Launch offer — 25% off with code LAUNCH-25 See plans →
Try now → N
Past papers/ Adv Accounting/ November 2018
Paper 18 Qs
Mock Test Paper (MTP) · November 2018

CA Inter Adv Accounting

This page contains all 18 questions from the CA Inter Advanced Accounting Mock Test Paper (MTP) for the November 2018 attempt cycle, sourced from VSI Jaipur.

18 worked solutions ready
Sign up free to unlock every solution + bare-Act citations + how-to-write skeletons. 30 seconds, no card, no spam. Already signed up? Log in.
🎯 Practice this paper now

Drill 5 questions from this paper — instant grading

Real ICAI questions, instantly graded with bare-Act citations. ~5 minutes. No signup.

Drill 5 questions →
‹ All papers Ask in chat Start drilling →
Q.1(a) 05 marks medium Proposed dividend accounting treatment ⚡ Try this Q →
The Board of Directors of New Graphics Ltd. recommended a dividend of Rs. 2 per equity share (on 2 crore fully paid up equity shares of Rs. 10 each) for the year ended 31st March, 2017. Discuss on the accounting treatment and presentation of the said proposed dividend in the annual accounts of the company for the year ended 31st March, 2017 as per the applicable Accounting Standard and other Statutory Requirements.
CTTP

Worked Solution

✓ Verified

Accounting Treatment and Presentation of Proposed Dividend

Applicable Standard: AS 4 – Contingencies and Events Occurring After the Balance Sheet Date (Revised)

The Board of Directors of New Graphics Ltd. recommended a dividend of Rs. 2 per equity share on 2 crore fully paid-up equity shares, aggregating to a total proposed dividend of Rs. 4,00,00,000 (Rs. 4 crores). This recommendation was made after the balance sheet date of 31st March, 2017.

Classification under AS 4 (Revised)

As per the revised AS 4, events occurring after the balance sheet date are classified into:
1. Adjusting events – those that provide further evidence of conditions existing at the balance sheet date (require adjustment in financial statements).
2. Non-adjusting events – those that are indicative of conditions arising after the balance sheet date (require only disclosure).

The declaration of dividend by the Board of Directors after the balance sheet date (i.e., after 31st March, 2017) is a non-adjusting event, since the obligation to pay dividend arises only upon its recommendation/declaration after the reporting date — it does not reflect any condition existing as on 31st March, 2017.

Key Change under Revised AS 4 (effective from FY 2016-17)

Prior to the revision, it was a common practice to recognize proposed dividends as a provision (liability) in the balance sheet under the head "Current Liabilities." However, the Ministry of Corporate Affairs (MCA) amended AS 4, making it mandatory that proposed dividends should NOT be recognized as a liability in the financial statements for the year ended 31st March, 2017, if declared after the balance sheet date.

This amendment aligns AS 4 with the treatment prescribed under Ind AS 10 – Events After the Reporting Period.

Accounting Treatment

- No provision/liability shall be created in the Balance Sheet for proposed dividend of Rs. 4 crores for the year ended 31st March, 2017.
- The profit for the year shall NOT be reduced by the proposed dividend amount in the Statement of Profit and Loss.
- The full profit remains intact in the Surplus under Reserves and Surplus in the Balance Sheet.

Presentation and Disclosure Requirements

As per the revised AS 4 and Schedule III to the Companies Act, 2013:
- The proposed dividend of Rs. 4,00,00,000 shall be disclosed in the Notes to Accounts as a contingent liability or as a separate disclosure under events occurring after the balance sheet date.
- The amount per share (Rs. 2 per share) and the total amount of dividend proposed shall be stated.
- Similarly, Dividend Distribution Tax (DDT) payable on the proposed dividend (if applicable) shall also only be disclosed and not provided for in the books.

Summary

ParticularsTreatment
Proposed Dividend (Rs. 4 crores)Not recognized as liability; disclosed in Notes
Impact on P&LNil – no charge to profits
Balance Sheet PresentationNo entry; only disclosure in Notes to Accounts

Conclusion: As per revised AS 4, since the proposed dividend of Rs. 4,00,00,000 was declared by the Board after 31st March, 2017, it constitutes a non-adjusting post-balance sheet event. Accordingly, no provision is to be made in the accounts for the year ended 31st March, 2017; it shall only be disclosed in the Notes to Accounts.

