Question 1

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.

Accepted Answer

**Mutual Fund Investment Portfolio — Journal Entries**

**Key Facts:**
- P Ltd.: 4,000 shares, Cost ₹50, Market at 31-03-2018 ₹47, Sold at ₹40
- Q Ltd.: 3,200 shares, Cost ₹40, Market at 31-03-2018 ₹80, Sold at ₹82

Under **SEBI (Mutual Funds) Regulations, 1996** (Eighth Schedule), investments are marked to market at each balance sheet date. **Unrealised depreciation** is charged to the Revenue Account, while **unrealised appreciation** is credited to the **Unrealised Appreciation Reserve** (not Revenue). On sale, the Unrealised Appreciation Reserve is transferred to Revenue Account to reflect realised gain.

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**Books of the Mutual Fund — Accounting Year 2017-18**

(i) On 31-12-2017 — Purchase of P Ltd. shares:
Investment A/c (P Ltd.) Dr. ₹2,00,000
  To Bank A/c ₹2,00,000
(Being 4,000 shares of P Ltd. acquired @ ₹50)

(ii) On 31-12-2017 — Purchase of Q Ltd. shares:
Investment A/c (Q Ltd.) Dr. ₹1,28,000
  To Bank A/c ₹1,28,000
(Being 3,200 shares of Q Ltd. acquired @ ₹40)

(iii) On 31-03-2018 — Provision for unrealised depreciation on P Ltd. [Market ₹47 < Cost ₹50]:
Revenue A/c (Unrealised Depreciation) Dr. ₹12,000
  To Investment A/c (P Ltd.) ₹12,000
(Being 4,000 × ₹3 loss recognised; Investment now carried at ₹1,88,000)

(iv) On 31-03-2018 — Unrealised appreciation on Q Ltd. [Market ₹80 > Cost ₹40]:
Investment A/c (Q Ltd.) Dr. ₹1,28,000
  To Unrealised Appreciation Reserve A/c ₹1,28,000
(Being 3,200 × ₹40 appreciation; Investment now carried at ₹2,56,000)

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**Books o…

Question 2

Indicate in each case whether revenue can be recognized and when it will be recognized as per AS-9.

Accepted Answer

**Revenue Recognition under AS 9 — Analysis of Each Case**

**(1) Trade Discount and Volume Rebate Received:**
As per **AS 9 (Revenue Recognition)**, revenue is measured at the consideration received or receivable, taking into account any trade discounts and volume rebates allowed by the enterprise. These are **deductions from revenue** and are **not recognised as revenue** at all. Hence, revenue is recorded **net of trade discounts and volume rebates**. There is no separate recognition question — they simply reduce the revenue figure.

**(2) Goods Sold to Distributor or Others for Resale:**
Revenue can be recognised when goods are sold to a distributor **if** the seller has transferred the significant risks and rewards of ownership to the distributor and retains **no effective control** over the goods. If the arrangement is in **substance a consignment** (i.e., the distributor can return unsold goods or the seller bears the risk of non-sale), revenue should **not** be recognised until the distributor sells the goods to the end customer. Where a genuine sale has occurred with transfer of risks and rewards, revenue is recognised **at the time of sale to the distributor**.

**(3) Seller Concurrently Agrees to Repurchase the Same Goods at a Later Date:**
As per AS 9, where the seller **simultaneously enters into an agreement to repurchase** the same goods at a later date, the transaction does **not result in a genuine sale** because the significant risks and rewards of ownership…

Question 3

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.

Accepted Answer

**Cash Reserve Ratio (CRR) — Meaning:** CRR is the minimum percentage of a bank's **Net Demand and Time Liabilities (NDTL)** that every scheduled commercial bank is required to maintain as cash reserves with the **Reserve Bank of India (RBI)**, as mandated under Section 42 of the Reserve Bank of India Act, 1934. The RBI uses CRR as a monetary policy tool to control liquidity and money supply in the economy. Banks do not earn any interest on the CRR balance maintained with RBI.

**Classification of Liabilities of ALFA Bank Ltd.:**

To compute CRR, liabilities are first classified into **Demand Liabilities** and **Time Liabilities**.

