1. The Coronet Company has a cost card in relation to an item of goods manufactured as follows: Materials $70, Storage costs of finished goods 18, Delivery to customers 4, Irrecoverable purchase taxes 6. According to IAS2 Inventories, at what figure should the item be valued in inventory?
2. The Parrot bill Company produces units of product UB06. The following costs have been incurred: per unit- Direct materials and labor $1.80, Variable production overhead 0.25,Factory administrative costs 0.15, Fixed production costs 0.20 Under IAS2 Inventories, what is the correct inventory value of a unit of product UB06?
3. The Hopkins Company is a manufacturing company. The cost per unit of an item of inventory is shown on its card as follows: Materials $30, Production labor costs 33. Production overheads 12, General administration costs 10, Marketing costs 5. According to IAS2 Inventories, what is the value of one completed item of inventory in Hopkins's statement of financial position?

4. The Motmot Company has partially-completed inventory located in its factory, to which the following estimates relate: Production costs incurred to date $2,900; Production costs to complete 2,000, Transport costs to customer 300, Future selling costs 400, and selling price 2,800. According to IAS2 Inventories, what is the net realisable value of Motmot's inventory?
5. The Charcoal Company is purchasing a second-hand polishing machine from a competitor who has gone bankrupt. It will incur the following costs: Agreed price to be paid to vendor $8,000, Dismantling the machine at its current location $400, Transportation to Charcoal's factory $350, Machine refurbishment costs prior to re-installation $175, Re-installation $125. Under IAS16 Property, plant and equipment, the total included in non-current assets in respect of the machine should be.
6. The Plaice Company acquired a new filing machine, the list price of which was $49,000. The supplier allowed a trade discount of $1, 700 off the list price. On delivery, the cost of installing the machine in its desired location was $450. According to IAS16 Property, plant and equipment, at what cost should the filing machine be measured in the financial statements of Plaice?
7. The Tanager Company purchased a boring machine on 1 January 2006 for $81,000. The useful life of the machine is estimated at 3 years with a residual value at the end of this period of $6,000. During its useful life, the expected units of production from the machine are:
2006--- 12,000 units
2007----- 7,000 units
2008 ----5,000 units
What should be the depreciation expense for the year ended 31 December 2007, using the most appropriate depreciation method permitted by IAS16 Property, plant and equipment?
8. The Lamprey Defense Company acquired an aero plane in 2005. At the time of acquisition, the cost of the jet frame was $4.6million and the additional cost of the engine was $600,000. In 2008, the engine was replaced with a new one costing $1, 100,000. At the time of replacement, the accumulated depreciation to date on the jet Frame was $1,750,000 and on the engine was $400,000. Using the principles outlined in IAS16 Property, plant and equipment, what amount should be derecognized at the date of replacement?
9. The Mateo Company acquired a drilling machine on 1 October 2005 at a cost of $25, 000 and depreciated it at 25% per annum on a straight line basis. On 1 October 2007,$5,000 was spent on an upgrade to the machine in order to improve its efficiency and increase the inflow of economic benefits over the machine's remaining life. According to IAS16 Property, plant and equipment, what depreciation expense should be recognized in profit or loss for the year ended 30 September 2008.
10. The Marled Company purchased a non-current asset with a useful life of 12 years on 1 January 2007 for $6,500,000. At its year end of 31 December 2007, the amount the company would receive from the disposal of the asset if it was already of the age and in the condition expected at the end of its useful life was estimated at $700, 000. Inclusive of inflation the actual amount expected to be received on disposal was estimated at $900, 000. What should be the depreciation charge under IAS16 Property, plant and equipment, for the year ended 31 December 2007?

11. The Marko Company has acquired a trademark relating to the introduction of a new manufacturing process. The costs incurred were as follows: Cost of trademark $3,500,000 Expenditure on promoting the new product $50,000, Employee benefits relating to the testing of the proper functioning of the new process $200,000, According to IAS38 Intangible assets, what is the total cost that should be capitalized as an intangible non-current asset in respect of the new process?