AS 4 – Contingencies and Events Occurring After the Balance Sheet Date (Revised)Ind AS 10 – Events After the Reporting PeriodSchedule III to the Companies Act, 2013MCA Notification amending AS 4 (effective FY 2016-17)
PLAN

Write it like this

Time target 9 min

1The skeleton

- Name AS 4 (Revised) in your first line — write 'As per revised AS 4, events after the balance sheet date are classified as adjusting or non-adjusting' so the examiner ticks the standard immediately without hunting for it.
- Classify the proposed dividend as a non-adjusting event — state that the obligation to pay arises only after the board's recommendation post 31st March 2017, so no condition existed at the balance sheet date; this classification IS the core answer and earns 2 marks alone.
- State the accounting treatment in one crisp line — 'No provision/liability of Rs. 4,00,00,000 shall be recognised in the Balance Sheet for the year ended 31st March, 2017'; write the rupee figure to show you computed it (2 cr shares × Rs. 2).
- State P&L impact explicitly — tell the examiner 'Profit for the year shall not be reduced; the amount remains in Surplus under Reserves and Surplus'; examiners look for this because students miss it.
- Cover disclosure — write that proposed dividend of Rs. 4,00,00,000 (Rs. 2 per share) and DDT thereon shall be disclosed in Notes to Accounts as a post-balance sheet event; Schedule III reference adds a bonus tick.

2Examiner-rewarded phrases

“non-adjusting event occurring after the balance sheet date”“shall not be recognised as a liability in the financial statements”“shall be disclosed in the notes to accounts”

3Common trap

Don't fall for this

Heads up — the single biggest killer here is writing the OLD treatment (creating a provision under Current Liabilities) out of habit. The revision to AS 4 is exactly what this question is testing; if you provide for Rs. 4 crores, you've answered the wrong law and lose 3-4 marks even with perfect presentation.

🎯 Practice more Proposed dividend accounting treatment questions →
Q.1(b) 05 marks medium Onerous contract accounting for obsolete assets ⚡ Try this Q →
ABC Ltd. has entered into a binding agreement with XYZ Ltd. to buy a custom-made machine amounting to Rs. 4,00,000. As on 31st March, 2018 before delivery of the machine, ABC Ltd. had to change its method of production. The new method will not require the machine ordered and so it shall be scrapped after delivery. The expected scrap value is 'NIL'. Explain the treatment of machine in the books of ABC Ltd.
CTTP

Worked Solution

✓ Verified

Treatment of Machine in the Books of ABC Ltd. — Onerous Contract

The binding agreement entered into by ABC Ltd. with XYZ Ltd. for purchase of a custom-made machine at Rs. 4,00,000 constitutes an onerous contract as defined under AS 29 — Provisions, Contingent Liabilities and Contingent Assets (Issued by ICAI).

What is an Onerous Contract?
An onerous contract is one in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received. Since the agreement is binding, ABC Ltd. cannot avoid accepting the machine.

Analysis of the Present Case:
- Unavoidable cost (purchase price of machine) = Rs. 4,00,000
- Expected economic benefits (scrap value) = NIL
- Net onerous obligation = Rs. 4,00,000

Since unavoidable costs (Rs. 4,00,000) exceed economic benefits (NIL), this is clearly an onerous contract, and a provision must be recognised as at 31st March, 2018.

Accounting Treatment:

Step 1 — As at 31st March, 2018 (before delivery):
ABC Ltd. must recognise a provision for the full unavoidable loss:
Dr. Profit & Loss A/c Rs. 4,00,000
Cr. Provision for Onerous Contract Rs. 4,00,000
(Being provision recognised for onerous contract as per AS 29)

Step 2 — On delivery of the machine:
The machine is recorded at cost:
Dr. Machinery A/c Rs. 4,00,000
Cr. Creditor / Bank Rs. 4,00,000
(Being machine received as per binding agreement)

Step 3 — On scrapping the machine (scrap value NIL):
The provision created is utilised to write off the machine:
Dr. Provision for Onerous Contract Rs. 4,00,000
Cr. Machinery A/c Rs. 4,00,000
(Being machinery written off on scrapping; provision utilised)

Conclusion: The entire cost of Rs. 4,00,000 is charged to Profit & Loss Account for the year ended 31st March, 2018 by way of a provision for onerous contract. No asset is recognised in the Balance Sheet since the expected future economic benefit is NIL. This treatment ensures faithful representation of the obligation as at the reporting date in accordance with AS 29.

