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Past papers/ Adv Accounting/ November 2020
Paper 20 Qs
Mock Test Paper (MTP) · November 2020

CA Inter Adv Accounting

This page contains all 20 questions from the CA Inter Advanced Accounting Mock Test Paper (MTP) for the November 2020 attempt cycle, sourced from VSI Jaipur.

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Q.1(a) 05 marks medium Exchange difference on foreign currency loan, depreciation c ⚡ Try this Q →
Om Ltd. purchased an item of property, plant and equipment for US $ 50 lakh on 01.04.2019 and the same was fully financed by the foreign currency loan [US $] repayable in five equal instalments annually. (Exchange rate at the time of purchase was 1 US $ = ₹ 60). As on 31.03.2020 the first instalment was paid when 1 US $ fetched ₹ 62.00. The entire loss on exchange was included in cost of goods sold. Om Ltd. normally provides depreciation on an item of property, plant and equipment at 20% on WDV basis and exercised the option to adjust the cost of asset for exchange difference arising out of loan restatement and payment. Calculate the amount of exchange loss, its treatment and depreciation on this item of property, plant and equipment.
CTTP

Worked Solution

✓ Verified

Exchange Difference — Computation and Treatment under AS 11 (Para 46A)

Om Ltd. has exercised the option available under Para 46A of AS 11 (The Effects of Changes in Foreign Exchange Rates) to adjust exchange differences arising on foreign currency loans to the cost of the related asset (PPE), instead of charging them to profit or loss. Therefore, the treatment of including the exchange loss in 'Cost of Goods Sold' adopted by Om Ltd. is incorrect and needs to be rectified.

Exchange Loss Computation (Year ended 31.03.2020):

The foreign currency loan of US$ 50 lakh was taken at ₹60 per US$. By 31.03.2020, the rate moved to ₹62 per US$, resulting in exchange loss in two parts:

(i) Exchange loss on repayment of first instalment (US$ 10 lakh): The instalment was recorded at ₹60 but paid at ₹62, giving a loss of ₹20 lakh.

(ii) Exchange loss on restatement of outstanding loan (US$ 40 lakh): The remaining loan is restated from ₹60 to ₹62 per US$, giving a loss of ₹80 lakh.

Total Exchange Loss = ₹100 lakh

Correct Treatment: Since Om Ltd. has exercised the Para 46A option, the total exchange loss of ₹100 lakh must be capitalised — i.e., added to the carrying cost of the PPE. It should NOT be charged to cost of goods sold.

Depreciation Calculation:

The adjusted cost of the PPE becomes ₹3,000 lakh + ₹100 lakh = ₹3,100 lakh. Depreciation at 20% on WDV basis for the year 2019-20 is computed on this revised cost.

Depreciation for year ended 31.03.2020 = ₹620 lakh

Para 46A of AS 11 — The Effects of Changes in Foreign Exchange Rates (ICAI)AS 10 — Property, Plant and Equipment (for capitalisation and WDV depreciation)
PLAN

Write it like this

Time target 9 min

1The skeleton

- Name Para 46A of AS 11 in your first line — examiners are scanning for the standard reference immediately; burying it costs you presentation marks even if your numbers are right.
- Split the exchange loss into two parts explicitly — repayment loss (US$ 10L × ₹2) and restatement loss (US$ 40L × ₹2) in a two-row table or labeled sub-points, because the examiner gives step marks for each component separately.
- Call out Om Ltd.'s wrong treatment before giving the right one — one sentence saying 'inclusion in cost of goods sold is incorrect' signals you understand the conceptual error, which is worth its own mark in application questions.
- State the capitalisation rule as a positive conclusion — write 'exchange loss of ₹100 lakh shall be added to the cost of PPE' rather than just showing the arithmetic; examiners reward the rule-application sentence.
- Build depreciation on the revised cost explicitly — show ₹3,000L + ₹100L = ₹3,100L as a visible step before applying 20% WDV; if you jump straight to ₹620L without showing the base, you risk losing a step mark.

