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Intermediate Accounting Ii Question Paper

Intermediate Accounting Ii

Course:Bachelor Of Commerce

Institution: Kabarak University question papers

Exam Year:2009

COURSE CODE: ACCT 221
COURSE TITLE: INTERMEDIATE ACCOUNTING II
STREAM: Y2S2

INSTRUCTIONS:
Answer ALL questions
QUESTION ONE
On 1st January 2004, I bought equipment at cost of Ksh. 5 million and depreciate it on a
straight line basis over 5 years. For tax purpose, the equipment is depreciated at 25%,
straight line per annum on the qualifying tax base. Tax losses maybe carried back against
taxable profit of the previous five years.
In the year 2003, the enterprise taxable profit was Ksh. 2.5 million profit in subsequent
years are expected to average the year 2003 profit. The corporation tax rate is 30%.
Required:
i) Show the temporary differences and deferred tax. (10mks)
ii) Show the differed tax impact on income statement for the year 2004 to
2008. (10mks)
QUESTION TWO
Payuka Ltd. Has 1 million ordinary shares outstanding at 1st January 2006. The company
is a potentially growing business whose additional capital requirements are satisfied upon
satisfaction of set conditions. The conditions provide for contingently issuable shares as
follows:
- 20,000 additional ordinary shares for every new distribution centre opened
in each of the three years 2006 to 2008.
- 2,000 additional ordinary shares for each Ksh. 100,000 of total net income
in excess of Ksh. 700,000 over the three years ending 31st December 2008.
The company opened one new distribution centre on 1st April 2006 and another on 1st
February 2008. The actual net income that was reported in 2006 – 2008 was Ksh. 30
million, 47.5 million and 35 million respectively.
Required:
Computed the diluted EPs for:
i) 2006 (6mks)
ii) 2007 (7mks)
iii) 2008 (7mks)
QUESTION THREE
a) Write explanatory notes on the following:
i) Secured and unsecured bond
ii) Term and serial bond
iii) Registered and bearer bonds
iv) Convertible and commodity backed bond
v) Income & revenue bond (15mks)
QUESTION FOUR
Blue sky Ltd issued 5,000,000 ordinary shares of Shs. 100 each at a premium of Shs. 25
per share payable as follows:
On application Sh 30
On allotment (premium included) 45
On first call 25
On second call 25
125
On 1st January 2005, the company received 12,000,000 applications. Applications for
2,000,000 shares were rejected and the application money refunded on 1st February 2005
when the remaining applicants were allotted shares on a pro rata basis. The allotment
money was received in full on 15th Feb 2005.
The first call was made on 16th May 2005 and received on 2nd June 2005 except on
25,000 shares held by Mr. Ahmed. His shares were forfeited on 1st October 2005 and
resold on 15th October 2005 to Mr. Okelo at shs 110 credited to the ordinary share capital
account at Sh 75 per share.
The final call was made on 1st November 2005 and received on 15th November 2005,
except on 100,000 shares held by Mr. Mwanzia.
Required:
Journal entries to record the above transactions (15mks)

Intermediate Accounting Ii Question Paper

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