QbMutual Fund Accounting - Investment Portfolio, Gain/Loss on
5 marks medium
The investment portfolio of a mutual fund scheme includes 4,000 shares of P Ltd. and 3,200 shares of Q Ltd. acquired on 31-12-2017. The cost of P Ltd.'s share is ₹ 50 and Q Ltd.'s share is ₹ 40. The market value of these shares at the end of 2017-18 were ₹ 47 and ₹ 80 respectively. On 30th June, 2018 shares of both companies were disposed of realizing: P Ltd's share at ₹ 40 and Q Ltd.'s share at ₹ 82. Show important accounting entries in the books of the fund for the accounting year 2017-18 and 2018-19.
QcRevenue Recognition - AS-9
5 marks hard
Case: Consider the following cases:
(1) Trade discount and volume rebate received.
(2) Where goods are sold to distributor or others for resale.
(3) Where seller concurrently agrees to repurchase the same goods at a later date.
(4) Insurance agency commission for rendering services.
(5) On 11-03-2019 cloths worth ₹ 50,000 were sold to X mart, but due to refurbishing of their showroom being underway, all client request cloths were delivered on 12-04-2019.
Indicate in each case whether revenue can be recognized and when it will be recognized as per AS-9.
QcBanking - Cash Reserve Ratio (CRR) Calculation
5 marks medium
The following information is furnished by ALFA Bank Ltd.: Margins held against letter of credit ₹ 200 Lakhs, Recurring accounts deposits ₹ 100 Lakhs, Current accounts deposits ₹ 375 Lakhs, Demand deposit ₹ 125 Lakhs, Unclaimed deposit ₹ 75 Lakhs, Gold deposit ₹ 235 Lakhs, Demand liabilities portion of saving bank deposit ₹ 1325 Lakhs, Time liabilities portion of saving bank deposit ₹ 722 Lakhs. Explain CRR and you are required to calculate the amount of Cash Reserve Ratio (CRR) as per the direction of Reserve Bank of India.
QcConsolidation - Minority Interest
5 marks medium
From the following data determine in each case: Minority Interest at the date of acquisition and at the date of consolidation.
Case | Subsidiary Company | % of Share Owned | Cost | Date of Acquisition | Consolidation date
Case-A | X | 90% | 2,00,000 | 01-01-2018 | 31-12-2018 | Share Capital: 1,50,000 (Acq), 1,50,000 (Cons); P&L: 75,000 (Acq), 85,000 (Cons)
Case-B | Y | 75% | 1,75,000 | 1,40,000 | 60,000 (Acq), 1,40,000 (Cons); P&L: - (Acq), 20,000 (Cons)
Case-C | Z | 70% | 98,000 | 40,000 | 20,000 (Acq), 40,000 (Cons); P&L: - (Acq), 20,000 (Cons)
Case-D | M | 95% | 75,000 | 60,000 | 35,000 (Acq), 60,000 (Cons); P&L: - (Acq), 55,000 (Cons)
Case-E | N | 100% | 1,00,000 | 40,000 | 40,000 (Acq), - (Cons); P&L: - (Acq), 65,000 (Cons)
QdEarnings Per Share - AS-20
5 marks medium
Case: Following information is supplied by K Ltd:
Number of shares outstanding prior to right issue = 2,50,000 shares.
Right issue = two new share for each 5 outstanding shares (i.e. 1,00,000 new shares).
Right issue price = ₹ 98.
Last date of exercising rights = 30-06-2018.
Fair value of one equity share immediately prior to exercise of right on 30-06-2018 is ₹ 102.
Net Profit to equity shareholders:
2017-2018 = ₹ 50,00,000
2018-2019 = ₹ 75,00,000
You are required to calculate the basic earnings per share as per AS-20 Earning per Share.
QdNon-Banking Financial Companies - Income Recognition
5 marks medium
Explain the criterion of income recognition in the case of Non Banking Financial Companies.
QeLease Classification - Operating vs Finance Lease
5 marks medium
Classify the following into either operating lease or finance lease with reason:
(1) Economic life of asset is 10 years, lease term is 9 years, but asset is not acquired at the end of lease term.
(2) Lessee has option to purchase the asset at lower than fair value at the end of lease term.
(3) Lease payments should be recognized as an expense in the statement of Profit & Loss of a lessee.
(4) Present Value (PV) of Minimum Lease Payment (MLP) = "X". Fair value of the asset = "Y". And X = Y.
(5) Economic life of the asset is 5 years, lease term is 2 years, but the asset is of special nature and has been procured only for use of the lessee.
Q2aBalance Sheet Analysis
15 marks very hard
Case: Balance Sheet showing:
Share Capital: Equity Share Capital of ₹ 30 each fully paid up - ₹ 50,00,000; 10,000, 10% Preference Share of ₹ 100 each fully paid up - ₹ 10,00,000, ₹ 60,00,000
Reserves & Surplus: Capital Reserve - ₹ 1,00,000; Security Premium - ₹ 12,00,000; Revenue Reserve - ₹ 5,00,000; Profit and Loss - ₹ 20,00,000; Dividend Equalization Fund - ₹ 5,50,000, ₹ 43,50,000
Non-Current Liabilities: 12% Debenture - ₹ 12,50,000
Current Liabilities and Provisions: - ₹ 5,50,000
Total: ₹ 1,31,50,000
X Ltd furnishes the following summarized Balance Sheet as at 31-03-2018.