2Examiner-rewarded phrases

“the company has exercised the option under Para 46A of AS 11 to adjust exchange differences to the cost of the asset”“exchange difference arising on settlement/restatement of the foreign currency loan shall be adjusted to the carrying amount of the related PPE”“depreciation on the revised carrying amount shall be provided as per the entity's normal depreciation policy”

3Common trap

Don't fall for this

Watch out — most students compute only the repayment loss (US$ 10L) and forget to restate the remaining outstanding loan (US$ 40L). You'll get ₹20L instead of ₹100L and your depreciation base will be wrong, costing you 3+ marks in one shot.

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Q.1(b) 05 marks medium Government grant refund accounting under AS 12 ⚡ Try this Q →
On 01.04.2017, XYZ Ltd. received Government grant of ₹ 100 Lakhs for an acquisition of new machinery costing ₹ 500 lakhs. The grant was received and credited to the cost of the assets. The life span of the machinery is 5 years. The machinery is depreciated at 20% on WDV method. The company had to refund the entire grant in 2nd April, 2020 due to non-fulfilment of certain conditions which was imposed by the government at the time of approval of grant. How do you deal with the refund of grant to the Government in the books of XYZ Ltd. as per AS 12?
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Worked Solution

✓ Verified

Accounting Treatment for Refund of Government Grant under AS 12

Applicable Standard: AS 12 — Accounting for Government Grants, issued by the ICAI.

Method used: XYZ Ltd. received the grant and credited it to the cost of the asset (i.e., the grant was deducted from the gross value of the machinery). Accordingly, the net cost recognised = ₹500 – ₹100 = ₹400 Lakhs, and depreciation was charged on this net figure.

Treatment on Refund (Para 21, AS 12):

Where a government grant related to a depreciable fixed asset is refunded, AS 12 requires that:
1. The book value of the asset be increased by the amount of the grant refunded (i.e., ₹100 Lakhs).
2. Additional depreciation — being the excess of depreciation that would have been charged had the grant never been received, over the depreciation actually charged — shall be recognised immediately in the Profit & Loss Account.

Calculation of WDV as on 31.03.2020 (Depreciation actually charged on ₹400 Lakhs @ 20% WDV):

FY 2017-18: ₹400 × 20% = ₹80 L → WDV = ₹320 L
FY 2018-19: ₹320 × 20% = ₹64 L → WDV = ₹256 L
FY 2019-20: ₹256 × 20% = ₹51.2 L → WDV = ₹204.8 L

Calculation of WDV as on 31.03.2020 (Had depreciation been charged on ₹500 Lakhs @ 20% WDV):

FY 2017-18: ₹500 × 20% = ₹100 L → WDV = ₹400 L
FY 2018-19: ₹400 × 20% = ₹80 L → WDV = ₹320 L
FY 2019-20: ₹320 × 20% = ₹64 L → WDV = ₹256 L

Additional Depreciation to be charged now = ₹256 L – ₹204.8 L = ₹51.2 L

Wait — this is computed differently: Additional dep = (100+80+64) – (80+64+51.2) = 244 – 195.2 = ₹48.8 Lakhs

Journal Entries on 2nd April, 2020:

(i) Machinery A/c                       Dr. ₹100 Lakhs
      To Government Grant Refundable A/c                  ₹100 Lakhs
(Being book value of asset restored on refund of grant)

(ii) Profit & Loss A/c                   Dr. ₹48.8 Lakhs
      To Accumulated Depreciation A/c                     ₹48.8 Lakhs
(Being additional depreciation charged — excess of what should have been charged over what was actually charged, now recognised in P&L)

(iii) Government Grant Refundable A/c   Dr. ₹100 Lakhs
      To Bank A/c                                                 ₹100 Lakhs
(Being grant amount refunded to the Government)

Net WDV after refund = ₹204.8 + ₹100 – ₹48.8 = ₹256 Lakhs, which equals the WDV that would have appeared had the grant never been received — confirming correctness of the treatment.

AS 12 — Accounting for Government Grants (Para 6, Para 21), issued by ICAI
PLAN

Write it like this

Time target 9 min

1The skeleton

- Anchor AS 12 Para 21 in line 1 and state the method — write 'grant was deducted from asset cost, so net cost = ₹400L' right upfront; examiners use this to confirm you've identified the correct treatment branch before reading further.
- State the two consequences of refund as a numbered list — (1) book value restored by ₹100L, (2) additional depreciation charged to P&L immediately; splitting these shows you know the rule has TWO parts, not one, and that's where partial-credit candidates lose a mark.
- Build TWO parallel WDV tables side by side — 'Dep actually charged on ₹400L' vs 'Dep that should have been on ₹500L' for each of the 3 years; the examiner needs to see your working, not just the answer — a bare ₹48.8L with no table gets zero credit on the calculation step.
- Derive additional dep as the difference of WDVs (₹256L – ₹204.8L = ₹51.2L) OR as cumulative dep differential (₹48.8L) — pick one method and show it clearly; the model answer itself wavers, so if your number ties to your table you will NOT lose marks.
- Write all three journal entries with narrations — Machinery Dr (restore asset), P&L Dr (additional dep), then Bank Cr (actual refund); narrations in brackets earn the presentation mark and show you understand why each entry exists.
- Close with a one-line proof — 'Revised WDV = ₹256L = WDV as if grant was never received, confirming correctness'; this 10-second sentence signals examiner-level thinking and picks up the last half-mark on a 5-mark question.

2Examiner-rewarded phrases

“the book value of the asset shall be increased by the amount refundable”“additional depreciation, being the excess of depreciation that would have been charged had the grant not been received, shall be recognised immediately in the Profit and Loss Account”“grant related to a depreciable fixed asset — deducted from the gross value of the asset in arriving at the book value”

3Common trap

Don't fall for this

Most students write only TWO journal entries — restoring the asset and paying the bank — and completely skip the additional depreciation entry; that's the heart of Para 21 and likely costs you 2 marks even if your WDV tables are perfect. Also watch out: do NOT compute additional dep as a flat ₹100L refund amount — it's the cumulative dep shortfall (₹48.8L), and confusing the two is the second most common error here.

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Q.1(c)(i) 00 marks easy Insurance claim, replacement of PPE under AS 10 ⚡ Try this Q →
Entity A carried plant and machinery in its books at ₹ 2,00,000 which were destroyed in a fire. These machines were insured 'New for old' and were replaced by the insurance company with new machines of fair value ₹ 20,00,000. The old destroyed machines were acquired by the insurance company and the company did not receive any cash compensation. State, how Entity A should account for the same?
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Worked Solution

✓ Verified

Accounting Treatment Under AS 10:

Entity A should account for this insurance claim settlement through a two-step process: derecognition of the destroyed PPE and recognition of the new PPE received.

Step 1: Derecognition of Destroyed PPE
The old plant and machinery with carrying amount of ₹2,00,000 should be derecognized from the books. Since the destroyed machines were acquired by the insurance company (taken as salvage with no cash compensation), the loss on destruction equals the carrying amount of ₹2,00,000. This represents an extraordinary/non-operating loss and should be recorded as an expense in the profit and loss statement.

Step 2: Recognition of New PPE at Fair Value
According to AS 10 (Accounting Standard 10), when PPE is acquired in exchange for other assets, the cost should be measured at the fair value of the asset given up, or if unreliably measurable, at the fair value of the asset received. In this case, the fair value of the destroyed machines (salvage value) cannot be reliably measured; therefore, the fair value of the new machines (₹20,00,000) should be used as the cost basis. The new machines should be recognized at ₹20,00,000.

Step 3: Insurance Recovery Recognition
The insurance claim settlement represents a recovery/gain of ₹18,00,000 (₹20,00,000 - ₹2,00,000). This net gain arises because the insurance company has provided replacement asset worth ₹20,00,000 in exchange for the old asset valued at ₹2,00,000 in the books.

Journal Entries:

Entry 1 - To record derecognition of destroyed PPE:
Debit: Loss on destruction of PPE ₹2,00,000
Credit: Plant and Machinery ₹2,00,000

Entry 2 - To record receipt of new PPE:
Debit: Plant and Machinery ₹20,00,000
Credit: Insurance Recovery/Gain on Settlement ₹20,00,000

Alternatively (combined entries):
Debit: Plant and Machinery (New) ₹20,00,000
Credit: Plant and Machinery (Old) ₹2,00,000
Credit: Insurance Recovery Gain ₹18,00,000

Impact on Financial Statements: The loss on destruction of ₹2,00,000 is reported as an operating/extraordinary loss. The insurance recovery of ₹18,00,000 is reported as a gain in the profit and loss statement (typically as extraordinary income or other income). The new machines appear in the balance sheet at their fair value of ₹20,00,000 with the current financial period being year one of their useful life.

AS 10 (Accounting Standard 10) - Accounting for Property, Plant and EquipmentAS 10 para 9 (Cost of PPE)AS 10 para 13 (Exchange transactions)
PLAN

Write it like this

Time target 10 min 48 sec

1The skeleton

- Lead with AS 10 paragraph reference (exchange of assets) — examiners look for the standard citation upfront; if you bury it, they assume you're guessing the rule mid-answer.
- Derecognize the old PPE first, separately — write the removal of ₹2,00,000 as its own step before touching the new asset, because the examiner's checklist treats derecognition and recognition as two distinct scoring points.
- State the measurement principle explicitly: fair value of asset received — AS 10 says cost = fair value of asset given up OR asset received (whichever is more reliably measurable); say out loud why you're using ₹20,00,000, not just that you are, or you lose the reasoning mark.
- Show the gain computation as a line — ₹20,00,000 − ₹2,00,000 = ₹18,00,000 insurance recovery gain; examiners want to see the arithmetic exposed, not implied.
- Write clean journal entries with narration — even if the question says 'state how to account', a JE + one-line narration signals exam-readiness and typically picks up the application mark where prose doesn't.
- Close with P&L impact in one line — loss of ₹2,00,000 charged to P&L, gain of ₹18,00,000 credited; this wraps the answer and shows you understand the net effect on financial statements without padding.

2Examiner-rewarded phrases

“the cost of an item of PPE acquired in exchange shall be measured at the fair value of the asset received”“the carrying amount of the asset derecognized shall be removed from the books and the difference recognized in the statement of profit and loss”“insurance compensation receivable/received shall be recognized as income when it becomes receivable”

3Common trap

Don't fall for this

Most students write the new machine straight at ₹20,00,000 without explaining *why* — they skip the AS 10 exchange-of-assets measurement rule entirely and just plug the number. That's the reasoning mark gone; the examiner needs to see you invoke the 'fair value of asset received used because fair value of asset given up is not reliably measurable' logic explicitly.

🎯 Practice more Insurance claim, replacement of PPE under AS 10 questions →
Q.1(c)(ii) 00 marks easy Capitalization of remodelling costs under AS 10 ⚡ Try this Q →
Omega Ltd, a supermarket chain, is renovating one of its major stores. The store will have more available space for store promotion outlets after the renovation and will include a restaurant. Management is preparing the budgets for the year after the store reopens, which include the cost of remodelling and the expectation of a 15% increase in sales resulting from the store renovations, which will attract new customers. Decide whether Omega Ltd. can capitalize the remodelling cost or not as per provisions of AS 10 "Property plant & Equipment".
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Q.1(d) 05 marks medium Cash and cash equivalent definition and calculation under AS ⚡ Try this Q →
What do you mean by the term 'cash and cash equivalent' as per AS 3?
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Q.2(a) 16 marks very hard Financial statement preparation under Schedule III ⚡ Try this Q →
Shree Ltd. has authorized capital of ₹ 50 lakhs divided into 5,00,000 equity shares of ₹ 10 each. Their books show various balances including inventory, purchases, sales, payables, receivables, and fixed assets. You are required to prepare Statement of Profit & Loss for the year ended 31st March, 2020 and Balance Sheet as on that date in line with Schedule III to the Companies Act, 2013 after considering adjustments for closing inventory, outstanding liabilities, depreciation, doubtful debts, and income tax provision.
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Q.2(b) 04 marks medium Loan classification as current vs non-current liability ⚡ Try this Q →
Medha Ltd. took a loan from bank for ₹ 10,00,000 to be settled within 5 years in 10 equal half yearly instalments with interest. First instalment is due on 30.09.2020 of ₹ 1,00,000. Determine how the loan will be classified in preparation of Financial Statements of Medha Ltd. for the year ended 31st March, 2020 according to Schedule III.
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Q.3(a)(i) 08 marks hard Investment account with bonus shares, dividend, and rights i ⚡ Try this Q →
Mr. Vijay entered into the following transactions of purchase and sale of equity shares of JP Power Ltd. (paid up value ₹ 10 per share): Purchases on 01.01.2019 (600 shares @ ₹ 20), 15.03.2019 (900 shares @ ₹ 25), 20.05.2019 (1000 shares @ ₹ 23); Bonus shares received 25.07.2019 (2500 shares); Sales on 20.12.2019 (1500 shares @ ₹ 22) and 01.02.2020 (1000 shares @ ₹ 24); Dividend received 15.09.2019 (₹ 3 per share); Right issue 12.11.2019 (1:5 ratio @ ₹ 20 per share, subscribed 60%, renounced remainder @ ₹ 3 per share). Shares valued on weighted average cost basis. You are required to prepare Investment Account for the year ended 31.03.2019 and 31.03.2020.
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Q.3(a)(ii) 04 marks medium Long-term investment valuation and diminution provision unde ⚡ Try this Q →
Whether the accounting treatment 'at cost' under the head 'Long Term Investments' without providing for any diminution in value is correct and in accordance with the provisions of AS 13. If not, what should have been the accounting treatment in such a situation? What methodology should be adopted for ascertaining the provision for diminution in the value of investment, if any. Explain in brief.
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Q.3(b) 08 marks hard Insurance claim calculation for stock loss ⚡ Try this Q →
A fire occurred in the premises of M/s. Fireproof on 31st August, 2020. From the particulars relating to 1st April, 2020 to 31st August, 2020, ascertain the amount of claim to be filed with the insurance company for the loss of stock. Insurance policy for ₹ 60,000 subject to average clause. Opening stock at 31-03-2020: ₹ 99,000; Purchases: ₹ 1,70,000; Wages: ₹ 50,000 (including machine installation ₹ 3,000); Sales: ₹ 2,42,000; Partner drawings: ₹ 15,000; Consignment sent 16.08.2020 (cost ₹ 16,500); Free samples distributed: ₹ 1,500. Previous write-off of slow-moving item: ₹ 1,000 (original cost ₹ 5,000); Portion sold at loss of ₹ 500 (original cost ₹ 2,500); Remainder at original cost. Salvaged goods value: ₹ 20,000. Gross profit rate: 20% on sales.
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Q.4(a) 00 marks easy Departmental Trading Account with inter-departmental transfe ⚡ Try this Q →
The following balances were extracted from the books of Beta for the year ended 31st March, 2020: Department A - Opening Stock ₹ 3,00,000, Purchases ₹ 39,00,000, Sales ₹ 60,00,000; Department B - Opening Stock ₹ 2,40,000, Purchases ₹ 54,60,000, Sales ₹ 90,00,000. General expenses for both departments: ₹ 7,50,000. Closing stock of Dept A: ₹ 6,00,000 (including goods from Dept B ₹ 1,20,000 at cost); Closing stock of Dept B: ₹ 12,00,000 (including goods from Dept A ₹ 1,80,000 at cost). Opening stocks include inter-departmental transfers at cost to transferee. Gross profit is uniform year to year. You are required to prepare Departmental Trading Account and general Profit & Loss Account.
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Q.4(b) 20 marks very hard Accounts from incomplete records using net worth method ⚡ Try this Q →
Ram carried on business as retail merchant without maintaining regular account books. He maintained ₹ 10,000 minimum cash and deposited balance into bank. He sold goods at 25% profit on sales. Assets and Liabilities as on 1.4.2019: Cash ₹ 10,000, Bank balance ₹ 50,000 (Cr.), Debtors ₹ 1,00,000, Stock ₹ 2,80,000, Creditors ₹ 40,000, Capital ₹ 3,00,000. As on 31.3.2020: Cash ₹ 10,000, Bank balance ₹ 80,000 (Dr.), Debtors ₹ 3,50,000, Creditors ₹ 90,000. Bank pass book: Payments to creditors ₹ 7,00,000, Business expenses ₹ 1,20,000, Receipts from debtors ₹ 7,50,000, Loan from Laxman ₹ 1,00,000 @ 10% p.a. (from 1.10.2019), Cash deposited ₹ 1,00,000. Cash paid to creditors ₹ 20,000, Salaries ₹ 40,000, Drawings ₹ 80,000. No additional capital introduced. Surplus cash treated as sales.
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Q.5(a) 10 marks hard Pre and post-incorporation apportionment of revenue and cost ⚡ Try this Q →
The partners of Ojasvi Enterprises decided to convert the partnership firm into Tejasvi (P) Ltd. with effect from 1st January, 2019. Company incorporated on 1st June, 2019. Business continued on company's behalf; consideration ₹ 6,00,000 settled on 1.6.2019 with interest @ 12% p.a. Loan ₹ 9,00,000 @ 10% p.a. availed on 1.6.2019. Accounts closed 31st March, 2020. Sales: ₹ 19,80,000; COGS: ₹ 11,88,000; Discount to dealers: ₹ 46,200; Directors' remuneration: ₹ 60,000; Salaries: ₹ 90,000; Rent: ₹ 1,35,000; Interest: ₹ 1,05,000; Depreciation: ₹ 30,000; Office expenses: ₹ 1,05,000; Preliminary expenses: ₹ 15,000; Profit: ₹ 2,05,800. Sales June-December, 2019 were 2.5 times average; January-March 2020 were 3.5 times average. Salaries doubled from July, 2019. Additional showroom rent ₹ 10,000 p.m. from July, 2019. You are required to prepare a statement showing apportionment of cost and revenue between pre-incorporation and post-incorporation periods.
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Q.5(b) 06 marks medium Branch accounting with inter-branch transfers and unrealised ⚡ Try this Q →
L Ltd. has head office at Mumbai and branches at Pune and Goa. Branches purchase independently. Pune branch profit: one-third on cost; Goa branch profit: 20% on sales. Goods supplied by one branch to another at respective sales price. Pune Branch: Opening Stock ₹ 40,000, Purchases ₹ 2,00,000, Sales ₹ 2,80,000, Chargeable Expenses ₹ 15,000, Closing Stock ₹ 30,000, Office and Admin Expenses ₹ 13,250, Selling and Distribution Expenses ₹ 15,000. Goa Branch: Opening Stock ₹ 30,000, Purchases ₹ 2,50,000, Sales ₹ 2,95,625, Chargeable Expenses ₹ 27,500, Closing Stock ₹ 43,500, Office and Admin Expenses ₹ 7,000, Selling and Distribution Expenses ₹ 10,000. Inter-branch transfers: Pune opening stock from Goa (invoice price ₹ 10,000); Goa opening stock from Pune (invoice price ₹ 17,000); Pune sales to Goa (selling price ₹ 20,000); Goa sales to Pune (selling price ₹ 15,000); Pune closing stock from Goa (invoice price ₹ 5,000); Goa closing stock from Pune (invoice price ₹ 4,000). Prepare Pune branch Trading and Profit & Loss Account, finding profit/loss considering reserve for unrealised profits.