AS 29 — Provisions, Contingent Liabilities and Contingent Assets (ICAI)Para 66, AS 29 — Onerous Contracts
PLAN

Write it like this

Time target 9 min

1The skeleton

- Name the standard in line 1 — write 'AS 29 — Provisions, Contingent Liabilities and Contingent Assets' upfront, because examiners tick the standard citation before reading anything else.
- Define onerous contract in one line with the formula — 'unavoidable costs > economic benefits expected' — this exact comparison is what the examiner is scanning for to award the definition mark.
- Plug in the numbers immediately after the definition — show Rs. 4,00,000 vs NIL in a two-line mini-table; it proves you applied the concept, not just memorised it.
- Write all three journal entries in Dr/Cr format with narrations — the question is implicitly asking for entries across three events (provision date, delivery, scrapping); missing any one entry drops you a mark even if your logic is correct.
- End with a one-line conclusion stating the P&L impact and Balance Sheet position — 'entire Rs. 4,00,000 charged to P&L; no asset appears in Balance Sheet' — examiners reward closure because it shows you understand the end-state, not just the mechanics.

2Examiner-rewarded phrases

“unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received”“a provision shall be recognised for the present obligation under an onerous contract”“the provision is utilised on actual scrapping of the asset”

3Common trap

Don't fall for this

Most students write the provision entry correctly but then forget to show the delivery entry and the write-off entry separately — they collapse three steps into one, and the examiner docks marks for each missing entry. Don't assume 'the provision covers it all'; you must show the machine actually hitting the books at cost before it's written off.

🎯 Practice more Onerous contract accounting for obsolete assets questions →
Q.1(c) 05 marks medium Investment impairment and reclassification under AS-13 ⚡ Try this Q →
How you will deal with the following in the financial statements of Paridhi Electronics Ltd. as on 31.3.18 with reference to AS-13?
CTTP

Worked Solution

✓ Verified

Treatment under AS-13 (Accounting for Investments) in the financial statements of Paridhi Electronics Ltd. as on 31.3.2018:

(i) Long-term Investment in Unlisted Company — Permanent Diminution in Value

Since the shares were purchased on 1st May 2014 with the intention of holding for more than a year, they are classified as long-term investments. Under AS-13, long-term investments are normally carried at cost. However, the Standard requires that when there is a decline in the value of a long-term investment that is other than temporary in nature, the carrying amount must be reduced to recognise such decline.

In the present case, the published accounts of the unlisted company (received January 2018) reveal cash losses and declining market share, indicating that the investment may not fetch more than Rs. 45,000 against a cost of Rs. 3,00,000. These factors clearly indicate a permanent/other-than-temporary decline in value.

Treatment: Paridhi Electronics Ltd. should write down the investment from Rs. 3,00,000 to Rs. 45,000. A provision for diminution of Rs. 2,55,000 must be created and charged to the Statement of Profit and Loss for the year ended 31.3.2018. The investment will appear in the Balance Sheet at Rs. 45,000.

When the decline is subsequently reversed, the reversal should also be recognised in the Statement of Profit and Loss as per AS-13.

(ii) Reclassification of Current Investment to Long-term Investment

X Ltd.'s shares were originally classified as a current investment and carried at lower of cost or fair value (as required by AS-13 for current investments). The company now wishes to reclassify them as long-term investments.

As per AS-13, paragraph 26, when a current investment is reclassified as a long-term investment, the transfer is made at the lower of cost or fair value at the date of reclassification (i.e., 31.3.2018).

- Cost of investment = Rs. 5,00,000
- Fair value (market value) as on 31.3.2018 = Rs. 2,50,000
- Transfer value = Rs. 2,50,000 (lower of the two)

Treatment: The investment will be reclassified and carried as a long-term investment at Rs. 2,50,000. The resultant reduction of Rs. 2,50,000 (i.e., Rs. 5,00,000 − Rs. 2,50,000) must be charged to the Statement of Profit and Loss for the year ended 31.3.2018. It cannot be deferred or adjusted against reserves.

