1. | Answer any four out of the following: | 4x5=20 | |
| (a) | On 30.6.2007, Asmitha Ltd. incurred Rs. 2,00,000, net loss from disposal of a business segment. Also, on 30.7.2007, the company paid Rs. 60,000 for property taxes assessed for the calendar year 2007. How the above transactions should be included in determination of net income of Asmitha Ltd. for the six months interim period ended on 30.9.2007. | | (0) |
| (b) | M/s XYZ Ltd. has three segments namely X, Y, Z. The total assets of the Company are Rs. 10.00 crs. Segment X has Rs. 2.00 crs., segment Y has Rs. 3.00 crs. and segment Z has Rs. 5.00 crs. Deferred tax assets included in the assets of each segments are X – Rs. 0.50 crs., Y–Rs. 0.40 crs. and Z–Rs. 0.30 crs. The accountant contends that all the three segments are reportable segments. Comment. | | (0) |
| (c) | M/s Dinesh & Company signed an agreement with workers for increase in wages with retrospective effect. The out–flow on account of arrears was for 2005–06–Rs. 10.00 lakhs, for 2006–07–Rs. 12.00 lakhs and for 2007–08–Rs. 12.00 lakhs. This amount is payable in September, 2008. The accountant wants to charge Rs. 22.00 lakhs as prior period charges in financial statement for 2008–09. Discuss. | | (0) |
| (d) | M/s Prima Co. Ltd. sold goods worth Rs. 50,000 to M/s Y and Company. M/s Y and Co. asked for discount of Rs. 8,000 which was agreed by M/s Prima Co. Ltd. The sale was effected and goods were despatched. After receiving, goods worth Rs. 7,000 was found defective, which they returned immediately. They made the payment of Rs. 35,000 to M/s Prima Co. Ltd. Accountant booked the sales for Rs. 35,000. Please discuss. | | (0) |
| (e) | Himalayas Ltd. is showing an intangible Asset at Rs. 72 lakhs as on 01.04.2007 and that item was required for Rs. 96 lakhs on 01.04.2004 and that item was available for use from that date. Himalayas Ltd. has been following the policy of amortisation of the intangible asset over a period of 12 years on straight line basis. Comment on the accounting treatment of the above with reference to relevant accounting standard. | | (0) |
2. | System Ltd. and HRD Ltd. decided to amalgamate as on 01.04.2008. Their Balance Sheets as on 31.03.2008 were as follows: (Rs. in ‘000) | Particulars Source of Funds : | System Ltd. | HRD Ltd. | Equity share capital (Rs. 10 each) 9% preference share capital (Rs. 100 each) Investment allowance reserve Profit and Loss Account 10 % Debentures Sundry Creditors Tax provision Equity Dividend Proposed Total | 150 30 5 10 50 25 7 30 307 | 140 20 2 6 30 15 4 28 245 | Application of Funds : Building Plant and Machinery Investments Sundry Debtors Stock Cash and Bank Preliminary Expenses Total | 60 80 40 45 36 40 6 307 | 50 70 25 35 40 25 – 245 |
From the following information, you are to prepare the draft Balance Sheet as on 01.04.2008 of a new company, Intranet Ltd., which was formed to take over the business of both the companies and took over all the assets and liabilities: (i) | 50 % Debentures are to be converted into Equity Shares of the New Company. | (ii) | Out of the investments, 20% are non–trade investments. | (iii) | Fixed Assets of Systems Ltd. were valued at 10% above cost and that of HRD Ltd. at 5% above cost. | (iv) | 10 % of sundry Debtors were doubtful for both the companies. Stocks to be carried at cost. | (v) | Preference shareholders were discharged by issuing equal number of 9% preference shares at par. | (vi) | Equity shareholders of both the transferor companies are to be discharged by issuing Equity shares of Rs. 10 each of the new company at a premium of Rs. 5 per share. |
Amalgamation is in the nature of purchase. | 16 | (0) |
