QbAS-20 Earnings Per Share
5 marks hard
NAT, a listed entity, as on 1st April, 2021 had the following capital structure: 10,00,000 Equity Shares having face value of ₹ 1 each and 10,00,000 8% Preference Shares having face value of ₹ 10 each. During the year 2021-2022, the company had profit after tax of ₹ 90,00,000. On 1st January, 2022, NAT made a bonus issue of one equity share for every 2 equity shares outstanding as at 31st December, 2021. On 1st January, 2022, NAT issued 2,00,000 equity shares of ₹ 1 each at their full market price of ₹ 7.60 per share. NAT's shares were trading at ₹ 8.05 per share on 31st March, 2022. Further it has been provided that the basic earnings per share for the year ended 31st March, 2021 was previously reported at ₹ 62.30.
QcAS-29 Provisions, Contingent Liabilities and Contingent Asse
5 marks hard
Alloy Fabrication Limited is engaged in manufacturing of iron and steel rods. The company is in the process of finalization of the financial statements for the year ended 31st March, 2023 and seeks your advice on the following issues in line with the provisions of AS-29:
QdContract Accounting
5 marks hard
Grace Ltd., a firm of contractors provided the following information in respect of a contract for the year ended 31st March, 2022: Fixed Contract Price with an escalation clause ₹ 35,000; Work Certified ₹ 17,500; Work not Certified (includes ₹ 26,25,000 for materials issued, out of which material lying unused at the end of the period is ₹ 1,40,000) ₹ 3,815; Estimated further cost to completion ₹ 17,325; Progress Payment Received ₹ 14,000; Payment to be Received ₹ 4,900; Escalation in cost is by 8% and accordingly the contract price is increased by 8%.
Q1Accounting Standards - Prior Period Items and Extraordinary
5 marks medium
TQ Cycles Ltd. is in the manufacturing of bicycles, a labour intensive manufacturing sector. In April 2022, the Government enhanced the minimum wages payable to workers with retrospective effect from the 1st January, 2022. Due to this legislative change, the additional wages for the period from January 2022 to March 2022 amounted to ₹ 30 lakhs. The management asked the Finance manager to charge ₹ 30 lakhs as prior period item while finalizing financial statements for the year 2022-23. Further, the Finance manager is of the view that this amount being abnormal should be disclosed as extraordinary item in the Profit and loss account for the financial year 2021-22. Discuss with reference to applicable Accounting Standards.
Q3Consolidation of Financial Statements
15 marks very hard
While Ltd. acquired 2,250 shares of Black Ltd. on 1st October, 2020. The summarized balance sheets of both the companies as on 31st March, 2021 are given below:
Equity and Liabilities:
Shareholder's fund: Share capital (Equity shares of ₹ 100 each fully paid up), Reserves and Surplus, General Reserve, Profit and loss account
Current Liabilities: Trade payables, Due to White Ltd.
Assets:
Non-current assets: Property, Plant and Equipment
Investments: Shares in Black Ltd. (2,250 shares)
Current assets: Inventories, Due from Black Ltd., Cash and Cash equivalents
Other Information:
(i) During the year, Black Limited fabricated a machine, which is sold to White Ltd. for ₹ 39,000, the transaction being completed on 30th March, 2021.
(ii) Cash in transit from Black Ltd. to White Ltd. was ₹ 6,000 on 31st March, 2021.
(iii) Profits during the year 2020-2021 were earned evenly.
(iv) The balances of Reserves and Profit and Loss account as on 1st April, 2020 were as follows: White Ltd. - Reserves ₹ 30,000, Profit and loss ₹ 15,000 Profit; Black Ltd. - Reserves ₹ 30,000, Profit and loss ₹ 10,000 Loss.
You are required to prepare consolidated Balance Sheet of the group as on 31st March, 2021 as per the requirement of Schedule III of the Companies Act, 2013.
Q4Revenue Recognition, Profit/Loss Calculation
20 marks very hard
From the above information, you are required to: (i) Compute the contract revenue to be recognized for the year ended 31st March, 2022 and (ii) Calculate the Profit / Loss for the year ended 31st March, 2022 and additional provision for loss to be made, if any, for the year ended 31st March, 2022.
