EXEMPTIONS AWARDED BY ICAP TO VARIOUS DEGREE, CERTIFICATE HOLDERS

For Other Professional Qualifications
All candidates seeking exemptions are required to apply on the prescribed Exemption form alongwith the fee and supporting documents / certificates as mentioned on the form to the Directorate of Examinations before the prescribed date of submission of Examination forms.
No exemptions shall be given from any ICAP examination or paper(s) thereof to any individual, Professional Accountancy Institution or body or University unless such request:

Is received from the Certificate awarding body;
The said body is making the request on a reciprocal basis; and
The request is subjected to a detailed evaluation procedure to be laid down by ICAP and made transparent.
As per conditions mentioned in Para above, the under mentioned specific exemptions as approved by the Council of ICAP are presently available:

The examination and the training prescribed by the following Chartered Accountancy Institutes will be treated as equivalent to the examinations and training prescribed under the Chartered Accountants Bye-Laws 1983 for the purpose of membership of ICAP:
The Institute of Chartered Accountants in England & Wales (ICAEW);
The Institute of Chartered Accountants in Ireland (ICAI);
The Institute of Chartered Accountants in Scotland (ICAS);
The Institute of Chartered Accountants in Australia (ICAA);
The Canadian Institute of Chartered Accountants (CICA).
Provided that if such members desire to start practice as Chartered Accountants, they will have to pass the papers of “Advanced Taxation” and “Corporate Laws” of the Final Examinations.
Provided also that such members desire to start practice as Chartered Accountant or Management Consultant, he shall do so if his training comprises of atleast two years training with training organization in practice or has undergone further training with training organization in practice so as to complete the aggregate training of two years with training organizations in practice.

Under the Council’s Directive 1.14 dated December 31, 2010 the candidates who have successfully completed all examinations of specified accountancy bodies will be eligible for exemption as follows:

i. Association of Chartered Certified Accountants (ACCA)


ICAP Modules
Papers Exempted
Additional Condition


Pre-Entry Proficiency Test
-

A
Functional English
-

A
Quantitative Methods
-

B
Introduction to Financial Accounting
-

C
Financial Accounting
-

C
Taxation
Exemption will be granted to only those candidates who have passed F6 Taxation (Pakistan variant)

D
Cost Accounting
-

D
Auditing
Exemption will be granted to only those candidates who have passed F8 Audit and Assurance; and P7 Advanced Audit and Assurance


II. Chartered Institute of Management Accountants (CIMA)

ICAP Module
Papers Exempted


Pre-Entry Proficiency Test

A
Functional English

A
Quantitative Methods

B
Introduction to Economics & Finance

B
Introduction to Financial Accounting

C
Financial Accounting

D
Cost Accounting


III.Institute of Cost and Management Accountants of Pakistan (ICMAP)



ICAP Module
Papers Exempted


Pre-Entry Proficiency Test

A
Functional English

A
Quantitative Methods

B
Introduction to Economics & Finance

B
Introduction to Financial Accounting

B
Mercantile Law

C
Financial Accounting

C
Taxation

C
Business Communication & Behavioural Studies

D
Company Law

D
Cost Accounting

D
Information Technology




IV.American Institute of Certified Public Accountants (AICPA)

Candidates who have successfully completed all examinations of American Institute of Certified Public Accountants (AICPA) will be dealt with on case to case basis. Such candidates are advised to complete the prescribed exemption form and submit it alongwith copies of certificates, copies of syllabus certified by AICPA for evaluation.

V. Pakistan Institute of Public Finance Accountants (PIPFA)

Candidates who have successfully completed all examinations of Pakistan Institute of Public Finance Accountants (PIPFA) under the Private Sector Scheme and Syllabi will be exempted from the under mentioned entrance test and examinations of ICAP:

Pre-Entry Proficiency Test (PPT);
Foundation Examinations: All papers of Module A & B


Those candidates who hold graduation degree in addition to the above qualifications may join training at training organizations upon obtaining exemptions from above mentioned paper(s). Such candidates will undergo a continuous training period of 3 years in training organizations. However, if they are unable to pass their Module E and F examinations in first attempt, their training period shall be extended to 3.5 years. Such candidates will attempt their examinations after completing the prescribed eligibility period for trainee students.

