Total No. of Questions – 6
Time Allowed – 3 Hours Maximum Marks – 100
FPR
Answer to questions are to be given only in English except in the case of candidates who have opted for Hindi Medium. If a candidate has not opted for Hindi Medium, his /her
Answers in Hindi will not be valued.
Question No. 1 is compulsory.
Candidates are also required to answer any four questions from the remaining five questions.
Working notes should form part of the respective answer.
- (a) TQ Cycles Ltd. Is in the manufacturing of bicycles, a labour intensive manufacturing sector. In April 2022, the Government enhanced the minimum wages payable to workers with retrospective effect from the 1stJanuary, 2022. Due to this legislative change, the additional wages for the period from Janauary 2022 to March 2022 amounted to 30lakhs. The management asked the Finance manager to charge ₹ 30 lakhs as prior period item while finalizing financial statements for the year 2022-23. Further, the Finance manager is of the view that this amount being abnormal should be disclosed as extra- ordinary item in the Profit and loss account for the financial year 2021-22.
Discuss with reference to applicable Accounting Standards.
(b) NAT, a listed entity, as on 1st April, 2021 had the following capital structure:
| ₹ | |
| 10,00,000 Equity Shares having face value of ₹ each | 10,00,000 |
| 10,00,000 8% Preference shares having face value of ₹ 10 each | 1,00,00,000 |
During the year 2021 – 2022, the company had profit after tax of ₹ 90,00,000
On 1st January, 2022, NAT made a bonus issue of one equity share for every 2 equity shares outstanding as at 31st December, 2021.
On 1st January, 2022 NAT issued 2,00,000 equity shares of ₹ 1 each at their full market price of ₹ 7,60 per share.
NAT’s shares were trading at ₹ 8.05 per share on 31st March, 2022.
Further it has been provided that the basic earnings per share for the year ended 31st March, 2021 was previously reported at ₹ 62.30.
You are required to:
(i) Calculate the basic earnings per share to be reported in the financial statements of NAT for the year ended 31st March, 2022 including the comparative figure, in accordance with AS-20 Earnings per share.
(ii) Explain why the bonus issue of shares and the shares issue at full market price are treated differently in the calculation of the basic earnings per share?
(c) Alloy Fabrication Limited is engaged in manufacturing of iron and steel rods. The company is in the process of finalization of the accounts for the year ended 31st March, 2022 and needs your advice on the following issues in line with the provisions of AS-29:
(i) On 1st April, 2019, the company installed a huge furnace in their plant. The furnace has a lining that needs to be replaced every five years for technical reasons. At the Balance Sheet daten31st March, 2022, the company does not provide any provision for replacement of lining of the furnace.
(ii) A case has been filed against the company in the consumer court and a notice for levy of a penalty of ₹ 50 Lakhs has been received. The company has appointed a lawyer to defend the case for a fee of ₹ 5 Lakhs. 60% of the fees have been paid in advance and rest 40% will be paid after finalization of the case. There are 70% chances that the penalty may not be levied.
(d) Grace Ltd. A firm of contractors provided the following information in respect of a contract for the year ended on 31st March, 2022:
| Particulars | ( ₹ in ‘000) |
| Fixed Contract Price with an escalation clause
Work Certified
Work not certified (includes ₹ 26,25,000 for materials issued, out of which material Lying unused at the end of the period is 1,40,000
Estimated further cost to completion
Progress Payment Received
Payment to be Received Escalation in cost is by 8% and accordingly the contract price is increased 8% |
35,000
17,500
3,815
17,325
14,000
4,900 |
From the above information, you are required to:
(i) Compute the contract revenue to be recognized,
(ii) Calculate Profit / Loss for the year ended 31st March, 2022 and additional provision for loss to be made, if any, for the year ended 31st March,2022.
