Launch offer — 25% off with code LAUNCH-25 See plans →
Try now → N
Past papers/ Adv Accounting/ December 2021
Paper 23 Qs
Question Paper · December 2021

CA Inter Adv Accounting

This page contains all 23 questions from the CA Inter Advanced Accounting Question Paper for the December 2021 attempt cycle, sourced from CATS, VSI Jaipur.

23 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 15 marks very hard AS 4 - Events after Balance Sheet Date; AS-9 - Revenue Recog ⚡ Try this Q →
Advanced Accounting question with multiple parts on Accounting Standards (AS 4, AS-9, and Intangible Assets)
CTTP

Worked Solution

✓ Verified

Part (a): AS 4 — Events After Balance Sheet Date (Year ended 31.03.2021; Board approval: 10.07.2021)

AS 4 (Revised) classifies post-balance-sheet events as either adjusting events (confirming conditions existing at the balance sheet date) or non-adjusting events (conditions arising after that date).

(1) Equity Dividend declared @ 7% on 15.05.2021 — This is a Non-Adjusting Event. The decision to declare dividend was taken after 31.03.2021. The obligation to pay dividend arises only upon declaration; no condition existed at the balance sheet date. Under AS 4, such dividends declared after year-end should be disclosed but not recognised as a liability in the financial statements for 2020-21.

(2) Fraud of ₹53,000 detected on 22.06.2021 — This is an Adjusting Event. The cash was misappropriated by the cashier on 05.03.2021, i.e., before the balance sheet date. The fraud was merely detected after the balance sheet date. Since the underlying condition (misappropriation) existed at 31.03.2021, the accounts must be adjusted to write off ₹53,000 as a loss or reduce cash balance accordingly.

(3) Building damaged by fire on 23.05.2021 — Loss ₹81,00,000 — This is a Non-Adjusting Event. The fire occurred on 23.05.2021, i.e., after the balance sheet date. No condition related to this damage existed on 31.03.2021. However, since the amount is material (₹81,00,000), disclosure must be made in the notes to financial statements to prevent the accounts from being misleading.

---

Part (b): AS 9 — Revenue Recognition for Rainbow Ltd. (Year ended 31.03.2021)

(i) Sale on Approval — ₹5,00,000 (dispatched 15th November; approval period 4 months): The 4-month approval period expires on 15th March (before year-end). 75% (₹3,75,000) was confirmed by 31st January. For the remaining 25% (₹1,25,000), no disapproval was received and the approval period expired on 15th March (before 31st March). As per AS 9, goods unsold under approval after the approval period lapses are treated as sold. Revenue recognised = ₹5,00,000 (entire amount).

(ii) Bill and Hold Sale — ₹2,40,000 (sold 31st March; delivery 10th April at buyer's request): This is a bill and hold arrangement. As per AS 9, revenue can be recognised even before delivery if: the buyer acknowledges ownership, delivery is probable, and goods are identified and ready. Since deferral of delivery was at Bright Ltd.'s specific request (showroom refurbishing), significant risks and rewards passed to the buyer on 31st March. Revenue recognised = ₹2,40,000.

(iii) Sale with Repurchase Agreement — ₹6,00,000 (goods supplied to Shyam Ltd.; repurchase on 14th April): Where goods are sold with a concurrent agreement to repurchase, the transaction is in substance a financing arrangement, not a genuine sale. As per AS 9, since the seller retains the risks and rewards of ownership, Revenue recognised = NIL. The goods should remain in inventory.

(iv) Interest and Royalties from Dew Ltd. — ₹7.5 lakhs interest + ₹12 lakhs royalties: As per AS 9, interest should be recognised on a time proportion basis and royalties on an accrual basis in accordance with the terms of the agreement. Both have accrued during the year 2020-21. Revenue recognised = ₹7,50,000 + ₹12,00,000 = ₹19,50,000.

(v) Consignment Sale — ₹4,00,000 (sent 25th December; 40% unsold at 31st March): Under AS 9, in a consignment arrangement, revenue is recognised only when the consignee sells the goods to a third party. At year-end, 40% remains unsold with the consignee. Only 60% has been sold. Revenue recognised = ₹4,00,000 × 60% = ₹2,40,000. The unsold 40% (₹1,60,000) remains as inventory.

---

Part (c): Intangible Assets — Surgical Ltd. (Development Expenditure under AS 26)

As per AS 26 (Intangible Assets), expenditure on an internally generated intangible arising from development can be recognised only if the asset meets specified recognition criteria. Expenditure incurred before recognition criteria are met must be expensed and cannot be reinstated as an intangible asset at a later date.

Total expenditure for year ended 31.03.2020 = ₹67 lakhs. Criteria for recognition met on 01.01.2020. Expenditure till 01.01.2020 = ₹15 lakhs.

Expenditure from 01.01.2020 to 31.03.2020 = ₹67 − ₹15 = ₹52 lakhs — this qualifies for capitalisation as an Intangible Asset (development phase post-criteria).

Expenditure up to 01.01.2020 = ₹15 lakhs — this represents the research/pre-criteria phase and must be charged to the Statement of Profit and Loss as incurred. It cannot be retrospectively capitalised.

Accounting treatment: Debit Intangible Asset A/c ₹52 lakhs; Debit P&L (Research/Development expense) ₹15 lakhs.

AS 4 (Revised) — Events After Balance Sheet DateAS 9 — Revenue RecognitionAS 26 — Intangible Assets
PLAN

Write it like this

Time target 27 min

1The skeleton

- Label the classification in the very first line of each sub-part — write 'Adjusting Event', 'Non-Adjusting Event', or 'Revenue Recognised = ₹X' before any reasoning, because examiners tick that word first and everything else is support.
- For AS 4, pin two dates explicitly — date of occurrence vs date of detection/declaration — this single comparison IS your proof; without it your classification looks like a guess even if it's right.
- For AS 9, state the governing condition THEN apply it — one line like 'Under AS 9, revenue on consignment is recognised only when the consignee sells to a third party' before your calculation, or the marks for 'principle' are gone.
- For the repurchase (Shyam Ltd.) and bill-and-hold (Bright Ltd.) items, write the substance-over-form line explicitly — 'the transaction is in substance a financing arrangement' or 'delivery deferred at buyer's specific request' is exactly what the examiner is hunting for.
- Split the ₹67 lakhs in Part (c) with a date-anchored table or two clear lines — show ₹15L (pre-criteria, expensed) and ₹52L (post-criteria, capitalised) separately with dates, then state the irreversibility rule; this part has at least 3 scoring checkpoints and a single lump answer gets zero.
- End every sub-part with the accounting treatment or disclosure line — 'Disclose in notes to prevent accounts from being misleading' or 'Debit Intangible Asset ₹52L; Debit P&L ₹15L' — these closing lines are often separately marked and students skip them.

2Examiner-rewarded phrases

“the transaction is in substance a financing arrangement and revenue shall not be recognised”“expenditure incurred before the recognition criteria are met shall be recognised as an expense and cannot be reinstated as part of an intangible asset at a later date”“significant risks and rewards of ownership have been transferred to the buyer”

3Common trap

Don't fall for this

The deadliest move on this paper: treating the repurchase agreement (Shyam Ltd.) as a normal sale and booking ₹6,00,000 revenue — that's a full sub-part wiped out. If there's a concurrent agreement to repurchase, your brain should immediately fire 'financing arrangement, NIL revenue' before you even read the numbers. Also watch the AS 26 trap — students capitalise the entire ₹67 lakhs because 'it's development expenditure', completely missing that pre-criteria spend (₹15L) is permanently expensed and the split date is the whole answer.

🎯 Practice more AS 4 - Events after Balance Sheet Date; AS-9 - R questions →
Q.1 20 marks very hard Foreign Exchange Transactions / AS 11 ⚡ Try this Q →
(a) (i) PP Ltd, an Indian Company acquired long term finance from WW Ltd., a U.S. company, amounting to ₹ 90,38,592. The transaction was recorded at US $1 = ₹ 72.00, taking exchange rate prevailing at the date of transaction. The exchange rate on balance sheet date (31.03.2021) is US $1 = ₹ 73.60. (ii) Trade receivables of PP Ltd. include amount receivable from Preksha Ltd, ₹ 20,00,150 recorded at the prevailing exchange rate on the date of sales, transaction recorded at US $1 = ₹ 73.40. The exchange rate on balance sheet date (31.03.2021) is US $1 = ₹ 74.00
CTTP

Worked Solution

✓ Verified

AS 11 — Effects of Changes in Foreign Exchange Rates governs the translation of foreign currency transactions at the reporting date. All monetary items (receivables, payables, borrowings) must be restated at the closing rate on the balance sheet date, and the resulting exchange difference is recognised in the Statement of Profit and Loss of the period.

Part (a)(i): Long-Term Finance from WW Ltd. (Foreign Currency Borrowing)

PP Ltd. borrowed from WW Ltd. (USA) and recorded the liability at the transaction-date rate of ₹ 72.00 per US$. The original INR amount of ₹ 90,38,592 represents US$ 1,25,536 (= 90,38,592 ÷ 72).

On the balance sheet date (31.03.2021), the closing rate is ₹ 73.60 per US$. The liability must be restated:

Restated value = US$ 1,25,536 × ₹ 73.60 = ₹ 92,39,449.60

Since the INR has depreciated, the liability in rupee terms has increased, resulting in an exchange loss of ₹ 2,00,857.60 (= ₹ 92,39,449.60 − ₹ 90,38,592).

As per AS 11 (Revised 2003), exchange differences on monetary items are recognised in the P&L account. The long-term borrowing is a monetary item; accordingly, the exchange loss of ₹ 2,00,857.60 is charged to the Statement of Profit and Loss. The borrowing is restated to ₹ 92,39,449.60 in the balance sheet.

Note: The option under the MCA notification (paragraph 46/46A of AS 11) to defer exchange differences on long-term monetary items and amortise over the remaining life was a company-specific election. In the absence of specific instructions, the standard treatment of charging to P&L is applied.

Journal Entry (31.03.2021):
Foreign Exchange Loss A/c … Dr. ₹ 2,00,857.60
To Long-Term Finance (WW Ltd.) A/c ₹ 2,00,857.60
(Being exchange loss on long-term foreign currency borrowing recognised at closing rate as per AS 11)

---

Part (a)(ii): Trade Receivable from Preksha Ltd. (Export Sale)

The trade receivable of ₹ 20,00,150 was recorded at the transaction-date rate of ₹ 73.40 per US$. The USD equivalent is US$ 27,250 (= 20,00,150 ÷ 73.40).

On the balance sheet date (31.03.2021), the closing rate is ₹ 74.00 per US$. The receivable must be restated:

Restated value = US$ 27,250 × ₹ 74.00 = ₹ 20,16,500

Since the INR has depreciated further, the receivable in rupee terms has increased, resulting in an exchange gain of ₹ 16,350 (= ₹ 20,16,500 − ₹ 20,00,150).

As per AS 11, exchange differences on monetary items (trade receivables being monetary assets) are recognised in the Statement of Profit and Loss. Accordingly, the exchange gain of ₹ 16,350 is credited to the P&L.

Journal Entry (31.03.2021):
Trade Receivables (Preksha Ltd.) A/c … Dr. ₹ 16,350
To Foreign Exchange Gain A/c ₹ 16,350
(Being exchange gain on trade receivable recognised at closing rate as per AS 11)

AS 11 — The Effects of Changes in Foreign Exchange Rates (Revised 2003), issued by ICAIParagraph 11 of AS 11 — monetary items to be reported at closing rateParagraph 13 of AS 11 — exchange differences on monetary items to be recognised in profit or lossMCA Notification — Paragraph 46/46A of AS 11 (option for long-term monetary items)
PLAN

Write it like this

Time target 36 min

1The skeleton

- Cite AS 11 and the monetary item rule in your very first line — examiners allocate an easy 1-2 marks just for correctly stating the standard + the closing-rate restatement rule before any numbers appear.
- Derive the USD amount first, show the division clearly — write 'US$ = INR amount ÷ transaction rate' as a labelled step; if you skip this and jump to restated value, the examiner cannot award method marks even if your final number is right.
- Restate at closing rate and present both values side-by-side — lay it out as 'Original INR value vs Restated INR value' so the exchange difference is self-evident; this format matches the model answer pattern ICAI rewards.
- Name the direction of exchange movement and link it to the item type — say 'INR depreciated → liability increases → exchange LOSS' or 'INR depreciated → receivable increases → exchange GAIN'; one line, but it proves you understand the logic, not just the arithmetic.
- Write the journal entry with the narration — even if marks aren't split, ICAI's suggested answers always include the JE; missing it on a 20-mark question signals you ran out of time or skipped it, both cost you.
- Add the Para 46/46A note for the borrowing part — one sentence acknowledging the deferral option exists but isn't applied here; this is what separates a 17/20 answer from a 19/20 answer on a long-term borrowing sub-part.**

2Examiner-rewarded phrases

“monetary items shall be translated using the closing rate at the balance sheet date”“exchange differences arising on such monetary items shall be recognised in the Statement of Profit and Loss in the period in which they arise”“as per AS 11 (Revised 2003) — Effects of Changes in Foreign Exchange Rates”

3Common trap

Don't fall for this

The classic killer here is treating the INR figure directly and computing a percentage difference instead of first backing out the USD amount — your difference will be wrong by rounding and you lose method marks throughout. Also watch out: INR depreciating hits a borrowing (liability) as a LOSS and a receivable (asset) as a GAIN — students routinely flip these signs under exam pressure.

🎯 Practice more Foreign Exchange Transactions / AS 11 questions →
Q.1 00 marks easy Investment Classification (AS-13), Inventory Valuation ⚡ Try this Q →
Question on Mutual Fund Investment and Inventory Provision
CTTP

Worked Solution

✓ Verified

Part (c): Mutual Fund Investment Classification and Valuation

1. Classification under AS-13 (Revised):

AS-13 (Revised) classifies investments based on holding period as of the balance sheet date (31.03.2021):

Long-term Investment:
- Fund A (₹48,225): Acquired 01.05.2017. Period from acquisition to 31.03.2021 exceeds 12 months. Classified as long-term investment.

Current Investments:
- Fund B (₹24,220): Acquired 05.08.2020. Period from acquisition to 31.03.2021 is approximately 7-8 months (less than 12 months). Classified as current investment.
- Fund C (₹78,190): Acquired 01.01.2021. Period from acquisition to 31.03.2021 is 3 months (less than 12 months). Classified as current investment.
- Fund D (₹65,880): Acquired 07.05.2020. Period from acquisition to 31.03.2021 is approximately 11 months (less than 12 months). Classified as current investment.

2. Valuation as on 31.03.2021:

Assuming the data represents: Date | Cost Price | NAV at Purchase | Units | Current Market Value/NAV

Under AS-13 (Revised), investments are valued at lower of cost and market value:

- Fund A (Long-term): Lower of ₹50,000 (cost) and ₹48,225 (market value) = ₹48,225
- Fund B (Current): Lower of ₹25,000 (cost) and ₹24,220 (market value) = ₹24,220
- Fund C (Current): Lower of ₹75,000 (cost) and ₹78,190 (market value) = ₹75,000
- Fund D (Current): Lower of ₹70,000 (cost) and ₹65,880 (market value) = ₹65,880

Total Value of Investments as on 31.03.2021 = ₹2,13,325

---

Part (d)(i): Inventory Provision — Change in Valuation Method

ABC Ltd. is changing from a non-moving stock method (based on 12-month non-issuance) to a technical evaluation method for determining inventory provision.

Analysis:
- Provision required under old method (12-month basis): ₹5.00 lakhs
- Provision required under new method (technical evaluation): ₹4.00 lakhs
- Difference: ₹1.00 lakh (release)

Accounting Treatment:

As per AS-2 (Valuation of Inventories), inventory must be valued at lower of cost and net realizable value. The technical evaluation method is more precise and appropriate because it reflects individual assessments of realization value, aligning with accounting principles better than an arbitrary time-based criterion.

Per AS-5 (Prior Period Items and Changes in Accounting Policies), the change in accounting policy should be:
1. Applied retrospectively to the extent practicable
2. If not practicable, recognized in current period

Conclusion:
- Provision for 31.03.2021: ₹4.00 lakhs (based on technical evaluation method)
- Release of provision in P&L: ₹1.00 lakh, to be recognized as adjustment/prior period correction or as change in estimate, depending on materiality and accounting policy adoption approach

Inventory valuation on Balance Sheet: Total stock ₹133.75 lakhs less provision ₹4.00 lakhs = Net inventory value ₹129.75 lakhs

AS-13 (Revised): Accounting for InvestmentsAS-2 (Revised 1998): Valuation of InventoriesAS-5: Prior Period Items and Changes in Accounting PoliciesSchedule III to the Companies Act, 2013
PLAN

Write it like this

Time target 14 min 24 sec

1The skeleton

- Lead with the AS-13 12-month rule in line 1 — write 'As per AS-13 (Revised), investments held for more than 12 months from the balance sheet date are classified as long-term' before touching any fund, because examiners award structure marks on that opening line.
- Build a two-column classification table (Fund | Long-term/Current | Reason) — listing each fund with its acquisition date and months-held stops you losing marks for an answer that feels like running prose with numbers buried inside.
- Separate the valuation step completely — after classification, write a fresh sub-heading 'Valuation as on 31.03.2021' and apply the rule differently: current investments → lower of cost and fair value; long-term → cost unless there is a permanent diminution, because mixing the two rules in one block is the #1 mark-killer here.
- For the inventory part, cite both AS-2 and AS-5 in your opening line — don't treat this as a pure calculation; examiners expect you to name the change-in-accounting-policy standard upfront, because the 1-lakh release only gets full credit when linked to a standard.
- State the nature of the change explicitly before the numbers — one sentence like 'The change from a time-based criterion to technical evaluation constitutes a change in accounting policy under AS-5' frames your answer and earns the analysis marks that pure arithmetic cannot.
- Close with the Balance Sheet line — write the net inventory figure (₹133.75 lakhs − ₹4.00 lakhs = ₹129.75 lakhs) as a standalone final line; examiners use this as a quick check-tick, so make it impossible to miss.

2Examiner-rewarded phrases

“classified as current investment since the period from date of acquisition to the balance sheet date does not exceed twelve months”“valued at lower of cost and fair value, determined on an individual investment basis”“the change in accounting policy should be applied retrospectively and the effect disclosed as required by AS-5 (Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies)”

3Common trap

Don't fall for this

Watch out — most students apply 'lower of cost or market value' to Fund A (long-term) exactly the same way they do for current investments. Wrong. Under AS-13, long-term investments are carried at cost; you only write them down for a permanent, not temporary, diminution. Applying the current-investment rule to a long-term fund drops you a mark even if the number coincidentally matches.

🎯 Practice more Investment Classification (AS-13), Inventory Val questions →
Q.2 00 marks easy Foreign Exchange (AS 11), Cash Flow Statement (AS-3) ⚡ Try this Q →
Question on Exchange Difference and Cash Flow Statement
Keep reading free — every worked solution + bare-Act citation for Foreign Exchange (AS 11), Cash Flow Statement (AS-3)
✓ 64-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.3 00 marks easy Accounting Standards - Impairment and Amalgamation ⚡ Try this Q →
Further expenditure incurred on the process for the financial year ending 31st March, 2021 was ₹ 105 lakhs. As on 31st March, 2021, the recoverable amount of technique embodied in the plan was estimated to be ₹ 89 lakhs. This includes estimates of future cash outflows and inflows. Under the provisions of AS 26, you are required to ascertain:
Keep reading free — every worked solution + bare-Act citation for Accounting Standards - Impairment and Amalgamation
✓ 45-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.3 10 marks hard Branch Accounting - Stock and Debtors System ⚡ Try this Q →
Delta Ltd has a branch at Kanpur. Goods are invoiced from head office to Branch at cost plus 50%. Branch remits all cash received to head office and all expenses are met by head office. Prepare necessary Ledger accounts in the books of Delta Ltd under Stock and Debtors system to show profit earned at the branch for the year ending 31st March, 2021
Keep reading free — every worked solution + bare-Act citation for Branch Accounting - Stock and Debtors System
✓ 43-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) 15 marks very hard Consolidated Financial Statements - Profit and Loss ⚡ Try this Q →
Case: Moon Ltd. and its subsidiary Star Ltd. provided financial information for the year ended 31st March, 2021.
Moon Ltd. and its subsidiary Star Ltd. provided the following information for the year ended 31st March, 2021: [Financial data table showing Equity Share Capital, Finished Goods Inventory, Dividend Income, Other non-operating Income, Raw material consumed, Selling and Distribution Expenses, Production Expenses, Loss of old investments, Sales and other operating income, Wages and Salaries, General and Administrative Expenses, Royalty paid, Depreciation, and Interest expense for both companies]. Other information: On 1st September, 2018 Moon Ltd. acquired 50,000 equity shares of ₹100 each fully paid up in Star Ltd. Star Ltd. paid a dividend of 10% for the year ended 31st March, 2020. The dividend was correctly accounted for by Moon Ltd. Moon Ltd. sold goods of ₹17,50,000 to Star Ltd. at a profit of 20% on selling price. Inventory of Star Ltd. includes goods of ₹2,700 received from Moon Ltd. Selling and Distribution expenses of Star Ltd. include ₹2,12,500 paid to Moon Ltd. as brokerage fees. General and Administrative expenses of Moon Ltd. include ₹2,80,000 paid to Star Ltd. as consultancy fees. Star Ltd. issued some resources of Moon Ltd., and Star Ltd. paid ₹50,000 to Moon Ltd. as royalty. Prepare Consolidated Statement of Profit and Loss of Moon Ltd. and its subsidiary Star Ltd. for the year ended 31st March 2021 as per Schedule III of the Companies Act, 2013.
Keep reading free — every worked solution + bare-Act citation for Consolidated Financial Statements - Profit and Loss
✓ 64-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.3(b) 05 marks medium NBFC - Owned Fund and Net Owned Fund calculation ⚡ Try this Q →
GEM Ltd. is a NBFC providing Hire Purchase Solutions for acquiring consumer durables. The following information is extracted from its books for the year ended 31st March 2021: Paid up Equity Capital ₹2,520 lakhs; Compulsory convertible preference shares ₹1,615 lakhs; Free Reserve ₹243 lakhs; Share premium ₹96 lakhs; Capital Reserve ₹319 lakhs; ₹220 Lakhs surplus arising out of sale of Building; Deferred revenue expenditure ₹54 lakhs; Debentures issued ₹702 lakhs; Investments in debentures of subsidiaries ₹171 lakhs; Investments in shares of other NBFC ₹595 lakhs. You are required to calculate Owned Fund and Net Owned Fund.
Keep reading free — every worked solution + bare-Act citation for NBFC - Owned Fund and Net Owned Fund calculation
✓ 24-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.4 18 marks very hard Amalgamation ⚡ Try this Q →
Case: Dark Ltd. and Fair Ltd. were amalgamated on and from 1st April, 2021. A new company Bright Ltd. was formed to take over the business of the existing companies. Balance Sheet data (₹ in Lakhs): Equity and Liabilities - Share Capital (Dark Ltd. ₹1,650, Fair Ltd. ₹1,425), Reserves and Surplus (Dark Ltd. ₹630, Fair Ltd. ₹495), Long Term Borrowings 10% Debentures (Dark Ltd. ₹90, Fair Ltd. ₹45), Trade Payables (Dark Ltd. ₹630, Fair Ltd. ₹285), Total (Dark Ltd. ₹3,000, Fair Ltd. ₹2,250). Assets - Property, Plant and Equipment (Dark Ltd. ₹1,350, Fair Ltd. ₹975), Non Current Investments (Dark Ltd. ₹225…
Dark Ltd. and Fair Ltd. were amalgamated on and from 1st April, 2021. A new company Bright Ltd. was formed to take over the business of the existing companies. The Balance Sheets of Dark Ltd. and Fair Ltd. as at 31st March, 2021 are given below.
Keep reading free — every worked solution + bare-Act citation for Amalgamation
✓ 43-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.4(a) 15 marks very hard ⚡ Try this Q →