AS-13 Accounting for Investments (ICAI)AS-13 paragraph 17 (Carrying amount of current investments)AS-13 paragraph 26 (Reclassification of investments)
PLAN

Write it like this

Time target 9 min

1The skeleton

- Lead with classification — before any numbers, state whether each investment is long-term or current and WHY (intention + holding period); examiners check classification first, treatment second.
- Cite AS-13 + the specific paragraph for reclassification — para 26 is what unlocks the 'lower of cost or fair value' rule; dropping the para number signals you actually read the standard, not just mugged a formula.
- For part (i), use the phrase 'other than temporary decline' — this exact phrase triggers the provision treatment; if you write 'permanent loss' without this language, you lose the half-mark the examiner is looking for.
- State numbers in a mini-table or clear lines — Cost / Fair Value / Transfer Value on separate lines; examiners are marking 30+ scripts and your number layout either jumps out or gets missed.
- End each part with the Balance Sheet impact — say the figure at which the investment appears in the Balance Sheet; this closes the loop and picks up the presentation mark that most students skip.

2Examiner-rewarded phrases

“decline in value other than temporary in nature”“transfer is made at the lower of cost or fair value at the date of reclassification”“provision for diminution shall be charged to the Statement of Profit and Loss”

3Common trap

Don't fall for this

Most students flip the reclassification rule — they write 'lower of cost or fair value' correctly but then say the loss can be adjusted against reserves or deferred. It cannot. AS-13 para 26 forces the hit straight to P&L, and getting that wrong costs you the treatment mark even if your Rs. 2,50,000 figure is right.

