No.

1 for CA/CWA & MEC/CEC MASTER MINDS

11. ELECTRICITY COMPANY ACCOUNTS

SOLUTIONS TO ASSIGNMENT PROBLEMS
PROBLEM No. 1

Closing
balance Rate of Depreciation
Particulars
at cost depreciation (Rs.)
(Rs.)
Land
a. Freehold 3,.34,900 0 -
b. Leasehold 1,07,275 3.34% 3,598.02
Buildings 18,82,475 3.34% 61,545.35
Railway Skiing 5,850 3.34% 195.39`
Plant and Machinery - -
a. Steam Station 70,82,475 5.28% 3,73,954.68
b. Others including ”Switchgears and transformers” 51,44,725 5.28% 2,71,641.48
Transmission and Distributing Systems
a. Overhead 10,60,725 5.28% 56,006.28
b. Underground 42,24,025 5.28% 2,23,028.52
Electrical Fittings and Apparatus 1,25,325 6.33% 7,933.07
Furniture, Fixture and Office Equipments 1,75,900 6.33% 11,134.47
Vehicles 53,700 5.28% 2,835.36
Total (other than land) 19,823,125 1,011,872.62

1,011,872. 62
Weighted average rate of depreciation = x 100 = 5.10% ( Approx.)
19,823,125

PROBLEM No. 2
Name o the Power Station Excellent Power Generation Project
th
Date of commercial operation / Work completed date 11 January, 1995
st
Beginning of current year 1 April, 2010
Useful life 35 years
Remaining useful life 20 years
(Rs. in Crores)
S.No. Particulars 2010.11 2011.12 2012.13
Capital cost at beginning of the year (in Rs.) 166.27 166.27 166.99
Additional capitalization during the year (in Rs.) - 0.72 6.11
Closing capital cost (in Rs.) 166.27 166.99 173.10
1. Average capital cost 166.27 166.63 170.05
2. Less: Value of Land - - -
3. Capital cost for depreciation (in Rs.) 166.27 166.63 170.05
4. Depreciable value (90% of 3) (in Rs.) 149.64 149.97 153.05
5. Depreciation recovered upto 2008-09 (in Rs.) 72.07 - -
6. Depreciation recovered in 2009-10 (in Rs.) 4.77 - -
7. Depreciation recovered upto previous year (5+6) (in Rs.) 76.84 80.48 84.14
8. Balance depreciation to be recovered (in Rs.) 72.80 69.49 68.91
9. Balance useful life out of 35 years (in years) 20 19 18
10. Yearly depreciation from 2010-11 (8/9) (in Rs.) 3.64 3.66 3.83
11. Depreciation recovered upto the year (7 + 10) (in Rs.) 80.48 84.14 87.97
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 Ph: 9885125025/26 www.mastermindsindia.com
Note: Capital cost at the beginning of the year and accumulated depreciation are as per tariff order
Financial Year 2010-11.

PROBLEM No. 3
a. Average Capital cost:

2010-11 2011-12 2012-13 2013-14

Particulars
Rs. Rs. Rs. Rs.
Opening capital cost (A) 2,84,330.74 3,04,175.32 3,09,748,62 3,13,615.70
Additional capital expenditure
(allowed above) (B) 19,844.58 5,573.30 3,667.08 3,015,70
Closing Capital cost (A) + (B) 3,04,175.32 3,09,748.62 3,13,615.70 3,16,631.40
Average Capital cost 2,94,253.03 3,06,961.62 3,11,662.16 3,15,123.55

b. Depreciation: Annual weighted average rate of depreciation is considered as 5.28% and retained
for the purpose of tariff. The necessary calculations are as under:

2010-11 2011-12 2012-13 2013-14

Particulars
Rs. Rs. Rs. Rs.
Average capital cost 2,94,253.03 3,06,961.97 3,11,682.16 3,15,123.55
Weighted Average Rate of
depreciation% 0.0528 0.0528 0.0528 0.0528
Depreciation (annualized) 15,536.56 16,207.60 16.456.82 16.638.52

PROBLEM No. 4
Balance Sheet of U.P. Electric Ltd. for the year ended March 31, 2012
Particulars Note No (Rs.’000)
Equity And Liabilities:
1 Shareholders funds
a Share capital 1 16,250
b Reserves and Surplus 2 5,600
2 Non-current liabilities
a Long-term borrowings 3 10,000
3 Current liabilities -
a Trade Payable 1,631
b Other current liabilities 4 3,025
Total 36,506
Assets: -
1 Non-current assets -
a Fixed assets -
i Tangible assets 5 27,490
ii Intangible assets 626
Other non-current assets 6 3,002.5
2 Current assets -
a Inventories 3,012.5
b Trade receivables 1,561.5
c Cash and cash equivalents 813.5
Total 36,506

IPCC__33e_Accounts_Group-II_Electricity Company A/c’s_Assignment Solutions____2

 No.1 for CA/CWA & MEC/CEC MASTER MINDS
Notes to financial statements

S.No. Particulars Rs. Rs. (‘000)

1. Share Capital
Issued & subscribed
Equity share capital
10,000 Equity shares of Rs.10 each 10,000 -
Add: 2,50,000 Equity shares of Rs.10 each
issued during the year (A) 2,500 12,500
Preference share capital
62,500 14% Preference shares of Rs.100 each
Less: 25,000 Preference shares of Rs.100 each 6,250

Redeemed during the year (B) (2,500) 3,750

Total (A + B) 16,250

2. Reserves and Surplus

Capital reserve 1,255
Contingency Reserve 3,007.5
Balance of net return A/c 1,337.5
Total 5,600

3. Long term borrowings:

Secured
15% Debentures 6,175
16% Term Loan (considered secured) 3,825
Total 10,000
4. Other Current liabilities: -
Proposed dividend 3,025
Total 3,025
5. Tangible assets:
Land 2,600
Addition during the year 512.5 3,112.5
Building 7,513.5
Addition during the year 1,270 8,783.5
Plant and Machinery
Steam Power Plant 14,264.5
Transformers 4,110
Mains 1,131
Meters 787.5
Public Lamps 760 21.053
General Equipments
Electrical Instruments 382.5
Office Furniture 612.5 998
33,944
Less: Depreciation fund (6,454)
27,490
6. Other non-current assets
Contingency Reserve Investment (assumed as non- 3,002.5
current item)

THE END

IPCC__33e_Accounts_Group-II_Electricity Company A/c’s_Assignment Solutions____3