TJM & Sons is a partnership firm consisting of T, J and M who share profit and losses in the ratio 2:2:1 and JEK Limited is another company doing similar business. The firm (TJM & Sons) and the company (JEK Ltd) provide the following balance sheet as of 31.03.2021: Plant & Machinery: TJM & Sons ₹ 7,50,000, JEK Ltd ₹ 24,00,000; Furniture & Fixtures: TJM & Sons ₹ 75,000, JEK Ltd ₹ 3,37,500; Inventories: TJM & Sons ₹ 3,00,000, JEK Ltd ₹ 1,75,000; Trade receivables: TJM & Sons ₹ 3,00,000, JEK Ltd ₹ 12,37,500; Cash at Bank: TJM & Sons ₹ 15,000, JEK Ltd ₹ 6,00,000; Cash in Hand: TJM & Sons ₹ 60,000, JEK Ltd ₹ 1,50,000; Equity share capital: JEK Ltd ₹ 30,00,000; Partners Capitals: T ₹ 3,00,000, J ₹ 4,50,000, M ₹ 1,50,000; General Reserve: TJM & Sons ₹ 1,50,000, JEK Ltd ₹ 10,50,000; Trade Payables: TJM & Sons ₹ 4,50,000, JEK Ltd ₹ 19,50,000. On the balance sheet date, TJM & Sons is dissolved and all liabilities taken over by JEK Limited by issuing 75,000 shares of ₹ 10/- each at a premium of ₹ 4/- per share. Plant & Machinery and Furniture & Fixtures are to be revalued at ₹ 8,50,000 and ₹ 1,00,000 respectively. Partners of TJM & Sons agreed to divide the shares issued by JEK Limited in the profit sharing ratio and bring necessary cash for settlement of their capital. The trade payable of TJM & Sons includes ₹ 1,50,000 payable to JEK Limited. An unrecoered liability of ₹ 37,500 of TJM & Sons must also be taken over by JEK Ltd.
Keep reading free — every worked solution + bare-Act citation
✓ 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.4(b) 05 marks medium Partnership - Dissolution ⚡ Try this Q →
State the circumstances when Garner v/s Murray rule is not applicable.
Keep reading free — every worked solution + bare-Act citation for Partnership - Dissolution
✓ 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.5 00 marks easy Consolidation - Amalgamation in the nature of purchase - Bal ⚡ Try this Q →
Case: Dark Limited and Fair Limited are being amalgamated into Bright Limited. The following information is provided: Balance Sheet Position (₹ in lakhs): Current Assets: - Inventories: Dark Ltd. 525, Fair Ltd. 375 - Trade Receivables: Dark Ltd. 450, Fair Ltd. 525 - Cash and Cash Equivalents: Dark Ltd. 450, Fair Ltd. 300 Total: Dark Ltd. 3,000, Fair Ltd. 2,550 Notes to Accounts: Share Capital: - Equity Shares of ₹ 100 each: Dark Ltd. 1,200, Fair Ltd. 1,125 - 14% Preference Shares of ₹ 100: Dark Ltd. 450, Fair Ltd. 300 Total: Dark Ltd. 1,650, Fair Ltd. 1,425 Reserves and Surplus: - Revaluation Res…
You are required to prepare Balance Sheet of Bright Limited as at 1st April, 2021 after amalgamation has been carried out on the basis of Amalgamation in the nature of purchase.
Keep reading free — every worked solution + bare-Act citation for Consolidation - Amalgamation in the nature of purchase - Balance Sheet preparation
✓ 48-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 10 marks very hard Company Accounts - Share Capital, Buyback, Bonus Shares, Deb ⚡ Try this Q →
Case: Balance Sheet as on 31st March 2021 (₹ in Lakhs): Equity and Liabilities: Equity shares of ₹10 each fully paid up: 780 6% Redeemable Preference shares of ₹50 each fully paid up: 240 Capital Reserves: 58 General Reserve: 625 Security Premium: 82 Profit & Loss: 148 Revaluation Reserve: 34 Infrastructure Development Reserve: 16 7% Debentures: 268 Unsecured Loans: 96 Current Liabilities: 395 Total: 2652 Assets: Plant and Equipment less depreciation: 725 Investment at cost: 720 Current Assets: 1207 Total: 2652 Other Information: (1) The company redeemed preference shares at a premium of 10% on 1…
Mohan Ltd. furnishes the following summarised Balance Sheet as on 31st March 2021
Keep reading free — every worked solution + bare-Act citation for Company Accounts - Share Capital, Buyback, Bonus Shares, Debentures
✓ 67-line worked answer · ✓ 8 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 05 marks hard Insolvency and Liquidation - Liquidator remuneration calcula ⚡ Try this Q →
A liquidator is entitled to receive remuneration at 3% on the assets realized and 4% on the payment made to creditors and company's bankers. The assets were realized for ₹ 80,00,000. All the assets of the company have been charged to the company's bankers to whom the company owes ₹ 1,00,000. The company owes following amounts to others:
Keep reading free — every worked solution + bare-Act citation for Insolvency and Liquidation - Liquidator remuneration calculation
✓ 21-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.6 05 marks hard Balance Sheet, Accounting Equation ⚡ Try this Q →
Mrs. A is showing the consolidated aggregate opening balance of equity, liabilities and assets of ₹ 6 lakh, 4 lakh and 10 lakh respectively. During the current year Mrs. A has the following transactions. You are required to prepare the statement of the effect of aforesaid each transaction on closing balance sheet in the form of Assets - Liabilities = Equity plus transactions.
Keep reading free — every worked solution + bare-Act citation for Balance Sheet, Accounting Equation
✓ 25-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 05 marks hard Capital structure, Financial analysis ⚡ Try this Q →