🎯 Practice more Investment impairment and reclassification under questions →
Q.1(d) 05 marks medium Debenture interest capitalization under AS-16 ⚡ Try this Q →
Suhana Ltd. issued 12% secured debentures of Rs. 100 Lakhs on 01.05.2016, to be utilized for construction of factory building (Rs. 40 lakhs), purchase of machinery (Rs. 35 lakhs), and working capital (Rs. 25 lakhs). In March 2017, construction of factory building was completed and machinery was installed and ready for its intended use. Total interest on debentures for the financial year ended 31.03.2017 was Rs. 11,00,000. During the year 2016-17, the company had invested idle funds out of money raised from debentures in banks' fixed deposit and earned interest of Rs. 2,00,000. Explain the treatment of interest under Accounting Standard 16 and also explain nature of assets.
Keep reading free — every worked solution + bare-Act citation for Debenture interest capitalization under AS-16
✓ 38-line worked answer · ✓ 3 bare-Act citations · ✓ 3 examiner-rewarded phrases · ✓ Common-trap warning · ✓ How-to-write skeleton
✓ Join 828 CA Inter aspirants on catargettestprep Already signed up? Log in.
Q.2(a) 12 marks very hard Investment accounting with bonus and rights issues ⚡ Try this Q →
Smart Investments made the following investments in the year 2017-18: 12% State Government Bonds (face value Rs. 100): opening balance 1200 bonds at book value Rs. 1,26,000 on 01.04.2017; purchased 2,000 bonds @ Rs. 100 cum interest on 02.05.2017; sold 1,500 bonds at Rs. 105 ex interest on 30.09.2017; interest received on 30th June and 31st December each year. Equity Shares of X Ltd.: purchased 5,000 shares @ Rs. 200 on cum right basis with 1% brokerage (Face Value Rs. 10) on 15.04.2017; bonus issue of 2 shares for every 5 shares held on 03.06.2017; rights issue of 1 share for every 7 shares held at Rs. 250 per share on 16.08.2017 (all money payable by 31.08.2017); sold 20% of rights @ Rs. 60 on 22.8.2017 and subscribed remaining rights; received dividend @ 15% on 16.09.2017; sold 3,000 shares @ Rs. 300 with 1% brokerage extra on 15.12.2017; received interim dividend @ 10% on 15.01.2018; shares quoted @ Rs. 220 on 31.03.2018. Prepare Investment Accounts in the books of Smart Investments assuming average cost method.
Keep reading free — every worked solution + bare-Act citation for Investment accounting with bonus and rights issues
✓ 40-line worked answer · ✓ 1 bare-Act citation · ✓ 3 examiner-rewarded phrases · ✓ Common-trap warning · ✓ How-to-write skeleton
✓ Join 828 CA Inter aspirants on catargettestprep Already signed up? Log in.
Q.2(b) 08 marks hard Stock insurance claim calculation ⚡ Try this Q →
On 2.6.2018 the stock of Mr. Black was destroyed by fire. The following particulars were furnished from saved records: Stock at cost on 1.4.2017 Rs. 1,35,000; Stock at 90% of cost on 31.3.2018 Rs. 1,62,000; Purchases for the year ended 31.3.2018 Rs. 6,45,000; Sales for the year ended 31.3.2018 Rs. 9,00,000; Purchases from 1.4.2018 to 2.6.2018 Rs. 2,25,000; Sales from 1.4.2018 to 2.6.2018 Rs. 4,80,000. Sales upto 2.6.2018 includes Rs. 75,000 being goods not dispatched (sales invoice price Rs. 75,000). Purchases upto 2.6.2018 includes machinery acquired for Rs. 15,000. Purchases upto 2.6.2018 does not include goods worth Rs. 30,000 received from suppliers (invoice not received; goods remained in godown at time of fire). The insurance policy is for Rs. 1,20,000 and subject to average clause. Ascertain the amount of claim for loss of stock.
Keep reading free — every worked solution + bare-Act citation for Stock insurance claim calculation
✓ 29-line worked answer · ✓ 3 examiner-rewarded phrases · ✓ Common-trap warning · ✓ How-to-write skeleton
✓ Join 828 CA Inter aspirants on catargettestprep Already signed up? Log in.
Q.3(a) 12 marks very hard Foreign branch accounting and currency translation ⚡ Try this Q →
M/s Heera & Co. has head office at U.S.A. and branch in Patna (India). Patna branch is an integral foreign operation. Patna branch trial balance as on 31st March, 2018: Stock Rs. 300,000; Purchases Rs. 800,000; Sales Rs. 1,200,000; Debtors Rs. 400,000; Creditors Rs. 300,000; Bills of Exchange (Dr.) Rs. 120,000; Bills of Exchange (Cr.) Rs. 240,000; Wages Rs. 560,000; Rent, Rates & Taxes Rs. 360,000; Sundry Charges Rs. 160,000; Plant Rs. 240,000; Bank Balance Rs. 420,000; New York Office A/c Rs. 1,620,000. Plant acquired from US $ 6,000 remittance from USA head office, paid to suppliers; depreciate at 60%. Unsold stock worth Rs. 4,20,000 on 31.03.2018. Exchange rates: 01.04.2017 @ Rs. 55 per US $; 31.03.2018 @ Rs. 60 per US $; Average rate @ Rs. 58 per US $. Patna branch account showed debit balance of US $ 29,845.35 on 31.3.2018 in USA books; no items pending reconciliation. Prepare in US dollars the revenue statement for the year ended 31st March, 2018 and balance sheet as on that date of Patna branch as would appear in USA head office books.
