CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

(IAS-16)
Lecture 1 (IAS-16) Lecture 13 (overall)

Classwork:
1) Discussed Lecture 11 homework;
2) Started discussion on fixed assets and depreciation;
3) Discussed straight line method of depreciation and solved question 1; 2 and 3 on page 419 of book.

Homework:
Question 4 and 5 on page 419 of book.

Lecture 2 (IAS-16) Lecture 14 (overall)

Classwork:
1. Solved question 1; 2 and 4 on page 419 of book;
2. Solved question – 13 on page 424 of book.
Homework:
Question 14; 15 and 16 on page 424 of book

Lecture 3 (IAS-16) Lecture 15 (overall)

Classwork:
1. Solved lecture 14 classwork question and homework question 3;
2. Solved question – 17 on page 427 of book;

Homework:
Question 18 and 19 on page 427 of book.

Lecture 4 (IAS-16) Lecture 16 (overall)

Classwork:
1. Solved lecture 15 homework question 18 (Mr. Ehsan) on page 427 of book;
2. Started Disposal of fixed assets under straight line method and solved question – 20 & 21 on page 428
of book.

Homework:
Question 22 (page 428) and 23 (page 429).

Lecture 5 (IAS-16) Lecture 17 (overall)

Classwork:
Disposal of fixed assets under straight line method.
1. Solved question 21 on page 428 of book;
2. Solved question – 24 on page 431 of book:
Reducing balance method
3. Solved question – 25; 26 and 27 on page 431 of book;

Homework:
1. Question 6 – 12 starting from page 419 of book;
2. Question 29 – 32 starting from page 432 of book.

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Lecture 6 (IAS-16) Lecture 18 (overall)

Classwork:
1. Discussed lecture 17 classwork questions;
2. Solved question – 33 on page 434 of book;
3. Started Disposal of fixed assets under reducing balance method and solved question 34 on page 435 of
book;
Homework:
1. Question 36 on page 435 of book;
2. Question 37 on page 435 of book
3. A company maintains its fixed assets at cost. Depreciation provision accounts for each asset are kept.
At 31 December 20X8 the position was as follows:
Total cost to date Total depreciation to date
Machinery 94,500 28,350
Office furniture 3,200 1,280
The following additions were made during the financial year ended 31 December 20X9.
• Machinery Rs. 16,000, office furniture Rs. 460. Both of the additions were made on 1 October
20X9.
• A machine bought on 1 July 20X5 for Rs. 1,600 was sold for Rs. 360 during the year on 31October
20X9.
• The rates of depreciation are:
Machinery 20 percent, office furniture 10 percent, using the straight-line basis
Required
Show the asset and accumulated depreciation accounts for the year ended 31 December 209. (8)
4. Mr. Ijaz has provided following data for year ended 31 December, 2013:
Accumulated
Cost
Depreciation
1.1.2013 1.1.2013
Machinery 600,000 200,000
- An asset costing Rs. 70,000 is purchased on 1.4.2013.
- An asset costing Rs. 90,000 on 1 November, 2010 is sold for Rs. 36,000 on 30.6.2013.
Required:
Prepare relevant accounts for year ended December 31, 2013 assuming the method is straight line
and rate of depreciation is 10%. (8)
5. A company maintains its fixed assets at cost. Accumulated provision for depreciation accounts are
kept for each asset.
At 31 December 20X8 the position was as follows:
Total Cost To Date Total Depreciation To Date
Rs. Rs.
Machinery 52,950 28,350
Office furniture 2,860 1,490
The following transactions were made in the year ended 31 December 20X9:
(a) Purchased - machinery Rs. 2,480 and office furniture Rs. 320 both on 1 March 20X9
(b) Sold machinery for Rs. 800 on 31 January 20X9 which had cost Rs. 2,800 when purchased on
1 December 20X5.
Depreciation is charged, on a straight line basis, at 10% on machinery and at 5% on office furniture.
Required:
Show the asset and accumulated provision for depreciation accounts for the year 31 December
20X9. (8)

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Lecture 6 (IAS-16 Solution ) Lecture 18 (overall)

Answer-3
Dr. Machinery account – At cost Cr.
1.1.20X9 b/d 94,500 Disposal 1,600
1.10.20X9 Cash 16,000 31.12.X9 c/d 108,900

Dr. Machinery account – Accumulated depreciation a/c Cr.

Disposals (W-2) 1,387 1.1.X9 b/d 28,350
31.12.X9 c/d 46,610 Depreciation (W-1) 19,647

Dr. Office furniture account – At cost Cr.

1.1.20X9 b/d 3,200
1.10.20X9 Cash 460 31.12.X9 c/d 3,660

Dr. Office furniture account – Accumulated depreciation a/c Cr.

1.1.X9 b/d 1,280
31.12.X9 c/d 1,612 Depreciation (W-3) 332
WORKINGS
(W-1) Depreciation – machinery
On opening assets excluding disposals (94,500 − 1,600)  20% 18,580
On additions (16,000  20%  3/12) 800
On disposals
- Machinery sold on October 31st (1,600  20%  10/12) 267
19,647

(W-2) Accumulated depreciation of disposals of machinery

Number of period in use (1.7.20X5 − 31.10.20X9) 4 Years and 4 months
Accumulated depreciation (1,600  20%  4.3333 Y) 1,387

(W-3) Depreciation - office furniture

On opening assets excluding disposals (3,200  10%) 320
On additions (460  10%  3/12) 12
332

Answer-4
Dr. Machinery – cost Cr.
1.1.13 b/d 600,000 30.6.13 Disposal 90,000
1.4.13 Cash 70,000
31.12.13 c/d 580,000

Dr. Accumulated Depreciation Cr.

Disposal (W-2) 24,000 1.1.13 b/d 200,000
Depreciation (W-1) 60,750
31.12.13 c/d 236,750

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

WORKINGS
(W-1) Depreciation expense
- On opening assets excluding disposals (600,000 – 90,000)  10% 51,000
- On additions (70,000  10%  9/12) 5,250
- On disposals (90,000  10%  6/12) 4,500
60,750
(W-2) Accumulated Depreciation of Disposals
Years used (2y and 8 months) 2.6667 year
Accumulated Depreciation (90,000  10%  2.6667 24,000
years)
Dr. Disposal A/c Cr.
Machinery 90,000 Accumulated Depreciation 24,000
Cash 36,000
P/L (Bal.) 30,000
Answer-5
Dr. Machinery account – At cost Cr.
1.1.20X9 b/d 52,950 Disposal 2,800
1.3.20X9 Cash 2,480 31.12.X9 c/d 52,630

Dr. Machinery account – Accumulated depreciation a/c Cr.

Disposals (W-2) 887 1.1.X9 b/d 28,350
31.12.X9 c/d 32,708 Depreciation (W-1) 5,245

Dr. Office furniture account – At cost Cr.

1.1.20X9 b/d 2,860
1.3.20X9 Cash 320 31.12.X9 c/d 3,180

Dr. Office furniture account – Accumulated depreciation a/c Cr.

1.1.X9 b/d 1,490
31.12.X9 c/d 1,646 Depreciation (W-3) 156
WORKINGS
(W-1) Depreciation – machinery
On opening assets excluding disposals (52,950 − 2,800)  10% 5,015
On additions (2,480  10%  10/12) 207
On disposals
- Machinery sold on January 31st (2,800  10%  1/12) 23
5,245
(W-2) Accumulated depreciation of disposals of machinery
Number of period in use (1.12.20X5 − 31.1.20X9) 3 Years and 2 month
Accumulated depreciation (2,800  10%  3.1667 Y) 887
(W-3) Depreciation - office furniture
On opening assets excluding disposals (2,860  5%) 143
On additions (320  5%  10/12) 13
156

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Lecture 7 (IAS-16) Lecture 19 (overall)

Classwork:
1. Solved lecture 18 classwork questions;
2. Discussed lecture 18 homework questions.
3. Started discussion on Exchange of Assets.
Homework:
Question 41; 42 and 43 starting from page 436 of book.
Lecture 7 (IAS-16) Lecture 19 (overall)

Answer-43
Dr. Asset A/C – At cost Cr.
1.1.2015 b/d 200,000 Disposal 50,000
1.3.2015 Cash 10,000
30.9.15 Disposal (New) 90,000 31.12.X5 c/d 250,000

Dr. Accumulated depreciation a/c Cr.

Disposals (W-2) 11,250 1.1.15 b/d 80,000
31.12.X5 c/d 90,583 31.12.15 Depreciation (W-1) 21,833

Dr. Disposal A/C Cr.

Cash 60,000 Acc. Depreciation 11,250
Asset A/C 50,000 Asset A/C 90,000
P/L (Bal). 8,750

WORKINGS
(W-1) Depreciation Expense
On opening assets excluding disposals (200,000 − 50,000)  10% 15,000
On additions (10,000  10%  10/12) 833
Addition through exchange (90,000  10%  3/12) 2,250
On disposals
- Old asset on September 30 (50,000  10%  9/12) 3,750
21,833

(W-2) Accumulated depreciation of disposals of machinery

Number of period in use (1.7.2013 − 30.09.2015) 2 Years and 3 months
Accumulated depreciation (50,000  10%  2.25 Y) 11,250

Lecture 8 (IAS-16) Lecture 20 (overall)

Classwork:
1. Solved lecture 19 homework questions;
2. Determination of cost of new asset in an exchange transaction using class example (3 scenarios) on
page 437 of book.
Homework:
1. Past paper 10 (Akmal Brothers)
2. Past paper 9 (b).

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Lecture 9 (IAS-16) Lecture 21 (overall)

Classwork:
1. Solved past paper 10 (Akmal Brothers);
2. Started discussion on Change in estimate and solved question 44 on page 438 of book:

Homework:
Question 45 – 48 on page 438 of book.

Lecture 10 (IAS16) Lecture 22 (Overall

Classwork:
1) Homework of lecture 21 (change in estimate questions 44; 45 and 46) discussed.
2) Discussed preparation of asset account on book value and solved question – 49 on page 438 of
book.
Homework
1. Homework of lecture 20 (change in estimate questions 47 and 48);
2. Questions – 50 on page 438 of book;
3. Questions – 51 on page 439 of book;
4. Following question
A trading organisation charges depreciation on its plant and machinery on a reducing balance method
@ 15% per annum. On 1 July 2011, the net book value in the ledger stood at Rs. 5,660,000.
Movements in the plant and machinery account during the two years ended 30 June 2013 were as
follows:
Date Particulars
1 October 2011 A new machine costing Rs. 80,000 was purchased. A sum of Rs. 30,000
was paid on the same date and the balance was paid on 31 March 2012.
1 December 2011 A machine that was purchased for Rs.200,000 and installed at a cost of
Rs.10,000 on 1 August 2009 was fully destroyed in an accident.
1 February 2012 Some old machinery (book value on 1 July 2011 Rs. 20,000) was sold for
Rs.8,000.
30 November A machine imported on 1 July 2010 was disposed of for Rs. 63,000. The
2012 value of machine was Rs. 70,000 whereas import levies amounted to Rs.
5,000.
Required:
Prepare the plant and machinery account for the years ended 30 June 2012 and 2013. (19)
(Autumn 2013, Q.6, CAF-05)
Solution of question 50
Dr. Asset a/c – WDV Cr.
1.1.13 b/d 80,000 30.9.13 Disposals (W-1) 11,100
1.7.13 Additions 5,000 Depreciation expense (W-2) 7,950
31.12.13 c/d (bal.) 65,050

(W-1) WDV of disposals made on 30.Sep.2013 Rs.

1.1.13 WDV 12,000
30.9.13 Depreciation (12,000 x 10% x 9/12) (900)
30.9.13 WDV 11,100

(W-2) Depreciation expense for year ended 31.12.2013

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Depreciation on opening assets excluding disposals (80,000 – 12,000) x 10% 6,800

Depreciation on additions (5,000 x 10% x 6/12) 250
Depreciation on disposals (W-1) 900
7,950

Solution of question 51
Dr. Asset a/c – WDV Cr.
1.7.14 b/d 70,000 31.3.15 Disposals (W-1) 3,700
1.3.15 Additions 10,000 31.5.15 Disposals (W-2) 17,014
Depreciation expense (W-3) 7,077
31.12.13 c/d (bal.) 52,209

(W-1) WDV of disposals made on 31.Mar.2015 Rs.

1.7.14 WDV 4,000
31.3.15 Depreciation (4,000 x 10% x 9/12) (300)
31.3.15 WDV 3,700

(W-2) WDV of disposals made on 31.May.2015 Rs.

1.10.12 Cost 25,000
30.6.12 Depreciation (25,000 x 10% x 9/12) (1,875)
WDV 23,125
30.6.13 Depreciation (23,125 x 10%) (2,313)
WDV 20,812
30.6.14 Depreciation (20,812 x 10%) (2,081)
WDV 18,731
31.5.15 Depreciation (18,731 x 10% x 11/12) (1,717)
31.15.15 WDV 17,014

(W-3) Depreciation expense for year ended 30.06.2015

Depreciation on opening assets excluding disposals (70,000 – 4,000 – 18,731) x 10% 4,727
Depreciation on additions (10,000 x 10% x 4/12) 333
Depreciation on disposals 300 (W-1) + 1,717 (W-2) 2,017
7,077

Solution of homework (A trading organization)

Dr. Plant and Machinery a/c – WDV Cr.
1.7.11 b/d 5,660,000 Disposals (W-1) 144,334
1.10.11 Additions 80,000 Disposals (W-2) 18,250
Depreciation expense (W-3) 843,279
30.06.12 c/d (bal.) 4,734,137
1.7.12 b/d 4,734,137 Disposals (W-4) 50,801
Depreciation expense (W-5) 705,379
30.06.13 c/d (bal.) 3,977,957

(W-1) WDV of disposals made on 1.Dec.2011

Cost (1.08.09) (200,000 + 10,000) 210,000
Depreciation (30.06.10) (210,000 x 15%x 11/12) (28,875)

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WDV 181,125
Depreciation (30.06.11) (181,125 x 15%) (27,169)
WDV 153,956
Depreciation (01.12.11) (153,956 x 15% x 5/12) (9,622)
WDV (1.12.11) 144,334

(W-2) WDV of disposals made on 1.Feb.2012

WDV 20,000
Depreciation (1.02.12) (20,000 x 15% x 7/12) (1,750)
WDV (30.06.12) 18,250

(W-3) Depreciation expense for year ended 30.06.2012

Depreciation on opening assets excluding disposals
Opening WDV of all assets (W-3) 5,660,000
Less: Opening WDV of
disposals (153,956 + 20,000) (173,956)
5,486,044 15% 822,907
(80,000 x 15% x
Depreciation on additions 9/12) 9,000
Depreciation on disposals during the
year (9,622 + 1,750) 11,372
843,279

(W-4) WDV of disposals made on 30.Nov.2012

Cost (1.07.10) (70,000 + 5,000) 75,000
Depreciation (30.06.11) (75,000 x 15%) (11,250)
WDV 63,750
Depreciation (30.06.12) (63,750 x 15%) (9,563)
WDV 54,188
Depreciation (30.11.12) (54,188 x 15% x 5/12) (3,387)
WDV (30.11.12) 50,801

(W-5) Depreciation expense for year ended 30.06.2013

Depreciation on opening assets excluding disposals
Opening WDV of all assets (W-5) 4,734,137
Less: Opening WDV of disposals (W-1) (54,188)
4,679,949 15% 701,992
Depreciation on disposals during the year (W-4) 3,387
705,379

Lecture 11 (IAS-16) Lecture 23 (Overall)

Classwork:
INITIAL RECOGNITION of an item as property, plant and equipment;
INITIAL MEASUREMENT of an item of property, plant and equipment:
LO 2 ELEMENTS OF COST

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

The cost of an item of property, plant and equipment comprises:

(a) Its purchase price, import duties and non-refundable purchase taxes after deducting trade
discounts and rebates.
(b) Any costs necessary to bring the asset into current location and condition intended by
management.
(c) The initial estimate of the costs of dismantling and removing the item and restoring the site.
Examples of directly attributable costs are:
(a) Costs of employee benefits arising directly from the construction or acquisition of an item of
property, plant and equipment.
(b) Costs of site preparation
(c) Initial delivery and handling charges.
(d) Installation and assembly cost.
(e) Cost of testing whether the asset is functioning properly, after deducting the net proceeds from
selling any items produced (such as samples produced when testing equipment); and
(f) Professional fees.
LO 2.1 Not a part of cost of asset
Examples of costs that are not costs of an item of property, plant and equipment are:
(a) Costs of opening a new facility.
(b) Cost of introducing a new product or service (including costs of advertising and promotional
activities);
(c) Costs of conducting business in a new location or with a new class of customer (including
costs of staff training); and
(d) Administration and other general overhead costs.
Following costs are not included in the carrying amount e.g.,
(a) Costs paid while an item is yet to be brought into use or is operated at less than full capacity.
(b) Initial operating losses while demand for the product’s output builds-up; and
(c) Costs of relocating/re-organizing part or all of entity’s operations.
Example
A new machine is purchased by Arman Enterprise. Relevant details are as follows:
List price 800,000
Trade discount 10%
Import duties 4,000
Non-refundable taxes 6,300
Income tax adjustable 5,000
Insurance in-transit 7,000
Fees paid to clearing agent 9,000
Octroi charges 4,600
Land preparation cost 8,300
Installation cost 7,800
Estimate of initial cost of dismantling 5,000
Cost of furniture broke down during handling the machine 7,000
Insurance for the year 9,000
License fee for the year 11,000
Initial operating losses 12,000
Trial production cost net of sale proceeds of prototype/sample (4,000 – 2,100) 1,900
Calculate the cost at which machine should be debited?
3) Cessation of capitalization
Recognition of costs ceases when the item is in the location and condition necessary for it.

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

4) SUBSEQUENT EXPENDITURE
Subsequent costs normally include:
a. Repair and maintenance – Expense out
b. Expenditure to improve asset - Capitalize
c. Replacement of a part - Capitalize
5) Subsequent measurement of an item of property, plant and equipment;
6) Depreciation discussion:
(i) Discussed concept of monthly depreciation using a simple class example;
(ii) Discussed the concept of start of depreciation and its continuance in case asset becomes idle
during the year.
7) Discussed output method of depreciation using a simple class example.

Homework
1. ICAP question bank 16 (Alpha Enterprises);
2. Past paper 1 (Ammar);
3. Past paper 4 (a) & (b)(Delta);
4. Shangrila Enterprises (SE) expanded its production facility by installing a plant in 2019.
Following information pertains to the plant:
(i) Two vendors A and B submitted their bid prices of Rs. 750 million and Rs. 800 million
respectively. Due to better quality, vendor B was selected and after negotiations, price of the
plant was finalized at Rs. 780 million.
(ii) The acquisition of the new plant was financed by selling an old plant having book value of
Rs. 170 million for Rs. 140 million and remaining amount was arranged by selling investments
held by SE.
(iii) Arrival of the plant was originally scheduled on 31 March 2019 at a freight of Rs. 3.5 million.
However, the arrival date was rescheduled to 31 January 2019 by paying additional freight of
Rs. 1.5 million. While transporting, the plant was slightly damaged and repaired at a cost of
Rs. 2 million.
(iv) Site preparation work was completed at a cost of Rs. 5.8 million. This cost includes
Rs.1.2 million for demolition and reconstruction of the existing building structure.
(v) Installation work was carried out during the month of February 2019 at a cost of Rs. 5 million.
In addition, overheads of Rs. 1.5 million were allocated for using factory resources during
installation.
(vi) The plant was customised by altering some parts at a cost of Rs. 12 million. The alteration slows
down the production process but is necessary to align the plant with existing production process.
(vii) On 1 March 2019, safety equipment for the use of staff operating the plant were purchased at a
cost of Rs. 10 million. Expected useful life of the safety equipment is 5 years.
(viii) The plant was available for use on 1 May 2019 but due to unavailability of the required raw
material, commercial production was delayed till 1 June 2019.
(ix) Residual values of the plant at the end of its useful life and economic life of 20 years and 25
years are estimated at Rs. 100 million and Rs. 40 million respectively.
Required:
Compute book value of the plant as at 31 December 2019. (08)
(Items ignored while computing cost of the plant should be mentioned as zero)
(Spring 2020, Q # 01)

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Solution HW Q4 (Shangrila Enterprises)

Book value of the plant as at 31 December 2019
Rs. in million
Initial cost of the plant:
(i) Cost of the plant 780.00
(ii) Sale of old plant/investments -
(iii) Freight charges 3.50 + 1.50 5.00
Repair of plant damages
(iv) Preparation of site 4.6 + 1.2 5.80
(v) Installation work 5.00
Allocated cost
(vi) Customization of the plant 12.00
(vii) Purchase of safety equipment -

Initial cost 807.80

(807.80 − 100) 8
Depreciation for 2019  (23.59)
20 12
Book value of the plant as at 31 December 2019 784.21

Lecture 14 (IAS16) Lecture 26 (Overall)

Revaluation of PPE
Classwork
Explained the concept of share capital and retained earnings using a simple class example. Started
revaluation and solved question – 52 on page 440 of book.

Homework:
Question 53 and 54 on page 440 of book.

Lecture 15 (IAS-16) Lecture 27 (Overall)

Classwork
Solved question – 55 on page 442 of book;

Homework:
Question 56 (page 442); 57 & 58 (page 443).

Lecture 16 (IAS-16) Lecture 28 (Overall)

Classwork
Solved question – 59 and 60 on page 443 of book;

Homework:
Past paper 5 (Shahzad Textiles Mills Limited) on page 76 of book.

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Lecture 17 (IAS-16) Lecture 29 (Overall)

Classwork:
1) Past paper 5 (Shahzad Textiles Mills Limited) discussed;
2) Test 3 Q-1 (Chintoo Trans Lines) discussed:
Chintoo Trans Line (CTL) is a haulage contractor. At 1 May 2014 the company had three lorries,
details of which are as follows:
Lorry registration number Date purchased Cost Rs.000
BAHADUR 1 1 July 2011 16,000
CROSS 2 1 February 2013 21,000
DREAM 3 1 April 2014 31,000

Following further information is available for the year to 30 April 2015:

(a) CTL uses the straight-line method of depreciation and does not keep separate ledger
accounts for each individual lorry.
(b) The lorries are depreciated over a five-year period by which time they are assumed to have
a residual value of Rs.1 million each.
(c) BAHADUR 1 was sold on 31 July 2014 for Rs.3 million on cash terms. On 1 August 2014,
Chiniot Trucking Limited replaced it with a new lorry, registration number FLYING 4,
for which it paid Rs.35 million in cash.
(d) On 1 December 2014, the new lorry (FLYING 4) was involved in a major accident, and
as a result was completely written off. The company was able to agree a claim with its
insurance company, and on 31 December 2014 it received Rs.30 million from the
insurance company. On 1 January 2015 it bought another lorry (registration number
HOSHYAR 5) for Rs.41 million.
(e) During March 2015, CTL decided to exchange the lorry bought on 1 April 2014
(registration number DREAM 3) with a new lorry. It was delivered on 1 April 2015
(registration number JAZBATI 6). CTL agreed a purchase price of Rs.26 million for the
new lorry, the terms of which were Rs.20 million as part-exchange allowance for the old
lorry and the balance to be paid immediately in cash.
Required:
(a) Write up the following accounts for the year to 30 April 2015:
(i) Lorries account. (3.5)
(ii) Accumulated depreciation on lorries account. (08)
(iii) Lorries disposal account. (03)
(b) Show how the lorries account and the accumulated depreciation account would be presented in
CTL’s statement of financial position as at 30 April 2015. (1.5)

Lecture 18 (IAS-16) Lecture 30 (Overall)

Classwork:
1) Solved question – 63 on page 444 of book;
2) Started Year - end revaluation and solved question – 64 on page 444 of book.
Homework:
1. Revise Lecture 1 to 18 of IAS-16 (PPE).
2. Prepare ledgers of following questions:
i) Lecture 28 classwork question 1;
ii) Lecture 30 classwork question 1 (SKL).

