ADVANCED ACCOUNTING 23-09-2023

National Management College – Perundurai

CA Intermediate

Paper-5 Advanced Accounting

Date: 23.09.2023 Total Marks : 100

        Time: 3 Marks

Answer all the questions

1)  A. Given below are the interests on advances of a commercial bank (₹ in lakhs)

Performing Assets                                            NPA

Interest             Interest                            Interest     Interest

Earned              received                           earned       received

Term Loans                               120                       80                                   75                  5

Cash credits and overdrafts   750                      650                                150                 12

Bills purchased and discounted   150               150                                 100                 20

Find out the income to be recognized for the year ended 31st March, 20X1.

  1. From the following information, find out the amount of provisions to be shown in the profit and Loss Account of AG bank.   

                                                                              ₹ in lakhs  

Assets

Standard                                                                5000

Sub-standard                                                       4000

Doubt full   :   for one year                                800

: for three years                             600

: for more than three years         200

Loss Assets                                                         1000

Commission on government business      82

Profit on sale of land and building          27

Loss on exchange transactions                52

Interest paid on deposit                            27,20

Auditors’ fees and allowances                  1,20

Director’s fees and allowances                 2,50

Advertisements                                            1,80

Salaries, allowances and bonus to employees   12,40

  1. The following is an extract from Trial Balance of overseas Bank as at 31stMarch,20X1

₹ ₹

Bills discounted 12,64,000

Rebate on  bills discounted not due

on March 31st, 20X0 22,160

Discount received                      1,05,708

 

An analysis of the bills discounted is as follows:

          Amount             Due Date20X1 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                         June 6                                                16

Calculate  Rebate on Bills Discounted as on 31-3-20X1 and show necessary journal entries.

D   Templeton Finance Ltd. Is a non – banking finance company. It provides the following information:

 

Leased out assets

Investment:

In shares of subsidiaries and group companies

In debentures of subsidiaries and group companies

Cash and bank balances

Deferred expenditure

Paid-up equity capital

Free reserves

Loans

Deposits

₹ in crores

800

 

100

100

200

200

100

500

400

400

You are required to compute ‘Net owned Fund’ of Templeton Finance Ltd. As per Non-Banking Financial Company – Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank ) Directions,2016

Commission on government business

Profit on sale of land and building

Loss on exchange transactions

Interest paid on deposit

Auditors’ fees and allowances

Director’s fees and allowances

Advertisements

Salaries, allowances and bonus to employees

Payment to Provident fund

Printing and stationery

Repairs and maintenance

Postage, telegrams, telephones

82

27

52

27,20

1,20

2,50

1,80

12,40

2,80

1,40

50

80

Other Information:                                                                                                                                                                               

(i)          Interest on NPA is as follows

                                                          Earned (₹’000)                                  Collected(₹’000)

Cash credit                                               8,20                                                                4,00                                                     Overdraft                                                450                                                                  1,00

Term Loans                                             750                                                                  2,50

(ii)         Classification of Non Performing Advances (,000 ₹)                                                                                             Standard                                                                                               30,00

Sub-standard                                                                                        11,20

Doubtful assets not covered by security                                          2,00

Doubtful assets covered by security for one year                          50

Loss Assets                                                                                            2,00

(iii) Investments           27,50

Bank should not keep more than 25% of its investment as ‘held-for-maturity’ investment. The market value of its rest 75% investment is ₹ 19,75,000 as on 31-3-20X1.                                        (5Marks)

3) (A) Peoples Financiers Ltd. Is an NBFC Providing Hire purchase Solutions for acquiring consumer                       durables  

Asset FundedInterest Overdue but recognized in

Profit & loss

Net Book Value

of Assets

outstanding

Period OverdueInterest Amount
(₹ in crore)(₹ in crore)
LCD Televisions

Washing Machines

Refrigerators

Air Conditioners

    Upto 12 month

For 24 month

For 30 month

For 45 month

480,00

102.00

50.50

26.75

20,123.00

2,410.00

1,280.00

647.00

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

2)(A) A commercial bank has the following capital funds and assets. Segregate the capital funds into Tier I and Tier II  capitals. Find out the risk-adjusted asset and risk weighted assets ratio-

Capital Funds: (Figures  in Lakhs)

Equity Share Capital 4,80,00

Statutory Reserve 2,80,00

Capital Reserve (of which ₹ 280 lakhs were due    12,10

to revaluation of assets and the balance due to sale)

Assets:

Cash Balance with RBI       4,80

Balance with other Bank                12,50

Claims on Banks    28,50

Other Investments  782,50

Loans and Advances:

(i)  Guaranteed by government  128,20

(ii) Guaranteed by public sector  702,10

undertakings    of Government of India

(iii) Others             52,02,50

Premise, furniture and fixtures    182,00

Others Assets  201.20

Off-Balance Sheet Items:

Acceptances, endorsements and letters of credit             37,02,50

 

2) (B) From the following information, prepare profit and Loss A/c of KC Bank for the year ended 31st March, 20X1: (10 Marks)

Items ₹ 000

Interest on cash credit 18,20

Interest on overdraft   7,50

Interest on term loans 15,40

Income on investments   8,40

Interest on balance with RBI   1,50

Commission on remittances and transfer      75

Commission on letters of credit   1,18

3)(B) A Ltd acquired 1,600 ordinary shares of ₹ 100 each of B Ltd on 1st July, 20X1. On 31st December, 20X1, the balance sheets of the two companies were as given below:

Balance Sheet of A Ltd. And its subsidiary, B Ltd.

as at 31st December, 20X1

ParticularsNote

No.

A Ltd.

(₹)

B Ltd.

(₹)

I             Equity and Liabilites

(1)   Shareholder’s Funds

(a)     Share Capital

(b)     Reserves and Surplus

(2) Current Liabilities

(a)     Trade payable

(b)     Short term borrowings

 

Total

II    Assets

 

(1)     Non-current assets

(d)Property, Plant and Equipment

(b) Non-current Investments

(2) Current assets     

(a) Inventories

(b) Trade receivables

(c) Cash & Cash equivalents

 

Total

 

 

 

 

1

2

 

3

 

 

 

 

 

 

4

5

 

 

 

6

 

 

5,00,000

2,97,200

 

47,100

80,000

 

 

 

2,00,000

1,82,000

 

17,400

 

9,24,300

 

3,99,400
 

 

3,90,000

3,40,000

 

1,20,000

59,800

14,500

 

 

3,15,000

 

36,400

40,000

8,000

9,24,3003,99,400

Notes to Accounts

 

A Ltd.

B. Ltd

 

1.

 

 

 

2.

 

 

 

 

 

 

3.

 

4.

 

 

 

5.

 

6.

Share Capital

5,000 shares of ₹ 100 each, fully paid up

2,000 shares of ₹ 100 each, fully paid up

 

Total

Reserves and Surplus

General Reserves

Profit & loss

 

Total

 

Short term borrowings

Bank overdraft

Property plant and equipment

Land and building

Plant & Machinery

 

Total

Non-current Investments

Investment in B Ltd (at cost)

Cash & Cash equivalents

cash

 

 

 

5,00,000

 

5,00,000

 

2,40,000

57,200

 

 

2,00,000

 

2,00,000

 

1,00,000

82,000

 

 

2,97,200

 

1,82,000

 

80,000

 

1,50,000

2,40,000

 

3,90,000

 

3,40,000

 

14,500

                                            —

 

1,80,000

1,35,000

 

3,15,000

 

 

8,000

The profit & Loss Accounts of B Ltd. Showed a credit balance of ₹ 30,000 on 1 st January, 20X1 out of which a dividend of 10% was paid on 1 st August, 20X1; A Ltd. Credited the dividend received to its profit & Loss Account. The plant & Machinery which stood at ₹ 1,50,000 on 1 st January, 20X1 was considered as worth ₹ 1,80,000 on 1 st July, 20X1; this figure is to be considered while consolidating the Balance Sheets. The rate of depreciation on plant & machinery is 10% (computed on the basis of useful lives).

Prepare consolidated Balance Sheet as at 31st December, 20X1.

(A) X Co. Ltd. Went into voluntary liquidation on 1 st April, 1992. The following balance are extracted from its books on that date: (10 Marks)

                                                                                      ₹                                                                                       ₹

Capital                                                                                              Machinery                                        90,000

24,000 equity shares                                                                     Leasehold Properties                          1,20,000

of ₹ 10 each                                                           2,40,000          Stock                                                 3,000

Debentures (Secured                                                                     Debtors                                             1,50,000

by floating charge)                                              1,50,000           Investments                                     18,000

Bank overdraft                                                    54,000               Cash in hand                                   3,000

Creditors                                                              60,000               Profit & Loss A/c                            1,20,000

5,04,000                                                                        5,04,000

 

The following assets are valued as under:

Machinery

Leasehold Properties

Investments

Stock

Debtors

1,80,000

2,18,000

12,000

6,000

1,40,000

The bank overdraft is secured by deposit of title deeds of leasehold properties: There were preferential creditors ₹ 3,000 which were not included in creditors ₹ 60,000