3. | The following are the Balance Sheets of Ram Ltd.,Shyam Ltd. and Tom Ltd. as on 31.03.2008: (Rs. in ‘000) | Particulars Liabilities | Ram Ltd. | Shyam Ltd. | Tom Ltd. | Equity Share Capital (Rs. 100 each) General Reserve Profit and Loss Account Current Liabilities Total | 8,000 1,600 1,360 1,280 12,240 | 4,000 280 960 3,000 8,240 | 1,600 — — 1,120 2,720 | Assets Investments | 32,000, shares in Shyam Ltd. 4,000, shares in Tom Ltd. 12,000, shares in Tom Ltd. Profit and Loss Account Current Assets Total | 4,800 200 – – 7,240 12,240 | – – 720 – 7,520 8,240 | – – – 640 2,080 2,720 |
2Cash paid for fraction of shares = Rs. 25,000 less Rs. 24,990 = Rs. 10 From the following information, prepare consolidated Balance Sheet of Ram Ltd. and its subsidiaries as on 31.03.2008 : (i) | Shyam Ltd. has advanced Rs. 8,00,000 to Tom Ltd. | (ii) | Current Liabilities of Ram Ltd. includes Rs. 4,00,000 due to Tom Ltd. | (iii) | Shyam Ltd. and Tom Ltd. have not paid any Dividend. | (iv) | Ram Ltd. acquired its investments on 01.04.2007 from Shyam Ltd. and then amount standing to credit of General reserve and Profit and Loss account were Rs. 2,80,000 and Rs. 5,20,000 respectively. | (v) | Ram Ltd. acquired investments in Tom Ltd. on 01.04.2007, when the debit balance in Profit and Loss account in books of Tom Ltd. was Rs. 4,80,000. | (vi) | Shyam Ltd. acquired its investments in Tom Ltd. on 01.04.2005 and then the Debit balance in profit and Loss account was Rs. 1,60,000. | (vii) | Shyam Ltd.’s stock includes stock worth Rs. 4,80,000 which was invoiced by Ram Ltd. at 20% above cost. | | 16 | (0) |
4. | (a) | A Mutual Fund raised funds on 01.04.2007 by issuing 10 lakhs units @ 17.50 per unit. Out of this Fund, Rs. 160 lakhs invested in several capital market instruments. The initial expenses amount to Rs. 9 lakhs. During June, 2007, the Fund sold certain securities worth Rs. 100 lakhs for Rs. 125 lakhs and it bought certain securities for Rs. 90 lakhs. The Fund Management expenses amounting to Rs. 5 lakhs per month. The dividend earned was Rs. 3 lakhs. 80% of the realised earnings were distributed among the unitholders. The market value of the portfolio was Rs. 175 lakhs. Determine Net Asset value (NAV) per unit as on 30.06.2007. | 8 | (0) |
| (b) | The Balance Sheet of Gunshot Ltd. as on 31.3.2008 is given : (Rs. in ‘000) | Liabilities | Amount | Fixed Assets | Amount | Share Capital : Equity shares of Rs. 10 each Securities Premium General Reserve Profit and Loss Account 10% Debenture Creditors | 800 100 780 120 2,000 320 4,120 | Fixed Assets Non–trade Investments Stock Sundry Debtors Cash and Bank | 2,700 300 600 360 160
4,120 |
Gunshot Ltd. buy back 16,000 shares of Rs. 20 per share. For this purpose, the Company sold its all non–trade investments for Rs. 3,20,000. Give Journal Entries with full narrations effecting the buy back. | 8 | (0) |
|
5. | Dawn Ltd. was incorporated to take over Arun Ltd., Brown Ltd. and Crown Ltd. Balance Sheets of all the three companies as on 31.03.2008 are as follows: (Rs. in ‘000) | Particulars Liabilities | Arun Ltd. | Brown Ltd. | Crown Ltd. | Equity Share Capital (Share of Rs. 10 each) Reserve 10 % Debentures Other Liabilities Total | 1,800 300 600 600 3,300 | 2,100 150 — 450 2,700 | 900 300 300 300 1,800 | Assets: | Net Tangible Block Goodwill Other Assets Total | 2,400 – 900 3,300 | 1,800 150 750 2,700 | 1,500 — 300 1,800 |
From the following information you are to: (a) | Work out the number of Equity shares and Debentures to be issued to the shareholders of each company. | (b) | Prepare the Balance Sheet of Dawn Ltd. as on 31.03.2008. | Information: | (i) | Assets are to be revalued and the revalued amount of Tangible Block and other Assets are as follows : | Tangible Block | Other Assets | Arun Ltd. Brown Ltd. Crown Ltd. | Rs. 30,00,000 Rs. 15,00,000 Rs. 18,00,000 | Rs. 10,50,000 Rs. 4,20,000 Rs. 2,40,000 |