Those candidates who do not hold a graduation degree will have to pass the remaining subjects of Foundation & Intermediate Examinations (Module A to D) for being eligible to register as a trainee student

IQRA STUDY CENTRE - EXEMPTIONS AWARDED BY ICSP TO VARIOUS DEGREE, CERTIFICATE HOLDERS

IQRA STUDY CENTRE - EXEMPTIONS AWARDED BY ICSP TO VARIOUS DEGREE, CERTIFICATE HOLDERS

Methods of Costing By-Products: PART 4

The accepted methods for costing by-products fall into two categories:

Category 1:
A joint production cost is not allocated to the by product. Any revenue resulting from sales of the by product is credited either to income or to cost of the main product. In some cases, costs subsequent to split-off point may be offset against the by-product revenue. For inventory costing, any independent value may be assigned to the by product. The methods most commonly used in industry are:

Method 1: Recognition of Gross Revenue
Method 2: Recognition of Net Revenue
Method 3: Replacement cost method

Category 2:

Some portion of the joint production cost is allocated to the by product. Inventory costs are based on this allocated cost plus any subsequent processing cost. In this category, the following method is used:

Method 4: Market value method or reversal cost method

Recognition of Gross Revenue Method--By Products Costing:

This method is typical non-cost procedure in which the final inventory cost of the main product is overstated to the extent that some of the cost belongs to the by product.

However this shortcoming is somewhat removed in procedure 4 (by product revenue deducted from the production cost), although a sales value rather than a cost is deducted from the production cost of the main product.

By-Product Revenue as Other Income
By-Product Revenue as Additional Sales Revenue
By Product Revenue as a Deduction from the Cost of Goods Sold
By Product Revenue deducted from Production Cost
1.By-Product Revenue as Other Income:
To explain this procedure the following example is presented:

Example:
Sales (Main Product, 10,000 units @ $2) $20,000
Cost of goods sold:
Beginning inventory (1,000 units @ $1.5) $1,500
Total production cost (11,000 units @ $1.5) $16,500
-------
Cost of goods avail able for sale $18,000
Ending inventory (2,000 units @ $1.5) $3,000
-------
$15,000
--------
Gross profit 5,000
Marketing and administrative expenses $2,000
--------
Operating income $3,000
Other income: Revenue from sale of by-product $1,500
--------
Income before income tax $4,500
=====

2. By-Product Revenue as Additional Sales Revenue:
In this case, the income statement above would show the $1,500 revenue from sales of the by product as an addition to sales of the main product. As a result, total sales revenue would be $21,500, and gross profit and operating income would increase accordingly. All other figures would remain the same.

3. By Product Revenue as a Deduction from the Cost of Goods Sold:
In this case, $1,500 revenue from the by product would be deducted from the $15,000 cost of goods sold figure, thereby reducing the cost and increasing the gross profit and operating income. The income before income tax remains at $4,500.

4. By Product Revenue deducted from Production Cost:
In this case, the $1,500 revenue from by-product sales is deducted from the $16,500 total production cost, giving a new production cost of $15,000. This revised cost results in a new average unit cost of $1.3625 for the main product. The final inventory will consequently be $2,725 instead of $3,000. The income statement would appear as follows:

Sales (Main Product, 10,000 units @ $2) $20,000

Cost of goods sold:
Beginning inventory (1,000 units @ $1.35) $1,350
Total production cost (11,000 units @ $1.5) $16,500
Revenue from sale of by product $1,500
---------
Net production cost $15,000
Cost of goods available for sale 12000units @1.3625 average cost
$16350
Ending inventory (2,000 units @ $1.3625) $2,725
-------
$13,625
----------
Gross profit $6,375
Marketing and administrative expenses $2,000
----------
Operating income $4,375
======

The preceding method required no complicated journal entries. The revenue received from by product sales is debited to cash or accounts receivable. In the first three cases, income from sales of by product is credited; in the fourth case, the production cost of the main product is credited.

