CA INTER LEGENDS

TELEGRAM CHANNEL
Click On Below Image To join our channel
 मेहनत अगर आदत बन जाए तो, कामयाबी मुक र बन जाती है!

CA INTER
ADVANCED ACCOUNTING

CASE SCENARIO
FOR

MAY 2024
BY

CA P. S. Beniwal Faculty of CA Inter-Accounting and Advance Accounting

Faculty of CA Final-Financial Reporting
Member of IND AS Implementation Committee of ICAI

Contact Number: 9990301165, 9318445989

Telegram channel: “t.me/capsbeniwalclasses”

Website: capsbeniwal.com

Youtube: https://bit.ly/332doKz
 CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024

1. Ltd, (“RTS” or the “Company”), is engaged in the business of manufacturing of equipment/components. The
Company has a contract with the Indian Railways for a brake component which is structured such that:
 The Company’s obligation is to deliver the component to the Railways’ stockyard, while the delivery
terms are ex-works, the Company is responsible for engaging a transporter for delivery.
 Railways sends an order for a defined quantity.
 The Company manufactures the required quantity and informs Railways for carrying out the inspection.
 Railways representatives visit the Company’s factory and inspect the components and mark each
component with a quality check sticker.
 Goods once inspected by Railways are marked with a hologram sticker to earmark for delivery
identification by the customer when they are delivered to the customer’s location.
 The Company raises an invoice once it dispatches the goods.

The management of RTS is under discussion with the auditors of the Company in respect of accounting of a
critical matter as regards its accounting with respect subsequent events i.e. events after the reporting period.
They have been checking as to which one of the following events after the reporting period provides evidence
of conditions that existed at the end of the reporting period?
(i) Nationalisation or privatization by government
(ii) Out of court settlement of a legal claim
(iii) Rights issue of equity shares
(iv) Strike by workforce
(v) Announcing a plan to discontinue an operation

The Company has received a grant of ₹ 8 crores from the Government for setting up a factory in a backward
area. Out of this grant, the Company distributed ₹ 2 crores as dividend. The Company also received land, free
of cost, from the State Government but it has not recorded this at all in the books as no money has been spent.
RTS has a subsidiary, A Ltd, which is evaluating its production process wherein normal waste is 5% of input.
5,000 MT of input were put in process resulting in wastage of 300 MT. Cost per MT of input was ₹ 1,000. The
entire quantity of waste was on stock at the end of the financial year. (RTP - MAY 24)

(1) When should RTS Ltd recognize revenue as per the Accounting Standards notified under the Companies
(Accounting Standards) Rules, 2006? Would your answer be different if inspection is normally known to
lead to no quality rejections?
(a) Revenue should be recognized on dispatch of components. The assessment would not change even in
case where inspection is normally known to lead to no quality rejections.
(b) Revenue should be recognized on completion of inspection of components. The assessment would
not change even in case where inspection is normally known to lead to no quality rejections.
(c) Revenue should be recognized on dispatch of components. The assessment would change where
inspection is normally known to lead to no quality rejections.
(d) Revenue should be recognized on delivery of the component to the Railways’ stockyard. The
assessment would change where inspection is normally known to lead to no quality rejections.
(2) In respect of A Ltd, state with reference to Accounting Standards notified under the Companies
(Accounting Standards) Rules, 2006, what would be value of the inventory to be recorded in the books of
accounts?
(a) ₹ 47,00,000.
(b) ₹ 50,00,000.
(c) ₹ 49,50,000.
(d) ₹ 49,47,368.
(3) Please guide regarding the accounting treatment of both the grants mentioned above in line with the
requirements of Accounting Standard 12.
(a) Distribution of dividend out of grant is correct. In the second case also not recording land in the
books of accounts is correct.
(b) Distribution of dividend out of grant is incorrect. In the second case, not recording land in the books
of accounts is correct.

Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 1

 CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

(c) Distribution of dividend out of grant is correct. In the second case, land should be recorded in the
books of accounts at a nominal value.
(d) Distribution of dividend out of grant is incorrect. In the second case, land should be recorded in the
books of accounts at a nominal value.

2. SEAS Ltd., the “Company”, is in the business of tours and travels. It sells holiday packages to the customers.
The Company negotiates upfront with the Airlines for specified number of seats in flight. The Company
agrees to buy a specific number of tickets and pay for those tickets regardless of whether it is able to resell all
of those in package.

