Total Marks-50

Max Time: - 90 M

Test - Financial Reporting

Test Date: 28th June 2014

Roll No..

Question-1 Specify the treatment of following items in the financial statement of the company as per Schedule-III or Revised
Schedule-VI.

S No

Name of Items

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22

Capital Advances to Supplier of Machinery

Share Application Money not Refundable
Share Application Money Refundable
Current Maturities of Long Term Borrowings
Debit balance of Profit & Loss Account
Debenture Redemption Reserve
Fixed Deposit
Deposits Maturing within 12 Months
Proposed Dividend
Deferred Tax Assets/Liabilities
Agent Commission Payable
Advance given for Purchase of Machinery for which delivery would be given after 15 months
Investment in Shares of Reliance with the intention to hold till F.Y 2015-16
Provision for Tax or Current Tax
Funded post-employment benefit obligation to be paid in 2016-17
Advance received 25 lacs for construction of equipment for customers
Immovable property held to be sold within 12 months
Computer Software
Inventory or Trade Receivable normally realized in 16 months
Amount expended for Building under construction
Dividend Income
Amount paid to Auditors for Company law matters
A company produces ship and delivered to its customer in 9 months from the date of purchase
order and receive payments within 7 months from the date of delivery the Operating Cycle of
the company would be .months.
Inventory or Trade Receivable in the above case no 23 should be classified as
..assets
Loans payable to bank on demand
A Ltd has FCCBs worth 100 crores which are due to mature on December 31, 2014. While
preparing the financial statements for the year ending 31st March 2014 it is expected that the
FCCB holders will not exercise the option of converting the same to equity shares. How
should you classify it on 31st March 2014
Preliminary Expenses
Trade Creditors
P Ltd has Share Capital 100 lacs ,share premium of 50 lacs and debit balance of P & L
Account 200 Lacs then its shareholders fund would be shown at
Schedule-III and Accounting Standards conflicts over some presentation which one would
prevails?

23
24
25
26
27
28
29
30

Treatment as per
Schedule-III of the
Companies Act

(15 Marks)
Question-2 Exe Ltds managements seeks your advice regarding the presentation format of the Trade Receivables. Give a
detailed format of presentation of trade receivables in the Financial Statements of Exe Ltd.
Further X Ltd is having total Secured trade receivables Rs 36 lacs, Unsecured Trade Receivables 42 lacs and Balance in
Provision for Bad and Doubtful Debts is Rs 7,20,000 it classify 40% of receivable as Non Current Assets. Give a detailed
presentation of trade receivables in the Balance Sheet of Exe Ltd.
(5 Marks)
Question 3: PQR Ltd. constructed a fixed asset and incurred the following expenses on its construction:
Material
Direct Expenses
Direct Labour
(1/15th of the total labour time was chargeable to the construction)

`
16,00,000
3,00,000
6,00,000

Total Marks-50
Max Time: - 90 M

Test - Financial Reporting

Total Office & Administrative Expenses

(4% is specifically attributable to the construction of a fixed asset)
Depreciation on assets used for the construction of fixed asset
Calculate the cost of the fixed asset.

Test Date: 28th June 2014

Roll No..
9,00,000
15,000
(5 Marks)

Question 4: W Ltd. purchased machinery for `80 lakhs from X Ltd. during 2010-11 and installed the same immediately. Price
includes excise duty of `8 lakhs. During the year 2010-11, the company produced excisable goods on which excise duty of `7.20
lakhs was charged.
Give necessary entries explaining the treatment of CENVAT Credit.
(5 Marks)
Question 5 : What is the tax effect of sale of fixed assets, considering the block of assets approach followed in the Income-tax
Act, 1961?
Company X has a block of assets with a written down value of `1,00,000 on 1st April, 2011 for tax purposes. The book value of
the assets for accounting purposes is also `1,00,000. The assets are depreciated on written down value basis at 25 per cent per
annum for both accounting and tax purposes. Of the entire block, assets costing `5,000 on April 1, 2011, were sold for `10,000 on
31st March, 2013. Compute the deferred tax asset/liability assuming tax rate of 40 percent.
(5 Marks)
Question 6 : Alpha Ltd. prepares its accounts annually on 31st March. The company has incurred a loss of `1,00,000 in the year
2010 and made profits of `50,000 and `60,000 in year 2011 and year 2012 respectively. It is assumed that under the tax laws, loss
can be carried forward for 8 years and tax rate is 40% and at the end of year 2010, it was virtually certain, supported by
convincing evidence, that the company would have sufficient taxable income in the future years against which unabsorbed
depreciation and carry forward of losses can be set-off. It is also assumed that there is no difference between taxable income and
accounting income except that set off of loss is allowed in years 2011 and 2012 for tax purposes. Calculate profit (loss) after tax
effect as per AS 22, in all the three years.
(5 Marks)
Question 7: Rajesh Industries Ltd., is in the business of manufacturing and export. In 2013, the Government put a restriction on
export of goods exported by Rajesh industries Ltd. leading to impairment of its assets. Rajesh Industries acquired at the end of
2009, identifiable assets worth `400 lakhs for `600 lakhs, the balance being treated as goodwill. The useful life of the identifiable
assets is 15 years and depreciated on straight-line basis. When Government put the restriction at the end of 2013, the company
recognized the impairment loss by determining the recoverable amount of assets at ` 272 lakhs. In 2015, the restriction was
withdrawn by the Government and due to this favourable change Rajesh Industries Ltd. estimates its recoverable amount at ` 342
lakhs.
You are required to:
(a) Calculate and allocate impairment loss in 2013.
(b) Compute amount of Reversal of impairment loss and its allocation in 2015.
(5 Marks)
Question-8 Comptech Ltd. having office at Chennai, acquired a sophisticated three dimensional (3D) computer printer having all
inclusive MRP (Maximum Retail Price) of 50 lakhs from a supplier located at New Delhi. The terms of the purchase
were as under:
(i) The supplier would buy back the existing unit with Comptech that has caning amount of ` 10.20 lakhs. Prevailing
CST rate is 2%.
(ii) The supplier would give a special discount of 10% on MRP to Comptech considering their long standing
relationship.
(iii) A cash payment of ` 38.25 laths would be made by Comptech Ltd. to the supplier.
(iv) Accessories required to operate the machine costing ` 7.60 lakhs (inclusive of all taxes) will be purchased by
Comptech.
(v) The supplier will deliver free of cost certain heavy duty cables etc. having MRP of
` 5.75 lakhs, that are required to run the machine.
(vi) Transit insurance cost will be borne by Comptech @ 2% of MRP.
(vii) Freight and other incidentals amounting to ` 2.30 lakhs is borne by Comptech.
You are required to arrive at the cost of the new asset and show the profit (loss) incurred by Comptech on the buyback
arrangement and also draft the Journal Entries to record the above transaction.