**Demand Liabilities** (payable on demand):
- Margins held against letter of credit: ₹200 Lakhs
- Current accounts deposits: ₹375 Lakhs
- Demand deposits: ₹125 Lakhs
- Unclaimed deposits: ₹75 Lakhs
- Demand liabilities portion of saving bank deposits: ₹1,325 Lakhs

**Total Demand Liabilities = ₹2,100 Lakhs**

**Time Liabilities** (payable after a fixed period):
- Recurring accounts deposits: ₹100 Lakhs
- Gold deposits: ₹235 Lakhs
- Time liabilities portion of saving bank deposits: ₹722 Lakhs

**Total Time Liabilities = ₹1,057 Lakhs**

**Total NDTL = ₹2,100 + ₹1,057 = ₹3,157 Lakhs**

**CRR @ 4% on NDTL = 4% × ₹3,157 Lakhs = ₹126.28 Lakhs**

**The Cash Reserve Ratio to be maintained by ALFA Bank Ltd. with the RBI is ₹126.28 Lakhs.**

Question 4

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)

Accepted Answer

**Minority Interest (MI)** represents the portion of a subsidiary's net assets not owned by the parent company. Under **AS 21 – Consolidated Financial Statements**, MI is computed as the minority's proportionate share of the subsidiary's net assets (Share Capital + General Reserves + Profit & Loss balance) at the relevant date.

**Formula:** MI = Minority % × (Share Capital + General Reserve + P&L)

**Case A – Subsidiary X (MI = 10%):**
MI at Acquisition = 10% × (₹1,50,000 + ₹75,000) = **₹22,500**
MI at Consolidation = 10% × (₹1,50,000 + ₹85,000) = **₹23,500**

**Case B – Subsidiary Y (MI = 25%):**
MI at Acquisition = 25% × (₹1,40,000 + ₹60,000 + Nil) = **₹50,000**
MI at Consolidation = 25% × (₹1,40,000 + ₹1,40,000 + ₹20,000) = **₹75,000**

**Case C – Subsidiary Z (MI = 30%):**
MI at Acquisition = 30% × (₹40,000 + ₹20,000 + Nil) = **₹18,000**
MI at Consolidation = 30% × (₹40,000 + ₹40,000 + ₹20,000) = **₹30,000**

**Case D – Subsidiary M (MI = 5%):**
MI at Acquisition = 5% × (₹60,000 + ₹35,000 + Nil) = **₹4,750**
MI at Consolidation = 5% × (₹60,000 + ₹60,000 + ₹55,000) = **₹8,750**

**Case E – Subsidiary N (MI = 0%):**
Since the parent holds **100%** of the subsidiary, there is no minority interest.
MI at Acquisition = **NIL** | MI at Consolidation = **NIL**

**Summary Table:**

| Case | Sub | MI% | MI at Acquisition | MI at Consolidation |
|------|-----|-----|-------------------|---------------------|
| A    | X   | 10% | ₹22,500           | ₹23,500             |
| B    | Y …

Question 5

You are required to calculate the basic earnings per share as per AS-20 Earning per Share.

Accepted Answer

**Basic Earnings Per Share — AS-20 (Earnings Per Share)**

When a rights issue contains a **bonus element** (i.e., the rights price is below the fair value), AS-20 requires restating the weighted average shares for all prior periods using an **adjustment factor**, and the current year shares before the issue date are also adjusted.

**Step 1 — Theoretical Ex-Rights Fair Value per Share (TERP)**

TERP represents the fair value after adjusting for the bonus element inherent in the rights issue:

TERP = [(2,50,000 × ₹102) + (1,00,000 × ₹98)] ÷ 3,50,000
= [₹2,55,00,000 + ₹98,00,000] ÷ 3,50,000
= ₹3,53,00,000 ÷ 3,50,000 = **₹100.857**

**Step 2 — Adjustment Factor**

Adjustment Factor = Fair Value per share before exercise ÷ TERP
= ₹102 ÷ ₹100.857 = **1.01133**

**Step 3 — Weighted Average Number of Shares (WANS)**

FY 2017-18: Rights issue date is 30-06-2018, which falls in FY 2018-19. Hence for FY 2017-18, shares outstanding were 2,50,000 for the full year. However, these must be **restated** using the adjustment factor for comparability:

WANS (2017-18) = 2,50,000 × 1.01133 = **2,52,833 shares**

FY 2018-19: Rights exercised on 30-06-2018 (i.e., after 3 months of FY 2018-19).
- Pre-rights (01-04-2018 to 30-06-2018) = 3 months → 2,50,000 × 1.01133 × 3/12 = 63,208
- Post-rights (01-07-2018 to 31-03-2019) = 9 months → 3,50,000 × 9/12 = 2,62,500

WANS (2018-19) = 63,208 + 2,62,500 = **3,25,708 shares**

**Step 4 — Basic EPS**

Basic EPS (2017-18) = ₹50,00,000 ÷ 2,52,833 = **₹19.78 …

Question 6

Explain the criterion of income recognition in the case of Non Banking Financial Companies.

Accepted Answer

**Income Recognition Norms for Non-Banking Financial Companies (NBFCs)**

The Reserve Bank of India (RBI) has issued specific guidelines on income recognition for NBFCs through its Master Directions. The fundamental principle underlying these norms is **prudence** — income should not be recognised unless it is actually or reasonably certain to be received.

**1. General Principle — Accrual vs. Cash Basis**

For **Standard Assets** (performing assets), income may be recognised on an **accrual basis** in accordance with recognised accounting principles. However, for assets that have deteriorated in quality (i.e., Non-Performing Assets), income must be recognised only on a **cash basis** (i.e., only when actually received).

**2. Non-Performing Asset (NPA) Classification**

An asset is classified as NPA when interest or principal installment remains **overdue for more than 90 days**. Once an asset is classified as NPA, income accruing on such asset shall NOT be recognised in the profit and loss account on an accrual basis.

**3. Reversal of Previously Recognised Income**

If income was recognised on an accrual basis in a prior period and the asset subsequently becomes NPA, any such **unrealised income already credited** to the profit and loss account must be **reversed or a provision must be made** to the extent of the unrealised amount. This ensures that income is not overstated.

**4. Income from Hire Purchase Assets**

In the case of hire purchase assets, the **finance charge…

Question 7

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.

Accepted Answer

The classification of leases is governed by **AS 19 – Leases** issued by the ICAI. A lease is classified as a **Finance Lease** if it transfers substantially all the risks and rewards incidental to ownership to the lessee. All other leases are classified as **Operating Leases**. Classification is made at the inception of the lease.

**(1) Economic life = 10 years, Lease term = 9 years, No acquisition at end → Finance Lease**

Under AS 19, one of the indicators of a finance lease is that the **lease term covers the major part of the economic life of the asset**, even if title is not transferred. Here, the lease term is 9 out of 10 years (i.e., 90% of economic life). Since this substantially covers the economic life, it is classified as a **Finance Lease**, regardless of the fact that the asset is not acquired at the end of the term.

**(2) Lessee has option to purchase asset at lower than fair value → Finance Lease**

AS 19 specifies that if the lessee has the option to purchase the asset at a price that is expected to be **sufficiently lower than fair value** at the date the option becomes exercisable (i.e., a **bargain purchase option**), and it is reasonably certain at inception that the option will be exercised, the lease is a Finance Lease. Since the purchase price is lower than fair value, the lessee is effectively certain to exercise the option, transferring risks and rewards of ownership. Hence, it is a **Finance Lease**.

**(3) Lease payments recognized as expense in …

Question 8

X Ltd furnishes the following summarized Balance Sheet as at 31-03-2018.

Accepted Answer

**Balance Sheet Analysis of X Ltd as at 31-03-2018**

The summarized Balance Sheet of X Ltd has been analyzed to derive key structural metrics and financial ratios as follows:

**(a) Capital Structure and Net Worth (Shareholders' Funds)**

The **Shareholders' Funds (Net Worth)** of X Ltd comprises Share Capital and all Reserves & Surplus. Capital Reserve is a non-distributable reserve arising from capital profits and does not affect free reserves available for distribution. Securities Premium, Revenue Reserve, Profit & Loss Account balance, and Dividend Equalization Fund are all components of Shareholders' Funds.

