Q1(i)Borrowing Costs (AS 16)
0 marks easy
Case: A Company purchased a land from its own funds and started construction on two towers on the land. The Company for the construction borrowed funds of ` 60 lakhs each for both the towers. The Company is required to pay interest of ` 60,000 annually for each loan. During the first year the Company allotted the vacant area for parking purposes which fetched revenue of ` 15,000 in year 1 only. Tower 1 got ready at the end of year 2. The Company capitalised the same and started using the same for intended purpose.
How much borrowing cost should be charged to profit and loss at the end of year 1:
(A) ` 60,000
(B) ` 1,20,000
(C) ` 1,05,000
(D) Nil
Q1(ii)Borrowing Costs (AS 16)
0 marks easy
Case: A Company purchased a land from its own funds and started construction on two towers on the land. The Company for the construction borrowed funds of ` 60 lakhs each for both the towers. The Company is required to pay interest of ` 60,000 annually for each loan. During the first year the Company allotted the vacant area for parking purposes which fetched revenue of ` 15,000 in year 1 only. Tower 1 got ready at the end of year 2. The Company capitalised the same and started using the same for intended purpose.
How much borrowing cost is eligible for capitalisation at the end of year 1:
(A) ` 60,000
(B) ` 1,20,000
(C) ` 1,05,000
(D) Nil
Q1(iii)Borrowing Costs (AS 16)
0 marks easy
Case: A Company purchased a land from its own funds and started construction on two towers on the land. The Company for the construction borrowed funds of ` 60 lakhs each for both the towers. The Company is required to pay interest of ` 60,000 annually for each loan. During the first year the Company allotted the vacant area for parking purposes which fetched revenue of ` 15,000 in year 1 only. Tower 1 got ready at the end of year 2. The Company capitalised the same and started using the same for intended purpose.
How much borrowing cost should be charged to profit and loss at the end of year 3:
(A) ` 60,000
(B) ` 1,20,000
(C) ` 1,05,000
(D) Nil
Q1(iv)Borrowing Costs (AS 16)
0 marks easy
Case: A Company purchased a land from its own funds and started construction on two towers on the land. The Company for the construction borrowed funds of ` 60 lakhs each for both the towers. The Company is required to pay interest of ` 60,000 annually for each loan. During the first year the Company allotted the vacant area for parking purposes which fetched revenue of ` 15,000 in year 1 only. Tower 1 got ready at the end of year 2. The Company capitalised the same and started using the same for intended purpose.
How much borrowing cost is eligible for capitalisation at the end of year 3:
(A) ` 60,000
(B) ` 1,20,000
(C) ` 1,05,000
(D) Nil
Q2Leases (AS 19)
0 marks easy
Suraj Ltd. (the lessee) acquires machinery on lease from Chand Ltd. (the lessor) on April 1, 2025 for 3 years. The economic life of machinery is also 3 years. The fair value of the machinery is ` 2,50,000 and the guaranteed residual value is ` 2,000. As per the lease agreement, the lessee is required to pay ` 1,00,000 per year from April 1, 2025. The lessor has guaranteed a residual value of ` 20,000. However, lessor estimates that it would have a value of 5,000 only after 3 years. At what value the machinery would be recognised.
(A) ` 2,50,000
(B) ` 2,24,500 approx
(C) ` 2,37,400 approx
(D) ` 2,27,700 approx
Q3Cash Flow Statements (AS 3)
0 marks easy
Which of the following is not an example of cash and cash equivalent balances held by the entity that are not available for use?
(A) balance in unpaid dividend account
(B) balance in bank account as Fixed deposits
(C) earmarked bank balances for specific purposes. Examples: bank account for debenture redemption, dividend payment etc.
(D) balance in bank account subject to legal restrictions
Q4Intangible Assets (AS 26)
0 marks easy
Following is the example of research activities as per AS 26 which is recognised as expense when it is incurred:
(A) the design, construction and testing of pre-production or pre-use prototypes and models
(B) the search for alternatives for materials, devices, products, processes, systems or services
(C) the design of tools, jigs, moulds and dies involving new technology
(D) the design, construction and operation of a pilot plant that is not of a scale economically feasible for commercial production
Write a short note on International Accounting Standard Board (IASB).
Q6Contingent liabilities and events after balance sheet date (
0 marks easy
Giant Ltd. has entered into a binding agreement with Tiny Ltd. to buy a custom-made machine of ` 1,00,000 at the end of 2024-25, before delivery of the machine, Giant Ltd. had to change its method of production. The new method will not require the machine ordered and it will be scrapped after delivery. The expected scrap value is nil. You are required to advise the accounting treatment and give necessary journal entry in the year 2024-25.
Q7Applicability of Accounting Standards to MSMEs
0 marks easy
Virat Traders, an unlisted partnership firm, had a turnover of ` 249.99 crore and borrowings of ` 25.01 crore during the financial year 2023-24. It is not a bank, financial institution, or insurance company, and also not a subsidiary of any other entity. The firm wishes to avail MSME exemptions for FY 2024–25. Is it eligible?
Q8Cash Flow Statements (AS 3)
0 marks easy
The following are the summarised Balance Sheets of Dark Limited as at 31st March, 2025 and 31st March, 2024. You are required to prepare the Cash Flow Statement for the year ended 31st March, 2025 using Indirect Method.