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Lecture 19&20 (IAS-16) Lecture 31&32(Overall)

Classwork:
Year - end revaluation:
1. Solved following question
ABC Limited purchased a plant for Rs. 350,000 on 1 July 2010. The plant has an estimated useful life of
20 years and no residual value.
ABC uses revaluation model for subsequent measurement of its property, plant and equipment and accounts
for revaluations on net replacement value method. The details of revaluations performed by an independent
firm of valuers are as follows:

Revaluation date Fair value

30 June 2011 Rs. 475,000
30 June 2012 Rs. 390,000
30 June 2013 Rs. 380,000

Required:
a) Prepare journal entries to record the above transactions from the date of acquisition of the plant to
the year ended 30 June 2013. (16)
b) Prepare asset and accumulated depreciation account to record the above transactions from the date
of acquisition of the plant to the year ended 30 June 2013. (08)
c) Assume the plant was sold for Rs. 350,000 on 01 July, 2013. Prepare journal entry to be recorded
on disposal. (02)
2. Started Disposal of revalued assets and solved question – 65; 66 & 68 on page 445 of book:
Homework:
1. Question 67 on page 445 of book;
2. Question 69 on page 446 of book;
3. Question 70 on page 446 of book.

Lecture 21&22 (IAS-16) Lecture 33&34 (Overall)

Fixed asset schedule / Note of PPE / Disclosure of PPE under IAS-16 (Property, Plant and equipment)
1) Prepared note of PPE using ledgers in question – 61 on page 443 of book;
2) Prepared note of PPE using ledgers in question – 62 on page 444 of book.
3) Prepare note of PPE in class work Q#1 (lecture 28); Q#1-SKL (lecture 30); Q#4-UL (lecture 31&32);
4) Started discussion on ICAP question bank 6 (FAM)

Homework:

Lecture 23 (IAS-16) Lecture 35 (Overall)

Class work
1) Discussed sub-notes of ICAP question bank 6 (FAM) on page 108 of Crescent book;
2) Prepared note of change in estimate using a simple class example as follows:
Example:
We purchased an asset costing Rs. 120 on 1.1.15 having useful life of 4 years. On 1.1.17 it is estimated
that remaining life is 3 years.
Required: Prepare a note of change in estimate for the year ended 31.12.17.
3) Prepared note of change in estimate of question 44 on page 438 of Crescent book (Q1-Lecture 21 overall).

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Home work
1. Prepare note of change in estimate of question 46; 47; 48 on page 438 of Crescent book;
2. Past paper 11 (Piano Limited);
3. Past paper 8 (Sherdil Limited).

Lecture 24 (IAS-16) Lecture 36 (Overall)

Class work
Solved assessment 1 question 1 (Caribben Limited);
Home work
Assessment 1 question 2 (Mr. Abbasi);
Assessment 1 question 3 (MCQs);
Prepare note of change in estimate of question 46; 47; 48 on page 438 of Crescent book;
Past paper 11 (Piano Limited);
Past paper 8 (Sherdil Limited).

Lecture 25 (IAS-16) Lecture 37 (Overall)

1. Discussed Mid of the year revaluation and solved question – 71 on page 446 of book;
2. Understanding ‘fully depreciated asset’ concept using question – 72 on page 447 of book;
3. Discussed Gross replacement method of revaluation and solved question – 73 on page 447 on book;
4. Discussed Revaluation under reducing balance method and solved question – 74 on page 447 of
book.

Lecture 26 (IAS-16) Lecture 38 (Overall)

Class work
1. Assessment 1 Q-3(c)MCQ;
2. Mid of the year revaluation question – 71 on page 446 of book:

Homework
1. Prepare note of PPE in question 68 (Umer Limited) on page 445 of Crescent book;
2. Prepare note of PPE in question 69 (KL) on page 446 of Crescent book.

(IAS-36)
Lecture 1 (IAS-36) Lecture 38 (Overall)
Class work
Started discussion on IAS-36 and discussed concept of testing an asset for impairment using a simple class example as
follows:
Example
1. Following detail relate to Daewoo bus of Nabeel:
Cost (1.1.20) 200
Useful life 5 years
2. On 31.12.21 a competitor came in the market and it is appropriate for Nabeel to test his Bus for
impairment. Following relevant data in this regard is given as at 31.12.21:
Fair value 95
Cost to sell 5
Annual cash inflows for remaining 3 years 65
Annual cash outflows for remaining 3 years 20

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Sale proceeds of selling asset at the end of 3 years (i.e. useful life) 10
Disposal cost at the end of 3 years (i.e. useful life) 2
3. Discount rate is 15%.
Requirement
a) Calculate impairment loss (if any) as on 31.12.21;
b) Prepare a note of Property, plant and equipment as on 31.12.21.

Homework
Revision of class work.

Lecture 27 (IAS-16) Lecture 39 (Overall)

Class work
1) Discussed concept of fully depreciated asset and solved question 72 on page 447 of Crescent book
Homework
1. Prepare note of PPE in question 68 (Umer Limited) on page 445 of Crescent book;
2. Prepare note of PPE in question 69 (KL) on page 446 of Crescent book.

Lecture 2 (IAS-36) Lecture 39 (Overall)

Class work
1) Revision of class example solved in lecture 38;
2) Solved question 1 on page 448 of Crescent book.

Homework
Question 2 on page 448 of Crescent book.
Lecture 28 (IAS-16) Lecture 40 (Overall)
Class work
1) Prepared note of PPE in question 68 on page 445 of Crescent book;

Homework
1. Prepare note of PPE in question 68 (Umer Limited) on page 445 of Crescent book;
2. Prepare note of PPE in question 69 (KL) on page 446 of Crescent book.

Lecture 3 (IAS-36) Lecture 40 (Overall)

Class work
1 Discussed question 2 on page 448 of Crescent book.
Homework
Practice set 1-6 on page 317 and 318 of Crescent book.

Lecture 29 (IAS-16) Lecture 41 (Overall)

Class work
1) Prepared note of PPE in question 69 on page 446 of Crescent book;
2) Solved question 74 on page 447 of Crescent book.
Homework
Revision of class work.

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Lecture 4 (IAS-36) Lecture 41 (Overall)

Class work
Solved question 2 on page 448 of Crescent book

Homework
Revision of class work.

Lecture 5(IAS-36) Lecture 42 (Overall)

Class work
Solved question 1 of test 4 (Omega Limited)
Homework
Question 1 of test 4 (Omega Limited)
Lecture 6 (IAS-36) Lecture 43 (Overall)
Class work
1) Solved question 2 (again) on page 448 of Crescent book;
2) Discussed definitions and scope para on page 311 of Crescent book;
3) Explained indicators of impairment (internal and external) on page 311 of Crescent book;
4) Discussed fair value and cost to sell on page 311 of Crescent book;
5) Started solving example 3 on page 313 page 313 of Crescent book.

Homework
1. Past paper 1 (Dominant Fertilizers);
2. Past paper 2 (Barbary Cement Limited).

Lecture 7 (IAS-36) Lecture 44 (Overall)

Class work
1. Completed example 3 on page 313 of Crescent book;
2. Solved following question:
A company purchased a machine costing Rs. 1,800 on 1 January 20X3. It has a life of 8 years. The
fair value as on 31 December 20X5 is as follows:
Fair value Incremental selling cost
Machine 800 20

Following future cash flows data is available based on management’s most recently approved budgets:
20X6 20X7 20X8
Outflows:
Maintenance costs 100 120 80
Operational costs (electricity, water, labour etc.) 200(N-1) 220 240
Interest on loan payments 10 8 6
Principal payments on loan 100 100 100
Tax payments on profits 16 20 28
Cost of increasing the machine’s capaci 0 220 0
Overhauling cost 0 30 0

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Depreciation 156 211 211

Inflows:
Basic inflows 400(N-2) 480 560
Extra profits resulting from the upgrade 0 20 50
(N-1) It includes payment of expenses of Rs. 30 to be paid in respect of 20X5 accruals
(N-2) It includes debtors of Rs. 20 to be received from credit sale recorded in 20X5

The useful life of the machine is expected to last for 5 years. The growth rate in the business in 20X5
was an unusual 15% whereas the average growth rate over the last 7 years is:
In the industry 10%
In the business 8%
Discount factor for similar asset is 10%.

Required: Calculate impairment loss at 31 December 20X5 assuming that a 5-year projection is
considered to be appropriate.

1. Future cash flows in value in use discussion on page 313 of Crescent book;
2. Discussed past paper 1 (Dominant Fertilizers) and Past paper 2 (Barbary Cement Limited);
3. Solved question 3 on page 449 of Crescent book;
4. Solved question 73 on page 447 of Crescent book.