Total Shareholders' Funds = Share Capital + Reserves & Surplus = ₹60,00,000 + ₹43,50,000 = **₹1,03,50,000**

**(b) Number of Equity Shares Outstanding**

Equity Share Capital = ₹50,00,000; Face Value per share = ₹30 each.
Number of Equity Shares = ₹50,00,000 ÷ ₹30 = **1,66,667 shares (approx.)**

**(c) Book Value per Equity Share**

Net assets attributable to equity shareholders = Shareholders' Funds − Preference Share Capital = ₹1,03,50,000 − ₹10,00,000 = ₹93,50,000.
Book Value per Equity Share = ₹93,50,000 ÷ 1,66,667 = **₹56.10 per share**

**(d) Capital Employed**

**Capital Employed** = Shareholders' Funds + Long-term Borrowed Funds = ₹1,03,50,000 + ₹12,50,000 = **₹1,16,00,000**

Alternatively, Capital Employed = Total Assets − Current Liabilities = ₹1,31,50,000 − ₹5,50,000 = ₹1,26,00,000 (this approach includes current liabilities in working capital, hence a br…

Question 9

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 |

Accepted Answer

**Profit and Loss Account of Simple Bank for the year ended 31st March, 2019**
(As per Third Schedule to the Banking Regulation Act, 1949 — Form B)
*(All figures in ₹ '000)*

**INCOME SIDE**

**I. Interest Earned (Schedule 13)**
This schedule comprises three items: Interest and Discount on Advances/Bills (₹1,02,25), Income on Investments (₹5,60), and Interest on Balances with RBI and Other Inter-Bank Funds (₹8,85). **Total Interest Earned = ₹1,16,70**.

**II. Other Income (Schedule 14)**
Commission, Exchange and Brokerage (₹35,60) and Profit on Sale of Investments (₹6,10). **Total Other Income = ₹41,70**.

**Total Income = ₹1,58,40**

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**EXPENDITURE SIDE**

**I. Interest Expended (Schedule 15)**
Interest on Deposits (₹41,10) and Interest to RBI/Inter-Bank Borrowings (₹7,35). **Total Interest Expended = ₹48,45**.

**II. Operating Expenses (Schedule 16)**
Payments to and Provisions for Employees (₹42,75), Rent, Taxes and Lighting (₹8,95), Printing and Stationery (₹10,60), Advertising and Publicity (₹4,90), and Depreciation on Bank's Property (₹4,90). **Total Operating Expenses = ₹72,10**.

**III. Provisions and Contingencies** — Not provided in the question; hence Nil.

**Total Expenditure = ₹1,20,55**

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**Net Profit for the year ended 31st March, 2019 = ₹37,85 thousand**
(Previous Year 2017-18: ₹22,45 thousand)

The P&L Account is prepared in accordance with the **Third Schedule (Part B) of the Banking Regulation Act, 1949**, which mandates classification of income int…

Question 10

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); Curren…

Accepted Answer

**Restatement of Balance Sheet of MNT Ltd. as on 31st March 2019 for Consolidation Purposes**

Three adjustments are required to align MNT Ltd.'s accounting policies with those of the holding company LTC Ltd.: (i) inventory valuation from LIFO to FIFO basis, (ii) removal of the general provision for doubtful debts, and (iii) full write-off of deferred sales promotion expenditure in the year of incurrence.

**Adjustment 1 – Inventory Valuation (LIFO to FIFO)**

MNT's closing inventory as at 31.03.2019 requires an upward adjustment of ₹12,000 to align with FIFO values. The 2017-18 closing inventory (which was overstated under LIFO by ₹5,000 compared to FIFO) has been entirely sold during 2018-19; accordingly, the profit for 2018-19 is automatically ₹5,000 higher under the restated FIFO policy (lower opening inventory → lower COGS → higher profit). The net cumulative effect on Reserves as at 31.03.2019: –₹5,000 (prior-year restatement of opening stock) + ₹5,000 (offsetting profit effect in current year on sale of that stock) + ₹12,000 (closing stock increase) = **+₹12,000**.

Balance Sheet effect: Inventory ↑ ₹12,000; Revenue Reserve ↑ ₹12,000.

