Section: CAF

Marks: 30
Subject: FAR I
Time: 60 Minutes
Teacher: Sir Nasir Abbas
Test –: 9 Date: 22nd July 2022

Name: ___________________________________ Rise ID: ____________________

Question-1
The following information pertains to the financial statements of Butt Enterprise Limited (BEL), a listed company,
for the year ended 31 December 2016:
(i) Profit after tax for the year:
Rs. in million
Profit from continuing operations – net of tax 765
Profit from discontinued operations – net of tax 155
Profit after tax 920
(ii) Shareholders’ equity as on 1 January 2016 comprised of:
• 10 million ordinary shares of Rs. 10 each, having market value of Rs. 25 each.
• 4 million cumulative preference shares of Rs. 10 each entitled to a cumulative dividend at 10%.
(iii) On 31 March 2016, BEL announced 40% right shares to its ordinary shareholders at Rs.
25 per share. The entitlement date of right shares was 31 May 2016. The market price per share immediately
before the announcement date and entitlement date was Rs. 28 and Rs. 32 respectively.
(iv) On 2 August 2016, BEL announced 20% bonus issue. The entitlement date of bonus shares was 31 August
2016.
(v) On 1 February 2017, the board of directors announced 20% cash dividend and 10% bonus issue being the
final dividend to the ordinary shareholders and 10% cash dividend for preference shareholders.
Required:
Calculate basic earnings per share for inclusion in BEL’s financial statements for the year ended
31 December 2016. Show all relevant calculations. (10)

Question 2

Explain how dividend on preference shares is dealt with while computing basic EPS. (05)
Question 3
Following information pertains to Butt Limited (BL):
a. Shareholders' equity as on 1 January 2020:
Rs. in million
Share capital (Rs. 100 each) 250
Share premium 138
Retained earnings 142
Revaluation surplus: Land 25
Buildings 20

b. Profit and transfer of incremental depreciation as per the draft financial statements for the year
ended 31 December 2020 amounted to Rs. 45 million and Rs. 5 million respectively.

c. Dividends for the last two years:

For the year ended *Interim cash dividend Final bonus dividend
31 December 2019 10% 20%
31 December 2020 12% 15%
*Declared with half yearly accounts
 d. AL uses revaluation model for subsequent measurement of its land and buildings only. The
revalued amounts of land and buildings have been assessed at 31 December 2020 but not
incorporated in draft financial statements. The relevant details are as under:

Land Buildings
--- Rs. in million ---
Balances as on 31 December 2020 before revaluation:
Cost 75 240
Accumulated depreciation - 60
Revalued amounts assessed at 31 December 2020 65 158

Required:
Prepare BL’s statement of changes in equity for the year ended 31 December 2020. (10)

(Column for total and comparative figures are not required

Multiple Choice
Q4
The total value of shares a company offers to subscribe is called:
(a) Authorized share capital
(b) Issued share capital
(c) Subscribed share capital
(d) Paid up share capital 1
Q5
A company has profit after tax of Rs. 80 million for the financial year ended on 30 June 2019. It has
share capital of Rs. 500 million. During the year company has declared interim dividend of 10%.
How this dividend shall be presented in financial statements for the year ended 30 June 2019?

(a) Rs. 8 million deducted from retained earnings in statement of changes in equity
(b) Rs. 50 million deducted from retained earnings in statement of changes in equity
(c) Rs. 50 million deducted from profit or loss as finance cost
(d) It shall not be recorded, only disclosure shall be made. 2

Q6

Xavier Limited issued 5,000 shares of its Rs.10 par value to its shareholder. These shares were issued at a
premium at a price of Rs.25 per share.
The correct journal entry to record this transaction is:
(a) Cash Rs.125,000 (Debit); Share capital Rs.125,000 (Credit)
(b) Cash Rs.50,000 (Debit); Share capital Rs.50,000 (Credit)
(c) Share capital Rs.50,000 (Debit); Share premium Rs.75,000 (Debit); Cash Rs.125,000 (Credit)

(d) Cash Rs.125,000 (Debit); Share capital Rs.50,000 (Credit); Share premium Rs.75,000 (Credit)
2