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Past papers › Audit & Ethics › July 2021

CA Inter Audit & Ethics — Mock Test Paper (MTP) — July 2021

This page contains all 6 questions from the CA Inter Auditing & Ethics Mock Test Paper (MTP) for the July 2021 attempt cycle, sourced from VSI Jaipur.

Q2Amalgamation in nature of merger — pooling of interests meth
20 marks very hard
Robert Ltd. and Diamond Ltd. give the following information as at 31.03.2020 (Rs. in lakhs): Robert Ltd.: Equity Share Capital (Rs. 10 each, fully paid) 22,500; Securities Premium 4,500; General Reserve 14,250; Profit & Loss Account 4,305; Trade payables 1,800; Provisions 2,745; Land and Buildings 9,000; Plant and Machinery 21,000; Furniture, Fixtures and Fittings 3,456; Inventory 11,793; Trade receivables 3,180; Cash at Bank 1,671. Diamond Ltd.: Equity Share Capital (Rs. 10 each, fully paid) 9,000; Foreign Project Reserve 465; General Reserve 4,800; Profit & Loss Account 1,162.5; 12% Debentures 1,500; Trade payables 694.5; Provisions 1,053; Plant and Machinery 7,500; Furniture, Fixtures and Fittings 2,550; Inventory 6,061.5; Trade receivables 1,650; Cash at Bank 913.5. All the bills receivable held by Diamond Ltd. were Robert Ltd.'s acceptances. On 1st April 2020, Robert Ltd. took over Diamond Ltd. in an amalgamation in the nature of merger. Robert Ltd. would allot three fully paid equity shares of Rs. 10 each at par for every two shares held in Diamond Ltd. 12% debentures in Diamond Ltd. would be converted into 13% debentures in Robert Ltd. of the same amount and denomination. Details of trade receivables and trade payables (Rs. in lakhs) — Robert Ltd.: Creditors 1,620; Bills Payable 180; Debtors 3,180; Bills Receivable nil. Diamond Ltd.: Creditors 694.5; Bills Payable nil; Debtors 1,530; Bills Receivable 120. Expenses of amalgamation amounting to Rs. 1.5 lakhs were borne by Robert Ltd. You are required to: (i) Pass journal entries in the books of Robert Ltd. and (ii) Prepare Robert Ltd.'s Balance Sheet immediately after the merger.