 on that date.
(b) The bills accepted by SLtd are all in favour of HLtd which has discounted Rs
2,000 of them
(c) Sundry assets of SLtd are underevalued by Rs 2,000
(d) The stock Hltd includes Rs 5,000 bought from Sltd at a profit of the latter of
25% on cost .
Question 2(40Marks )

Following is the summarized balance sheet of XYZ at 31/12/2016

Assets Liabilities

Elements Amount Elements Amount

Good will 20,000 6% preference 1,50,000
Land and buildings 2,50,000 share -
Machinery 1,75,000 Capital
Furniture 10,00 Equity share 2,50,000
Stock 90,000 Capital
Sundry debtors 21,000 General reserves 20,000
Cash at bank 5,000 Profit and loss 15,000
Preliminary 4,000 5% debentures 1,000,000
expenses Sundry creditors 28,000
Bills payables
Total 5,75,000 Total 5,75,000

Other information’s : Total sales Rs 4,00,000: 20%of which is made on credit .

Gross profit and net profit ( after tax) for the year ended amounted to Rs 80,000
and Rs 20,000 respectively .

Question 3 ( 30 Marks )

A-Write the definition of following terms ( impairment , carrying amount ,

recoverable amount , fair value , value in use ) ( 20 Marks)

B-What are the intangible assets ? ( 5Marks)

C-What is the objectif of IAS 12? ( 5 Marks )

CARDIFF SCHOOL OF MANAGEMENT : VERIFICATION OF INTERNAL MODERATION OF ASSESSMENT

Module Number: Module Name: Financial Reporting Module Leader: Dr Mohamed Aymen

GAC5001

MODULE ASSESSMENT STRATEGY BRIEFING INCLUDES: X IV’s COMMENTS / RECOMMENDATIONS

Description of
Exam 50% X
Task/Problem/Topic

CW 50% Hand in Details X

Presentation Guidance Notes X

Assignment Learning Outcomes X

Total 100% Assessment Criteria

ASSESSMENT DETAILS Mark Criteria

Title: Examination Marking Scheme X

Feedback Sheet

Assessment type: Examination Referencing

Requirements Given

Nominated IV: Mrs Fatima IV Signature:

CARDIFF METROPOLITAN LINK TUTOR COMMENTS: EXTERNAL EXAINER COMMENTS

X Please check appropriate box below X Please check appropriate b

I confirm that I have considered the above draft assignment/exam and I am I confirm that I have consi
happy to approve the content. happy to approve the cont

Assessment can now be forwarded to the External Examiner for approval. Assessment can now be re

I confirm that I have considered the above draft assignment/exam and I am I confirm that I have consi
happy to approve the content subject to the above amendments. happy to approve the cont

Assessment can be forwarded to the External Examiner once these changes Assessment can be release
have been implemented and verified. implemented and verified

I confirm that I have considered the above draft assignment/exam and I confirm that I have consi
suggest the above amendments. suggest the above amendm

I would like to see the final amended version before I confirm approval. I would like to see the fina
)

Section B

(Compulsory Question)

(Total Marks 60)

Question 1.

The following trial balance relates to Neoklein as at 30 September 2016:

OMR’000 OMR’000

Revenue (note (i)) 213500

Cost of sales 136800

Distribution costs 12500

Administrative expenses 19000

(note (ii))

Loan note interest and 20700

dividend paid (notes (ii) and
(iii))

Investment income 400

Equity shares of 25 paisa each 60000

6% loan note (note (ii)) 25000

Retained earnings at 1 18500

October 2015

Land and buildings at cost 50000

(land element OMR10
million) (note (iv))

Plant and equipment at cost 83700

(note (iv))

Accumulated depreciation at
1 October 2015:

buildings 8000

plant and equipment 33700

Equity financial asset 17000

investments (note (v))

Inventory at 30 September 24800

2016

Trade receivables 28500

Bank 2900

Current tax (note (vi)) 1100

Deferred tax (note (vi)) 1200

Trade payables 36700

397000 397000
The following notes are relevant:

(i) On 1 October 2015, Neoklein sold one of its products for OMR10 million (included in
revenue in the trial balance). As part of the sale agreement, Neoklein is committed to the
ongoing servicing of this product until 30 September 2018 (i.e. three years from the date of
sale). The value of this service has been included in the selling price of OMR10 million. The
estimated cost to Neoklein of the servicing is OMR600,000 per annum and Neoklein ’s
normal gross profit margin on this type of servicing is 25%. Ignore discounting.

(ii) Neoklein issued a OMR25 million 6% loan note on 1 October 2015. Issue costs were OMR1
million and these have been charged to administrative expenses. The loan will be redeemed
on 30 September 2018 at a premium which gives an effective interest rate on the loan of
8%.

(iii) Neoklein paid an equity dividend of 8 baisa per share during the year ended 30 September
2016.

(iv) Non-current assets: Neoklein had been carrying land and buildings at depreciated cost, but
due to a recent rise in property prices, it decided to revalue its property on 1 October 2015
to market value. An independent valuer confirmed the value of the property at OMR60
million (land element OMR12 million) as at that date and the directors accepted this
valuation. The property had a remaining life of 16 years at the date of its revaluation.
Neoklein will make a transfer from the revaluation reserve to retained earnings in respect
of the realisation of the revaluation reserve. Ignore deferred tax on the revaluation. Plant
and equipment is depreciated at 15% per annum using the reducing balance method. No
depreciation has yet been charged on any non-current asset for the year ended 30
September 2016. All depreciation is charged to cost of sales.

(v) The investments had a fair value of OMR15·7 million as at 30 September 2016. There were
no acquisitions or disposals of these investments during the year ended 30 September 2016.

(vi) The balance on current tax represents the under/over provision of the tax liability for the
year ended 30 September 2015. A provision for income tax for the year ended 30
September 2016 of OMR7·4 million is required. At 30 September 2016, Neoklein had
taxable temporary differences of OMR5 million, requiring a provision for deferred tax. Any
deferred tax adjustment should be reported in the income statement. The income tax rate
of Neoklein is 20%.
Required: