1
ST. JOSEPH’S COLLEGEOF COMMERCE (AUTONOMOUS)
END SEMESTER EXMAINATION -OCTOBER 2013
B.COM – V SEMESTER
ADVANCED FINANCIAL ACCOUNTING (ELECTIVE P- II – ACCOUNTS)
TIME: 3 HOURS MAX MARKS-100
SECTION – A
I. Answer ANY TEN from the following questions. (10X2=20)
1. Give the meaning of the term Holding Company.
2. Explain the term Minority Interest.
3. How do you treat fictitious assets while preparing consolidated balance sheet of holding
company and the subsidiary.
4. What do you mean by Social Accounting?
5. Give the meaning of the term Human resource accounting.
6. Mention the various approaches to human resource accounting.
7. Explain the term Accounting for price level changes.
8. What are the various approaches to Price level accounting.
9. Explain the term EVA.
10. What do you mean by Value Added?
11. What are the advantages of Value added statements?
12. Explain the concept of ‘Environmental Accounting’.
SECTION – B
II. Answer ANY FOUR from the following questions. (4X5=20)
13. H Ltd., acquired all the shares in S ltd., on 1st January, 2006 and the balance sheets of the two
companies on 31st, March 2006 were as follows:
Liabilities H Ltd S Ltd Assets H Ltd., S Ltd.,
Share capital 50,000 30,000 Sundry assets 65,000 70,000
Reserves 1-4-2005 20,000 15,000 Shares in S Ltd., at
cost
50,000 –
Profit and loss
account
25,000 10,000
Sundry creditors 20,000 15,000
Total 1,15,000 70,000 Total 1,15,000 70,000
The profit and loss account of S Ltd., had a credit balance of Rs. 3,000 on 1st April, 2005. Prepare
a consolidated balance sheet as on 31st March 2006.
14. From the information given below, ascertain the cost of sales and closing inventory under
Current Purchasing Power method if the organization follows FIFO and LIFO system.
2
Historical cost General price index
Inventory as on 31-3-2011 40,000 200
Purchases during 2011-12 3,10,000 220(average for 2011-12)
Inventory on 31-3-2012 50,000 230
15. A firm purchased machinery for a sum of Rs. 2 lakhs on January 1, 2008. It has expected life
of 10 years without any scarp value. The price indices for the asset were as follows:
Jan 1, 2008 100
Jan 1, 2011 160
Dec 31, 2011 175
You are required to value the machinery on January 1, 2011 and December 31, 2011, both
according to Historical cost accounting and current cost accounting system, charging
depreciation on straight line basis. Also find the amount which needs to be adjusted for
appreciation during 2011.
16. Briefly explain the various approaches to Social Accounting
17. What are the various limitations of Human Resource Accounting?
18. Write a note on the reporting requirements of environmental accounting.
SECTION – C
III. Answer ANY THREE from the following questions. (3X15=45)
19. The summarized balance sheet of H and S Ltd., on December 31st, 2005 are as follows:
Liabilities H Ltd S Ltd Assets H Ltd., S Ltd.,
Share capital (Rs. 10) 5,00,000 1,00,000 Assets 5,00,000 1,70,000
Reserves 80,000 30,000 8,000 shares in S
Ltd.,
1,40,000
Profit and loss
account
60,000 40,000
Total 6,40,000 1,70,000 Total 6,40,000 1,70,000
S Ltd., had the credit balance of Rs. 30,000 in the reserves when H Ltd., acquired shares in S
Ltd., decided to make a bonus issue out of the post-acquisition profits of two shares of Rs. 10
each fully paid for every five shares held. Calculate the cost of control before the issue of bonus
shares and after the issue of bonus shares. Also make the consolidated balance sheet after the
issue of bonus shares.
20. The balance sheet of a partnership firm as on 1st April 2011 and the profit and loss statement
for the year ending March 2012 are given below:
3
Balance Sheet
As on 1-4-2011
Liabilities Rs. Assets Rs.
Capital 4,00,000 Plant and
machinery
3,00,000
13% loan 1,00,000 Furniture and
fixture
40,000
Current
Liabilities
50,000 Inventory 60,000
Debtors 50,000
Cash 1,00,000
Total 5,50,000 Total 5,50,000
Profit and loss statement for the year ending 31st, March 2012
Sales 10,00,000
Less: COGS- opening
inventory
60,000
Add: Purchases 7,10,000
7,70,000
Less: closing inventory 70,000
Gross profit 7,00,000
3,00,000
Less: operating expenses 1,51,000
Interest on loan 13,000
Depreciation on machinery 45,000
Depreciation on furniture 4,000 2,13,000
Net profit 87,000
Debtors and current liabilities balances remained constant throughout the year. Interest on
debentures was paid on 31-3-2012
The general price index was as follows:
On 1st, April 2011: 300 Average for the year: 320 on March 31st 2012 360
You are required to prepare financial statements for the year 2011-12 after adjusting for price
level changes under current purchasing power method.
21. From the following information taken from the books of F Ltd., relating to the staff and
community benefits, prepare a statement classifying the various items under the appropriate
heads and INTERPRET THE SAME
Environmental improvements 20,10,000
Medical facilities 45,00,000
Training programmes 10,25,000
Generation of Job opportunities 60,75,000
Municipal taxes 10,70,000
4
Increase in cost of living in the vicinity due to a thermal power
station
16,55,000
Concessional transport, water supply 11,25,000
Extra work put in by staff and officers for drought relief 18,50,000
Leave encashment and leave travel benefits 52,00,000
Educational facilities for children of staff members 21,60,000
Subsidized canteen facilities 14,40,000
Generation of business 25,00,000
22. The following is the profit and loss account of F Ltd., which you are required to prepare a
Gross value added statement and reconcile the same with Profit before taxation
Income: Sales 28,500
Other income 750 29,250
Expenditure: operating cost 25,600
Excise duty 1,700
Interest on bank overdraft 100
Interest on 12% debentures 1,150 28,550
Less: Profit before depreciation 700
Depreciation 250
Profit before tax 450
Less: Tax provision 270
Net profit after tax 180
Less: transfer to replacement
reserve
30
Balance profit 150
Less: dividend 50
Retained profit 100
Note:
a) Sales are net after deducting discounts, returns and sales tax
b) Operating cost includes Rs (000’s) 10,200 as wages, salaries and other benefits to employees
c) Bank overdraft is a temporary source of finance
d) Provision for tax includes Rs (000’s) 70 for deferred tax.
23. From the following information, compute EVA of Auto Ltd., (assume 35% tax rate)
Equity share capital 1,000 lakhs
12% debenture 500 lakhs
PE ratio 5 times
Financial leverage 1.5 times
Show your working with the help of Profit and loss statements, WACC, EVA (each statement
carries 5 marks)
5
SECTION – D
IV) Case Study – compulsory question. ( 15 marks)
24. The balance sheets of Hari and Suri Ltd., as on 31st March 2006 are as follows:
Balance sheet
As on March 31, 2006
Share Capital (Rs.10 ) 4,00,000 1,00,000 Plant and
Machinery
4,80,000 90,000
General reserve 1-4-
2005
2,80,000 34,000 Furniture 15,000 27,000
Profit and loss account 1,70,000 42,000 Investment 2,00,000
Creditors 70,000 35,000 Stock 95,000 42,000
Debtors 60,000 32,000
Cash at bank 70,000 20,000
Total 9,20,000 2,11,000 Total 9,20,000 2,11,000
The following information is also given to you:
a) Hari Ltd., acquired 8,000 equity shares in Suri Ltd., as at 1st July, 2005 at a cost of Rs.
2,00,000
b) Stock of Hari Ltd., includes Rs. 6,000 relating to stock purchased from Suri ltd., which
follows the practice of charging 25% extra on the cost for determining the sale price
c) Creditors of Hari ltd., include Rs. 10,000 on account of purchases from Suri Ltd.,
d) Profit and loss account of Hari ltd., includes dividend @10% for the year 2004-2005
received form Suri Ltd., which declared and paid it after 1st, July 2005.
e) Balance in Suri Ltd., profit and loss account on 1st April 2005 was Rs. 26,000. Dividend @
10% for the year 2004-05 was declared out of this balance after 1st July 2005
f) Profits during the year 2005-06 have been earned on uniform basis throughout the year
Prepare consolidated balance sheet of Hari Ltd., and its subsidiary Suri Ltd., as at 31st
March 2006. Submit all your working notes neatly
**************************
Advanced Financial Accounting (Elective – Ii- Accounts)
St. Joseph’s College of Commerce BBM 2013 V Sem Advanced Financial Accounting (Elective II Accounts) Question Paper PDF Download
1
ST. JOSEPH’S COLLEGEOF COMMERCE (AUTONOMOUS)
END SEMESTER EXMAINATION -OCTOBER 2013
B.B.M – V SEMESTER
ADVANCED FINANCIAL ACCOUNTING (ELECTIVE P- II – ACCOUNTS)
TIME: 3 HOURS MAX MARKS-100
SECTION – A
I. Answer ANY TEN from the following questions. (10X2=20)
1. Give the meaning of the term Holding Company.
2. Explain the term Minority Interest.
3. How do you treat fictitious assets while preparing consolidated balance sheet of holding
company and the subsidiary.
4. What do you mean by Social Accounting?
5. Give the meaning of the term Human resource accounting.
6. Mention the various approaches to human resource accounting.
7. Explain the term Accounting for price level changes.
8. What are the various approaches to Price level accounting.
9. Explain the term EVA.
10. What do you mean by Value Added?
11. What are the advantages of Value added statements?
12. Explain the concept of ‘Environmental Accounting’.
SECTION – B
II. Answer ANY FOUR from the following questions. (4X5=20)
13. H Ltd., acquired all the shares in S ltd., on 1st January, 2006 and the balance sheets of the two
companies on 31st, March 2006 were as follows:
Liabilities H Ltd S Ltd Assets H Ltd., S Ltd.,
Share capital 50,000 30,000 Sundry assets 65,000 70,000
Reserves 1-4-2005 20,000 15,000 Shares in S Ltd., at
cost
50,000 –
Profit and loss
account
25,000 10,000
Sundry creditors 20,000 15,000
Total 1,15,000 70,000 Total 1,15,000 70,000
The profit and loss account of S Ltd., had a credit balance of Rs. 3,000 on 1st April, 2005. Prepare
a consolidated balance sheet as on 31st March 2006.
14. From the information given below, ascertain the cost of sales and closing inventory under
Current Purchasing Power method if the organization follows FIFO and LIFO system.
2
Historical cost General price index
Inventory as on 31-3-2011 40,000 200
Purchases during 2011-12 3,10,000 220(average for 2011-12)
Inventory on 31-3-2012 50,000 230
15. A firm purchased machinery for a sum of Rs. 2 lakhs on January 1, 2008. It has expected life
of 10 years without any scarp value. The price indices for the asset were as follows:
Jan 1, 2008 100
Jan 1, 2011 160
Dec 31, 2011 175
You are required to value the machinery on January 1, 2011 and December 31, 2011, both
according to Historical cost accounting and current cost accounting system, charging
depreciation on straight line basis. Also find the amount which needs to be adjusted for
appreciation during 2011.
16. Briefly explain the various approaches to Social Accounting
17. What are the various limitations of Human Resource Accounting?
18. Write a note on the reporting requirements of environmental accounting.
SECTION – C
III. Answer ANY THREE from the following questions. (3X15=45)
19. The summarized balance sheet of H and S Ltd., on December 31st, 2005 are as follows:
Liabilities H Ltd S Ltd Assets H Ltd., S Ltd.,
Share capital (Rs. 10) 5,00,000 1,00,000 Assets 5,00,000 1,70,000
Reserves 80,000 30,000 8,000 shares in S
Ltd.,
1,40,000
Profit and loss
account
60,000 40,000
Total 6,40,000 1,70,000 Total 6,40,000 1,70,000
S Ltd., had the credit balance of Rs. 30,000 in the reserves when H Ltd., acquired shares in S
Ltd., decided to make a bonus issue out of the post-acquisition profits of two shares of Rs. 10
each fully paid for every five shares held. Calculate the cost of control before the issue of bonus
shares and after the issue of bonus shares. Also make the consolidated balance sheet after the
issue of bonus shares.
20. The balance sheet of a partnership firm as on 1st April 2011 and the profit and loss statement
for the year ending March 2012 are given below:
3
Balance Sheet
As on 1-4-2011
Liabilities Rs. Assets Rs.
Capital 4,00,000 Plant and
machinery
3,00,000
13% loan 1,00,000 Furniture and
fixture
40,000
Current
Liabilities
50,000 Inventory 60,000
Debtors 50,000
Cash 1,00,000
Total 5,50,000 Total 5,50,000
Profit and loss statement for the year ending 31st, March 2012
Sales 10,00,000
Less: COGS- opening
inventory
60,000
Add: Purchases 7,10,000
7,70,000
Less: closing inventory 70,000
Gross profit 7,00,000
3,00,000
Less: operating expenses 1,51,000
Interest on loan 13,000
Depreciation on machinery 45,000
Depreciation on furniture 4,000 2,13,000
Net profit 87,000
Debtors and current liabilities balances remained constant throughout the year. Interest on
debentures was paid on 31-3-2012
The general price index was as follows:
On 1st, April 2011: 300 Average for the year: 320 on March 31st 2012 360
You are required to prepare financial statements for the year 2011-12 after adjusting for price
level changes under current purchasing power method.
21. From the following information taken from the books of F Ltd., relating to the staff and
community benefits, prepare a statement classifying the various items under the appropriate
heads and INTERPRET THE SAME
Environmental improvements 20,10,000
Medical facilities 45,00,000
Training programmes 10,25,000
Generation of Job opportunities 60,75,000
Municipal taxes 10,70,000
4
Increase in cost of living in the vicinity due to a thermal power
station
16,55,000
Concessional transport, water supply 11,25,000
Extra work put in by staff and officers for drought relief 18,50,000
Leave encashment and leave travel benefits 52,00,000
Educational facilities for children of staff members 21,60,000
Subsidized canteen facilities 14,40,000
Generation of business 25,00,000
22. The following is the profit and loss account of F Ltd., which you are required to prepare a
Gross value added statement and reconcile the same with Profit before taxation
Income: Sales 28,500
Other income 750 29,250
Expenditure: operating cost 25,600
Excise duty 1,700
Interest on bank overdraft 100
Interest on 12% debentures 1,150 28,550
Less: Profit before depreciation 700
Depreciation 250
Profit before tax 450
Less: Tax provision 270
Net profit after tax 180
Less: transfer to replacement
reserve
30
Balance profit 150
Less: dividend 50
Retained profit 100
Note:
a) Sales are net after deducting discounts, returns and sales tax
b) Operating cost includes Rs (000’s) 10,200 as wages, salaries and other benefits to employees
c) Bank overdraft is a temporary source of finance
d) Provision for tax includes Rs (000’s) 70 for deferred tax.
23. From the following information, compute EVA of Auto Ltd., (assume 35% tax rate)
Equity share capital 1,000 lakhs
12% debenture 500 lakhs
PE ratio 5 times
Financial leverage 1.5 times
Show your working with the help of Profit and loss statements, WACC, EVA (each statement
carries 5 marks)
5
SECTION – D
IV) Case Study – compulsory question. ( 15 marks)
24. The balance sheets of Hari and Suri Ltd., as on 31st March 2006 are as follows:
Balance sheet
As on March 31, 2006
Share Capital (Rs.10 ) 4,00,000 1,00,000 Plant and
Machinery
4,80,000 90,000
General reserve 1-4-
2005
2,80,000 34,000 Furniture 15,000 27,000
Profit and loss account 1,70,000 42,000 Investment 2,00,000
Creditors 70,000 35,000 Stock 95,000 42,000
Debtors 60,000 32,000
Cash at bank 70,000 20,000
Total 9,20,000 2,11,000 Total 9,20,000 2,11,000
The following information is also given to you:
a) Hari Ltd., acquired 8,000 equity shares in Suri Ltd., as at 1st July, 2005 at a cost of Rs.