Q9Contingencies and Events After Balance Sheet Date (AS 4)
0 marks easy
While preparing its financial statements for the year ended 31st March, 2025, B Limited has come across the following events which took place after 31st March, 2025. The financial statements of the company were approved by the Board of Directors on 30th May, 2025. You are required to state with reasons, whether, the aforesaid events are adjusting or non-adjusting events as per the provisions of the relevant AS.
Q10Construction Contracts (AS 7) and Borrowing Costs (AS 16)
0 marks easy
On 1st April, 2024, Y Limited purchased an industrial plot of land for ` 50,00,000 for the purpose of constructing a new factory. This cost of ` 50,00,000 included legal cost of ` 2,50,000 incurred for the purpose of acquisition of this plot. The construction of the factory commenced on 1st May, 2024. Y Limited provides details of costs incurred in relation to the construction. The construction of the factory was completed on 31st December, 2024 and production could commence on 1st February, 2025. The overall useful life of the factory building was estimated at 40 years from the date of completion. However, it was estimated that the roof would need to be replaced 20 years after the date of completion. The cost of replacing the roof at current prices would be 25% of the total cost of the building. The construction of the factory was partly financed by a loan of ` 56,00,000 raised from State Bank of India on 1st April, 2024 at an interest rate of 9% per annum. During the period when the loan proceeds had been fully utilized to finance the construction, Y Limited earned an income of ` 50,000 from the temporary investment of the proceeds. You are required to compute the carrying amount (i.e. value after charging depreciation) of the Factory in the books of Y Limited as at 31 March, 2025 as per the provisions of the relevant Accounting Standard.
Q11Accounting for Government Grants (AS 12)
0 marks easy
Era Limited installed Plant and Machinery costing ` 100 lakhs on 1st April, 2023 and received a Government Grant of 40% towards its cost on the same day. The Grant was credited to Plant & Machinery Account. The life of the Plant & Machinery is 5 years and its residual value is ` 10 lakhs. The company charges depreciation on Straight Line Method. After one year, the Company had to refund the Grant to the extent of ` 25 lakhs on 1st April, 2024 due to non-compliance with certain conditions. You are required to pass the necessary Journal entries in the books of Era Limited for the first two years for the above transactions.
Q12Amalgamation (AS 14)
0 marks easy
A Limited and B Limited were amalgamated on 31st March, 2025 to form a new company named AB Limited. Prior to the amalgamation, Balance Sheets are provided. Prepare the Balance Sheet of AB Limited as at 31st March, 2025, after amalgamation has been completed, on the basis of amalgamation in the nature of purchase, along with Notes to Accounts as per Schedule III of Companies Act, 2013.
Q13Segment Reporting (AS 17)
0 marks easy
Whether interest expense relating to overdrafts and other operating liabilities identified to a particular segment should be included in the segment expense or not?
Q14Leases (AS 19)
0 marks easy
Explain, in brief, the accounting treatment for an asset given under Operating Lease in the books of the Lessor.
Q15Discontinuing Operations (AS 24)
0 marks easy
Arzoo Ltd. is in the business of manufacture of Passenger cars and commercial vehicles. The company is working on a strategic plan to shift from the Passenger car segment over the coming 5 years. However, no specific plans have been drawn up for sale of neither the division nor its assets. As part of its plan it will reduce the production of passenger cars by 20% annually. It also plans to commence another new factory for the manufacture of commercial vehicles plus transfer of employees in a phased manner.
Q16Impairment of Assets (AS 28)
0 marks easy
A publisher owns 150 magazine titles of which 70 were purchased and 80 were self-created. The price paid for a purchased magazine title is recognised as an intangible asset. The costs of creating magazine titles and maintaining the existing titles are recognised as an expense when incurred. Cash inflows from direct sales and advertising are identifiable for each magazine title. Titles are managed by customer segments. The level of advertising income for a magazine title depends on the range of titles in the customer segment to which the magazine title relates. Management has a policy to abandon old titles before the end of their economic lives and replace them immediately with new titles for the same customer segment. Whether it will be a cash-generating unit as per AS 28?
Q17Provisions, Contingent Liabilities and Contingent Assets (AS
0 marks easy
Galaxy Limited is in the process of finalization of its accounts for the year ended 31st March, 2025 and needs your advice on the following issues in line with the provisions of AS 29.
Q18Preparation of Financial Statements
0 marks easy
The following is the Trial Balance of Anmol Limited as on 31st March, 2025 with various adjustments provided. You are required to prepare Balance Sheet as on 31st March 2025 and Statement of Profit and Loss with Note to Accounts for the year ending 31st March, 2025 as per Schedule III of the Companies Act, 2013.
Q19Internal Reconstruction
0 marks easy
Following is the Balance Sheet of Ellora Limited as at 31st March, 2025 showing continued losses and liquidity constraints. A scheme of internal reconstruction was approved by the shareholders and sanctioned by the Tribunal.
Q20Accounting for Branches
0 marks easy
Following is the Trial Balance as on 31st December, 2025 of the Cambridge Branch of Harry Limited whose Head Office is situated at Pune, India. In the books of Head Office, the Branch Account is provided with additional information about goods being sent at cost plus 10% and branch selling at invoice price plus 25%, furniture depreciation, and branch manager commission.