| (ii) | Normal profit on capital employed is to be taken at 10%. | (iii) | Average amount of profit for three years before charging interest on Debentures are: Arun Ltd. Brown Ltd. Crown Ltd. | Rs. 5,40,000 Rs. 4,32,000 Rs. 3,12,000 |
| (iv) | Goodwill is to be calculated at three years’ purchase of average super profits for three years, such average is to be calculated after adjustment of 10% depreciation on Increase/Decrease on revaluation of Fixed Assets (Tangible Block). | (v) | Capital employed being considered on the basis of net revaluation of Tangible Assets. | (vi) | Equity Shares of Rs. 10 each fully paid up in Dawn Ltd. are to be distributed in the ratio of average profit after adjustment of depreciation on revaluation of Tangible Block. | (vii) | 10% Debentures of Rs. 100 each fully paid up are to be issued by Dawn Ltd. for the balance due. | (viii) | The ratio of issue of Equity shares and debentures of Dawn Ltd. are to be maintained at 3:1, towards the take over companies. | (ix) | The amount required for preliminary expenses of Rs. 1,50,000 and for payment to existing Debenture holders, were provided by issuing Equity shares of Rs. 10 each in Dawn Ltd. | | 16 | (0) |
6. | (a) | P Ltd. started its business on 01.04.2007, It issued one lac Equity Shares of Rs. 10 each at par and 30,000, 9% Debentures of Rs. 50 each, both were fully subscribed. It purchased Plant and Machinery for worth Rs. 15 Lac and goods for trading worth Rs. 12 lac @ Rs. 100 per unit. Estimated life of plant and machinery was 10 years with no scrap value. Goods were sold at Profit of 40% on selling price. Collection from Debtors outstanding as on 31.3.2008 amounted to Rs. 5 lac. Goods sold were replaced at a cost of Rs. 120 per unit, the number of units being the same. Trade Creditors outstanding as on 31.3.2008 were Rs. 3 lac. The replaced goods were entirely in stock on 31.3.2008, replacement cost of goods was considered to be Rs. 140 per unit. Replacement cost of machine was Rs. 20 lac as on 31.3.2008. Draft Profit and Loss Account and Replacement reserve on replacement cost basis. | 8 | (0) |
| (b) | Prepare a value added statement for the year ended on 31.3.2008 and reconciliation of total value added with profit before taxation, from the Profit and Loss Account of Futures Ltd. for the year ended on 31.3.2008 : (Rs. in ‘000) | Income: | Sales Other Income | 24,400 508 |
24,908 | Expenditure : | Operating cos Excise duty Interest on Bank Overdraft Interest on 9% Debentures | 21,250 1,110 75 1,200 | | Profit before Depreciation Depreciation Profit before tax Provision for tax Profit after tax Proposed Dividend Retained Profit | | 23,635 1,273 405 868 320 548 48 500 |
The following additional Information are given : (i) | Sales represents Net sales after adjusting Discounts, Returns and Sales tax. | (ii) | Operating cost includes Rs. 82,50,000 as wages, salaries and other benefits to Employees. | (iii) | Bank overdraft is temporary. | | 8 | (0) |
7. | Write short notes on any four from the following: | 4x4=16 | |
| (a) | State the treatment of the following items with reference to ‘Indian Accounting Standards’ (AS) and International Financial Reporting Standards (IFRS) : (i) Extra ordinary items (ii) Contingencies. | | (0) |
| (b) | Reversal of an Impairment Loss. | | (0) |
| (c) | Market value Added. | | (0) |
| (d) | What are the types of Employees benefit and what is the objective of Introduction of this Standard i.e. AS–15? | | (0) |
| (e) | What are Timing differences and Permanent differences? | | (0) |