| | | | | Roll No. Total No. of Questions — 7 Total No. of Printed Pages — 15 Time Allowed — 3 Hours Maximum Marks - 100 LON ‘Answers 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 Question No. 1 is compulsory. Candidates are also required to answer any five questions from the remaining six questions. Incase, any candidate answers extra questions(s)/sub-question(s) over and above the required number, then only the requisite number of questions first answered in the answer book shall be valued and subsequent extra question(s) answered shall be ignored. Where appropriate, suitable assumption/s should be made by the candidate. Working notes should form part of the respective answers. LON P.T.O.@Q) LON 1. Answer the following questions : @ b) Desire Limited acquired a patent for producing a product at a cost of % 1,00,00,000 for a period of 5 years. The life cycle of the product is also 5 years. The cost of the patent was capitalized by the company and it was amortized on straight line method. After 2 years, the company found that the product life-cycle may continue for another 5 years from then. The net cash flows from the product during these 5 years were expected to be % 45,00,000, % 42,00,000, % 40,00,000, % 38,00,000 and % 35,00,000. Patent is renewable and company changed amortization method from 3 year (i.e. From straight line Method to the ratio of expected net cash flows). Find out the amortization cost of the patent for each of the years (I" year to 7” year). The following information is available for TON Ltd. for the accounting year 2015-16 and 2016-17 : No. of shares outstanding prior to right issue — 15,00,000 shares; Right Issue - one new share for each three shares outstanding i.e. 5,00,000 Shares; 4 Right issue price - & 25; Last date to exercise right - 31" July 2016; Fair value of one equity share immediately prior to the exercise of rights on 31° July 2016 is & 35; Net profit for the year 2015-16 % 35,00,000 Net profit for the year 2016-17 7 45,00,000 You are required to compute : (® Basic earnings per share for the year 2015-16. (ii) Restated basic earnings per share for the year 2015-16 for right issue. (iii) Basic earnings per share for the year 2016-17. LON© @ @) LON {A specific government grant of € 15 Lakhs was received by USB Ltd. for acquisition of Hi-Tech Dairy Plant of % 95 ‘Lakhs during the year 2014-15. Plant has useful life of 10 years. The grant received was credited to deferred grant account. However during the year 2017-18, due to non-compliance of conditions laid down for the grant, the company had to refund the whole grant to the Government. Balance of the deferred grant account on that date was % 10.50 lakhs and written down value of plant was € 66.50 lakhs. (i) What should be the treatment of the refund of the grant, the effect on cost of the plant and the amount of depreciation to be charged during the year 2017-18 in the Profit and Loss account ? (ii) What should be the treatment of the refund of the grant and the amount of depreciation to be charged, if grant was deducted from the cost of the plant during the year 2014-15 assuming plant account showed balanced of € 56 lakhs as on 1.4.2017 ? Superbright Ltd, issued 10% debentures of & 25 lakhs on 30.06.2016. ‘These debentures have floating charge on fixed assets. Money raised from debentures to be utilized as under : Particulars ‘Amount (Zin lakhs) Construction of factory building 8 Purchase of Machinery 107 Working Capital Y Additional Information : Marks (j) Interest on debentures forthe year 2016-17 was paid by the company. Gi) In March 2017, Machinery was installed and ready for its intended use. ii) During the year, the company invested idle fund of % 4 lakhs (out of money raised from debentures) in bank’s fixed deposit and eared interest of € 24,000. (iv) The construction of the factory building was completed in July 2017. You are required to show the treatment of interest for the year ended 2016-17 as per AS-16. LON P.T.O.