- The summarized Balance Sheet of A Ltd. And B Ltd. As at 31stMarch, 2022 are as under:
| A Ltd. (in ₹) | B Ltd. (in ₹) | |
| Equity shares of ₹ 10 each, fully paid up
Share Premium Account General Reserve Profit and Loss Account Retirement Gratuity Fund Account 10% Debentures Unsecured Loan (including loan from A Ltd.) Trade payables
Land and Buildings Plant and Machinery Long term advance to B Ltd. Inventories Trade Receivables Cash and Bank
|
30,00,000
4,00,000 6,20,000 3,60,000 1,00,000 20,00,000 6,00,000 1,00,000 |
24,00,000
– 5,00,000 3,20,000 – – 8,20,000 3,40,000 |
|
71,80,000 |
43,80,000
|
|
|
28,00,000 20,00,000 2,20,000 10,40,000 8,20,000 3,00,000
|
21,00,000 7,60,000 – 7,00,000 5,20,000 3,00,000
|
|
|
71,80,000 |
43,80,000 |
- Ltd is to declare and pay ₹ 1 per equity share as dividend, before the following amalgamation takes place with Z Ltd.
Z Ltd. Was incorporated to take over the business of both A Ltd. And B Ltd.
(a) The authorized share capital of Z Ltd. Is ₹ 60 lakhs divided into 6 lakhs equity shares of ₹ 10 each
(b) As per Registered Valuer the value of equity shares of A Ltd. Is ₹ 18 per share and of B Ltd. Is ₹ 12 per share respectively and agreed by respective shareholders of the companies.
(c) 10% Debentures of A Ltd. to be issued 12% Debentures of Z Ltd. at per in consideration of their holdings
(d) A contingent liability of A Ltd. of ₹ 2,00,000 is to be treated as actual liability
(e) Liquidation expenses including Registered Valuer fees of A Ltd. ₹ 50,000 and B Ltd ₹ 30,000 respectively to be borne by Z Ltd.
(f) The shareholders of A Ltd. and B Lid. Is to be paid by issuing sufficient number of fully paid up equity shares of ₹ 10 each at a premium of 10 per share.
Assuming amalgamation in the nature of purchase, you are required to pass the necessary journal entries (narrations not required) in the books of Z Ltd. and prepare Balance Sheet of Z Ltd. immediately after amalgamation of both the companies.
(15 Marks)
- (a) White Ltd. acquired 2,250 shares of Black Ltd. on 1stOctober, 2020. The summarized balance sheets of both the companies as on 31stMarch, 2021 are give below:
| White Ltd. (₹) | Black Ltd. (₹) | |
| (I) Equity and Liabilities
(1) Shareholder’s fund Share capital (Equity shares of ₹ 100 each of ₹ 100 each fully paid up)
Reserves and Surplus General Reserve Profit and loss account
(2) Current Liabilities Trade payables Due to White Ltd. |
6,50,000
60,000 1,50,000
1,15,000 – |
3,00,000
30,000 90,000
75,000 30,000 |
| Total | 9,75,000 | 5,25,000 |
| (II) Assets:
Non-current assets Property, Plant and Equipment
Investments Shares in Bank Ltd. (2,250 shares) Current assets
Inventories Due from Black Ltd. Cash and cash equivalents |
5,80,000
2,70,000
50,000 36,000 39,000 |
3,51,000
–
1,20,000 – 54,000 |
| Total | 9,75,000 | 5,25,000 |
Other information:
(i) During the year, Black Limited fabricated a machine, which is sold to White Ltd. for ₹ 39,000, the transaction being completed on 30th March, 2021.
(ii) Cash in transit from Black Ltd. to White Ltd. was ₹ 60,000 on 31st March, 2021.
(iii) Profits during the year 2020-2021 were earned evenly.
(iv) The balances of Reserves and profit and Loss account as on 1st April, 2020 were as follows:
Reserves Profit and loss a/c
₹ ₹
White Ltd. 30,000 15,000 profit
Black Ltd 30,000 10,000 loss
You are required to prepare consolidated Balance Sheet of the group as on 31st March, 2021 as per the requirement of Schedule III of the Companies Act, 2013.