12. An entity has declared preference dividends for the year of $14,000 (based on its 7% $2,00,000 irredeemable preference shares in issue).At the start of the year, there was a balance of $7,000 for preference dividends payable. At the end of the year no amount was owing to preference shareholders in respect of dividends. The preference dividend paid for the year is not simply the $14,000 declared, as this amount needs to be adjusted for any opening and closing balances. What is the amount of dividend paid?
13. An item of plant was disposed of for cash proceeds of $1,000. The carrying amount of the item of plant at the date of the sale was: $ Cost 3,000 Less: Accumulated depreciation 1,300 carrying amount $1700. A loss of $700 (the difference between the proceeds of $1,000 and the carrying amount of $1,700) should be recognized in profit or loss and the non-current asset should be removed from the statement of financial position. What is the amount of cash proceeds received should be recognized in the statement of cash flows as an investing activity “proceeds from sale of property, plant and equipment”.
14. Extracts from the draft financial statements of Deluxe for the year ended 31 December 2008,are set out below: Revenue $250,000, Cost of sales: Opening inventories $30,000, Purchases $218,000, Closing inventories ($52,000) Cost of sales ($196,000), Gross profit $54,000, Other operating expenses (all cash costs except, for depreciation of $11,000) ($21,600), Profit from operations 32,400.Statement of financial position extracts
31 Dec 2008 31 Dec 2007
Trade receivables $68,000 $23,000
Trade payables 21,600 42,800
What is the amount net cash provided by operating activities for Deluxe for the year ended 31 December 2008 using the direct method?
15. An item of plant was disposed of for cash proceeds of $1,000. The carrying amount of the item of plant at the date of the sale was: Cost $3,000, Accumulated depreciation 1,300, Carrying amount 1,700. What amount should be recognized in profit or loss and the non-current asset should be removed from the statement of financial position.
16. An item of plant was disposed of for cash proceeds of $3,000. The carrying amount of the item of plant at the date of the sale was: Cost $9,000, Accumulated depreciation 3,900, Carrying amount 5,100. What amount should be recognized in the operating activities of cash flow statement
17. The Coronet Company has a cost card in relation to an item of goods manufactured as follows: Materials $80; Storage costs of finished goods $18; Delivery to customer’s $4 Irrecoverable purchase taxes $6. According to IAS2 Inventories, at what figure should the item be valued in inventory?
18. The Marmot Company has partially-completed inventory located in its factory, to which the following estimates relate: Cost per unit: Production costs incurred to date 2,900; Production costs to complete 3,000; Transport costs to customer 300; Future selling costs 400; Selling price 3,800. According to IAS2 Inventories, what is the net realizable value of Marmot’s inventory?
19. Manufacturing costs in 2007 for inventory held at the year-end are $60 million. All goods held at the year-end were sold in January 2008, for $50 million. The selling costs incurred for the goods sold in January 2008 were $4 million. According to IAS2 Inventories, what is the net realizable value of Marmot’s inventory?
20. A business plans for fixed production overheads of $50,000 and annual production is estimated at 100,000 items in its financial year. The planned overhead recovery rate is $0.50 per item ($50,000 per 100,000 items). A fire at the factory results in production being only 75,000 units although there is no saving in the level of fixed production overheads. What is the amount of inventory should still be valued on the basis of per item, leading to a recovery of overheads.
21. An entity is constructing a new production facility. The cost of the materials used was $20,000, consultancy fees were $1,000 and site preparation costs were $2,000. All of these are direct costs which should be included as part of the cost of the asset. The production facility will require dismantling in 5 years time at a cost of $800. This cost should be included as part of the cost. If the effect of the time value of money is significant, the cost of dismantling the facility should be recognized at its present value. Operating losses of $350 were incurred in the start up period between the asset becoming ready for use and full production commencing. The start up losses cannot be capitalized. Under IAS16 Property, plant and equipment, the total included in non-current assets in respect of the materials should be.