2,00,000
b) Stock of Hari Ltd., includes Rs. 6,000 relating to stock purchased from Suri ltd., which
follows the practice of charging 25% extra on the cost for determining the sale price
c) Creditors of Hari ltd., include Rs. 10,000 on account of purchases from Suri Ltd.,
d) Profit and loss account of Hari ltd., includes dividend @10% for the year 2004-2005
received form Suri Ltd., which declared and paid it after 1st, July 2005.
e) Balance in Suri Ltd., profit and loss account on 1st April 2005 was Rs. 26,000. Dividend @
10% for the year 2004-05 was declared out of this balance after 1st July 2005
f) Profits during the year 2005-06 have been earned on uniform basis throughout the year
Prepare consolidated balance sheet of Hari Ltd., and its subsidiary Suri Ltd., as at 31st
March 2006. Submit all your working notes neatly
**************************
St. Joseph’s College of Commerce B.B.M. 2014 V Sem Advanced Financial Accounting (Elective – Ii- Accounts) Question Paper PDF Download
- JOSEPH’ S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – OCTOBER 2014
B.B.M. -V SEMESTER
ADVANCED FINANCIAL ACCOUNTING (ELECTIVE – II- ACCOUNTS)
Duration: 3 Hours Max. Marks: 100
SECTION – A
- Answer ALL the questions. Each carries 2 marks. (10 x2 =20)
- Distinguish between EVA and Value Added.
- State the four approaches to Price Level Accounting.
- While preparing a consolidated Balance Sheet, how would you treat contingent liabilities?
- As per the Companies Act, 2013 what new inclusions (any two) has been made with regard to Corporate Social Responsibility?
- What are the three important aspects that Human Resource Accounting focuses on while accounting?
- Give the equation of Brand equity.
- X purchased a piece of land for Rs. 40,000 when the general price index was 120. Five years later he sold this piece of land for Rs. 60000 when the price index was 200. Find out the profit or loss on this transaction.
8.“Indian companies are generally following the model of human resource accounting suggested by Lev and Schwartz”—is this statement true? Mention any one company which has adopted this model.
- Describe in two sentences Environmental Accounting.
- Calculate EVA from the following information: net operating profit after tax – Rs. 98,00,000; capital structure: equity capital – Rs. 1,70,00,000; reserve and surplus – Rs. 1,30,00,000; 10% debentures – Rs. 4,00,00,000; cost of equity – 17.5%; income tax rate – 30%.
SECTION – B
- Answer any FOUR Each carries 5 marks. (4×5=20)
- From the following information taken from the books of Aarav Ltd. relating to staff and community (social) benefits& cost, you are required to prepare a statement classifying the various items under the appropriate heads:
| Environmental improvements | Extra work put in by staff and officers for drought relief |
| Medical facilities | Leave encashment and leave travel benefits |
| Training facilities | Educational facilities for children of staff members |
| Generation of Job Opportunities | Increase in cost of living in the vicinity due to a thermal power station |
| Municipal Taxes | Concessional transport, water supply |
- 12. Manish Ltd. acquired all the shares in Shwetha Ltd. on 1st January, 2013 and liabilities and assets of the two companies on 31st March, 2013 were as follows:
| Liabilities | Manish Ltd. | Shwetha Ltd. | Assets | Manish Ltd. | Shwetha Ltd. |
| Share capital | 50,000 | 30,000 | Sundry Assets | 65,000 | 70,000 |
| Reserve on 1-4-2012 | 20,000 | 15,000 | Shares in S Ltd. at cost. | 50,000 | —– |
| Surplus A/c | 25,000 | 10,000 | |||
| Sundry creditors | 20,000 | 15,000 | |||
| 1,15,000 | 70,000 | 1,15,000 | 70,000 |
Surplus of Shwetha ltd. had a credit balance of Rs. 3000 on 1st April 2012. Calculate the ratio of holding, pre-acquisition profits, post -acquisition profits and cost of control or capital reserve.
