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Assignment of Corporate Financial Accounting ID-R191415
Assignment of Corporate Financial Accounting ID-R191415
Spring-2020
Submitted To
Md. Musharof Hossain
Assistant Professor
Submitted By
Date of Examination-19.06.2020
Date of submission-21.06.2020
Answer to the question no- 1(a)
An entity’s financial statement typically includes four basic components. These
are:
1. Statement of financial position/Balance Sheet.
2. Statement of profit or loss/ Income Statement.
3. Statement of Cash Flows/ Cash Flows Statement.
4. Statement of Changes in Shareholder’s Equity/Statement of Changes in Equity.
1. Cash.
2. Marketable securities.
3. Prepaid expenses.
4. Accounts receivable.
5. Inventory.
6. Fixed assets.
Liabilities:
1. Accounts payable.
2. Accrued liabilities.
3. Customer prepayments.
4. Taxes payable.
5. Short-term debt.
6. Long-term debt.
Answer to the question no-02(a)
Statement of general purchasing power gain or loss
Particular Historical Adjusted Price Purchasing
Amount Factor Level Power
Adjusted Gain or
Amount Loss
Conversion of Monetary Assets:
Cash at Bank 15000 125/110 17045
Account Receivable 45000 125/110 51136
Add: Increase in monetary assets during year
Cash at Bank 6000 125/120 6250
Account Receivable (5000) 125/120 (5208)
It reflects the current and not the historical cost of the balance sheet.
Profit and loss will reflect the true condition of the company.
Financial ratios based on figures, adjusted to the current value, are more meaningful.
Disadvantage
reinstate the figures of the company and present the financial statements.
Inflation accounting is a complicated process and it involves too much calculation and
In times of deflation, the depreciation cost will be on a lower side hence it does not
X Ltd
factors
TK. TK.
Issue of share capital 3,00,000 150/100 4,50,000
Bank loan 2,00,000 150/125 2,40,000
Sales (320X2000) 6,40,000 150/125 7,68,000
Total 11,40,000 14,58,000
Less:
Purchase of plant 60,000 150/100 90,000
Purchase of goods 4,60,000 150/100 6,90,000
Expenses 20,000 150/125 24,000
Bank 21,000 150/140 22,500
Interest(2,00,000X14%X9/12
)
Total 5,61,000 8,26,500
Net Monetary items on (11,40,000- (14,58,000-
X Ltd
Income statement
TK. TK.
Sales 6,40,000 150/125 7,68,000
Less- Cost of goods 4,60,000 150/100 6,90,000
sold
Expenses 20,000 150/125 24,000
Interest on bank loan 21,000 150/140 22,500
Depreciation(60,000/10 6,000 150/100 9,000
)
Total 5,07,000 7,45,500
Net income 1,33,000 22,500
X Ltd
TK. TK.
Issue of share capital 3,00,000 150/100 4,50,000
Bank loan 2,00,000 150/125 2,40,000
Accumulated profit 1,33,000 22,500
Total Liabilities 6,33,000 7,12,500
Asset
Plant 60,000 150/100 90,000
Less: Depreciation 6,000 150/100 9,000
Cash at bank 54,000 81,000
Purchasing power 5,79,000 150/150 5,25,000
loss
Total Asset 6,33,000 7,12,500
From the standpoint of the lessor, leases may be classified for accounting
purposes as:
3. The lease term is equal to 75% or more of the estimated economic life of
the property
4. The present value of the minimum lease payments (excluding executory
accounting requires the companies to keep their records and present the financial
purchase power (CPP) as it suffers from that it does not take into the individual price
index related to the particular assets of a company. The RCA technique uses the index
directly relevant to the companies individual assets and not the general price index.
not be difficult to find out the relevant price index to be used in a particular case.
that assets and liabilities be measured at the current value at which they could be
sold or settled as of the current date. This varies from the historically-used
method of only recording assets and liabilities at the amounts at which they were
method is based on the concept that a business enterprise is a going concern which is
continuously replacing its assets. The method uses current dollars/ rupees and values
accounts.
Requirement-(i)
This is a capital lease to Flynn since the lease term is 78% (7/9) of the asset’s economic life.
In addition, the present value of the minimum lease payment is more than 90% of the fair
This is a capital lease to Bensen since collectability of the lease payment is reasonable
predictable, there are no important uncertainties surrounding the economic life. Because the
fair value of the equipment (160000) exceeds the lessor’s cost (130000). The lease is a sales
type lease.
Requirement – (ii)
Here,
=29668.73084 Answer
Requirement- (iii)
Here,
=5.111407327X29669=151650
01/01/2019
12/31/2019
[ 151650/7=21664]
[(151650-29669)X0.12)=14638]
Requirement- (iv)
Workings:
*(29669X5.23053786)+(10000X0.481658)=160000
*130000-(10000X0.481658)=125183
*29699X5.23053786=155185
01/01/2019
Sales-----------Cr 155185
Inventory-----Cr 129998
Cash-----Dr 29669
12/31/2019
[(160000-29669)X.11]=14336
Particular Amount
Current Tax (160000X35%) 56000
Less- Over Provision 3000
Add-Deferred Tax Liabilities(8000X35%) 2800
Tax Changes for the Period 55800
Requirement-a
(1,00,000/5)
Total Accounting Profit 50,000 50,000 50,000 50,000 50,000
Less-Tax Depreciation (1,00,000X25%) (25,000 (25,000 (25,000 (25,000 ------
) ) ) )
Taxable Income 25,000 25,000 25,000 25,000 50,000
Current Tax (40%) 10,000 10,000 10,000 10,000 50,000
Requirement-(b)
0
Less-Tax Base at year end (75000) (50000) (25000) ----- ------
Taxable Temporary Difference 5000 10000 15000 2000 -------
0
Deferred Tax (40%) 2000 4000 6000 8000 ------
0 0
Less: Tax Depreciation 25000 2500 2500 25000
0 0
Differences 5000 5000 5000 5000 (20000)
Deferred Tax 40% adjustment 2000 2000 2000 2000 (8000)
Requirement-(c)
ABC Company
0 0 0
Deferred Tax Adjustment 2000 2000 2000 2000 (8000)
Total 12000 1200 1200 1200 12000
0 0 0
Requirement-a
X Company
Tax Profit
Particular Amount
Income Tax on Profit (1100000X25%) 275000
Add-Deferred taxation 160000
Add-Under Provision (400000-380000) 20000
Tax on Profit for 2019 455000
Requirement –(b)
X Company
Balance Sheet
Particular Amount
(Current Liability)