Characteristics of Joint Products and Joint Cost:PART 3

Many products or services are linked together by physical relationships which necessitate simultaneous production. To the point of split-off or to the point where these several products emerge as individual units, the cost of the products forms a homogeneous whole.

The classic example of joint products is found in the meat packing industry, where various cuts of meet and numerous by products are processed from one original carcass with one lump-sum cost. An other example of joint products manufacturing is the production of gasoline, where the derivation of gasoline inevitably results in the production of such items as naphtha, kerosene, and distillate fuel oils. Other examples of joint products manufacturing are the simultaneous production of various grads of glue and the processing of soybeans into oil and meal. Joint product costing is also found in industries that must grade raw materials before it is processed. Tobacco manufacturers (except in cases where graded tobacco is purchased) and virtually all fruit and vegetables canners face the problem of grading. In fact, such manufacturers have a dual problem of joint cost allocation:

Materials cost is applicable to all grades
Subsequent manufacturing costs are incurred simultaneously for all the different grads.
The chief characteristic of the joint cost is the fact that the cost of these several different products is incurred in an indivisible sum for all products, rather than in individual amounts for each product. The total production cost of multiple products involves both joint cost and separate, individual products cost. These separable product costs are identifiably with the individual product and, generally, need no allocation. However, the joint production cost requires allocation or assignment to the individual products.

Definition and Explanation of By Products:
The term "by product" is generally used to denote one or more products of relatively small total value that are produced simultaneously with a product of greater total value. The product with the greater value, commonly called the "main product", is usually produced in greater quantities than the by products. Ordinarily, the manufacturer has only limited control over the quantity of the by product that comes into existence. However, the introduction of more advanced engineering methods, such as in the petroleum industry, has permitted greater control over the quantity of residual products. In fact, one company, which formerly paid a trucker to haul away and dump certain waste materials, discovered that the waste was valuable as fertilizer, and this by product is now an additional source of income for the entire industry.

Nature of By-Products:
The accounting treatment of by-products necessitates a reasonably complete knowledge of the technological factors underlying their manufacture, since the origins of by products may vary. By-products arising from the cleansing of the main product, such as gas and tar from coke manufacture, generally have a residual value. In some cases, the by product is left over scrap or waste, such as sawdust in lumber mills. In other cases, the by product may not be the result of any manufacturing process but may arise from preparing raw materials before they are used in the manufacture of the main product. The separation of cotton seed from cotton, cores and seeds from apples, and shells from coca beans are examples of this type of product.

By product can be classified into the following two groups according to their marketable condition at the split-off point:

Those sold in their original form without need of further processing.
Those which require further processing in order to be saleable.

Recognition of Gross Revenue Method--By Products Costing:

This method is typical non-cost procedure in which the final inventory cost of the main product is overstated to the extent that some of the cost belongs to the by product.

However this shortcoming is somewhat removed in procedure 4 (by product revenue deducted from the production cost), although a sales value rather than a cost is deducted from the production cost of the main product.

1.By-Product Revenue as Other Income:
To explain this procedure the following example is presented:

Example:
Sales (Main Product, 10,000 units @ $2) $20,000
Cost of goods sold:
Beginning inventory (1,000 units @ $1.5) $1,500
Total production cost (11,000 units @ $1.5) $16,500
-------
Cost of goods avail able for sale $18,000
Ending inventory (2,000 units @ $1.5) $3,000
-------
$15,000
--------
Gross profit 5,000
Marketing and administrative expenses $2,000
--------
Operating income $3,000
Other income: Revenue from sale of by-product $1,500
--------
Income before income tax $4,500
=====

2. By-Product Revenue as Additional Sales Revenue:
In this case, the income statement above would show the $1,500 revenue from sales of the by product as an addition to sales of the main product. As a result, total sales revenue would be $21,500, and gross profit and operating income would increase accordingly. All other figures would remain the same.

