Adv Acc Cluster Revision 1

ADVANCE ACCOUNTS
CLUSTER REVISION
PART – 1
Contents
1. Liquidation of Companies
2. Banking Companies
3. Non-Banking Finance Companies
4. AS 19 - Leases
5. AS 20 – Earnings per Share
6. AS 22 – Accounting for Taxes on Income
7. AS 24 – Discontinuing Operations
CA RAHUL GARG
(TRG)
GOLD MEDALIST
ALL INDIA RANKHOLDER in CA CS CMA
Telegram @ t.me/carahulgargrsa, Follow Instagram @https://www.instagram.com/rahulgarg_thefighter

Subscribe YouTube channel https://www.youtube.com/channel/UC0pn4J1gb2q4e98T-BX-Sng
Cost, FM, Accounts, Advanced Account Lectures available at www.carahulgarg.com, (R.S.A.)
Question 1
X Ltd. went into voluntary liquidation on 31st Dec, 2010 when their Balance Sheet read as
follows:
Liabilities ₹
Issued and Subscribed Capital :
5,000 10% Cumulative Preference Shares of ₹ 100 each, fully paid 5,00,000
2,500 Equity Shares of ₹ 100 each, ₹ 75 paid 1,87,500
7,500 Equity Shares of ₹ 100 each, ₹ 60 paid 4,50,000
15% Debentures secured by a floating charge 2,50,000
Interest outstanding on Debentures 37,500
Creditors 3,18,750
Total 17,43,750
Assets
Land & Building 2,50,000
Machinery & Plant 6,25,000
Patents 1,00,000
Stock 1,37,500
Trade Receivables 2,75,000
Cash at Bank 75,000
Profit & Loss Account 2,81,250
Total 17,43,750
Preference dividends were in arrears for 2 years and the creditors included Preferential Creditors
of ₹ 38,000.
The assets realized as follows :
Land and Building ₹ 3,00,000; Machinery and Plant ₹ 5,00,000; Patents ₹ 75,000; Stock ₹
1,50,000; Trade receivables ₹ 2,00,000.

The expenses of liquidation amounted to ₹ 27,250. The liquidator is entitled to a commission of
3% on assets realized except cash.
Assuming the final payments including those on debentures is made on 30th June, 2011 show the
Liquidator’s Statement of Account.

CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
Question 2
The following is an extract from Trial Balance of overseas Bank as at 31st March, 2014.
₹ ₹
Bills discounted 12,64,000
Rebate on bills discounted not due on March 31st, 2013 22,160
Discount received 1,05,708
An analysis of the bills discounted is as follows :
Amount Due Date 2014 Rate of Discount (%)
(i) 1,40,000 June 5 14
(ii) 4,36,000 June 12 14
(iii) 2,82,000 June 25 14
(iv) 4,06,000 July 6 16
Calculate Rebate on Bills Discounted as on 31-3-2014 and show necessary journal entries.

Question 3
From the following information, calculate the amount of Provisions and Contingencies and prepare
Profit and Loss Account of Zed Bank Ltd. for the year ended 31.3.2011.
(₹ in ‘000)
Interest and Discount (Includes interest accrued on investments) 8,860
Other Income 220
Interest expended 2,720
Operating expenses 2,830
Interest accrued on Investments 10
Additional Information :
a. Rebate on bills discounted to be provided for 30
b. Classification of Advances :
Standard assets 4,000
Sub-standard assets 2,240
Doubtful assets − (fully unsecured) 390
Doubtful assets – covered fully by security
Less than 1 year 100
More than 1 year, but less than 3 years 600
More than 3 years 600
Loss Assets 376
c. Provide 35% of the profit towards provision for taxation.
d. Transfer 25% of the profit to Statutory Reserve.

Question 4
Lokraj Financiers Ltd. is an NBFC providing Hire Purchase Solutions for acquiring consumer
durables. The following information is extracted from its books for the year ended 31st March,
2017:
Asset Funded Interest Overdue but recognized in Profit & loss A/c Net Book Value of
Period Overdue Interest Amount Assets outstanding
(₹ in crore) (₹ in crore)
Washing Machines Upto 12 months 450.00 20,550.00
Air Conditioners For 24 months 25.25 675.00
Music systems For 30 months 15.25 225.00
Refrigerators For 21 months 60.15 1,050.00
Air purifiers Upto 12 months 18.25 980.00
LCD Televisions For 45 months 420.00 21,200.00
You are required to calculate the amount of additional provision to be made.

Question 5
Jet Carriers Ltd. has initiated a lease for four years in respect of a vehicle costing ₹ 20,00,000
with expected useful life of 5 years. The asset would revert to the company under the lease
agreement.
The other information available in respect of lease agreement is :
a. The unguaranteed residual value of the equipment after the expiry of the lease term is
estimated at ₹ 2,50,000.
b. The implicit rate of interest is 10%.
c. The annual payments have been determined in such a way that the present value of the lease
payment plus the residual value is equal to the cost of asset.
Ascertain in the hand of Jet Carriers Ltd.
a. The annual lease payment.
b. The unearned finance income.
c. The segregation of finance income.
PV Residual value for 4 years @ 10% is 0.683. (b) PV Factor for 4 years @ 10% is 3.16987.