Q4(a)Partnership - Dissolution, Fraud Detection, Balance Sheet
15 marks very hard
Ajay, Vijay and Sanjay have been in partnership for a number of years, sharing profits and losses in the ratio 7:7:4 as a wholesale stationery trading business under the name "AVS Traders". On 31st March, 2021, it was found that some frauds were committed by Sanjay during the year 2020-2021. So, it was decided to dissolve the partnership business on 31st March, 2021 when their Balance sheet stood as under: [Balance sheet with Capital accounts: Ajay ₹1,80,000, Vijay ₹1,80,000, Sanjay overdraw; General Reserve ₹36,000; Trade Creditors ₹80,000; Bills payables ₹30,000; Assets: Building ₹1,90,000, Inventory ₹1,30,000, Investments ₹50,000, Trade Debtors ₹70,000, Cash & Bank ₹26,000, Sanjay's Capital (overdrawn) ₹40,000]. Additional Information: (1) Following frauds were committed by Sanjay: Investments costing ₹8,000 were sold by Sanjay at ₹11,000 and the funds were transferred to his personal account. This sale was omitted from firm's books. (2) A cheque for ₹7,000 received from trade debtors was not recorded in the books and was misappropriated by Sanjay.
Q5Amalgamation, Journal Entries, Balance Sheet Preparation
0 marks hard
B Ltd. is to declare and pay ₹ 1 per equity share as dividend, before the following amalgamation takes place with Z Ltd. Z Ltd. was incorporated to take over the business of both A Ltd. and B Ltd. (a) The authorized share capital of Z Ltd. is ₹ 60 lakhs divided into 6 lakhs equity shares of ₹ 10 each. (b) As per Registered Valuer the value of equity shares of A Ltd. is ₹ 18 per share and of B Ltd. is ₹ 12 per share respectively and agreed by respective shareholders of the companies. (c) 10% Debentures of A Ltd. to be issued 12% Debentures of Z Ltd. at par in consideration of their holdings. (d) A contingent liability of A Ltd. of ₹ 2,00,000 is to be treated as actual liability. (e) Liquidation expenses including Registered Valuer fees of A Ltd. ₹ 50,000 and B Ltd. ₹ 30,000 respectively to be borne by Z Ltd. (f) The shareholders of A Ltd. and B Ltd. is to be paid by issuing sufficient number of fully paid up equity shares of ₹ 10 each at a premium of ₹ 10 per share. Assuming amalgamation in the nature of purchase, you are required to pass the necessary journal entries (narrations not required) in the books of Z Ltd. and Prepare Balance Sheet of Z Ltd. immediately after amalgamation of both the companies.
Q6(a)Segment Reporting - AS-17 Profitability Test
5 marks medium
XYZ Ltd. has 5 business segments. Profit / Loss of each of the segments for the year ended 31st March, 2022 has been provided below. You are required to identify from the following whether reportable or not reportable segments, on the basis of "profitability test" as per AS-17.
Segment | Profit (Loss) ₹ in lakhs
A | 225
B | 25
C | (175)
D | (20)
E | (105)
Q6(c)Operating Leases Disclosure - AS-19
5 marks medium
What are the disclosures requirements for operating leases by the lessee as per AS-19 ?
Q6(d)Liquidation - Final Statement of Account
5 marks medium
The position of Bad Luck Limited on its liquidation on 31st March, 2022 is as follow:
Issued and paid up capital:
90,000, 10% Preference Shares of ₹ 100 each, fully paid
90,000 Equity Shares of ₹ 100 each, fully paid up
30,000 Equity Shares of ₹ 50 each, ₹ 40 paid up
10,000 Equity Shares of ₹ 10 each, ₹ 4 paid up
Calls in arrears are ₹ 3,00,000 and calls received in advance ₹ 2,55,000. Preference dividends are in arrears for two years. Amount left with the liquidator after discharging of all liabilities is ₹ 1,25,15,000. Articles of Association of the company provide for payment of preference dividend arrears in priority to return of equity capital.
You are required to prepare the Liquidator's Final Statement of Account.
Q8(b)(i)Banking Regulation - Non-performing assets
5 marks medium
Write a short note on Non-performing assets of a banking company.