Homework

(IAS-16) Lecture 45 (Overall)

Class work
1. Discussed concept of gross replacement method of revaluation and solved question 73 on page
447 of Crescent book;
2. Discussed concept of frequency of revaluation on page 24 of Crescent book;
3. Discussed disclosures of IAS-16 on page 24 of Crescent book.

Homework
MCQ 4; 13; 14; 15; 23;

(IAS-36) Lecture 45 (Overall)

Class work
1. Discussed past paper 4 (Barbary Cement Limited);
2. Discussed MCQ 1; 2; 3; 5; 6; 10; 13; 15; 26.
Homework
MCQ 1; 2; 3; 5; 6; 10; 13; 15; 20; 21; 22; 23; 25; 26; 28; 29; 31; 34; 35.

(Accrual basis of accounting)

Lecture 1 (Accrual basis of accounting) Lecture 45 (Overall)

Class work

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Started discussion on expenses in accrual basis of accounting and solved question 1 on page 450 of
Crescent book;

Homework
Question 1; 2 and 3 on page 450 of Crescent book.

(IAS-16) Lecture 46 (Overall)

Class work
Discussed MCQ 4; 13; 14; 15; 16 and 23 on page 135 and 138 of Crescent book.
Homework
1. All MCQs (IAS-16);
2. All MCQs (IAS-36).

Lecture 2 (Accrual basis of accounting) Lecture 46 (Overall)

Class work
1) Discussed the concept of opening payable; closing payable; opening prepaid; closing prepaid
and also written steps of solving accrual questions;
2) Solved question 2 and 3 on page 450 of Crescent book;
3) Discussed 2 types of trials using a simple class example.

Homework
Question 5 to 11 on page 450 to 452 of Crescent book.

Lecture 3 (Accrual basis of accounting) Lecture 47 (Overall)

Class work
1) Solved question 4 to 11 on page 450 and 451 of Crescent book;
2) Started discussion on income in accrual basis of accounting.
Homework
Question 12 To 17 on page 451 of Crescent book.

Lecture 2 (IAS-23) Lecture 50 (overall)

Classwork:
1. Solved question 1 on page 457 of Crescent book;
2. Solved basic practice question 4 on page 248 of Crescent book;
3. Solved basic practice question 5 on page 249 of Crescent book;
4. Discussed routine and non-routine suspension using following class examples:
Class example 5A (not in Crescent book)
Assuming all other data is same as basic practice question 5 on page 248 of Crescent book, but construction
work was suspended for 10 days during November 2016 due to cement being cured (strengthened).
Class example 5B (not in Crescent book)
Assuming all other data is same as basic practice question 5 on page 248 of Crescent book but construction
work was suspended for the whole month of December 2016 due to labor strike;
non-availability of raw material; heavy rain etc.
Homework:
Question 2 and 3 on page 457 of crescent book;

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Lecture 3 (IAS-23) Lecture 51 (overall)

Classwork:
1. Revision of routine and non-routine suspension from previous lecture;
2. Discussed concept of general loans;
3. Discussed average capitalization rate and solved question 6 and 7 on page 249 of Crescent book;
4. Solved practice question 17 on page 260 of Crescent book;

Homework:
Revise all class work.

Lecture 4 (IAS-23) Lecture 52 (overall)

Classwork:
Solved past paper 5 (Spin Industries) on page 278 of Crescent book.

Homework:
Past paper 7 (Granite Corporation) on page 279 of Crescent book.

Lecture 5 (IAS-23) Lecture 53 (overall)

Classwork:
1. Solved question 1 and question 2 (a & b) of test 5;
2. Solved past paper 7 on page 279 of Crescent book;
3. Discuss the concept of issuance right shares;

Homework:
1. Past paper 1(Imran limited) on page 276 of crescent book;
2. Question bank question 1 and 2 on page 286 of Crescent book;

Lecture 6 (IAS-23) Lecture 54 (overall)

Classwork:
1. Discuss past paper 7(Granite corporation) on page 279 of Crescent book;
2. Discuss test 6;
3. Discuss the concept of progress billing.

Homework:
1. Past paper 4(Alpha trading limited) on page 277 of crescent book;
2. All MCQS of IAS-23 on page 290 of Crescent book.

Lecture 7 (IAS-23) Lecture 55 (overall)

Classwork:
1. Solved past paper 1 on page 276 of Crescent book;
2. Solved past paper 4 on page 277 of Crescent book;

Homework:
1. Past paper 4 on page 277 of Crescent book;
2. All MCQS of IAS-23 on page 290 of Crescent book.

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Lecture 8 (Borrowing cost IAS-23) Lecture 56(Overall)

Classwork:
1. Discuss past paper 4 (Alpha Trading Limited) on page 277 of Crescent book;
2. Discussion of debt and equity.

Homework:
1. MCQS 4,5,9,12,13,15 on page 290 of Crescent book;

(Government grant)
Lecture 1 (Government grant) Lecture 56(Overall)
Classwork:
1. Discuss the concept of government grant and solved question 1 and 2 on page 459 of Crescent
book;
Homework:
1. Example 1 and 2 on page 214 of Crescent book;
2. Example 3 and 4 on page 215 and 216 of Crescent book.

Lecture 2 (IAS-20) Lecture 57 (overall)

Classwork:
1. Solved question 4 (Basit limited) on page 223 of Crescent book;
2. Solved question 2 on page 459 of Crescent book;
3. Discussion of non-monetary grant and forgivable loan.

Homework:
1. Past paper 4 (Bunny ear limited) on page 232 of Crescent book;
2. Example 5 and 6 on page 218 and 219 of Crescent book.

Lecture 3 (IAS-20) Lecture 58 (overall)

Classwork:
1. Solved past paper 4 (Bunny ear limited) on page 232 of Crescent book;

Homework:
1. Past paper 1,2 and 3 on page 231 and 232 of Crescent book;
2. All MCQS of IAS-20 on page 239 of Crescent book.
(IAS-40)
Lecture 1 (IAS-40) Lecture 59 (overall)
Classwork:
1. Discuss the concept of investment property and subsequent measurement of investment
property under cost model and fair value model;
2. Solved question 1 on page 458 of Crescent book;

Homework:
1. Question 3 (snake limited) on page 458 of Crescent book.

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Lecture 2 (IAS-40) Lecture 60 (overall)

Classwork:
1. Solved question 2 on page 458 of Crescent book;
2. Solved question 3 (snake limited) on page 458 of Crescent book;

Homework:
1. Past paper 13 of IAS-16 on page 80 of Crescent book.

Lecture 3 (IAS-40) Lecture 61 (overall)

Classwork:
1. Solved question 3 of term test;
2. Discuss question 4 of term test;
3. Discuss question 1 of term test.

Homework:
1. Solved question 4 of term test;
2. MCQS of term test;
3. Question 1 of term test.

Lecture 4 (IAS-40) Lecture 62 (overall)

Classwork:
1. Discuss term test MCQS;
2. Solved past paper 13 of IAS-16 on page 80 of Crescent book.

Lecture 5 (IAS-40) Lecture 63 (overall)

Classwork:
1. Discuss investment property disclosures;

Lecture 1 (Correction of errors) Lecture 63 (overall)

Classwork:
1. Discuss the concept of rectification of fixed asset, depreciation and exchange of fixed asset.
2. Solved example 6 on page 152 of Crescent book.
Homework:
1. Example 4,5,7 and 8 on page 152 and 153 of Crescent book.

Lecture 2 (Correction of errors) Lecture 64 (overall)

Classwork:
1. Discuss example 8 on page 155 of Crescent book;
2. Discuss the concept of inventory card under FIFO and AVCO method and solved question 1 on
page 460 of Crescent book.

Homework:
1. Revise class lecture.

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Lecture 3 (Correction of errors) Lecture 65 (overall)

Classwork:
1. Solved example 4,5,7 and 8 on page 152,153,154 and 155 of Crescent book;
2. Discuss the concept of periodic and perpetual system of inventory and also explain their journal
entries.

Homework:
1. Question 2 on page 460 of Crescent book.

Lecture 4 (Correction of errors) Lecture 66 (overall)

Classwork:
1. Solved question 1 and 2 on page 460 of Crescent book;
2. Discuss the concept of NRV.
3. Solved question 3 on page 461 of Crescent book;

Homework:
1. Question 4 and 5 on page 461 of Crescent book.
2. Revise class work.