Keep reading free — every worked solution + bare-Act citation for Foreign branch accounting and currency translation
✓ 34-line worked answer · ✓ 3 bare-Act citations · ✓ 3 examiner-rewarded phrases · ✓ Common-trap warning · ✓ How-to-write skeleton
✓ Join 828 CA Inter aspirants on catargettestprep Already signed up? Log in.
Q.3(b) 08 marks hard Departmental accounting with inter-departmental transfers ⚡ Try this Q →
The following balances were extracted from the books of M/s Division. Deptt. A: Opening Stock Rs. 50,000; Purchases Rs. 6,50,000; Sales Rs. 10,00,000. Deptt. B: Opening Stock Rs. 40,000; Purchases Rs. 9,10,000; Sales Rs. 15,00,000. General expenses for both departments Rs. 1,25,000. Closing stock of Department A Rs. 1,00,000 including goods from Department B for Rs. 20,000 at cost of Department A. Closing stock of Department B Rs. 2,00,000 including goods from Department A for Rs. 30,000 at cost to Department B. Opening stock of Department A includes goods valued Rs. 10,000 from Department B; opening stock of Department B includes goods valued Rs. 15,000 from Department A (all at cost to transferee departments). The rate of gross profit is uniform from year to year. You are required to prepare Departmental Trading Account and Profit and Loss account for the year ended 31st December, 2017 after adjusting the unrealized department profits if any.
Keep reading free — every worked solution + bare-Act citation for Departmental accounting with inter-departmental transfers
✓ 30-line worked answer · ✓ 3 examiner-rewarded phrases · ✓ Common-trap warning · ✓ How-to-write skeleton
✓ Join 828 CA Inter aspirants on catargettestprep Already signed up? Log in.
Q.4(a) 15 marks very hard Partnership amalgamation and goodwill adjustment ⚡ Try this Q →
A and B are partners of AB & Co. sharing profits and losses in the ratio of 2:1 and C and D are partners of CD & Co. sharing profits and losses in the ratio of 3:2. On 1st April 2017, they decided to amalgamate and form a new firm M/s. AD & Co. wherein all the partners would be partners sharing profits and losses in the ratio of 2:1:3:2 respectively to A, B, C and D. AB & Co. balance sheet: Capitals A Rs. 1,50,000; B Rs. 1,00,000; Reserve Rs. 66,000; Creditors Rs. 52,000; Assets include Building Rs. 75,000; Machinery Rs. 1,20,000; Furniture Rs. 15,000; Inventory Rs. 24,000; Debtors Rs. 65,000; Due from CD & Co. Rs. 47,000; Cash at Bank Rs. 18,000; Cash in hand Rs. 4,000. CD & Co. balance sheet: Capitals C Rs. 1,20,000; D Rs. 80,000; Reserve Rs. 54,000; Creditors Rs. 35,000; Due to AB & Co. Rs. 47,000; Assets include Building Rs. 90,000; Machinery Rs. 1,00,000; Furniture Rs. 12,000; Inventory Rs. 36,000; Debtors Rs. 78,000; Cash at Bank Rs. 15,000; Cash in hand Rs. 5,000. Terms: Building taken over at Rs. 1,00,000 (AB & Co.) and Rs. 1,25,000 (CD & Co.); Machinery at Rs. 1,25,000 (AB & Co.) and Rs. 1,10,000 (CD & Co.); Goodwill of AB & Co. Rs. 75,000 and CD & Co. Rs. 50,000 (not to be opened in books; adjustments through capital accounts); Provision for doubtful debts Rs. 5,000 (AB & Co.) and Rs. 8,000 (CD & Co.) to be carried forward.
Keep reading free — every worked solution + bare-Act citation for Partnership amalgamation and goodwill adjustment
✓ 58-line worked answer · ✓ 3 examiner-rewarded phrases · ✓ Common-trap warning · ✓ How-to-write skeleton
✓ Join 828 CA Inter aspirants on catargettestprep Already signed up? Log in.
Q.4(b) 05 marks medium LLP partner liability ⚡ Try this Q →
Under what circumstances, a partner may be called upon to pay the liabilities of LLP. Explain in brief.
Keep reading free — every worked solution + bare-Act citation for LLP partner liability
✓ 39-line worked answer · ✓ 4 bare-Act citations · ✓ 3 examiner-rewarded phrases · ✓ Common-trap warning · ✓ How-to-write skeleton
✓ Join 828 CA Inter aspirants on catargettestprep Already signed up? Log in.
Q.5(a) 16 marks very hard Balance sheet preparation under Schedule III, Companies Act ⚡ Try this Q →