22. An entity acquires an asset for $10,000. It is expected to have a useful life of ten years, after which time the asset will be scrapped. The asset has no residual value. Required: (a) Calculate the value of depreciation per year under straight-line method. (b) Calculate the value of depreciation per year under units of production method (if the number of units 2,00,000) (c) Calculate the value of depreciation per year under Diminishing balance method (d) Calculate the value of depreciation per year under double declining balance method.
23. A machine is acquired for $60,000 and is estimated to have a useful life of 15 years. Depreciation is being calculated on a straight-line basis. The asset has no residual value. Required: Calculate the depreciation charge each year and the carrying amount of the asset at the end of year 5. The entity revises the machine's useful life at the end of year 5, because of changes in technology, and estimates that it only has a further 4 years' life before it will need replacing. At the end of year 5, the remaining life is estimated to be 4 years. Annual depreciation charge in years 6 to 9.
24. An entity acquires a specialized piece of machinery for $200,000. Due to the specialized nature of the machinery, there is no active resale market for it. The entity revalues its plant and machinery. The machine is currently a quarter of its way through its life and therefore its carrying amount would have been $150,000 using a cost model and assuming a straight-line method of depreciation with no residual value. To replace the asset new would cost $300,000. The estimated depreciated replacement cost would, therefore, be 75% of the $300,000.
25. An entity acquires an item of PPE for $50,000, which is depreciated over 20 years. Three years later, the asset is revalued to $60,000. The useful life has not changed. On revaluation the depreciation will be based on $60,000 over the remaining 17 years. The amount transferred to the revaluation surplus should represent the difference between the carrying amount of the asset at the date of revaluation and the new revalued amount.
26.The following selected transactions relate to the Falsetto Company
Date Transactions
March 1 Sold $20,000 of merchandise to the Peter Company, terms 2/10, n/30
March 12 Received payment in full from Peter Company for balance due
March 13 Accepted Jane company’s $20,000, 6 months, 12% note for balance due.
March 15 Made Falsetto company credit card sales for $13,200
March 18 Made American Express credit sales totaling $6,700. A 5% service fee is charged by American Express.
March 31 Received payment in full from American Express Company.
April 10 Sold accounts receivable of $8,000 to Harman Company. Harman Company assesses a service charge of 2% of the amount of receivable sold.
April 15 Received collections of $8,200 on Hard son Company credit card sales and added finance charges of 1.50% to the remaining balances.
May 12 Wrote off as uncollectible $16,000 of accounts receivable. Hudson Company uses the percentage of sales basis to estimate bad debts.
June 30 Credit sales for the first 6 months total $2, 00,000. The bad debt percentage is 1% of credit sales. At June 30, the balance in the allowance account is $3,500
July 15 One of the accounts receivable written off in May was from Mr. Sunny, who pays the amount due, $4,000, in full.

Required: Prepare the Journal entries for the transactions.
27.
Presented below a list of items that may or may not be reported as inventory in a company‘s December 31, balance sheet.
i) Goods out on consignment at another company stores.
ii) Goods sold on an installment basis
iii) Goods purchased f.o.b. shipping points that are in transits at December 31.
iv) Goods purchased f.o.b. destination that are in transits at December 31.
v) Goods sold to another company, for which our company has signed an agreement to repurchase at a set price that cover all costs related to the company.
vi) Goods sold where large returns are predictable.
vii) Goods sold f.o.b. shipping points that are in transits at December 31.
viii) Freight charges on goods purchased
ix) Factory labor cost incurred on goods still unsold.
x) Interest costs incurred for inventories that are routinely manufactured.
xi) Costs incurred to advertise goods held for resale.
xii) Materials on hand not yet placed into production by a manufacturing firm.
xiii) Office Supplies.
xiv) Raw material on which a manufacturing firm has started production, but which are not completely processed.
xv) Factory supplies.
xvi) Goods held on consignment from another company.
xvii) Costs identified with units completed by a manufacturing firm but not yet sold.
xviii) Goods sold f.o.b. destination that are in transits at December 31.
xix) Temporary investment in stocks and bonds that will be resold in the near future.