Lecture 5 (Correction of errors) Lecture 67 (overall)

Classwork:
1. Solved question 4 on page 461 of Crescent book;
2. Discuss the concept of trade discount and solved the requirement 2 of question 6 on page 461
of Crescent book;
3. Discuss the concept Bad doubtful debts and Solved scenario 1 and 2 on page 462 of Crescent
book;
4. Solved question 7 and 8 on page 461 of Crescent book.

Homework:
1. Past paper 13 on page 172 of Crescent book;
2. Past paper 16 on page 174 of Crescent book.

Lecture 6 (Correction of errors) Lecture 68 (overall)

Classwork:
1. Discuss the concept of discount in the books of buyer and seller and solved question 6 on page
461 of Crescent book;
2. Discuss the concept of suspension account and solved of example 1 on page 149 of Crescent
book;
3. Discuss the types of errors on page 147 of Crescent book;
4. Solved past paper 13 on page 172 of Crescent book.

Homework:
1. Past paper 14 on page 172 of Crescent book;
2. Past paper 16 on page 174 of Crescent book;
3. Past paper 17 on page 175 of Crescent book;
4. Example 2 and 3 on page 150 and 152 of Crescent book;

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Lecture 7 (Correction of errors) Lecture 69 (overall)

Classwork:
1. Discuss adjustment (v) of past paper 13 on page 172 of Crescent book;
2. Solved past paper 16 requirement (a) on page 174 of Crescent book.

Homework:
1. Past paper 16 requirement (b) on page 174 of Crescent book;

Lecture 8 (Correction of errors) Lecture 70 (overall)

Classwork:
1. Discuss requirement (b) of past paper 16 on page 174 of Crescent book;
2. Solved past paper 14 on page 172 of Crescent book.

Homework:
1. Past paper 17 on page 175 of Crescent book.

(Statement of changes in equity)

Lecture 1 (Statement of changes in equity) Lecture 70 (overall)
Classwork:
1. Starting the discussion of statement of changes in equity and solved question 1on page 464 of
Crescent book.

Lecture 9 (Correction of errors) Lecture 71 (overall)

Classwork:
1. Discuss of past paper 14 on page 172 of Crescent book;
2. Discuss the concept of markup and margin and solved question 1,2 and 3 on page 462 of
Crescent book.

Homework:
1. Past paper 17 on page 175 of Crescent book.
2. Question 2,4 and 5 on page 462 of Crescent book.

Lecture 2 (Statement of changes in equity) Lecture 71 (overall)

Classwork:
1. Discuss the concept of dividend and types of dividend.

Lecture 10 (Correction of errors) Lecture 72 (overall)

Classwork:
1. Solved past paper 17 on page 175 of Crescent book;

Homework:
1. Past paper 17 on page 175 of Crescent book.

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Lecture 3 (Statement of changes in equity) Lecture 72 (overall)

Classwork:
1. Solved question 1 on page 464 of Crescent book;
2. Revise the concept of dividend.
Homework:
1. Question 1 on page 464 of Crescent book.

Lecture 4 (Statement of changes in equity) Lecture 73 (overall)

Classwork:
1. Explain the concept of revaluation surplus in statement of changes in equity with the help of following
question:

Q.1)
Asset purchased on 1-01-12
Cost of asset 500
Useful life 20 years
Revaluation Details:
01-01-14 800
01-01-16 250
01-01-18 600
Required: Prepare Journal entries from 2012 to 2018.

Homework:
1. Past paper 1 and 2 on page 358 of Crescent book.

Lecture 5 (Statement of changes in equity) Lecture 74 (overall)

Classwork:
1. Soled past paper 1 and 2 on page 358 of Crescent book.
Homework:
1. Question bank 1,2,3,4,5 and 6 on page 362,363,364 and 365 of Crescent book.

(IAS-8)
Lecture 1 (IAS-8) Lecture 75 (overall)
Classwork:
1. Started IAS-8 and solved practice question 1 on page 351 of Crescent book.
Homework:
1. Solve practice question 1 (2 times)

Lecture 2 (IAS-8) Lecture 76 (overall)

Classwork:
1. Discuss practice question 1 on page 381 of Crescent book;

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

2. Discuss the concept of impact of change in policy on retained earning with the help of accounting
equation;
3. Solved question bank 1 on page 399 of Crescent book.
Homework:
1. Past paper 1 and 2 on page 393 and 394 of Crescent book.

Lecture 3 (IAS-08) Lecture 77 (overall)

Classwork:
1. Solved past paper 1 on page 393 of Crescent book;
2. Revise previous class concepts;
3. Discuss the adjustment (3) of past paper 3 on page 395 of Crescent book.

Homework:
1. Question bank 6 and 7 on page 401 of Crescent book.

Lecture 4 (IAS-08) Lecture 78 (overall)

Classwork:
1. Solved question bank 2 on page 400 of Crescent book;
Homework:
1. Revise class work.

Lecture 5 (Correction of errors) Lecture 79 (overall)

Classwork
1. Solved past paper 15 on page 174 of Crescent book;
Homework:
1. Adjustment 8 of past paper 15 on page 150 of Crescent book.

(Statement of cash flows)

Lecture 1 (Statement of cash flows) Lecture 80 (overall)
Classwork:
1. Solved ICAP Past paper question 4 (Junaid Janjua):
Homework:
1. Revise class work.

Lecture 2 (IAS-8) Lecture 81 (overall)

Classwork:
1. Solved question bank 6 (Asif engineering) on page 401 of Crescent book.
Homework:
1. Revise class work.

Lecture 2 (Statement of cash flows) Lecture 82 (overall)

Classwork:
1. Solved past paper 5 (ameen industries) on page 401 of Crescent book.
Homework:
1. Revise class work.

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Lecture 3 (Statement of cash flows) Lecture 83 (overall)

Classwork:
1. Solved ICAP past paper 11 (quality enter praises) :
Homework:
1. Revise class work.

Lecture 4 (Statement of cash flows) Lecture 84 (overall)

Classwork:
1. Solved ICAP past paper 8 (AB enter praises)
Homework:
1. Revise class work.

Lecture 5 (Statement of cash flows) Lecture 85 (overall)

Classwork:
1. Solved following past paper 12 (Liaqat industries)
Homework:
1. Revise class work.

Lecture 6 (Statement of cash flows) Lecture 86 (overall)

Classwork:
1. Solved past paper 13 (Nadir limited) on page 610 of Crescent book.
Homework:
1. Revise class work.

Lecture 7(Statement of cash flows) Lecture 87 (overall)

Classwork:
1. Solved past paper 4 by direct method on page 604 of Crescent book.
2. Discuss past paper 17 on page 611 of Crescent book.
Homework:
1. Past paper 4 by direct method on page 604 of Crescent book;
2. Past paper 17 on page 613 of Crescent book.

Lecture 8 (Statement of cash flows) Lecture 88 (overall)

Classwork:
1. Solved past paper 15 (Nadir limited) on page 612 of Crescent book;
Homework:
1. Question bank 10 on page 653 of Crescent book;
2. Question bank 8 on page 653 of Crescent book.

Lecture 8 (IAS-08) Lecture 88 (overall)

Classwork:
2. Discuss past paper 2 (Chand limited) on page 394 of Crescent book.
Homework:

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

1. Past paper 2 on page 394 of Crescent book;

2. Question bank 7 on page 401 of Crescent book.

Lecture 9 (IAS-08) Lecture 89 (overall)

Classwork:
1. Solved question 7 on page 401 of Crescent book;
2. Discuss the theory of IAS-08.
Homework:
1. Past paper 9 (Galaxy’s brothers) of cash flows on page 607 of Crescent book;
2. All MCQS of IAS-08;
3. Read the theory of IAS-08.
Lecture 1 (Income and Expenditure) Lecture 90 (overall)
Classwork:
1. Starting the concept of income and expenditure and solved past paper 3 on page 856 of Crescent
book;
2. Discuss question 3 of term test 2.
Homework:
Revise class work.

