Question No: 5 10 Marks ii. Al Moosa Corporation is dealing with selling of electronic goods inside the Sultanate of Oman and the corporation operates eight branches in main cities of Sultanate of Oman. i. The directors of the organization took a decision to get an import quota and for this process corporation has completed its import formalities. So, the corporation has paid OMR 320,000 for an import quota and this would be valid for ten years. The import quota will create an additional profit of OMR 580,000 to the corporation A new customer relationship process was launched and the updated customer list was prepared for a cost of OMR 200,000 and due to this effect there would be an increase of profit of OMR 220,000 ii. A pilot plan was prepared at a cost of OMR 240,000 for opening four new branches in Oman and the viability of this expansion plan provided a negative result. iv. There was a training conducted by the management to staff for two months and a well reputed training institution was engaged in this task. The cost incurred towards the training was OMR 45,000. The training institution declared to the directors of the corporation that the increasing profit would be OMR 175,000 for the next two years. Required: Assess the above course of actions by Al Moosa Corporation and on the role of a financial analyst, what amounts should appear as assets in Corporation's statement of financial position as at 31 May 2019. Also explain the future economic benefits applied to each of the above assets. (4 points x 25 Marks = 10 Marks) Page 7 of 7 Question No: 4 10 Marks The following transactions were undertaken by Raysut Cements during the financial year ended 30 June 2017. Ignore Tax in this scenario The company has issued ordinary shares to the public for the value of OMR 1,000,000. The company has a plan expand their production for that they purchased a land for OMR 900,000 cash. The company has availed long term loan from National Bank of Oman, such loan was paid off on 17 June, 2017 - OMR 360,000 plus interest of OMR 32,000 The company's used trucks were sold for OMR 480,000 with a carrying amount of OMR 200,000. Cash dividends paid to shareholders were OMR 220,000. During the year company purchased machinery for factory giving OMR 120,000 cash and signing a mortgage loan for OMR 400,000. Bank Muscat's share was purchased by company which was to be held as an investment for OMR 400,000 cash and sold a long-term government bond. with a carrying amount of OMR 100,000, for OMR 198,000, including OMR 12 000 accrued interest. The company has issued 5% debentures for OMR 1,400,000. On 15 August, 2017 the company has purchased shares in Omasco to be held as a long-term investment, paying OMR 380 000 cash. Required: a) With the above crude information on the role of an accountant prepare the net cash flow used in investing activities and financing activities sections of the statement of cash flows using the classification as per the requirements of IAS 7. (6 Marks) b) Explain the treatment of each concept of the above cash flows in other financial statements. (4 Marks) Page 6 of 7 Question No: 3 10 Marks Case a) Mr. Mohammed is the Managing Director and major shareholder of Ohoud Perfumes LLC, a wholesale perfume business. He has asked you to assist in the preparation of the year-end financial statements of the company. The inventories at the close of business on 30 December, 2019 were valued at cost at OMR 49,477. However, included in this balance were some items which had cost OMR 8,200 but it is estimated that they could now be sold for only OMR 4,800. The purchases figure includes items to the value of OMR 2,000 which Mohammed took for personal use and for gifts to friends. Case (b) In a trading company, beginning of the inventory has got the cost value of OMR 72,000 and its retail value of inventory was OMR 92,000. During the year the company has purchased inventories at a cost of OMR 280,000 and but its retail value was OMR 400,000. The freight charges for the purchase of the whole year amounted to OMR 16,320 and cost of packing during the year was OMR 10,880. The cost of goods available for sale OMR 379,200 and its retail value was OMR 492,000. The retail value of the sales during the year was OMR 396,000 Required: Case (a) Mr. Mohammed is seeking your advice as an accountant about the valuation of inventory and the adjustments to be made on the above situation. What amount should have to be included and excluded in the value of inventory and what amounts need to be charged as an expense? (5 Marks) Case (b) From the above information assess the cost of goods available for sale and its corresponding retail value and also the management is asking to find out the cost value and retail value of ending inventory. On the role of an accountant how would you arrive at the value of ending inventory for the company by using both cost value and retail value? Explain the steps to arrive at value of inventory elaborately. (5 Marks) Page 5 of 7 Question No: 10 Marks On 16 January, 2016 Al Muaid Corporation purchases a machine for their production for the value of OMR 375,000. The following costs were incurred relevant to the machine: Delivery charges OMR 27,000, Installation charges OMR 36,750 and general administration and variable overheads OMR 4.500 The process of installation and setting up of the machine took for 3 months and a direct additional cost was incurred for bringing the asset into location and functional condition for OMR 31,500. The machine started to function on 15 April, 2016. From the first start date of the machine up to five months, the machine was not functioning well as per the specifications provided by the supplier of that machine. Al Muaid Corporation does not expect this situation. The machine has produced very less quantities of products than what was actually estimated. The corporation has incurred a capital loss of OMR 22,500 because of the small quantities of products produced by the machine. After five months the machine was started producing quantities of products positively as per the estimated specifications. The estimated useful life of the machine was 14 years and the salvage value after 14 years amounted to OMR 27,000. After the useful life of the machine the management has decided to dismantle and the estimated cost of dismantling would be OMR 18,750. Required: a) On the role of an accountant, provide information to the management about various cost to be capitalized relevant to the asset in the corporation's financial statements. (5 Marks) b) What are the annual charges in the statement of comprehensive income related to the economic benefits arrived out of this asset? (5 Marks) Page 4 of 7 Question No:1 10 Marks Case (a): Entity X acquired a computer-controlled machine for production purposes together with software. The purchase price of that machine was OMR 17,500 and the cost of software was OMR 2,500 which is included in the purchase price of machine. Without the software the machine would not be able to operate. As the machine tangible and it is more than the software which is an intangible. Case (b): Entity Y is engaging in selling various computer hardware and software. It has produced a new computer game. The Hardware instrument is sold for OMR 150 and software used in that instrument is an integral part. Without the software the instrument not function Entity Y sells this game to its customers in the ordinary course of business. Case (c): Entity Z is producer and seller of computer software. The company created an accounting software program that is marketed all over the world. The customers who want to purchase needs to download the software program freely. The company will collect OMR 390 through online for activation and license and the license will have a validity of one year. The same accounting software program is used by Entity Z's employees for handling the company's accounting process. Required: Explain the above category of assets separately and also assess which standard has to be applied by AI Shams Company to the items described above and also explain the process of measurement and recognition of those assets separately. (Case a: 3 Marks, Case b: 3 Marks, Case c; 4 Marks) Page 3 of 7