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INTERMEDIATE (IPC) EXAMINATION: MAY, 2016

AS 6 Depreciation Accounting
19. (a) A computer costing ` 1.2 lakh is depreciated on straight line basis, assuming 10
years working life and Nil residual value, for three years. The estimate of remaining
useful life after third year was reassessed at 5 years. Calculate depreciation as per
the provisions of Accounting Standard 6 "Depreciation Accounting".
AS 7 Construction Contracts
(b) Five Star Construction Limited commenced a construction contract on 1 st April,
2014. The Fixed Contract price agreed was ` 50,00,000. The company incurred
` 21,00,000 in 2014-15 for 40% work and received ` 19,00,000 as progress
payment from the customer. The company estimated that a further ` 31,50,000
would incurred to complete it. What amount should be charged to revenue for the
year 2014-15 as per AS 7? Show the extract of Profit & Loss A/c for the year 201415 in the books of the company.
AS 9 Revenue Recognition
20. (a) X Limited sold goods worth ` 13 Lakhs to Mr. Y. Mr. Y asked for a Trade Discount
amounting to ` 1,06,000 and the same was agreed to by X Limited. Such discount
was allowed in the ordinary course of business. The sale was effected and goods
were dispatched. On receipt of goods, Mr. Y has found that goods worth ` 1,34,000
are defective. Mr. Y returned defective goods to X Limited and made payment
amount to ` 10,60,000. The Accountant of X Limited booked the sale for
` 10,60,000.
Discuss the contention of the Accountant with reference to relevant Accounting
Standard.
AS 10 Accounting for Fixed Assets
(b) XYZ Ltd. constructed a fixed asset and incurred the following expenses on its
construction:

`
Materials
Direct Labour
(1/6th of the total labour time was chargeable to the construction)
Direct Expenses
Office & Administrative Expenses
(5% is specifically attributable to construction)
Depreciation on assets used for the construction of this asset

10,00,000
3,00,000
2,00,000
7,50,000
10,000

Calculate the cost of the fixed asset.

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