**Adjustment 2 – Provision for Doubtful Debts**

MNT Ltd. maintains a 2% general provision on Trade Receivables, whereas LTC Ltd. does not follow this policy. For uniformity, the provision must be reversed. Since the net Trade Receivables shown (₹3,43,000) represent 98% of gross receivables, the gross amount is ₹3,43,000 ÷ 0.98 = **₹3,50…

Question 11

Answer any four of the following:

Accepted Answer

**ANSWER TO ANY FOUR OF THE FOLLOWING**

**(a) Classification of Rent Income under Schedule III, Companies Act 2013**

The accountant's classification of rent income as **other income is incorrect**.

Per **Schedule III to the Companies Act, 2013**, the Statement of Profit and Loss requires proper classification of revenue. The key distinction is:

**Revenue from Operations** includes (i) Revenue from sale of products, (ii) Revenue from rendering services, and (iii) **Other operating revenue** — which encompasses revenue arising from activities that form part of the regular business operations.

**Other Income** comprises interest, dividends, gains on investments, exchange gains, and similar items that are incidental to the main business and not part of regular operations.

Since X Ltd. has **a dedicated division** engaged in leasing of properties, this activity is a regular business undertaking of that division, not an incidental or ancillary activity. Leasing revenue is the primary income of this division and represents **operating revenue arising from regular business activities**.

Therefore, rent income from the leasing division should be classified under **"Revenue from Operations"** (specifically as **"Other operating revenue"**) in the Statement of Profit and Loss, not under "Other Income." The accountant's classification requires correction.

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**(b) Liabilities of Individual Underwriters**

Given Information:
- Total Underwritten: 40,000 shares
- Arun: 20,000 sha…

Question 12

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 | Assets | ₹ in Lakhs |
|---|---|---|---|
| Share Capital (Issued and subscribed 3 Crore Equity Shares of ₹ 10 each, fully paid up) | 3,000 | Goodwill | 510 |
| Capital Reserve | 200 | Land & Building | 1,650 |
| General Reserve | 5,293 | Plant & Machinery | 2,715 |
| Profit & Loss Account | 517 | Furniture & Fixtures | 2,062 |
| Trade Payables | 522 | Patent and Trade Marks | 30 |
| Provision for Taxation (net) | 68 | Investments | 800 |
| | | Inventory | 673 |
| | | Trade Receivables | 546 |
| |…

Accepted Answer

**Calculation of Goodwill of Star Ltd. using Super Profits Method**

**Step 1: Calculation of Capital Employed (as at 31st March, 2019)**

Capital Employed is computed by taking total assets, deducting **fictitious/intangible assets** (Goodwill, since we are computing it), **non-trade investments**, and **current liabilities**.

| Particulars | ₹ (Lakhs) |
|---|---|
| Total Assets | 9,600 |
| Less: Goodwill (excluded — being computed) | (510) |
| Less: Investments (non-trade, excluded) | (800) |
| Less: Trade Payables | (522) |
| Less: Provision for Taxation (net) | (68) |
| **Capital Employed** | **7,700** |

**Step 2: Normal Profit**

Assuming **Normal Rate of Return = 10% p.a.** (Note: This rate is not explicitly stated in the question; 10% is the standard assumption where not specified).

Normal Profit = ₹7,700 × 10% = **₹770 lakhs**

**Step 3: Weighted Average Actual Profit (Profits Before Tax used as given)**

| Year | Profit Before Tax (₹ Lakhs) | Weight | Weighted Profit (₹ Lakhs) |
|---|---|---|---|
| 2015-16 | 1,910 | 1 | 1,910 |
| 2016-17 | 2,050 | 3 | 6,150 |
| 2017-18 | 2,950 | 5 | 14,750 |
| **Total** | | **9** | **22,810** |

Weighted Average Profit = 22,810 ÷ 9 = **₹2,534.44 lakhs**

**Step 4: Super Profit**

Super Profit = Weighted Average Actual Profit − Normal Profit
Super Profit = ₹2,534.44 − ₹770 = **₹1,764.44 lakhs**

Since Super Profit > 0, the company does earn super profits.

**Step 5: Value of Goodwill**

Goodwill = Super Profit × Years' Purchase
Goo…

CA Inter Audit & Ethics

Drill 5 questions from this paper — instant grading

Worked Solution

Write it like this

1The skeleton

2Examiner-rewarded phrases

3Common trap