Lecture 2 (Income and Expenditure) Lecture 91 (overall)

Classwork:
1. solved past paper 8 on page 860 of Crescent book;
2. Discuss the concept of prior period errors;
3. Discuss MCQS of IAS-08 from MCQ 1 TO 13 on page 912 of Crescent book.
Homework:
Past paper 9 on page 861 of Crescent book.

Lecture 3 (Income and Expenditure) Lecture 92 (overall)

Classwork:
1. solved past paper 9 on page 861 of Crescent book;
2. Solved question 1 of term test 2;
3. Discuss the concept of change in accounting estimate on page 378 of Crescent book.
Homework:
Revise class work.

Lecture 4 (Income and Expenditure) Lecture 93 (overall)

Classwork:
1. Solved past paper 12 on page 863 of Crescent book;
Homework:
Revise class work.

Lecture 5 (Income and Expenditure) Lecture 94 (overall)

Classwork:
1. Solved past paper 13 on page 864 of Crescent book;
Homework:

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

All MCQS of cash flows on page 672 of Crescent book.

Lecture 6 (Income and Expenditure) Lecture 95 (overall)

Classwork:
1. Solved past paper 14 on page 865 of Crescent book;
2. Discuss the concept of general donation and specific donation.
Homework:
1. All MCQS of cash flows on page 672 of Crescent book;
2. Theory of NPO.

(IAS-33)
Lecture 1 (IAS-33) Lecture 96 (overall)
Classwork:
1. Starting the discussion of earning per share and Solved question 1,2 and 3 on page 939 of Crescent
book;
2. Solve question 37 on page 511 of Crescent book;
3. Discuss the concept of earning per share in case of discontinued business;
4. Discuss MCQ 17 and 18 of IAS-08.
Homework:
1. Example 1,2 and 3 on page 469 and 470 of Crescent book;
2. Question 38 on page 511
3. Practice question 1 on page 518 of Crescent book;
4. All MCQS of cash flows.

Lecture 2 (IAS-33) Lecture 97 (overall)

Classwork:
1. Discuss the concept of share issue;
2. Solve question 4,5 and 6 on page 939 of Crescent book;
3. Discuss question 3 of term test 2;
4. Discuss the theory of IAS-07;
5. Discuss the concept of gratuity and warranty.
Homework:
1. Example 1 to 17 on page 474 of Crescent book;
2. Example 28 to 35 on page 502 of Crescent book;
3. Question 7 on page 940 of Crescent book;
4. MCQ 19,20.37 and 39 of IAS-07.

Lecture 3 (IAS-33) Lecture 98 (overall)

Classwork:
1. Discuss the concept right issue;
2. Solve question 7 on page 939 of Crescent book;
3. Solve question 18 on page 489 of Crescent book;
4. Solve following question in class;
5. Discuss MCQS of cash flows.

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Homework:
1. Questions from 19 to 27 on page 490 of Crescent book.

Lecture 4 (IAS-33) Lecture 99 (overall)

Classwork:
1. Discuss the concept of preference shares, debentures and share certificate;
2. Solve question 8 on page 940 of Crescent book;
3. Solve question 9 on page 940 of Crescent book;
4. Solve question 10 on page 941 of Crescent book;
Homework:
1. Question 9 and 10 on page 940 and 941 of Crescent book;
2. Question 39 on page 514 of Crescent book;
3. Question 40 on page 515 of Crescent book;
4. All MCQS of earning per share.

(Ratios)
Lecture 1 (Ratios) Lecture 100 (overall)
Classwork:
Discuss following ratios;
1. Capital employed.
2. Return on capital employed.
3. Return on ordinary equity.
4. Return on asset.
5. Asset turn over.
6. Debtor days.
7. Inventory days.
8. Creditor days.
9. Cash operating cycle.
10. Debtor turnover.
11. Inventory turnover.
12. Creditor turnover.
13. Current ratio.
14. Quick ratio.
15. Debt/equity ratio.
16. Net profit ratio.
17. Gross profit ratio.
18. Expense ratio.
2. Solve question 1 on page 708 of Crescent book;
3. Solve question 2 on page 710 of Crescent book.
Homework:
1. Past paper 1(a) on page 749 of Crescent book;
2. Past paper 3 on page 750 of Crescent book;
3. Past paper 4 and 6 on page 751 of Crescent book.

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Lecture 2 (Ratios) Lecture 101 (overall)

Classwork:
1. Discuss the theory of following concepts:
(i) Ratios;
(ii) Percentage growth in sale;
(iii) Price earnings ratio;
(iv) Horizontal analysis;
(v) Vertical analysis;
(vi) Limitations of ratios analysis;
(vii) Window dressing.
2. Solve question 2 on page 710 of Crescent book;
3. Solve past paper 1 on page 749 of Crescent book;
4. Solve past paper 3 and 4 on page 749 and 750 of Crescent book;
5. Solve past paper 6 on page 751 of Crescent book;
6. Discuss the MCQS of ratios.
Homework:
1. Past paper 8 on page 753 of Crescent book;
2. Past paper 11 on page 765 of Crescent book;
3. All MCQS of ratios.

Lecture 3 (Ratios) Lecture 102 (overall)

Classwork:
1. Discuss the theory of following concepts;
(i) LO:1 of ratio theory;
(ii) NPO theory;
(iii) Types of funds (endowment fund, restricted fund, unrestricted fund);
(iv) LO:7 OF NPO;
(v) Revenue recognition;
(vi) Contribution receivable;
(vii) Pledge;
(viii) Bequest/legacy;
(ix) Member ship fee.
2. Discuss past paper 8 and 9 on page 753 of Crescent book;
3. Solve example on page 798 of Crescent book;
4. Discuss the concept of components cost and solve example 1 on page 10 of Crescent book;
Homework:
1. Past paper 2 on page 749 of Crescent book;
2. Past paper 5 on page 751 of Crescent book;
3. Past paper 7 on page 752 of Crescent book;
4. Past paper 10 on page 754 of Crescent book;
5. Example on page 792 of Crescent book;
6. Example of member ship fee on page 794 of Crescent book.

Lecture 4 (IAS-16) Lecture 103 (overall)

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

Classwork:
1. Discuss the concept of sum of year digit method of IAS-16;
2. Solve example on page 9 of Crescent book;
3. Discuss past paper 14 on page 81 of Crescent book;
4. Discuss question 16 on page 83 of Crescent book;

Lecture 4 (IAS-36) Lecture 103 (overall)

Classwork:
1. Discuss the concept of reversal of impairment of fixed assets under cost and revaluation model;
2. Solve self-made question 1 and question 2.
Homework:
1. Following Question 1 of test 3;
Q.1
1. A plant was purchased on 1 January 2022 for Rs. 200,000.
2. The plant is measured under the revaluation model and was revalued to its fair value of Rs. 270,000 on
I January 2023.
3. The asset's recoverable amount decreased to’ Rs. 70,000 at 31 December 2024 due to a decrease
in demand for the product produced by this plant.
4. The plant is depreciated straight-line to a nil residual value over 10 years.
5. The revaluation surplus is transferred to retained earnings over the asset’s useful life.
Required:
Show the journal entries assuming that:
(a) The asset's recoverable amount increased to Rs. 160,000 at. 31 December 2025; (4)
(b) The assets recoverable amount increased to Rs. 210,000 at31December2025; (4)

Lecture (Revision classes) Lecture 104 (overall)

Classwork:
1. Solved question 8 (Chand limited) of recent attempt;
2. Solved question 7 (Qamar limited) of recent attempt;
3. Discuss the theory of SOCIE;
4. Discuss question 3 (madhab limited) of recent attempt;
5. Discuss donation to purchase and contract fixed assets.

Homework:
1. MCQS OF IAS-16, IAS-36, IAS-23, IAS-20, IAS-40;
2. QUESTION 3 Mehtab limited.

Lecture (Revision classes) Lecture # 105 – Pre (Over All)

Classwork:
Question-1
Following information have been extracted from the financial statements of Fakhr Limited (FL) for
the year ended 31 December 2019:
(i) 2019 2018 2017
Draft Audited Audited
--------- Rs. in million ---------
Net profit 84 98 72
Revaluation surplus arising during the year* 25 (14) -

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

*Transfer to retained earnings is made upon de-recognition of related asset.