(b) (i) White a short note on Non- performing assets of a banking company.
(ii) Dee Bank provides you the following information relating to their two cash credit accounts:
| Account A
₹ In lakhs |
Account B
₹ In Lakhs |
|
| Sanctioned limit | 4,500 | 3,200 |
| Drawing power | 4,200 | 2,500 |
| Amount outstanding continuously
From 01.01.2021 to 31.03.2021 |
3,600 |
2,000 |
| Total Interest debited for the above period | 288 | 315 |
| Total credits for the above period | 120 | 380 |
State with reason whether the above cash credit accounts are
NPA or not ?
- (a) Ajay , Vijay and Sanjay have been in partnership for a number of years, sharing profit and losses in the ratio 7:7: 4 as a wholesale stationers running business under the name “AVS Traders”. On 31stMarch, 2021, it was found that some frauds were committed by Sanjay during the year 2020-2021. So, was decided to dissolve the partnership business on 31stMarch, 2021 when their Balance sheet stood as under:
Balance Sheet as at 31st March,2021
| Liabilities | Amount (₹) | Assets | Amount
(₹) |
| Capital accounts
Ajay 1,80,000
Vijay 1,80,000
General Reserve
Trade Creditors
Bills payable |
3,60,000
36,000
80,000
30,000 |
Building
Inventory
Investments
Trade Debtors
Cash & Bank
Sanjay’s Capital (overdrawn) |
1,90,000
1,30,000
50,000
70,000
26,000
40,000 |
| 5,06,000 | 5,06,000 |
Additional Information:
(i) Following frauds were committed by Sanjay:
(1) Investments costing ₹ 8,000 were sold by Sanjay at ₹ 11,000 and the funds were transferred to to his personal account. This sale was omitted from firm’s books.
(2) A cheque for ₹ 7,000 received from trade debtors was not recorded in the books and was misappropriated by Sanjay.
(ii) A trade creditor agreed to take over investments of the book value of ₹ 9,000 at ₹ 13,000. The rest of the trade creditors were paid off at a discount of 10%.
(iii) Other assets were realized as follows:
| Inventory | ₹ 1,20,000 |
| Building | 110% of book value |
| Investments | The rest of the investments were sold at a profit of ₹ 7,000 |
| Trade Debtors | The rest of the trade debtors were realized at a discount of 10% |
(iv) The Bills payables were settled at a discount of ₹ 500.
(v) The expenses of dissolution amounted to ₹ 8,060.
(vi) It was found out, that realization from Sanjay’s private assets would be ₹ 7,000.
You are required to prepare:
(1) Realisation Account
(2) Cash & Bank Account
(3) Partner’s Capital Account
(All workings should form part of your answer)
(b) Explain the nature of a Limited Liability Partnership. Who can be a designated partner in a Limited Liability Partnership and what are their liabilities?
- (a) Quick Ltd. has the following capital structure as on 31stMarch, 2021:
| ₹ In Crores | |||
| (1)
(2)
(3)
|
Share Capital
(Equity shares of ₹ 10 each, fully paid) Reserves and Surplus: General Reserve Securities Premium Account Profit and Loss Account Statutory Reserve Capital Redemption Reserve Plant Revaluation Reserve
Loan Funds: Secured Unsecured |
336 126 126 180 87 33
2,200 320 |
462
888
2,520 |
On the recommendations of the Board of Directors, on 16th September, 2021, the shareholders of the company have approved a proposal to buy –back of equity shares. The prevailing market value of the company’s share is ₹ 20 per share and in order to include the existing shareholders to offer their shares for buy-back, it was decided to offer a price of 50% over market value. The company had sufficient balance in its bank account for the buy-back of shares.
