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Roll No……… Total No. of Questions — 6] [Total No. of Printed Pages — 4 Time Allowed : 3 Hours Maximum Marks : 100
Answer all Questions Working notes should form part of the answer. Wherever necessary, suitable assumption(s) may be made and disclosed by the candidates.
- Answer the following questions: 10x2= (i) Goods worth Rs. 5,00,000 were destroyed due to flood in September, 2006. A claim was lodged with insurance company. But no entry was passed in the books for insurance claim in the financial year 2006–07. In March, 2008, the claim was passed and the company received a payment of Rs.3,50, against the claim. Explain the treatment of such receipt in final accounts for the year ended 31 st^ March, 2008. (ii) Briefly indicate the items which are included in the expressions "Borrowing Cost" as per AS
(iii) Sterling Ltd. purchased a plant for US $ 20,000 on 31st^ December, 07 payable after 4 months. The company entered into a forward contract for 4 months @ Rs. 48.85 per dollar. On 31 st^ December, 07, the exchange rate was Rs. 47.50 per dollar.
How will you recognize the profit or loss on forward contract in the books of Sterling Limited for the year ended 31st^ March, 2008. (iv) A company created a provision of Rs. 75,000 for staff welfare while preparing the financial statements for the year 2007–08. On 31 st^ March, in a meeting with staff welfare association, it was decided to increase the amount of provision for staff welfare to Rs. 1,00,000. The accounts were approved by Board of Directors on 15th^ April, 2008. Explain the treatment of such revision in financial statements for the year ended 31st^ March,
(v) Explain "Employee’s stock option plan". (vi) A company entered into an agreement to sell its immovable property to another company for 35 lakhs. The property was shown in the Balance Sheet at Rs.7 lakhs. The agreement to sell was concluded on 15th February, 2008 and sale deed was registered on 30th April, 2008. The financial statements for the year 2007–08 were approved by the board on 12th^ May,2008. You are required to state, how this transaction would be dealt with in the financial statements for the year ended 31st^ March, 2008. (vii) A Ltd. entered into a binding contract with C Ltd. to buy a machine for Rs. 1,00,000. The machine is to be delivered on 15th^ February, 2009. On 1st^ January, 2009, A Ltd. changed its process of production. The new process will not require the machine ordered and it shall have to be scrapped after delivery. The expected scrap value of the machine is nil. Explain how A Ltd. should recognise the entire transaction in the books of account for the year ended 31st^ March, 2009.
(viii) Goods are transferred from Department P to Department Q at a price 50% above cost. If closing stock of Department Q is Rs. 27,000, compute the amount of stock reserve. (ix) X Ltd. received a revenue grant of Rs.10 crores during 2006–07 from Government for welfare activities to be carried on by the company for its employees. The grant prescribed the conditions for utilization. However during the year 2008–09, it was found that the prescribed conditions were not fulfilled and the grant should be refunded to the Government. State how this matter will have to be dealt with in the financial statements of X Ltd. for the year ended 2008–09. (x) "Conversion of debt into equity is a non–cash transaction." Comment.
- Sun Ltd. and Moon Ltd. were amalgamated on and from 1 st^ April, 2009. A new company Star Ltd. was formed to take over the business of the existing companies. The Balance Sheets of Sun Ltd. and Moon Ltd. as at 31 stMarch, 2009 are given below: (Rs. in lakhs) Liabilities Sun Ltd.
Moon Ltd.
Assets Sun Ltd.
Moon Ltd. Share capital: Equity shares of Rs.100 each 12% Preference shares of Rs.100 each Reserves and surplus: Revaluation reserve General reserve Investment allowance reserve Profit and Loss Account Secured loan: 10% Debentures (Rs.100 each) Current liabilities and Provisions: Sundry creditors Acceptance
Fixed Assets: Land & Building Plant & Machinery Investments Current Assets, Loans and Advances: Stock Sundry Debtors Bills Receivables Cash and Bank balances
Additional information:
(a )
Star Ltd. will issue 5 equity shares for each equity share of Sun Ltd. and 4 equity shares for each equity share of Moon Ltd. The shares are to be issued @ Rs. 30 each, having a face value of Rs. 10 per share. (b )
Preference shareholders of the two companies are issued equivalent number of 15% preference shares of Star Ltd. at a price of Rs. 150 per share (face value Rs. 100). (c )
10% Debentureholders of Sun Ltd. and Moon Ltd. are discharged by Star Ltd., issuing such number of its 15% Debentures of Rs.100 each so as to maintain the same amount of interest. (d )
Investment allowance reserve is to be maintained for 4 more years.