3. By Product Revenue as a Deduction from the Cost of Goods Sold:
In this case, $1,500 revenue from the by product would be deducted from the $15,000 cost of goods sold figure, thereby reducing the cost and increasing the gross profit and operating income. The income before income tax remains at $4,500.

4. By Product Revenue deducted from Production Cost:
In this case, the $1,500 revenue from by-product sales is deducted from the $16,500 total production cost, giving a new production cost of $15,000. This revised cost results in a new average unit cost of $1.3625 for the main product. The final inventory will consequently be $2,725 instead of $3,000. The income statement would appear as follows:

Sales (Main Product, 10,000 units @ $2) $20,000

Cost of goods sold:
Beginning inventory (1,000 units @ $1.35) $1,350
Total production cost (11,000 units @ $1.5) $16,500
Revenue from sale of by product $1,500
---------
Net production cost $15,000
Cost of goods available for sale 12000units @1.3625 average cost
$16350
Ending inventory (2,000 units @ $1.3625) $2,725
-------
$13,625
----------
Gross profit $6,375
Marketing and administrative expenses $2,000
----------
Operating income $4,375
======

The preceding method required no complicated journal entries. The revenue received from by product sales is debited to cash or accounts receivable. In the first three cases, income from sales of by product is credited; in the fourth case, the production cost of the main product is credited.

Joint Products and Joint Product Cost PART 2

CRASH CLASSE OF CA MODULE D
COST ACCOUNTING
FOR STUDENTS IN KARACHI
0322-3385752



Definition and Explanation of Joint Products:

Joint products are produced simultaneously by a common process or series of processes, with each product processing more than a nominal value in the form in which it is produced. The definition emphasizes the point that the manufacturing process creates products in a definite quantitative relationship. An increase in one product's output will bring about an increase in the quantity of the other products, or vice versa, but not necessarily in the same proportion.

Definition and explanation of Joint Product Cost:
A joint product cost cay be defined as that cost which arises from the common processing or manufacturing of products produced from a common raw material. Whenever two or more different products are created from a single cost factor, a joint product cost results. A joint cost is incurred prior to the point at which separately identifiable products emerge from the same process.

Example:
For example, the production of coke, for which coal is the original raw material. In addition to coke as its major product, the process produces sulfate of ammonia, light oil, crude tar and gas. The greater quantity of gas is not sold but is used to fire the coke ovens and the boilers in the power plant. The coke ovens are the split-off point for cost assignments. The cost of each product consists of a pro rata share of the joint cost plus any separable or subsequent costs incurred in order to put the products into saleable condition.

COKE AND ITS ASSOCIATED PRODUCTS

COAL
(ORIGINAL RAW MATERIAL) → COKE OVEN
(SPLIT-OFF POINT) → COKE
(MAJOR PRODUCT) Plus Separable cost
→ COKE

→ SULFATE OF AMMONIA Plus Separable cost
→ SULFATE OF AMMONIA
→ LIGHT OIL Plus Separable cost
→ BENZOL
→ CRUDE TAR Plus Separable cost
→ TAR
→ COKE OVEN GAS Plus Separable cost
→ GAS

Characteristics of Joint Products and Joint Cost:

Many products or services are linked together by physical relationships which necessitate simultaneous production. To the point of split-off or to the point where these several products emerge as individual units, the cost of the products forms a homogeneous whole.