From the following particulars furnished by Megha Ltd., prepare the Balance Sheet as on 31st March 20X1 as required by Part I, Schedule III of the Companies Act, 2013. Equity Share Capital (Face value Rs. 100 each) Rs. 50,00,000; Call in Arrears Rs. 5,000; Land & Building Rs. 27,50,000; Plant & Machinery Rs. 26,25,000; Furniture Rs. 2,50,000; General Reserve Rs. 10,50,000; Loan from State Financial Corporation Rs. 7,50,000; Inventory (Raw Materials Rs. 2,50,000; Finished Goods Rs. 10,00,000) Rs. 12,50,000; Provision for Taxation Rs. 6,40,000; Trade receivables Rs. 10,00,000; Short term Advances Rs. 2,13,500; Profit & Loss Account Rs. 4,33,500; Cash in Hand Rs. 1,50,000; Cash at Bank Rs. 12,35,000; Unsecured Loan Rs. 6,05,000; Trade payables Rs. 8,00,000; Loans & advances from related parties Rs. 2,00,000. Additional info: 10,000 equity shares issued for non-cash consideration; Trade receivables Rs. 2,60,000 due for more than 6 months; Asset costs: Building Rs. 30,00,000; Plant & Machinery Rs. 35,00,000; Furniture Rs. 3,12,500; State Finance Corporation loan includes Rs. 37,500 interest accrued but not due (secured by hypothecation of Plant & Machinery); Bank balance includes Rs. 10,000 with non-scheduled bank; Transfer of Rs. 20,000 to general reserve proposed.
Keep reading free — every worked solution + bare-Act citation for Balance sheet preparation under Schedule III, Companies Act
✓ 42-line worked answer · ✓ 2 bare-Act citations · ✓ 3 examiner-rewarded phrases · ✓ Common-trap warning · ✓ How-to-write skeleton
✓ Join 828 CA Inter aspirants on catargettestprep Already signed up? Log in.
Q.5(b) 04 marks medium Rights issue valuation ⚡ Try this Q →
Omega company offers new shares of Rs. 100 each at 25% premium to existing shareholders on the basis one for five shares. The cum-right market price of a share is Rs. 200. You are required to calculate:
Keep reading free — every worked solution + bare-Act citation for Rights issue valuation
✓ 15-line worked answer · ✓ 3 examiner-rewarded phrases · ✓ Common-trap warning · ✓ How-to-write skeleton
✓ Join 828 CA Inter aspirants on catargettestprep Already signed up? Log in.
Q.6(a) 05 marks medium Managerial remuneration limits under Companies Act ⚡ Try this Q →
The following is the Draft Profit & Loss A/c of Mudra Ltd., for the year ended 31st March, 20X1: To Administrative, Selling and distribution expenses Rs. 8,22,542; To Directors fees Rs. 1,34,780; To Interest on debentures Rs. 31,240; To Managerial remuneration Rs. 2,85,350; To Depreciation on fixed assets Rs. 5,22,543; To Provision for Taxation Rs. 12,42,500; To General Reserve Rs. 4,00,000; To Investment Revaluation Reserve Rs. 12,500; To Balance c/d Rs. 14,20,185; By Balance b/d Rs. 5,72,350; By Balance from Trading A/c Rs. 40,25,365; By Subsidies received from Govt. Rs. 2,73,925. Depreciation on fixed assets as per Schedule II of the Companies Act, 2013 was Rs. 5,75,345. You are required to calculate the maximum limits of the managerial remuneration as per Companies Act, 2013.
Keep reading free — every worked solution + bare-Act citation for Managerial remuneration limits under Companies Act
✓ 34-line worked answer · ✓ 3 bare-Act citations · ✓ 3 examiner-rewarded phrases · ✓ Common-trap warning · ✓ How-to-write skeleton
✓ Join 828 CA Inter aspirants on catargettestprep Already signed up? Log in.
Q.6(b) 05 marks medium Final call and bonus shares journal entries ⚡ Try this Q →
Following is the extract of the Balance Sheet of Manoj Ltd. as at 31st March, 20X1. Authorised capital: 30,000 12% Preference shares of Rs. 10 each Rs. 3,00,000; 3,00,000 Equity shares of Rs. 10 each Rs. 30,00,000. Issued and Subscribed capital: 24,000 12% Preference shares of Rs. 10 each fully paid Rs. 2,40,000; 2,70,000 Equity shares of Rs. 10 each, Rs. 8 paid up Rs. 21,60,000. Reserves and surplus: General Reserve Rs. 3,60,000; Capital Redemption Reserve Rs. 1,20,000; Securities premium Rs. 75,000; Profit and Loss Account Rs. 6,00,000. On 1st April, 20X1, the Company made final call @ Rs. 2 each on 2,70,000 equity shares. The call money was received by 20th April, 20X1. Thereafter, the company decided to capitalise its reserves by way of bonus at the rate of one share for every four shares held. Prepare necessary journal entries in the books of the company.
Keep reading free — every worked solution + bare-Act citation for Final call and bonus shares journal entries
✓ 31-line worked answer · ✓ 3 bare-Act citations · ✓ 3 examiner-rewarded phrases · ✓ Common-trap warning · ✓ How-to-write skeleton
✓ Join 828 CA Inter aspirants on catargettestprep Already signed up? Log in.
Q.6(c) 05 marks medium Accounting policy change disclosure in notes ⚡ Try this Q →