Prepare a statement of affairs to be submitted to the meeting of members/creditors

 

4) (b) Bad Luck Ltd. Went into voluntary liquidation on 31 st December, 1992 when is Balance Sheet was as under:

Liabilities                                                                       ₹       Assets                                                                          ₹

Share Capital:                                                                                  Freehold Property                                           5,80,000        6,000 5% Cumulative pref.                                                          Plant & Machinery                                           2,89,000        Shares of ₹ 100 each                                                                      Motor Vehicles                                                 57,500            Fully paid                                                              6,00,000          Stock                                                                   1,86,000        50,000 Equity Shares of                                                               Debtors                                                               74,000           ₹ 10 each fully called                                                                    P & L A/c                                                            2,14,000        (less calls-in-arrear)

Amounting to ₹ 25,000                                    4,75,000

Share Premium A/c                                          50,000                                                                                                                  5% Debentures                                                  1,00,000                                                                                                                  Interest on Debentures                                   2,500

Bank Overdraft                                                 58.000                                                                                                                      Creditors                                                            1,15,000

                                                                     14,00,500                                                                             14,00,500

The Preference dividends are in arrear from 1 st January, 1989

The company’s articles provide for the repayment to the Preference Shareholders of their capital together with a premium thereon of ₹ 12.50 per share and any arrears of dividend. These sums to be paid in priority to the equity shareholders.

The bank overdraft was guaranteed by the directors who were called upon and duly implemented their guarantee.

The Liquidator realized the assets as follows: Freehold Property ₹ 7,00,000, plant & Machinery ₹ 2,40,000; Motor Vehicles ₹ 59,000; Stock ₹1,50,000; Debtors ₹60,000. He duly collected the call-in-arrear.

Creditors were paid less discount of 5 per cent. The Debentures and accrued interest were repaid on 31 st March, 1993.

Liquidation costs were ₹ 3,750 and the liquidator’s remuncration was 21/2% on the amounts realized.

Prepare the Liquidator’s Statement of Account

5) (A) Super Express Ltd. And fast Express Ltd. Were in company business. They decided to from a new company named Super Fast Express Ltd. The balance sheets of both the companies were as under:

Super Express Ltd.

Balance Sheet as at 31 st December,2002

LiabilitiesAssets
20,000 Equity Share

of ₹ 100 each

Provident Fund

Sunday Creditors

Insurance Reserve

 

 

20,00,000

1,00,000

60,000

1,00,000

Building

Machinery

Stock

Sunday Debtors

Cash at Bank

Cash in Hand

10,00,000

4,00,000

3,00,000

2,40,000

2,20,000

1,00,000

22,60,00022,60,000

Fast Express Ltd.

Balance Sheet as at 31 st December, 2002

LiabilitiesAssets
10,000 Equity Shares

Of ₹ 100 each

Employees Profit sharing

Account

Sundry Creditors

Reserve Account

Surplus

 

10,00,000

 

60,000

40,000

1,00,000

1,00,000

Goodwill

Building

Machinery

Stock

Sundry Debtors

Cash at Bank

Cash in hand

1,00,000

6,00,000

5,00,000

40,000

40,000

10,000

10,000

13,00,00013,00,000

The assets and liabilities of both the companies were taken over by the new company their book values. The companies were allocated equity shares of ₹ 100 each in lieu of purchase consideration.

Prepare opening balance sheet of Super Fast Express Ltd.

5)(B)Following is the summarized Balance Sheet of Ravi Limited as on 31 st March, 2014.

Balance Sheet as on 31 st March 2014

LiabilitiesAmount

AssetsAmount

Authorised and Issued equity share capital:

30,000 shares of ₹ 100 each fully paid

20,000  7%  cumulative preference shares of

₹ 100 each fully paid

General Reserve

Loan from Director

Trade Payable

Outstanding expenses

Proposed dividend

 

 

 

 

30,00,000

20,00,000

 

6,00,000

4,40,000

24,60,000

3,20,000

3,00,000

 

 

Patent

Plant & machinery

Building

 

Trade receivables

Inventory

Cash

Bank Balance

Profit and Loss

account

 

 

4,00,000

30,00,000

5,50,000

 

23,50,000

16,30,000

1,20,000

2,30,000

 

8,40,000

 

 

91,20,000

 

 

91,20,000

Note: The arrears of preference dividend amount to ₹ 2,80,000.

The company had suffered losses since last 3 years due to bad market conditions and hope for a better position in the future.

 

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