The classic example of joint products is found in the meat packing industry, where various cuts of meet and numerous by products are processed from one original carcass with one lump-sum cost. An other example of joint products manufacturing is the production of gasoline, where the derivation of gasoline inevitably results in the production of such items as naphtha, kerosene, and distillate fuel oils. Other examples of joint products manufacturing are the simultaneous production of various grads of glue and the processing of soybeans into oil and meal. Joint product costing is also found in industries that must grade raw materials before it is processed. Tobacco manufacturers (except in cases where graded tobacco is purchased) and virtually all fruit and vegetables canners face the problem of grading. In fact, such manufacturers have a dual problem of joint cost allocation:

Materials cost is applicable to all grades
Subsequent manufacturing costs are incurred simultaneously for all the different grads.
The chief characteristic of the joint cost is the fact that the cost of these several different products is incurred in an indivisible sum for all products, rather than in individual amounts for each product. The total production cost of multiple products involves both joint cost and separate, individual products cost. These separable product costs are identifiably with the individual product and, generally, need no allocation. However, the joint production cost requires allocation or assignment to the individual products.

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FA1 Recording Financial Transactions

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FA2 Maintaining Financial Records

MA2 Managing Costs and Finance

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FAU Foundations in Audit


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By Products and Joint Products PART 1

CRASH CLASSES OF CA MODULE D
COST ACCOUNTING FOR STUDENTS IN KARACHI.
0322-3385752



Many industrial concerns are confronted with the difficult and often rather complicated problem of assigning costs to their by-products and joint products. Chemical companies, coke manufacturers, refineries, flour mills, coal mines, lumber mills, gas companies, dairies, canners, meat packers, and many others produce in their manufacturing or conversion processes a multitude of products to which some cost must be assigned. Assignment of costs of these various products enhances equitable inventory costing for income determination and financial statement purposes. An even more important aspect of by product and joint product costing is that it furnishes management with data for use in planning maximum profit potentials and evaluating actual profit performance.

Difficulties / Problems in Costing by Products and Joint Products:

By products and joint products are difficult to cost because a true joint cost is indivisible. For example, an ore might contain both lead and Zink. In the raw state, these minerals are joint products, and until they are separated by reduction of the ore, the cost of finding mining, and processing is a joint cost; neither lead nor Zink can be produced without the other prior to the split-off point.

The cost accumulated to the split-off point must be born by the difference between the selling price and the cost to complete and sale each mineral after the split-off point.

joint costs are frequently confused with common costs. However, there is a significant difference between the two: a joint cost is indivisible and common costs are divisible. Common costs are allocable among products or service. Because each of the products or services could have been obtained separately. Therefore, any shared costs of obtaining them can be allocated on the basis of relative usage of common facilities. For example, the cost of fuel or power may be allocated to products on the basis of production volumes or metered usage. The indivisibility characteristics of a joint cost is not always easy to comprehend, since in some cases a joint cost can be divided among joint products in accordance with a common cost causing characteristic. However the result of such a division is of limited use to management for decision making.

Because of the indivisibility of a joint cost, cost allocation and apportionment procedures used for establishing the unit cost of a product are far from perfect and are, indeed, quite arbitrary. The costing of joint products and by products highlights the problem of assigning costs to products whose origin, use of equipment, share of raw materials, share of labor costs, and share of other facilities cannot truly be determined. Whatever methods of allocation are employed, the total profit or loss figure is not affected--provided there are no beginning or ending inventories--by allocation costs to the joint products or by products, since these costs are recombined in the final income statement. However, a joint cost is ordinarily allocated to the products on some acceptable basis to determine product costs needed for inventory carrying costs. For this reason, there is an effect on periodic income, because different amounts may be allocated to inventories of the numerous joint products or by products under various allocation methods. In addition, product costs may be required for such special purposes as justifying selling prices before governmental regularity bodies. However, the validity of splitting a joint cost to determine fair regulated prices for joint products has been questioned by both accountants and economists.