Question 6
Net profit for the year 2012 ₹ 11,00,000
Net profit for the year 2013 ₹ 15,00,000
No. of shares outstanding prior to rights issue 5,00,000 shares
Rights issue price ₹ 15
Last date to exercise rights 1st April, 2013
Rights issue is one new share for each five outstanding. Fair value of one equity share immediately
prior to exercise of rights on 1st April 2013 was ₹ 21.
Compute Basic Earnings Per Share.

Question 7
Ultra Ltd. has provided the following information.
Depreciation as per accounting records = ₹ 4,00,000
Depreciation as per tax records = ₹ 10,00,000
Unamortised preliminary expenses as per tax record = ₹ 30,000
There is adequate evidence of future profit sufficiency.
How much deferred tax asset/liability should be recognised as transition adjustment when the tax
rate is 50%?

Question 8
What is the meaning of Discontinuing Operation as per AS 24?

ANSWER – 8
A discontinuing operation is a component of an enterprise:
a. That the enterprise, pursuant to a single plan, is:
▪ Disposing of substantially in its entirety, such as by selling the component in a
single transaction or by demerger or spin-off of ownership of the component to
the enterprise's shareholders or
▪ Disposing of piecemeal, such as by selling off the component's assets and
settling its liabilities individually or
▪ Terminating through abandonment and
b. That represents a separate major line of business or geographical area of
operations.
c. That can be distinguished operationally and for financial reporting purposes.


Adv Acc Cluster Revision 1

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Adv Acc Cluster Revision 1

Uploaded by

Copyright:

Available Formats

ADVANCE ACCOUNTS

3. Non-Banking Finance Companies

5. AS 20 – Earnings per Share

6. AS 22 – Accounting for Taxes on Income

Telegram @ t.me/carahulgargrsa, Follow Instagram @https://www.instagram.com/rahulgarg_thefighter

Issued and Subscribed Capital :

2,500 Equity Shares of ₹ 100 each, ₹ 75 paid 1,87,500

7,500 Equity Shares of ₹ 100 each, ₹ 60 paid 4,50,000

15% Debentures secured by a floating charge 2,50,000

Interest outstanding on Debentures 37,500

Land & Building 2,50,000

Machinery & Plant 6,25,000

Trade Receivables 2,75,000

Cash at Bank 75,000

Profit & Loss Account 2,81,250

The assets realized as follows :

1,50,000; Trade receivables ₹ 2,00,000.

Telegram @ t.me/carahulgargrsa, Follow Instagram @https://www.instagram.com/rahulgarg_thefighter

3% on assets realized except cash.

Liquidator’s Statement of Account.

Telegram @ t.me/carahulgargrsa, Follow Instagram @https://www.instagram.com/rahulgarg_thefighter

Bills discounted 12,64,000

Rebate on bills discounted not due on March 31st, 2013 22,160

Discount received 1,05,708

An analysis of the bills discounted is as follows :

Amount Due Date 2014 Rate of Discount (%)

(i) 1,40,000 June 5 14

(ii) 4,36,000 June 12 14

(iii) 2,82,000 June 25 14

(iv) 4,06,000 July 6 16

Telegram @ t.me/carahulgargrsa, Follow Instagram @https://www.instagram.com/rahulgarg_thefighter

Interest and Discount (Includes interest accrued on investments) 8,860

Other Income 220

Interest expended 2,720

Operating expenses 2,830

Interest accrued on Investments 10

a. Rebate on bills discounted to be provided for 30

Standard assets 4,000

Sub-standard assets 2,240

Doubtful assets − (fully unsecured) 390

Doubtful assets – covered fully by security

Less than 1 year 100

More than 1 year, but less than 3 years 600

More than 3 years 600

Loss Assets 376

c. Provide 35% of the profit towards provision for taxation.

d. Transfer 25% of the profit to Statutory Reserve.

Telegram @ t.me/carahulgargrsa, Follow Instagram @https://www.instagram.com/rahulgarg_thefighter

Period Overdue Interest Amount Assets outstanding

Washing Machines Upto 12 months 450.00 20,550.00

Air Conditioners For 24 months 25.25 675.00

Music systems For 30 months 15.25 225.00

Refrigerators For 21 months 60.15 1,050.00

Air purifiers Upto 12 months 18.25 980.00

LCD Televisions For 45 months 420.00 21,200.00

You are required to calculate the amount of additional provision to be made.

Telegram @ t.me/carahulgargrsa, Follow Instagram @https://www.instagram.com/rahulgarg_thefighter

The other information available in respect of lease agreement is :

b. The implicit rate of interest is 10%.

payment plus the residual value is equal to the cost of asset.

Ascertain in the hand of Jet Carriers Ltd.

a. The annual lease payment.

b. The unearned finance income.

c. The segregation of finance income.