(ii) Share capital and reserves as at 1 January:
2018 2017
----- Rs. in million -----
Share capital (Rs. 10 each) 300 300
Revaluation surplus 102 102
Retained earnings 348 276

(iii) On 1 March 2018, FL declared a final cash dividend of 10% for the year ended 31 December
2017. On 1 November 2018, FL issued 40% right shares to its ordinary shareholders at Rs. 24
per share. On 1 August 2019, an interim bonus of 15% was declared.

Following matters need to be incorporated in the draft financial statements of FL:

(i) To provide more relevant and reliable information about investment property, it has been
decided to change the measurement basis for investment property from cost model to fair value
model.
The only investment property of FL is a building purchased on 1 January 2016 at a cost of Rs.
150 million. 60% of the cost represents building component having estimated useful life of 20
years and residual value of Rs. 10 million. The depreciation is included in the above draft
financial statements. The fair value of the investment property has increased by 6% in each year
since acquisition.
Required:
Prepare FL’s statement of changes in equity (including comparative figures) for the year ended 31
December 2019. (‘Total’ column is not require
Question-2
Following is the trial balance of Mahtab Welfare Hospital (MWH) as on 31 December 2021:
Debit Credit
---- Rs. in million ----
Capital work in progress – hospital building 335
Cash at bank 125
Closing inventory – medicines and supplies 14
Contributions received 281
General fund as at 1 January 2021 332
Medical equipment 320 100
Medicines and supplies used 76
Other expenditures 19
Payables 17
Research cost 33
Restricted fund as at 1 January 2021 230
Salaries 53
Other income 15
Total 975 975
Additional information:
(i) The break-up of restricted fund balance is as follows:

Fund Description Rs. in million

Hospital building Contributions received for the construction of
120
Fund hospital building.

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

As per the resolution of board of trustees,

Research fund MWH is required to allocate 20% of surplus 60
of each year to the research fund.
Endowment fund Contribution received for endowment fund 50

(ii) Contributions received include Rs. 55 million and 26 million received for construction of hospital
and endowment fund respectively.
(iii) The other income includes investment income of Rs. 6 million which is externally restricted to be
added to principal amount of Endowment fund. There is no other restrictions on other income.
(iv) During the year, MWH also received construction materials having fair value ofRs. 65
million for the hospital building which has not been recorded in books.
(v) MWH has completed the construction of hospital building on 1 April 2021.
(vi) Depreciation is to be charged as follows:
Hospital building 5% – straight line
Other fixed assets 10% – reducing balance

Requirement 1:
Prepare the following using deferral method:
(a) Statement of income and expenditure for the year ended 31 December 2021;
(b) Statement of changes in net assets;
(c) Statement of financial position as at 31 December 2021 (single column);
Requirement 2:
Prepare the following using restricted fund method:
(a) Statement of income and expenditure for the year ended 31 December 2021;
(b) Statement of changes in net assets;
(c) Statement of financial position as at 31 December 2021 (single column);

Homework
1. Revise class work;

Lecture (Revision classes) Lecture # 106 – Pre (Over All)

Classwork:

Question 1

The following information relates to Miles Limited for the year ended 31 December 2011:
Milles Limited
Draft result of operations
2011 2010
Profit before tax 503,000 403,000
Income tax expense (200,000) (180,000)
Profit after tax 303,000 223,000
Preference dividends declared (3,000) (3,000)
Ordinary dividend declared (30,000) (30,000)
Retained earnings for the year 270,000 190,000
Additional Information
The balances in equity at 1 January' 2010 comprised:

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

• 1,000,000 ordinary shares of 0.20 each;

• 10,000 10% non-cumulative non-redeemable preference shares of 3 each;
• Share premium of 290,000; and
• Retained earnings of 60,000.
In terms of an agreement with the bank the company has undertaken to have a capitalization issue in
order to capitalize excess reserves. In accordance with this agreement, there was a capitalization issue of
1 for every 2 shares held on 1 July 2011.
Required:
Prepare extracts from the statement of comprehensive income, and related notes of Miles Limited in
terms of International Financial Reporting Standards for the year ended 31 December 2011.
Comparatives are required

Homework

Question 14

The following relates to Early Morning Limited for the year ended 31 December 2015:
1. Profit for the year Rs.500,000 (2014: Rs.337,500). This profit includes a profit from a
discontinued operation (after tax) of Rs.52,500 (2014: Rs.0).
2. On 1 January 2014 there were 250 000 ordinary shares each with a par value of Rs.5.00 in issue.
On the 30 September 2014 there was a rights issue on a basis of 1 ordinary share issued for every5
already held at a price of Rs.6.00 The market value of the ordinary shares immediately before the
rights issue was Rs.7.50 per share. On 31 May 2015 there was an issue of 50,000 ordinary shares
at market price (Rs.5 per share).
3. There are 25,000 options in existence, each of which allows the holder to acquire four shares at a
strike price of Rs.10.00 per share. The average market price per ordinary share for 2014 and 2015
was 12.00. These options were in existence throughout 2014 and 2015.
4. Preference shares in issue are convertible (at the option of the preference shareholders) into 500
ordinary shares on 31 December 2017. If not converted, the preference shares will be redeemed
on 31 December 2017. 245 Page 10 of 11 Dividends of Rs. 1,000 are incurred annually on these
preference shares (these have been correctly accounted for as finance charges). The preference
shares were in existence throughout 2014 and 2015.Ignore tax.
Required:

Disclose earnings per share in the financial statements of Early Morning Limited for the year ended31
December 2015. (With comparatives)

Lecture (Revision classes) Lecture # 107 (a) – Pre (Over All)

Lecture (Revision classes) Lecture # 74 (a) – Post (Over All)
Classwork:
1. Prepare the note of Question 38 on page 511 of Crescent Book.
2. Solve Question 2 of lecture notes of 106.

Lecture (Revision classes) Lecture # 107 (b) – Pre (Over All)

Lecture (Revision classes) Lecture # 74 (b) – Post (Over All)
Classwork:
1. Solved Q-2 of lecture 106 handout.

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CAF-01: FAR-I (Pre Batch) Over All Lecture Notes

2. Bonus issue is also known as “scrip issue”; “capitalization issue” or “stock dividend”;
3. In right issue, cum-right and ex-right price;
4. Discussed P/E ratio on page 516 of book;
5. Discussed LO12 (Presentation and disclosure) on page 516 of book;
6. Discussed PP 1 adjustment (v) on page 547 of book and replaced the question with lecture 98
(pre) and 65 (post) handout question;
7. Verbally discussed QB 1 on page 504 of book;
8. If RV is zero, assume it 1 while calculating depreciation rate under reducing balance method using
formula.

Lecture (Revision classes) Lecture # 107 (c) – Pre (Over All)

Lecture (Revision classes) Lecture # 74 (c) – Post (Over All)
Classwork:
1. Discussed concept of frequency of revaluation on page 25 of book (IAS-16);
2. Treatment of cash / settlement discount in case of an item of PPE (IAS-16);
3. PP-12 (Monday Ltd) sol to be uploaded on you-tube for post batch (from pre-batch) (IAS-16);
4. Discuss the concept of gross replacement method and solved question 37 on page 447 of Crescent
book (IAS-16);
5. If Q is silent assume suspension as non-routine (IAS-23);
6. Discussed disclosure requirement on page 242 of book (IAS-23);
7. PP-6 (Marvelous Engineering Limited) different names of loans (IAS-23);
8. Discussed PP-5 (Spin Industries), correction of concept and solution (IAS-23);
9. Reclassification (vs) restatement concept reading from ICAP ST page 235 (IAS-08);
10. Capital and revenue reserves’ (IAS-01);
11. What to do if dividend is given in Rupees per share (IAS-01);
12. ICAP QB # 6 adjustment 5 discussed (IAS-01);
13. Discussed PS 7 (b) (ratios);
14. Discussed PS 9 (important for MCQs point of view) (page 735 of book) (ratios);
15. Alternative name of quick ratio is “liquid ratio” and that of current ratio is “safe margin of solvency”
(ratios);

Lecture (Revision classes) Lecture # 107 (d) – Pre (Over All)

Lecture (Revision classes) Lecture # 74 (d) – Post (Over All)
Classwork:
1. Discuss the concept of restricted funds and solved question Mehtab limited of lecture
notes 105 of NPO;
2. Solved question 7 on page 690 of Crescent book;
3. Discuss past paper 9 ( galaxy limited) of IAS-07.

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