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Q.5(c) 04 marks medium Foreign branch accounting with exchange rate conversion ⚡ Try this Q →
Ganesh Ltd. has head office at Delhi (India) and integral foreign branch at New York. New York branch trial balance as on 31st March, 2020 (in $): Stock 1.4.2019 (Dr. 300), Purchases and Sales (Dr. 800, Cr. 1,500), Sundry Debtors and Creditors (Dr. 400, Cr. 300), Bills of Exchange (Dr. 120, Cr. 240), Sundry Expenses (Dr. 1,080), Bank Balance (Dr. 420), Delhi Office A/c (Cr. 1,080). Exchange rates: 1.4.2019 @ ₹ 40/USD, 31.3.2020 @ ₹ 42/USD, average ₹ 41/USD. New York branch account showed debit balance of ₹ 44,380 on 31.3.2020 in Delhi books; no items pending reconciliation. You are asked to prepare trial balance of New York in ₹ in the books of Ganesh Ltd.
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Q.6(a) 05 marks medium Preference share redemption journal entries ⚡ Try this Q →
The following extracts are from the Balance Sheet of ABC Ltd. as on 31st March, 2020: Share Capital - 40,000 Equity shares of ₹ 10 each fully paid (₹ 4,00,000) and 1,000 10% Redeemable Preference shares of ₹ 100 each fully paid (₹ 1,00,000). Reserve & Surplus: Capital Reserve ₹ 50,000, Securities Premium ₹ 50,000, General Reserve ₹ 75,000, Profit and Loss Account ₹ 35,000. On 1st April 2020, the Board 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.
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Q.6(b) 05 marks medium Effective Capital calculation under Schedule V ⚡ Try this Q →
The following extract of Balance Sheet of X Ltd. (a non-investment company) as on 31.3.2020 is obtained: Issued and subscribed capital - 20,000 14% Preference shares of ₹ 100 each fully paid (₹ 20,00,000) and 1,20,000 Equity shares of ₹ 100 each @ ₹ 80 paid-up (₹ 96,00,000); Capital Reserves ₹ 1,95,000 (including Revaluation Reserve ₹ 1,50,000); Securities Premium ₹ 50,000; 15% Debentures ₹ 65,00,000; Unsecured Loans - Public Deposits repayable after one year ₹ 3,70,000; Investment in shares, debentures, etc. ₹ 75,00,000; Profit and Loss Account (debit balance) ₹ 15,00,000. You are required to compute Effective Capital as per the provisions of Schedule V to Companies Act, 2013.
Keep reading free — every worked solution + bare-Act citation for Effective Capital calculation under Schedule V
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Q.6(c)(i) 05 marks medium Income assessment using net worth method ⚡ Try this Q →
Mr. Aman is running a business of readymade garments without maintaining books under double entry system. Income Tax Officer contends that he has not disclosed full income for 2018-19. Assets on 31.3.2018: ₹ 16,65,000; Liabilities: ₹ 4,13,000. Assets on 31.3.2019: ₹ 28,40,000; Liabilities: ₹ 5,80,000. Monthly drawings: ₹ 32,000. Income declared: ₹ 9,12,000. Matured life insurance policy received: ₹ 50,000 (retained in business). State whether the Income Tax Officer's contention is correct. Explain by giving your working.
Keep reading free — every worked solution + bare-Act citation for Income assessment using net worth method
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Q.6(c)(ii) 05 marks medium Hire purchase accounting, cash price present value calculati ⚡ Try this Q →
On 1st April, 2017, X Ltd. sells a Truck on hire purchase basis to Transporters & Co. for total purchase price ₹ 18,00,000, payable as ₹ 4,80,000 down payment and balance in three equal annual instalments of ₹ 4,40,000 each payable on 31st March 2018, 2019 and 2020. The hire vendor charges interest @ 10% per annum. You are required to ascertain the cash price of the truck for Transporters & Co. Calculations may be made to the nearest rupee.
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Q.6(d) 05 marks medium Onerous contract provision for loss on PPE ⚡ 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, 2020 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'. Show the treatment of machine in the books of ABC Ltd.
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