ANS 1:

A) Property Rights: Under Note to accounts, fixed assets schedule- note 12a-Tangible
Assets
B) Business Entity: page 72-subsidiary and associate companies with details of transactions
C)Going concern: Page 83 NOTE 1 :-J :- Page 61-Non-current liabilities-long term loan
maturity dates
D)Monetary Expression in A/Cs: Page 63,fixed assets schedule(buildings, plant and
equipment, furniture, vehicles)A
E)Matching Concept :-Page no 66 :- Note 23 :- Cost of materials Consumed .

F)Realisation concept :- Page 66 :- Note 21 :-Revenue from operations .

G)Consistency b/w accounting periods :- Page 83 Note 1 Inventories mention that FIFO
is used.
H)Diversity among independednt identities :- Page 72/73 shows the various subsidiaries
and the related transaction details . Also it is mentioned that only summary of subsiadiary will
be part of the statement
I) Dependability of data through internal control :- Page 48 :-Certification by CFO which
says that all data is verified through internal mechanism
J)Materiality :- Page 68 under Administrative expenses the Sundry and written off and
Section D :- Mischelleneous Expenditure written off . Hence little expenses not counted .

K )Timeliness :- In page 52 Statement of profit and loss shows the accounting period
between 1-apr-2013 to 31 march-2014 .

ANS 2:
Stakeholder as mentioned on page 22 are :

Farmers: subsidies, net profit, cash flow concerns.

Subsidies: company is in loss so government subsidy helps to clear out the
arrears.
Government: net operating income via ethanol blending, cost of
production, cash flow analysis, import export scenario.
Industrial consumers: net production, cost of production.
Retail consumers: net production, cost of production.
Employees: cash flow generation capability, share price, dividend, growth
trend.

Promoters: they will be interested in net profit, external market conditions,

inventory losses, share price, growth trend, government policies, import
export scenarios.
Shareholders: they will be interested in net profit, external market
conditions, inventory losses, share price, growth trend, government
policies, import export scenarios.
Investors: cash flow generation capability, current assets, total
outstanding liability.

*cash flow analysis: page 54

*profit and loss statement: page 53
*balance sheet: page 52
*inventory growth: page 23, describes the inventory stock growth resulting in
loss.

ANS 3: Amar, Akbar, Anthony and Amarpreet

Based on each individuals personality, different businesses are recommended
for themAmar should go for a company as he is ambitious and wants to set up a chain of
beauty parlors nationwide. For this purpose, he will need funds from the public
which will enable him to grow his business fast and to a large extent
Akbar does not have large dreams and wants to be self-reliant. For this, he
should go for a sole proprietorship where he alone will invest in and run his
sponge iron business
Anthony should set up his event management firm in the form of a general
partnership. Since he believes in being a team player, he will not look to protect
himself by limiting his liability and will be willing to compensate for his partners
mistakes (if any). Also, creating a general partnership will be simpler and faster
to set-up and more flexible in operating. This is particularly beneficial for a
dynamic business like event management
Amarpreet, being a doctor and wanting to set up a hospital with other doctors
and health care practitioners, should go for a Limited Liability Partnership. This
will protect him and his personal assets from negligence of his partners. His
liability will only be limited to the investment made by him and his personal
assets will not be affected.
ANS 4:KoyasKabs
We do not agree with Koyas loss calculation. It is given that:
1. He used all of his savings to put the down-payment (= INR 285000)
2. The fare was his only source of income
3. The period covered is one year after the purchase of the cab
As such, we can say that all his expenses, personal and professional, added to
his remaining s/b account balance gives us his total revenue in that year
Revenue
Head

Cost

Groceries
Clothes for daughters
Books and fees
Driver's uniform and
badge
Food and drinks while
driving
Sari for wife
Diesel and oil
Domestic expenses
EMI
S/B account payment
Total

(in INR)
48725
2850
850
2785
18000
1250
157500
11000
198000
7490
448450

His professional expenses are as below:

Expenses
Head
Driver's uniform and
badge
Food and drinks while
driving
Diesel and oil
EMI
Down Payment
Total

Cost
(in INR)
2785
18000
157500
198000
285000
661285

That leaves us with a total loss of INR 661285 INR 448450 = INR 212835
Hence, we can say that Koya over-estimated his loss

ANS 5:

Lehman Brothers case 5 answer

These are the following benefits for starting a subsidiary in a foreign country::
1)Tax Incentives: The country may offer the business at a lower rate or a number of years
without national taxes to aid in establishing the subsidiary.
2) Separate Liability: Corporations create subsidiaries for the specific purpose of limiting

their liability. Liabilities attached to one subsidiary and legal actions against one company do
not threaten the financial health of the parent organization.
3) Establish a new consumer/customer base.