Advanced Financial Accounting Midterm Spring 2026 Question Paper

1 Daffodil International University Faculty of Business and Entrepreneurship Department of Business Administration Program: BBA Semester: Spring 202 6 Examination: Mid Term Time: 1.5 Hours Full Marks: 25 Course Code: 0411 - 411 Course Title: Advanced Financial Accounting Section: 6 4 - A Teacher’s Name: D SFA Answer all the questions Qns.1 : Describe briefly the following: [CLO 1; Level 2] [5*1=5] i) Outstanding share, ii) Cash dividend, i ii ) Capital lease , i v) Circuit Breaker, v) Incremental borrowing rate Qns. 2 : On January 1, 20 25 , Ehan Finance Limited signed an agreement to lease machine to Rohan Company. The information related to this agreement we re as follows:  The cost of the asset to the lessor is $ 6 ,00,000, and its fair value as of January 1, 2025, is also $ 6 ,00,000.  The lease term is 5 years with no renewable option. The estimated economic life of the machine is 5 years.  The appropriate party has to pay repair expense of $ 3 ,000 per year.  The agreement requires equal annual rental payments, beginning on January 1, 2025.  The lessee has committed to make the payments on time, while the lessor has taken the necessary steps to make the asset leasable.  The implicit rate is 1 0 % p.a. Instructions: [CLO 2; Level 3] (i) Use the above information in preparing an amortization schedule for the lessor for the lease term. [ 6 ] (ii) Use the information of amortization schedule in preparing the journal entries for the lessor for 202 5 , and 202 6 . [ 4 ] Qns.3 : On J anuary 1, 202 4 , Mehazabien Company issued $ 12 ,00,000 of 1 0 - year, 8 % convertible debentures for $ 12 , 4 0,000. Interest is to be paid semi - annu ally on June 30 and December 31. Each $ 5 00 debenture can be converted into three shares of Mehazabien Company $100 par value common stock. On January 1, 202 5 , 25% of debentures were converted into common stock, which was then selling at $10 5 . An additional $ 8 0,000 of debentures were converted on April 30, 2025 .