Q8(b)(ii)Banking Regulation - NPA Classification
0 marks hard
Case: Account A: Sanctioned limit ₹4,500 lakhs, Drawing power ₹4,200 lakhs, Amount outstanding continuously from 01.01.2021 to 31.03.2021 ₹3,600 lakhs, Total Interest debited for the period ₹288 lakhs, Total credits for the period ₹120 lakhs. Account B: Sanctioned limit ₹3,200 lakhs, Drawing power ₹2,500 lakhs, Amount outstanding continuously from 01.01.2021 to 31.03.2021 ₹2,000 lakhs, Total Interest debited for the period ₹315 lakhs, Total credits for the period ₹380 lakhs.
Dee Bank provides you the following information relating to their two cash credit accounts. State with reason whether the above cash credit accounts are NPA or not?
Q10Partnership Dissolution - Realisation Account
10 marks hard
A partnership was being dissolved. The following assets and liabilities were realised as follows: (ii) A true creditor agreed to take over investments of the book value of ₹ 9,600 at ₹ 13,000. The rest of the trade creditors were settled at a discount of 10%. (iii) Other assets were realised as follows: Inventory ₹ 1,20,000; Building 110% of book value; Investments The rest of the investments were sold at a profit of ₹ 7,000; Trade Debtors The rest of the trade debtors were realised at a discount of 10%. (iv) The Bills payable were settled at a discount of ₹ 500. (v) The expenses of dissolution amounted to ₹ 8,060. (vi) It was found out, that realisation from Sanjay's private assets would be ₹ 7,000. You are required to prepare: (1) Realisation Account (2) Cash & Bank Account (3) Partner's Capital Account
Q11Capital Structure - Share Buy-back
10 marks very hard
Quick Ltd. has the following capital structure as on 31st March, 2021: Share Capital (Equity Shares of ₹ 10 each, fully paid) ₹ 462 Crores; Reserves and Surplus - General Reserve ₹ 336 Crores, Securities Premium Account ₹ 126 Crores, Profit and Loss Account ₹ 126 Crores, Statutory Reserve ₹ 180 Crores, Capital Redemption Reserve ₹ 87 Crores, Plant Revaluation Reserve ₹ 33 Crores (Total Reserves ₹ 888 Crores); Loan Funds - Secured ₹ 2,200 Crores, Unsecured ₹ 320 Crores (Total ₹ 2,520 Crores). On the recommendations of the Board of Directors, on 16th September, 2021, the shareholders of the company have approved a proposal to buy-back of equity shares. The prevailing market value of the company's share is ₹ 20 per share and in order to induce the existing shareholders to offer their shares for buy-back, it was decided to offer a price of 50% over market value. The company had sufficient balance in its bank account for the buy-back of shares.
Q12Share Buyback and Capital Funds (Banking Regulation Act)
10 marks hard
You are required to compute the maximum number of shares that can be bought back in the light of the above information and also under a situation where the loan funds of the company were either ₹ 1,680 Crores or ₹ 2,100 Crores. Assuming that the entire buy-back is completed by 31st December, 2021, Pass the necessary accounting entries (narrations not required) in the books of the company in each situation.
Q13Capital Adequacy and Basel Norms
0 marks easy
You are required to: (i) Segregate the capital funds into Tier I and Tier II capitals, and (ii) Find out the risk-adjusted asset and risk weighted assets ratio.
Q16(c)Employee Share Purchase Plan / Share Based Payments
0 marks easy
On 1st April 2021, a company offered 100 shares to each of its 5,000 employees at ₹ 50 per share. The employees are given 3 years to accept the offer. The shares issued under the plan shall be subject to lock-in on transfer for three years from the grant date. The market price of shares of the company on the grant date is ₹ 60 per share. Due to post-vesting restrictions on transfer, the fair value of shares issued under the plan is estimated at ₹ 56 per share and fair value per option worked out to be ₹ 6.
On 31st March, 2022, 4,000 employees accepted the offer and paid ₹ 50 per share purchased. Nominal value of each share is ₹ 10.
You are required to pass journal entries (with narration) as would appear in the books of the company up to 31st March, 2022.