You are required to compute the maximum number of shares that can be bought back in the light of the above information and also under a situation where the loan funds of the company were either ₹ 1,680 Crores or ₹ 2,100 Crores.
Assuming that the entire buy-back is completed by 31st December, 2021, pass the necessary accounting entries ( narrations not required)in the books of the company in each situation.
(b) Deluxe Commercial Bank has the following capital funds and assets:
| ₹ In crores | |
| Capital Funds and Assets
Capital Funds:
Paid up Equity Share Capital
Statutory Reserves
Securities Premium
Capital Reserve (of which ₹ 128 Crores were due to revaluation of assets and balance due to sale of assets)
Profit and Loss Account (Dr. Balance)
Assets:
(i) Cash balance with Reserve Bank of India
(ii) Claims on Banks
(iii) Other Investments
Loans and Advances: (i) Guaranteed by Government of India and State Governments
(ii) Bank Staff Advances-fully covered by supernnuation benefit
Other loans and advances
Others Asset:
Acceptance, Endorsements and Letters of Credit
Guarantee and other obligations |
2,400
480
480
48
192
544
7,360
160
544
4,800
160 |
You are required to:
(i) Segregated the capital funds into Tier I and Tire II capitals, and
(ii) Find out the risk-adjusted asset and risk weighted assets ratio.
- Answer any four of the following:
(a) XYZ Ltd. has 5 business segments. Profit / Loss of each of the segments for the year ended 31st March, 2022 has been provided below. You are required to identify from the following whether reportable segments or not reportable segments, on the basis of “ Profitability test” as per AS -17.
| Segment | Profit (Loss) ₹ in lakhs |
| A | 225 |
| B | 25 |
| C | (175) |
| D | (20) |
| E | (105 |
(b) In a limited company, Equity Share Capital is held by X,Y and Z in the proportion of 30 : 30 : 40. Also A,B and C hold preference share capital in the proportion of 50 : 30 : 20. The company has not paid the dividend to holders of preference share capital for more than 3 years. Given that the paid-up equity share capital of the company is ₹ 1 Crore and that of preference share capital is ₹50 Lakh.
(i) Find out the relative weight in the voting right of equity shareholders and preference shareholders.
(ii) Also the company proposing to issue equity shares with differential voting rights (DVR) to the ectent of ₹ 50 lakhs. Assuming the company fulfils other conditions pertaining to the issue of shares with DVR. Can the company issue the shares with DVR?
(c) What are the disclosures requirements for operating leases by the lessee as per AS-19?
(d) The position of Bad Luck Limited on its liquidation on 31st March, 2022 is as under:
Issued and paid:
90,000, 10% Preference Shares of ₹100 each, fully paid
90,000 Equity Shares of ₹ 100 each, ₹ fully paid
30,000 Equity Shares of ₹50 each, ₹ 40 paid up
10,000 Equity Shares of ₹ 10 each, ₹ 4 paid up
Calls in arrears are ₹ 3,00,000 and calls received in advance ₹ 2,55,000. Preference dividends are in arrears for two years. Amount left with the liquidator after discharging of all liabilities is ₹ 1,25,15,000. Articles of Association of the company provide for payment of preference dividend arrears in priority to return of equity capital.
You are required to prepare the Liquidator’s Final Statement of Account:
(e) On 1st April, 2021, a company offered 100 shares to each of its 5,000 employees at ₹ 50 per share. The employees are given a year to accept the offer, The shares issued under the plan shall be subject to lock-in on transfer for three years from the grant date. The market price of shares of the company on the grant date is ₹ 60 per share. Due to post –vesting restrictions on transfer, the fair value of shares issued under 0t20he plan is estimated at ₹ 56 per share and fair value per option worked out to be ₹ 6.
On 31st March, 2022, 4000 employees accepted the offer and paid ₹50 per share purchased. Nominal value of each share is ₹ 10.
You are required to pass journal entries (with narration) as would appear in the books of the company up to 31st March, 2022.