Q4aBank Financial Statement - P&L Account Preparation
10 marks hard
From the following information, you are required to prepare Profit and Loss Account of Simple Bank for the year ended as on 31st March, 2019.
Data (₹ in '000):
2017-18 | Item | 2018-19
71,35 | Interest and Discount | 1,02,25
5,70 | Income from investment | 5,60
7,75 | Interest on Balances with RBI | 8,85
36,10 | Commission, Exchange and Brokerage | 35,60
60 | Profit on sale of investments | 6,10
30,60 | Interest on Deposits | 41,10
6,35 | Interest to RBI | 7,35
36,35 | Payment to and provision for employees | 42,75
7,90 | Rent, taxes and lighting | 8,95
7,35 | Printing and Stationery | 10,60
5,60 | Advertising and publicity | 4,90
4,90 | Depreciation | 4,90
Q5(a)Consolidation adjustments - inventory valuation harmonizatio
10 marks hard
Consider the following summarized Balance Sheets of subsidiary MNT Ltd. for 2017-18 and 2018-19 (in ₹): Share Capital - Issued and subscribed 7500 Equity Shares of ₹ 100 each: 7,50,000 (2017-18), 7,50,000 (2018-19); Reserves and Surplus: 2,14,000 (2017-18), 5,05,000 (2018-19); Revenue Reserve; Securities Premium; Current Liabilities and Provisions - Trade Payables: 2,90,000 (2017-18), 2,46,000 (2018-19); Bank Overdraft: —, 1,70,000 (2018-19); Provision for Taxation: 2,62,000 (2017-18), 4,30,000 (2018-19); Total: 15,88,000 (2017-18), 23,08,000 (2018-19). Assets - Fixed Assets (Cost): 9,20,000 (2017-18), 9,20,000 (2018-19); Less: Accumulated Depreciation: (1,70,000) (2017-18), (2,82,500) (2018-19); Net: 7,50,000 (2017-18), 6,37,500 (2018-19); Investment at Cost: —, 5,30,000 (2018-19); Current Assets - Inventory: 4,12,300 (2017-18), 6,90,000 (2018-19); Trade Receivable: 2,95,000 (2017-18), 3,43,000 (2018-19); Prepaid expenses: 78,000 (2017-18), 6,000 (2018-19); Cash at Bank: 52,700 (2017-18), 42,500 (2018-19); Total: 15,88,000 (2017-18), 23,08,000 (2018-19). Other Information: (1) MNT Ltd. is a subsidiary of LTC Ltd. (2) LTC Ltd. values inventory on FIFO basis, while MNT Ltd. used LIFO basis. To bring MNT Ltd.'s inventories values in line with those of LTC Ltd., its value of inventory is required to be reduced by ₹ 5,000 at the end of 2017-2018 and increased by ₹ 12,000 at the end of 2018-2019. (Inventory of 2017-18 has been sold out during the year 2018-19). (3) MNT Ltd. deducts 2% from Trade Receivables as a general provision against doubtful debts. (4) Prepaid expenses in MNT Ltd. include Sales Promotion expenditure carried forward of ₹ 25,000 in 2017-18 and ₹ 12,500 in 2018-19 being part of initial Sales Promotion expenditure of ₹ 37,500 in 2017-18, which is being written off over three years. Similar nature of Sales Promotion expenditure of LTC Ltd. has been fully written off in 2017-18. Restate the balance sheet of MNT Ltd. as on 31st March, 2019 after considering the above information for the purpose of consolidation. Such restatement is necessary to make the accounting policies adopted by LTC Ltd. and MNT Ltd. uniform.
Answer any four of the following:
Q15(b)Goodwill calculation using super profits method with weighte
10 marks hard
On the basis of the following information, calculate the value of goodwill of Star Ltd. at 5 years' purchase of super profits, if any, earned by the company in the previous three completed accounting years.
Summarised Balance Sheet of Star Ltd. as at 31st March, 2019:
Liabilities (₹ in Lakhs): Share Capital (Issued and subscribed 3 Crore Equity Shares of ₹ 10 each, fully paid up): 3,000; Capital Reserve: 200; General Reserve: 5,293; Profit & Loss Account: 517; Trade Payables: 522; Provision for Taxation (net): 68; Total: 9,600
Assets (₹ in Lakhs): Goodwill: 510; Land & Building: 1,650; Plant & Machinery: 2,715; Furniture & Fixtures: 2,062; Patent and Trade Marks: 30; Investments: 800; Inventory: 673; Trade Receivables: 546; Cash and Cash equivalents: 614; Total: 9,600
The profits before tax of three years are as follows:
Year ended 31st March | Profit before tax in lakhs of (₹) | Weights
2015-16: 1,910 | 1
2016-17: 2,050 | 3
2017-18: 2,950 | 5