X Ltd. a non investment company has been incurring losses for the past few years. The company provides the following information for the current year: Paid up equity share capital ₹ 90 lakhs; Paid up preference share capital ₹ 10 lakhs; Reserves (including revaluation reserve ₹ 5 lakhs) ₹ 75 lakhs; Securities premium ₹ 30 lakhs; Long term loans ₹ 20 lakhs; Deposit repayable after one year ₹ 10 lakhs; Application money pending allotment ₹ 360 lakhs; Accumulated losses not written off ₹ 40 lakhs; Investment ₹ 90 lakhs.
Keep reading free — every worked solution + bare-Act citation for Capital structure, Financial analysis
✓ 46-line worked answer · ✓ 5 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.7 10 marks hard Departmental Accounts ⚡ Try this Q →
M/s Wee has two Departments X and Y. From the following particulars, Prepare Departmental Trading Account and Consolidated Trading Account for the year ending 31st March, 2021
Keep reading free — every worked solution + bare-Act citation for Departmental Accounts
✓ 31-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.10 00 marks hard Financial Management - Share capital transactions, journal e ⚡ Try this Q →
(iii) To issue fully paid bonus shares in the ratio of one equity share for every three shares held on 31st March, 2021. (iv) Redemption of preference shares and debentures will be paid through company's cash & bank balance subject to leaving a minimum cash & bank balance of ₹ 2,00,000. (v) To issue sufficient number of equity shares @ ₹ 40 per share as required to finance redemption of Preference Shareholders and debenture holders. On 5th June, 2021 investments were sold for ₹ 16,80,000 and preference shares were redeemed. 30% of Debenture holders exercised their option to accept cash and their claims were settled on 19th August, 2021. The bonus issue was concluded by 10th August 2021. You are requested to journalize the above transactions including cash transactions and prepare Balance Sheet as at 30th September, 2021. All working notes should form part of your answer.
Keep reading free — every worked solution + bare-Act citation for Financial Management - Share capital transactions, journal entries, balance sheet preparation
✓ 75-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.11a 12 marks very hard Financial Management - Profit & Loss calculation, allowed/di ⚡ Try this Q →
Posh Ltd was incorporated on 01.07.2020 to take over the existing business of Rich & Co. with effect from 01.04.2020. Date of closing books of accounts is 31.03.2021. Total sales were ₹ 75,00,000. Rate of Gross profit is 10% on sales. The expenses charged to profit and loss statement includes: Salesmen's Commission ₹ 30,000 Discount Allowed ₹ 15,000 Carriage outward ₹ 45,000 Free Sample ₹ 60,000 After sales service charge ₹ 90,000 Directors' fees ₹ 1,50,000 Audit fees (Statutory audit of company) ₹ 70,000 Tax audit fees to Chartered Accountant ₹ 15,000 Salary to general staff ₹ 16,000 Formation Expenses ₹ 30,000 Rent (Office Building) ₹ 27,000 General Expenses ₹ 48,000 Donation to political party ₹ 51,000 General travelling Expenses ₹ 60,000 The sales per month in the first half year were half of what they were in the later half year.
Keep reading free — every worked solution + bare-Act citation for Financial Management - Profit & Loss calculation, allowed/disallowed expenses
✓ 42-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.12 04 marks medium Pre-incorporation and post-incorporation profit ⚡ Try this Q →
Rent of office building was paid @ ₹ 2000 p.m upto 30th September, 2020 and thereafter it was increased by ₹ 500 p.m. Prepare a statement showing pre incorporation & post incorporation profit for the year ended 31.03.2021 and also compute the amount to be transferred to capital reserve account.
Keep reading free — every worked solution + bare-Act citation for Pre-incorporation and post-incorporation profit
✓ 31-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.12 08 marks hard Machinery Account, Hire Purchase ⚡ Try this Q →
ABC Ltd. acquired a Machine on hire purchase from P Ltd. with term of payment is four equal annual instalments. The annual instalment is commencing from the date of agreement signed by both the parties. The payment of annual instalments is ₹ 25,000 at the end of each year. The interest is charged @ 25 % and is included in the annual instalment. ABC Ltd. could not pay third annual instalment and desired Purchaser Defaulted, wherefrom he set to repossess the Machinery. ABC Ltd. is providing depreciation on Machinery at the rate of 20% per annum on the diminishing balance method. You are required to prepare Machinery Account and P Ltd account in the books of ABC Ltd. Working notes will form part of the answer
Keep reading free — every worked solution + bare-Act citation for Machinery Account, Hire Purchase
✓ 45-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.13 10 marks hard Financial Statements - Profit and Loss Account preparation ⚡ Try this Q →
From the following information, you are required to prepare Profit and Loss Account of Popular Bank for the year ended 31st March, 2021.
Keep reading free — every worked solution + bare-Act citation for Financial Statements - Profit and Loss Account preparation
✓ 53-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.15 00 marks easy ⚡ Try this Q →
Answer the following questions on corporate accounting and financial reporting.
Keep reading free — every worked solution + bare-Act citation
✓ 80-line worked answer · ✓ 6 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