13.“HRA is the process of identifying and measuring data about human resources and communicating this information to interested parties”- in this context, bring out the various objectives of HRA.
- From the following data, calculate the gearing adjustment required under CCA Method:
| Particulars | Opening (Rs.) | Closing (Rs.) |
| Convertible Debentures | 2000 | 2400 |
| Bank Overdraft | 1200 | 1600 |
| Cash | 200 | 600 |
| Paid-Up Capital | 3000 | 4000 |
| Reserves | 1000 | 1600 |
Cost of sales Adjustment Rs. 400
Monetary Working Capital Adjustment Rs. 300
Depreciation Adjustment Rs. 100. Therefore total adjustment is Rs. 800.
- State whether the following is True or False with reasons.
- Disclosure of the value of HRA in the financial statements is made as a statutory obligation.
- Charging depreciation on current values of fixed assets is acceptable to income tax authorities.
- As per Business Income concept accounting income and economic income are one and the same.
- Minority Interest = Paid up value of shares held by outsiders.
- Social accounting is one of the oldest forms of accounting.
- Following information is available of a concern. Calculate EVA.
| Debt Capital 12% | Rs. 4000 crores | Beta Factor | 1.05 |
| Equity Capital | Rs. 1000 crores | Market Rate of Return | 19% |
| Reserves and Surplus | Rs. 15,000 crores | Equity (Market) Risk Premium | 10% |
| Capital Employed | Rs. 20,000 crores | Operating Profit after tax | Rs. 4,200 crores |
| Risk-free Rate | 9% | Tax Rate | 30% |
SECTION – C
III) Answer any THREE questions. Each carries 15 marks. (3×15=45)
17.On the basis of the following Statement of Profit and Loss of Zinc Ltd. and the supplementary information provided thereafter, prepare Gross Value Added Statement of the company for the year ended 31st March, 2013including percentage calculation. Also prepare another statement showing reconciliation of Gross Value Added with Profit before Taxation.
| Particulars | Amount (in Lakhs) | Amount (in Lakhs) |
| Income: | ||
| Sales | 5,010 | |
| Other Income | 130 | |
| 5,140 | ||
| Expenditure: | ||
| Production and Operational Expenses | 3,550 | |
| Administration Expenses | 185 | |
| Interest | 235 | |
| Depreciation | 370 | 4,340 |
| Profit before taxation | 800 | |
| Provision for Taxation | 280 | |
| Profit after taxation | 520 | |
| Credit Balance as per last Balance Sheet | 40 | |
| 560 | ||
| Appropriations: | ||
| Transfer to General Reserve | 100 | |
| Preference Dividend (interim) paid | 50 | |
| Proposed preference dividend (final) | 50 | |
| Proposed Equity Dividend | 300 | |
| Balance carried to Balance Sheet | 60 | |
| 560 | ||
| Supplementary Information: | ||
| Production and operational expenses consist of: | ||
| – Raw materials and stores consumed | 1900 | |
| – Wages, salaries and Bonus | 610 | |
| – Local taxes including Cess | 220 | |
| 3,550 | ||
| Administrative Expenses consist of: | ||
| – Salaries and commission to Directors | 60 | |
| – Audit Fee | 24 | |
| – Provision for Bad and Doubtful Debts | 20 | |
| – Other Administrative Expenses | 81 | |
| 185 | ||
| Interest is on: | ||
| Loan from bank for working capital | 35 | |
| debentures | 200 | |
| 235 |
- Following are the Balance Sheets and Profit and Loss account of a Firm prepared on the basis of Historical cost accounting.