@) LON A,B, C and D were sharing profits and losses in the ratio of 3:2: 2:3. Due to fraud committed by C during the year, it was decided to dissolve the partnership on 31* March, 2017 when their Balance Sheet was as under : Liabilities ‘Amount ‘Assets ‘Amount ® @. Capital Building 95,000 A 60,000 |. Stock 60,900 B 40,000 | Investments 20,000 Debtors 29,800 D 55,000 | Cash 7,300 General reserve 15,000 | C’s Capital A/c 12,000 Trade creditors 39,000 Bills payable 16,000 2,25,000 2,28,000 Following information is given to you : (iC sold an investment costing % 3,900 at © 5,500 and the funds transferred to his personal account, No entry was made in firm’s book to record this transaction. Gi) C misappropriated a cheque for € 2,400 received from debtor and it was not recorded in the books. Gii) A creditor agreed to take over investments of book value of % 3,500 at % 4,800. The rest of the creditors were paid off at a discount of 2%. (iv) The other assets realized as follows : Building 105% of Book value Stock 75,000 Investments The rest of the investments were sold at a profit of 10%. Debtors The rest of the debtors were realized at a discount of 12% (v) The bills payable were settled at a discount of € 800. (vi) The expenses of dissolution amounted to € 5,200, (vii) It was found that realization from C’s private assets would only be 2,500. ‘You are required to prepare the following Ledger Accounts : (A) Realisation Account (B) Cash Account (©) Partners’ Capital Accounts LON Marks 166) LON Marks The summarised balance-sheet of Pee Limited as on 31% March, 2017 is as under: Equity and Liabilities ‘Amount @. ® Share Capital : Authorised Capital 2,50,000 Equity Shares of 10 each 25,00,000 5,000 Preference Shares of ® 100 each 5,00,000| _30,00,000 Issued, Subscribed and Paid up Capital : 2,40,000 Equity Shares of € 10 cach fully paid 24,00,000 3,000 Preference Shares of € 100 each fully paid 3,00,000] 27,00,000 (Issued two months back for the purpose of buy back) Reserves and Surplus Capital Reserve 10,00,000 Revenue Reserve 25,00,000 Securities Premium 27,00,000 Profit and Loss Account 35,00,000| 97,00,000 Current Liabilities Trade Payables 13,00,000 Other Current Liabilities 3,00,000| _16,00,000 1,40,00,000 ‘Assets Amount @), ®@ Fixed Assets Tangible Assets Building 25,00,000 Machinery 31,00,000 Furniture 20,00,000} 76,00,000 Non-Current investments 30,00,000 Current Assets Inventory 12,00,000 Trade Receivables 7,00,000 Cash at Bank 15,00,000 | _34,00,000 1,40,00,000 P.T.O.) © LON On 1* April, 2017, the company announced the buy-back of 20% of its equity shares @ 60 per share. For this purpose, the company sold all of its investments for ® 25,00,000. The company achieved its target of buy back. You are required to : (@® Pass necessary Journal Entries for the above transactions. (ii) Prepare Balance Sheet of the company after buy back of shares. The summarized Balance Sheet of Spices Ltd. as on 31" March, 2018 is as under : Equity and Liabilities ‘Amount ® Share Capital ; 9,000 equity shares of © 10 each fully paid up 90,000 General Reserve 38,000 Debenture Redemption Reserve 35,000 12% Convertible Debentures : 1200 Debentures of % 50 each 60,000 Unsecured Loans 28,000 Short Term Borrowings 19,000 ‘ 2,70,000 ‘Assets ‘Amount ®, Fixed Assets (at cost less depreciation) 72,000 Debentures Redemption Reserve Investments 34,000 Cash and Bank Balances 86,000 Other Current Assets 78,000 2,70,000 ‘The debentures are due for redemption on 1* April, 2018. The terms of issue of debentures provided that they were redeemable at a premium of 10% and also conferred option to the debenture holders to convert 40% of their holding into equity shares at a predetermined price of % 11 per share and the balance payment in cash. LON Marks4. @ LON Further following information are given : ‘Marks (i) Except for debenture holders holding 200 debentures in aggregate, rest of them exercised the option for maximum conversion. Gi) The investments sold for € 56,000. (iii) All transactions were executed on 1" April, 2018. (iv) Premium on redemption of debentures is to be adjusted against General Reserve. You are required to : (A) Prepare the Balance Sheet of Spices Ltd. as on 01.04.2018 after giving effect to the redemption. (B) Show your calculations in respect of the number of equity shares to be allotted. ‘The summarised Balance Sheet of M/s Venus Ltd. as on 31 March, 2018 is riven below Liabilities Amount Ec ‘Share Capital 3 35,000 Equity Shares of € 50 each fully paid up 17,50,000 Reserves & Surplus Profit & Loss Statement (Debit Balance) (2,42,375) ‘Non-Current Liabilities : 5% Debentures 2,80,000 Interest Accured 7,000 2,87,000 (Secured by floating charge on all assets) Current Liabilites : Bank Overdraft 43,750 (Secured by hypothecation of stock) Trade payables 63,000 Total 19,01,375 16 P.T.O.8) LON Assets Amount ® ‘Non-Current Assets : Tangible Assets : Land & Building 7,87,500 Plant & Machinery 962,500 Fumiture & Fixtures 40,250 Current Assets : Stock 66,500 Trade Receivables 43,750 Cash & Bank Balance 875 Total 19,01,375 Ws Venus Lid, went into voluntary li on on 31* March, 2018. ‘The following assets are estimated to be realised : Particulars ‘Amount ®@ ’ Tand & Building 5,26,750 Plant & Machinery 9,18,750 Furniture & Fixtures 17,500 Stock 54,250 Trade Receivables 35,000 Trade payables included : © Salaries of 5 employees for 4 winding up) € 21,000. months (immediately before the date of Godown rent for last six months amounting to 75,250. ‘Income tax deducted out of salaries of employees @ 1,750. © Directors fees ¥ 875. LON Marks5 @) LON ‘Three years ago, the debit balance of Statement of Profit & Loss was £ 1,36,369 and since that date the accounts of company have shown the following figures = lf ‘Year ended | Year ended | Year ended 31.03.2016 | 31.03.2017 | 31.03.2018 ® ® ®, Total Revenue 1,13,750 78,750 70,000 Salaries 70,875 63,000 60,200 Electricity and Water Charges 10,063 11,165 9,205 Debenture Interest 14,000 14,000 14,000 Bad debts 14,945 13,300 = Depreciation 11,725 11,725 11,725 Director's Fee 1,750 1,750 1,750 Miscellaneous Expenses 18,375 988 13,965 Total Expenses 741,733 _1,15,928| __1,10,845 in addition, itis estimated that the company would have to pay © 8,750 as compensation to an employee for injuries suffered by him which was contingent liability not accepted by the company. Prepare the Statement of Affairs and the Deficiency Account. (@ From the following information furnished to you by Bharat Insurance Co. Ltd., you are required to pass Journal Entries relating to Unexpired Risk Reserve and show “Unexpired Risks Reserve Account” for the year ending 31" March, 2017 in columnar form. (@ On 01.04.2016, it had reserve for unexpired risks amounting t0 2 55 crores, It comprised of € 21 crores in respect of marine insurance business, % 28 crores in respect of fire insurance business and % 6 crores in respect of miscellaneous insurance business. (Gi) The Bharat Insurance Co. Ltd. creates reserves at 100% of net premium income in respect of marine insurance policies and at '50% of net premium income in respect of fire and miscellaneous insurance policies. Marks LON P.T.O.) (10) LON (ii) During the year 2016-17, the following business was conducted : (®in crores) Particulars Marine | Fire | Miscellaneous insureds in respect 2) Premium from business ceded issued (Direct Business) insurance companies in other insurance companies on (1) Premium collected from] 22.0 46.0 13.0 of policies other respect of risks undertaken : Received during the year us | 92 55 Receivable ~ 01.04.16 70 | 3.0 15 Receivable ~ 31.03.17 40 | 10 10 @) Premium paid/payable to] 7.5 | 53 8.0 From the following information, calculate the amount of Provisions and Contingencies and prepare Profit and Loss Account of Supreme Bank Limited for the year ending 31" March, 2018 : Income @in Expenditure @in lakhs lakhs Interest and discount | 1835 | Interest expended 1136 Interest accrued on Printing & Stationery 18 Investments 8 Commission, Repairs & Maintenance 2 exchange and brokerage 12 Profit on sale of Payment to and Investments provision for employees 1 | Galaries, bonus etc,) 80 Rent received 2 | Other operating expenses 5 LON Marksis ay Marks LON Additional Information = in lakhs @ Rebate on bills discounted to be provided for 3 Gi) Classification of Advances = Standard Assets 4,100 ‘Sub-Standard Assets (Fully secured) 380 Doubtful Assets not covered by security 155 Doubtful Assets fully covered by security Less than 1 year 10 More than 1 year, but less than 2 years 18 More than 2 years, but less than 3 years 35 ‘More than 3 years 2 Loss Assets 50 ii) Make tax provisions @ 35% of the profit. (iy) Profit and Loss Account (Cr.) brought forward 65 from the previous year. (a) XYZ Lid. has three departments R, S and 31° Mi arch, 2018, the following information is given : T. For the year ended Particulars Department) Department | Department R s T ® ® ®@. (Opening stock 6,000 70,000 | 21,000 Opening reserve. for], — 2,500 3,500 [unrealised profit [Materials purchased 18,000 | 22,000 = |Direct labour 11,000 12,000 - ‘Closing stock 5,000 20,000 5,000 ‘Sales - - 1,15,000 Area occupied (sq. mtr.) 2,700 1,400 900 No. of employees 40 30 20 LON P.T.O.