Kumar Ltd. had made a rights issue of shares in 2017. In the offer document to its members, it had projected a surplus of Rs. 40 crores during the accounting year to end on 31st March, 2017. The draft results for the year, prepared on the hitherto followed accounting policies showed a deficit of Rs. 10 crores. The board in consultation with the managing director, decided not to provide for 'after sales expenses' during the warranty period. Till the last year, provision at 2% of sales used to be made under the concept of 'matching of costs against revenue' and actual expenses used to be charged against the provision. The board now decided to account for expenses as and when actually incurred. Sales during the year total to Rs. 600 crores. As chief accountant of the company, you are asked by the managing director to draft the notes on accounts for inclusion in the annual report for 2016-2017.
Keep reading free — every worked solution + bare-Act citation for Accounting policy change disclosure in notes
✓ 45-line worked answer · ✓ 3 bare-Act citations · ✓ 3 examiner-rewarded phrases · ✓ Common-trap warning · ✓ How-to-write skeleton
✓ Join 828 CA Inter aspirants on catargettestprep Already signed up? Log in.
Q.6(d) 05 marks medium Closing stock valuation under AS-2 ⚡ Try this Q →
A Limited is engaged in manufacturing of Chemical Y for which Raw Material X is required. The company provides the following information for the year ended 31st March, 2017. Raw Material X: Cost price Rs. 380 per unit; Unloading Charges Rs. 20 per unit; Freight Inward Rs. 40 per unit; Replacement cost Rs. 300 per unit. Chemical Y: Material consumed Rs. 440 per unit; Direct Labour Rs. 120 per unit; Variable Overheads Rs. 80 per unit. Total fixed overhead for the year was Rs. 4,00,000 on normal capacity of 20,000 units. Closing balance of Raw Material X was 1,000 units and Chemical Y was 2,400 units. You are required to calculate the total value of closing stock of Raw Material X and Chemical Y according to AS 2, when Net realizable value of Chemical Y is Rs. 800 per unit.
Keep reading free — every worked solution + bare-Act citation for Closing stock valuation under AS-2
✓ 19-line worked answer · ✓ 1 bare-Act citation · ✓ 3 examiner-rewarded phrases · ✓ Common-trap warning · ✓ How-to-write skeleton
✓ Join 828 CA Inter aspirants on catargettestprep Already signed up? Log in.
Q.6(d) - Alternative 05 marks medium Capital asset capitalization under AS-10 ⚡ Try this Q →
ABC Ltd. is installing a new plant at its production facility. It has incurred these costs: Cost of the plant (cost per supplier's invoice plus taxes) Rs. 25,00,000; Initial delivery and handling costs Rs. 2,00,000; Cost of site preparation Rs. 6,00,000; Consultants used for advice on the acquisition of the plant Rs. 7,00,000; Interest charges paid to supplier of plant for deferred credit Rs. 2,00,000; Estimated dismantling costs to be incurred after 7 years Rs. 3,00,000; Operating losses before commercial production Rs. 4,00,000. Please advise ABC Ltd. on the costs that can be capitalised in accordance with AS 10 (Revised).
Keep reading free — every worked solution + bare-Act citation for Capital asset capitalization under AS-10
✓ 37-line worked answer · ✓ 3 bare-Act citations · ✓ 3 examiner-rewarded phrases · ✓ Common-trap warning · ✓ How-to-write skeleton
✓ Join 828 CA Inter aspirants on catargettestprep Already signed up? Log in.
Q.6(e) 05 marks medium Preference share redemption journal entries ⚡ Try this Q →
The following are the extracts from the Balance Sheet of ABC Ltd. as on 31st December, 20X1. Share capital: 40,000 Equity shares of Rs. 10 each fully paid Rs. 4,00,000; 1,000 10% Redeemable preference shares of Rs. 100 each fully paid Rs. 1,00,000. Reserve & Surplus: Capital reserve Rs. 50,000; Securities premium Rs. 50,000; General reserve Rs. 75,000; Profit and Loss Account Rs. 35,000. On 1st January 20X2, the Board of Directors decided to redeem the preference shares at par by utilisation of reserve. You are required to pass necessary Journal Entries including cash transactions in the books of the company.
Keep reading free — every worked solution + bare-Act citation for Preference share redemption journal entries
✓ 32-line worked answer · ✓ 2 bare-Act citations · ✓ 3 examiner-rewarded phrases · ✓ Common-trap warning · ✓ How-to-write skeleton
✓ Join 828 CA Inter aspirants on catargettestprep Already signed up? Log in.
‹ All papers Ask in chat Start drilling →
Start 15-min diagnostic