Balance Sheet as on 1.4.2012
| Capital | Rs. 10,00,000 | Fixed Assets | Rs. 10,00,000 |
| Profit & Loss A/c | Rs. 3,00,000 | Inventories | Rs. 4,00,000 |
| Sundry Liabilities | Rs. 5,00,000 | Debtors | Rs. 3,00,000 |
| Cash | Rs. 1,00,000 | ||
| Rs. 18,00,000 | Rs. 18,00,000 |
Balance Sheet as on 31.3.2013
| Capital | Rs. 10,00,000 | Fixed Assets less Depreciation @ 10% Rs. 1,00,000 | Rs. 9,00,000 |
| Profit & Loss A/c | Rs. 5,00,000 | Inventories | Rs. 3,20,000 |
| Sundry Liabilities | Rs. 3,00,000 | Debtors | Rs. 4,00,000 |
| Cash | Rs. 1,80,000 | ||
| Rs. 18,00,000 | Rs. 18,00,000 |
Profit & Loss Account for the year ending 31.3.2013
| To Inventory (1.4.2012) | Rs. 4,00,000 | By sales | Rs. 30,00,000 |
| To Purchases | 23,20,000 | By Inventory (31.3.2013) | 3,20,000 |
| To Depreciation | 1,00,000 | ||
| To Other Operating Expenses | 3,00,000 | ||
| To Net Profit | 2,00,000 | ||
| 33,20,000 | 33,20,000 |
Additional Information:
- The current replacement cost of the goods on the dates sales were made amounted to Rs. 23,60,000.
- On 31.3.2013, the replacement cost of the fixed assets was Rs. 12,00,000.
- The current replacement cost of the inventory on 31.3.2013 is Rs. 3,50,000.
You are required to prepare Income Statement for the year ending 31.3.2013 and Balance Sheet as on that date on the basis of Current Cost Accounting.
- Following are the liabilities and assets of H Ltd. and S Ltd. as on 31st March, 2013:
| Liabilities | H Ltd. (Rs.) | S Ltd. (Rs.) | Assets | H Ltd. (Rs.) | S Ltd. (Rs.) |
| Share Capital: Equity shares of Rs.100 each | 9,00,000 | 4,00,000 | FixedAssets:Plant &Machinery | 3,30,000 | 1,80,000 |
| Preference Share Capita | 3,00,000 | 40,000 | Land & Building | 6,00,000 | 2,60,000 |
| Reserves & Surplus: General Reserve on 1.4.2012 | 2,00,000 | 1,20,000 | Goodwill | 70,000 | 60,000 |
| Surplus A/c | 2,80,000 | 1,80,000 | Investments: 3,000 shares in S Ltd. (30.9.2012) | 4,80,000 | —— |
| Current Liabilities Creditors | 1,60,000 | 1,00,000 | Current Assets:
Stock |
2,00,000 | 1,80,000 |
| Bills Payable | —— | 40,000 | Debtors | 40,000 | 1,50,000 |
| Cash | 1,20,000 | 40,000 | |||
| Preliminary expenses | —– | 10,000 | |||
| 18,40,000 | 8,80,000 | 18,40,000 | 8,80,000 |
Following further information is furnished:
- A dividend of 15% was paid by S Ltd. in October, 2012 for the year ended 31st March, 2012.
- Plant & Machinery of S Ltd. in the beginning was Rs. 2,00,000. H Ltd. revalued it by Rs. 1,10,000.
- There was a bonus issue of Rs. 40,000 out of post- acquisition profits by S Ltd.
- Credit balance of Surplus A/c of S Ltd. on 1st April, 2012 was Rs. 1,00,000.
- Included in creditors of S Ltd. is Rs. 40,000 for goods supplied by H Ltd. Also included in stocks of S Ltd. are goods to the value of Rs. 16,000 which were supplied by H Ltd. at a profit of 25 % on sales.
Prepare a Consolidated Balance Sheet with all the necessary calculations as per Schedule III, Companies Act, 2013.