Required:
Indicate which of these items would typically be reported as inventory in the financial statements. If an item should be reported as inventory, indicate how it should be reported in the financial statements.

28.
Two or more items are omitted in each of the following tabulations of income statement data. Fill in the amount that are missing.
Particulars 2003 2004 2005
Sales $2,90,000 ? $4,10,000
Sales returns 11,000 13,000
Net Sales ? 3,47,000 ?
Beginning inventory 20,000 32,000 ?
Ending inventory ? ? ?
Purchase ? 2,60,000 2,98,000
Purchase returns & allowances 5,000 8,000 10,000
Transportation in 8,000 9,000 12,000
Cost of goods sold 2,33,000 ? 2,93,000
Gross Profit on sales 46,000 91,000 97,000
29.
Navajo Company is a manufacturing firm. Presented below is selected information from its 2005 accounting records.
Particulars Amount($)
Raw material inventory 01.01. 2005 $30,800
Raw material inventory 31.12. 2005 37,400
Work in Process inventory 01.01. 2005 72,600
Work in Process inventory 31.12. 2005 61,600
Finished goods inventory 01.01. 2005 35,200
Finished goods inventory 31.12. 2005 22,000
Purchases 2,78,600
Transportation in 6,600
Transportation out 8,000
Selling expenses 3,00,000
Administrative expenses 1,80,000
Purchase discounts 10,640
Purchase returns and allowances 6,460
Interest expenses 15,000
Direct labor costs 4,40,000
Manufacturing overhead 3,30,000
Required:
i) Determine raw material used.
ii) Determine cost of goods manufactured.
iii) Determine cost of goods sold.
iv) Indicate how inventories would be reported in the December 31, 2005, balance sheet.
30.
Wall Mart company has the following inventory, purchase and sales data for the year of 2004.
Date Explanation Units Unit cost Total costs
01.01.05 Beginning inventory 200 Tk.10 Tk.2,000
15.04.05 Purchase 400 11 4,400
24.08.05 Purchase 600 12 7,200
27.11.05 Purchase 800 13 10,400
Total 2,000 Tk.24,000
During the year, 1,100 units were sold and 900 units are on hand at 31.12.2005
Required:
Under a Periodic inventory system,
a. Determine the cost of inventory on hand at December 31,2005 and
b. Determine the cost of goods sold for December 31,2005 under the
1. First In, First Out (FIFO)
2. Last In, First Out (LIFO)
3. Weighted Average cost Method.
c. Prepare a Condensed Income Statement assume that Wall Mart sold its 1,100 units for Tk.23, 000 and its operating expenses were Tk.2, 000. Its income tax rate is 30%.
d. Compare results for the three cost flow assumptions.

31.
Presented below a list of items that may or may not be reported as inventory in a company‘s December 31, balance sheet.
xx) Goods out on consignment at another company stores.
xxi) Goods sold on an installment basis
xxii) Goods purchased f.o.b. shipping points that are in transits at December 31.
xxiii) Goods purchased f.o.b. destination that are in transits at December 31.
xxiv) Goods sold to another company, for which our company has signed an agreement to repurchase at a set price that cover all costs related to the company.
xxv) Goods sold where large returns are predictable.
xxvi) Goods sold f.o.b. shipping points that are in transits at December 31.
xxvii) Freight charges on goods purchased
xxviii) Factory labor cost incurred on goods still unsold.
xxix) Interest costs incurred for inventories that are routinely manufactured.
xxx) Costs incurred to advertise goods held for resale.
xxxi) Materials on hand not yet placed into production by a manufacturing firm.
xxxii) Office Supplies.
xxxiii) Raw material on which a manufacturing firm has started production, but which are not completely processed.
xxxiv) Factory supplies.
xxxv) Goods held on consignment from another company.
xxxvi) Costs identified with units completed by a manufacturing firm but not yet sold.
xxxvii) Goods sold f.o.b. destination that are in transits at December 31.
xxxviii) Temporary investment in stocks and bonds that will be resold in the near future.
Required:
Indicate which of these items would typically be reported as inventory in the financial statements. If an item should be reported as inventory, indicate how it should be reported in the financial statements.