(b) (12) LON Stocks of each department are valued at costs to the department concerned. Stocks of Department R are transferred to Department Sat cost plus 20% and stocks of Department S are transferred to Department T at a gross profit of 25% on sales. Other common expenses are salaries € 18,000, staff welfare € 9,000 and rent %9,000. ‘You are required to prepare : (1) Departmental Trading and Profit & Loss Account. (2) General Profit and Loss Account. Pass necessary Journal Entries in the books of an Independent Branch of M/s TPL Sons, to rectify or adjust the following transactions : @ Branch paid % 5,000 as salary to a Head Office Manager, but the amount paid has been debited by the Branch to Salaries Account. (i) A remittance of % 1,50,000 sent by the Branch has not been received by Head Office till date of reconciliation: ii) Branch assets accounts retained at Head Office, depreciation charged for the year ® 15,000 not recorded by Branch. (iv) Head Office expenses ¥ 55,000 allocated to the Branch, but not recorded by the Branch. (v)_ Head Office collected % 60,000 directly from a Branch Customer, but no intimation of this fact has been received by the Branch. (vi) Goods dispatched by the Head Office amounting to % 50,000, but not received by the Branch till date of reconciliation. (vii) Branch incurred advertisement expenses of & 10,000 on behalf of Head Office and debited to advertisement expenses account. (viii) Head Office made payment of % 16,000 for purchase of goods by branch, but not recorded in branch books. LON Marks(13) LON Marks 7. Answer any four of the followings : 4 @ JKS Ltd. has its share capital divided into equity shares of € 10 each. On 1.1.2018 it granted 5,000 employees’ stock option at % 30 per share, when the market price was % 50 per share. The options were to be exercised between 15" March, 2018 and 31 March, 2018. The employees exercised their options for 3,600 shares only and the remaining options lapsed. Show Journal Entries (with narration) as would appear in the books of JKS Ltd, upto 31" March, 2018. Sham Chaurasi who is appointed as liquidator is entitled to receive 4 remuneration at 2% on the assets realised, 3% on the amount distributed to Preferential Creditors and 3% on the payment made to Unsecured Creditors. The assets were realized for € 12,00,000 against which payment was made as follows : ; 7 Liquidation expenses 65,000 Secured Creditors 6,00,000 Preferential Creditors 4,00,000 The amount due to Unsecured Creditors was @ 5,00,000. Calculate the total remuneration payable to liquidator. LON P.T.O,© @® a4) LON Marks ‘The following balances are extracted from the books of a commercial 4 bank, You are required to segregate the capital funds into Tier I and Tier II capitals : Particulars re (@ in Crores) Equity Share Capital 600 Statutory Reserve 375 Capital Reserve (of which % 27 Crores were due to revaluation of assets and the balance due to sale of capital assets) 90 Loan and advances 75 Cash balance with RBI 15 Other Investments 25 Off Balance Sheet item : (@) Guarantee and other obligations 100 (b) Acceptances, endorsements and letter of 50 credit ABC Ltd. sold a machine having written down value of 19 Lakhs to 4 XYZ Ltd. for % 22 lakhs and the same machinery was Jeased back by XYZ Ltd. to ABC Ltd, The lease back is operating lease. What should be the treatment in the books of ABC Ltd. in the following cases ? (1) Sale price of € 22 Lakhs is equal to fair value. (2) Fair value is @ 22 Lakhs and sale price is 24 Lakhs. (3). Fair value is € 17 Lakhs and sale price is € 18 Lakhs. (4) Fair value is 19 Lakhs and sale price is 24 Lakhs. LON(15) LON Marks (©) Differentiate between Branch Accounts and Departmental Accounts on 4 the basis of : (@) Maintenance of accounts Gi) Allocation of common expenses (iii) Reconciliation (iv) Conversion of foreign currency figures