- Balance Sheet of a Partnership Firm as on 1st April, 2012 and Profit & Loss Statement for the year ending March, 2013 are given below:
Balance Sheet as on 1.4.2012
| Liabilities | Amount (Rs.) | Assets | Amount (Rs.) |
| Capital | 8,00,000 | Plant & Machinery | 6,00,000 |
| 13% Loan | 2,00,000 | Furniture & Fixture | 80,000 |
| Current Liabilities | 1,00,000 | Inventory | 1.20,000 |
| Debtors | 1,00,000 | ||
| Cash | 2,00,000 | ||
| 11,00,000 | 11,00,000 |
Profit & Loss Statement for the year ending 31st March, 2013
| Sales | 20,00,000 | |
| Less: Cost of Goods Sold: Opening Inventory | 1,20,000 | |
| Add: Purchases | 14,20,000 | |
| 15,40,000 | ||
| Less: Closing Inventory | 1,40,000 | 14,00,000 |
| Gross Profit | 6,00,000 | |
| Less: Operating Expenses | 3,02,000 | |
| Interest on Loan | 26,000 | |
| Depreciation on machinery | 90,000 | |
| Depreciation on furniture | 8,000 | 4,26,000 |
| Net Profit | 1,74,000 |
Debtors and Current Liabilities balances remained constant throughout the year. Interest on debentures was paid on 31.3.2013
The general price index was as follows:
On April 1, 2012: 300; Average for the year: 320; On March 31, 2013: 360.
You are required to prepare the financial statements for the year 2012-2013 after adjusting for price level changes under Current Purchasing Power Method.
- a) Briefly discuss the advantages and disadvantages of Price Level Accounting. (5 marks)
- b) “It is clear that discharge of social responsibilities by a business unit is not something opposed to earning profits.”—in this context explain the various social responsibilities of business as a social unit. (5 marks)
- c) Write a short note on Recording and Disclosure of HRA in Financial Statements. (5 marks)
SECTION – D
- IV) Case study- Compulsory questions. (15 marks)
- A Ltd. acquired 8,000 shares of Rs. 100 each in B Ltd. on 30th September 2012. The Liabilities and Assets of the two Companies as on 31st March, 2013 were as follows:
| Liabilities | A Ltd. (Rs.) | B Ltd. (Rs.) | Assets | A Ltd. (Rs.) | B Ltd. (Rs.) |
| Share Capital: 30,000 shares of Rs. 100 each | 30,00,000 | —- | Fixed Assets | 15,00,000 | 14,47,000 |
| 10,000 shares of Rs. 100 each | —– | 10,00,000 | Investment in B Ltd. at cost | 17,00,000 | —– |
| Capital Reserve | —– | 5,50,000 | Stock in hand | 4,00,000 | 2,00,000 |
| General Reserve | 3,00,000 | 50,000 | Loan to A Ltd. | —– | 20,000 |
| Surplus A/c | 3,82,000 | 1,80,000 | Bills Receivable (including Rs. 5000 from B Ltd.) | 12,000 | —— |
| Loan from B Ltd. | 21,000 | —– | Debtors | 2,50,000 | 1,80,000 |
| Bills Payable (including Rs. 5000 to A Ltd.) | —– | 17,000 | Cash & Bank Balance | 20,000 | 20,000 |
| Creditors | 1,79,000 | 70,000 | |||
| 38,82,000 | 18,67,000 | 38,82,000 | 18,67,000 |
Note: On the Balance Sheet of A Ltd., there is a contingent liability for bills discounted of Rs. 6,000.
You are given the following information:
- B Ltd. made a bonus issue on 31st March, 2013 of one share for every two shares held, reducing the Capital Reserve equivalently but the accounting effect to this has not been given in the above Balance sheet.
- Interest receivable for the year (Rs. 1000) in respect of the loan due by A Ltd. to B Ltd. has not been credited in the books of B Ltd.
- The credit balance in Surplus A/c of B Ltd. as on 1.4.2012 was Rs. 21,000.
- The directors decided on the date of the acquisition that the fixed assets of B Ltd. were over -valued and should be written down by Rs. 50,000. Consequently adjustments on depreciation are to be ignored.
Prepare Consolidated Balance Sheet as at 31st March, 2013 showing your working.