32.

If your audit of the Jose Oliva Company, you find that a physical inventory on December 31, 2008, showed merchandise with a cost of $4,41,000 was on hand at that date. You also discover the following items were all excluded from $4,41,000.
i) Merchandise of $61,000 which is held by Oliva on consignment. The consignor is the Max Suzuki Company.
ii) Merchandising costing of $38,000 which was shipped by Oliva f.o.b. destination to a customer on December 31, 2008. The customer was expected to receive the merchandise on January 6, 2009.
iii) Merchandising costing of $46,000 which was shipped by Oliva f.o.b. shipping to a customer on December 29, 2008. The customer was scheduled to receive the merchandise on January 2, 2009.
iv) Merchandising costing of $83,000 shipped by a vendor f.o.b. destination to a customer on December 30, 2008 and received by Oliva on January 4, 2009.
v) Merchandising costing of $51,000 shipped by a vendor f.o.b. seller on December 31, 2008 and received by Oliva on January 5, 2009.
Required:
Based on the above information, calculate the amount that should appear on Balance sheet at December 31, 2008, for inventory.
33.
In an annual audit of Jan Matejko at December 31, 2005, you find the following transactions near the closing date.
i) A special machine fabricated to order for a customer, was finished and specially segregated in the back part in the shipping room on December 31, 2005. The customer was billed on that date and the machine excluded from inventory although it was shipped on January 4, 2006.
ii) Merchandising costing of $2,800 was received on January 3, 2006 and the related purchase invoice recorded January 5. The invoice showed the shipment was made on December 29, 2005 f.o.b. destination.
iii) A packing case containing a product costing $3,400 was standing in the shipping room when the physical inventory was taken. It was not included in the because it was marked “ Hold for shipping instructions”. Your investigation revealed that the customer order was dated December 18, 2005 but that the case was shipped and the customer billed on January 10, 2006. The product was a stock item of your client.
iv) Merchandise received on January 6, 2006, costing $680 was entered into the purchase Journal on January 7, 2006. The invoice showed shipment was made f.o.b. suppliers warehouse on December 31, 2005. Because it was not on hand at December 31, it was not included in the inventory.
v) Merchandising costing of $720 was received on December 28, 2005 and the invoice was not recorded. You located it in the hands of the purchasing agent, it was marked on consignment.
Required:
Assuming that each of the amounts is material, state whether the merchandise should be included in the client’s inventory and give your reason for your decision on each item.
34.
Two or more items are omitted in each of the following tabulations of income statement data. Fill in the amount that are missing.
Particulars 2006 2007 2008
Sales $3,90,000 ? $5,10,000
Sales returns 22,000 23,000
Net Sales ? 4,47,000 ?
Beginning inventory 50,000 52,000 ?
Ending inventory ? ? ?
Purchase ? 2,60,000 2,98,000
Purchase returns & allowances 15,000 18,000 10,000
Transportation in 10,000 19,000 22,000
Cost of goods sold 2,33,000 ? 3,93,000
Gross Profit on sales 56,000 81,000 87,000

35.
XYZ Company is a manufacturing firm. Presented below is selected information from its 2009 accounting records.
Particulars Amount
Raw material inventory 01.01. 2009 $30,000
Raw material inventory 31.12. 2009 37,000
Work in Process inventory 01.01. 2009 72,000
Work in Process inventory 31.12. 2009 61,000
Finished goods inventory 01.01. 2009 35,000
Finished goods inventory 31.12. 2009 22,000
Purchases 2,78,000
Transportation in 6,000
Transportation out 8,000
Selling expenses 3,00,000
Administrative expenses 1,80,000
Purchase discounts 10,000
Purchase returns and allowances 6,000
Interest expenses 15,000
Direct labor costs 4,40,000
Total Manufacturing overhead 4,30,000
Required:
v) Determine raw material used.
vi) Determine cost of goods manufactured.
vii) Determine cost of goods sold.
viii) Indicate how inventories would be reported in the December 31, 2009, balance sheet.