(e )
Liquidation expenses are: Sun Ltd. Rs.2,00,
November 2009
redemption fund investment realized Rs. 1,80,000 on sales. You are required to redraft the Balance Sheet after giving effects to the right issue and redemption of debentures. Also show the calculations in respect of number of equity shares issued and cash
- DM Ltd., Delhi has a branch in London. London branch is an integral foreign operation of DMpayment. Ltd. At the end of the year 31 st^ March, 2009, the branch furnishes the following trial balance in U.K. Pound: Particulars £ £ Dr. Cr. Fixed assets (Acquired on 1 st^ April, 2005) Stock as on 1 st^ April, 2008 Goods from head office Expenses Debtors Creditors Cash at bank Head office account Purchases Sales
In head office books, the branch account stood as shown below:
Particulars Amount Particulars Amount
To Balance b/d To Goods sent to branch
Rs. 20,10, 49,26,
By Bank A/c By Balance c/d
Rs. 52,16, 17,20, 69,36,000 69,36,
The following further information are given:
(a )
Fixed assets are to be depreciated @ 10% p.a on straight line basis.
(b )
On 31 st^ March, 2009: Expenses outstanding Prepaid expenses Closing stock
(c )
Rate of Exchange: 1 st^ April, 2005 1 st^ April, 2008 31 st^ March, 2009 Average
Rs. 70 to £ 1 Rs. 76 to £ 1 Rs. 77 to £ 1 Rs. 75 to £ 1
November 2009
You are required to prepare:
(i) Trial balance, incorporating adjustments of outstanding and prepaid expenses, converting U.K. pound into Indian rupees. (ii )
Trading and profit and loss account for the year ended 31st March, 2009 and the Balance Sheet as on that date of London branch as would appear in the books of Delhi head office of DM Ltd.
- (a) From the following information, you are required to prepare Profit and Loss Account of Zee Bank Ltd., for the year ending 31st^ March, 2009: Rs. Rs. Interest and Discount Other Income Income on investments
Interest expended Operating expenses Interest on balance with RBI
Additional information:
(a )
Rebate on bills discounted to be provided for Rs. 15,
(b )
Classification of advances: Rs. Standard assets Sub–standard assets Doubtful assets not covered by security Doubtful assets covered by security For 1 year For 2 years For 3 years For 4 years Loss assets
(c )
Make tax provision @ 35%
(d )
Profit and Loss A/c (Cr.) Rs. 40,000.
(b) Dee Limited furnishes the following Balance Sheet as at 31 st^ March, 2008: Rs.‘000 Rs.‘ Liabilities Share capital: Authorised capital Issued and subscribed capital: 2,50,000 Equity shares of Rs.10 each fully paid up 2,000, 10% Preference shares of Rs.100 each (Issued two months back for the purpose of buy back) Reserves and surplus: Capital reserve
(i) Axe Limited began construction of a new plant on 1st April, 2008 and obtained a special loan of Rs.4,00,000 to finance the construction of the plant. The rate of interest on loan was 10%. The expenditure that were made on the project of plant were as follows: Rs. 1st April, 2008 1st August, 2008 1st January, 2009
The company’s other outstanding non–specific loan was Rs.23,00,000 at an interest rate of 12%. The construction of the plant completed on 31st March, 2009. You are required to:
(a )
Calculate the amount of interest to be capitalized as per the provisions of AS 16 "Borrowing Cost". (b )
Pass a journal entry for capitalizing the cost and the borrowing cost in respect of the plant.
(ii) Compute Basic Earnings per share from the following information:
Date Particulars No. of shares 1st April, 2008 1st August, 2008 31st March, 2009
Balance at the beginning of the year Issue of shares for cash Buy back of shares
Net profit for the year ended 31st March, 2009 was Rs.2,75,000.