The rate paid by the Company for each ticket purchased is negotiated and agreed in advance. The Company
also assists the customers in resolving complaints with the service provided by airlines. However, each airline
is responsible for fulfilling obligations associated with the ticket, including remedies to a customer for
dissatisfaction with the service.
The Company bought a forward contract for three months of US$ 1,00,000 on 1 March 2024 at 1 US$ = INR
83.10 when exchange rate was US$ 1 = INR 83.02. On 31 March 2024, when the Company closed its books,
exchange rate was US$ 1 = INR 83.15. On 1 April 2024, the Company decided for premature settlement of the
contract due to some exceptional circumstances.
The Company is evaluating below mentioned schemes:

(i) Introduction of a formal retirement gratuity scheme by an employer in place of ad hoc ex - gratia
payments to employees on retirement.
(ii) Management decided to pay pension to those employees who have retired after completing 5 years of
service in the organization. Such employees will get pension of ₹ 20,000 per month. Earlier there was no
such scheme of pension in the organization.
SEAS Ltd. has a subsidiary, ADI Ltd., which is in the business of construction having turnover of ₹ 200
crores. SEAS Ltd. and ADI Ltd. hold 9% and 23% respectively in an associate company, ASOC Ltd. Both
SEAS Ltd. and ADI Ltd. prepare consolidated financial statements as per Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006. (MTP I - MAY 24)
(1) What would be the basis of revenue recognition for SEAS Ltd. as per the requirements of Accounting
Standards?
(a) Gross basis.
(b) Net basis.
(c) Depends on the accounting policy of the Company.
(d) Indian GAAP allows a choice to the Company to recognize revenue on gross basis or net basis.
(2) Please suggest accounting treatment of forward contract for the year ended 31 March 2024 as per
Accounting Standard 11.
(a) MTM (marked to market value) of contract will be recorded on 31 March 2024.
(b) MTM (marked to market value) of contract will be computed as at 31 March 2024 and only if there
is loss, it will be recorded during the year ended 31 March 2024.
(c) No accounting will be done during the year ended 31 March 2024.
(d) Premium on contract will be amortized over the life of the contract.
(3) You are requested to advise the Company in respect of the accounting requirements of above schemes
related to employee benefits as to which one of those schemes should be considered as a change in
accounting policy during the year.
(a) 1 – Change in accounting policy. 2 – Change in accounting policy.
(b) 1– Not a change in accounting policy. 2 – Change in accounting policy.
(c) 1 – Not a change in accounting policy. 2 – Not a change in accounting policy.
(d) 1– Change in accounting policy. 2 – Not a change in accounting policy.
(4) Please comment regarding consolidation requirements for SEAS Ltd. and ADI Ltd. using the below
mentioned options as to which one should be correct.
(a) ADI Ltd. would using equity method of accounting for 23% in ASOC Ltd. SEAS Ltd. would
consolidate ADI Ltd. and consequently automatically equity account 23% and separately account for
the balance 9% as per AS 13.
(b) ADI Ltd. would account for 23% in ASOC Ltd. as per AS 13. SEAS Ltd. would consolidate ADI
Ltd. and consequently automatically account 23% and separately account for the balance 9%.
Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 2
 CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

(c) ADI Ltd. would account for 23% share in ASOC Ltd using equity method of accounting. SEAS Ltd.
would consolidate ADI Ltd. and consequently, automatically account for ASOC Ltd 23% share and
separately account for 9% share in ASOC Ltd. using equity method of accounting in consolidated
financial statements.
(d) ADI Ltd. would account for 23% in ASOC Ltd. as per AS 13. SEAS Ltd. would consolidate ADI
Ltd. and using equity method of accounting 23% in ASOC Ltd. and separately account for the
balance 9% as per AS 13.

3. On 1st April, 2022, Shubham Limited purchased some land for ₹ 30 lakhs for the purpose of constructing a
new factory. This cost of 30 lakhs included legal cost of ₹ 2 lakhs incurred for the purpose of acquisition of
this land. Construction work could start on 1st May, 2022 and Shubham Limited provides you the details of
the following costs incurred in relation to its construction:

₹
Preparation and levelling of the land 80,000
Employment costs of the construction workers (per month) 29,000
Purchase of materials for the construction 21,24,000
Cost of relocating employees to new factory for work 60,000
Costs of inauguration ceremony on 1st January, 2023 80,000
Overhead costs incurred directly on the construction of the factory (per month) 25,000
General overhead costs allocated to construction project by the Manager is ₹ 30,000. However, as
per company’s normal overhead allocation policy, it should be ₹ 24,000. The auditor of the
company has support documentation for the cost of ₹ 15,000 only) and raised objection for the
balance amount.
The construction of the factory was completed on 31st December, 2022 and production could begin on 1st
February, 2023. The overall useful life of the factory building was estimated at 40 years from the date of
completion. However, it was estimated that the roof will need to be replaced 20 years after the date of
completion and that the cost of replacing the roof at current prices would be 25% of the total cost of the
building.
The construction of the factory was partly financed by a loan of ₹ 28 lakhs borrowed on 1st April, 2022. The
loan was taken at an annual rate of interest of 9%. During the period when the loan proceeds had been fully
utilized to finance the construction, Shubham Limited received investment income of ₹ 25,000 on the
temporary investment of the proceeds. You are required to assume that all of the net finance costs to be
allocated to the cost of factory (not land) and interest cost to be capitalized based on nine months’ period.
Based on the information given in the above scenario, answer the following multiple-choice questions:
(MTP I - MAY 24)

(1) Which of the following cost (incurred directly on construction) will be capitalized to the cost of factory
building?
(a) ₹ 2,00,000 incurred as legal cost
(b) ₹ 60,000 – costs of relocating employees
(c) ₹ 80,000 costs of inauguration ceremony
(d) ₹ 24,000 – allocated general overhead cost
(2) What amount of employment cost of construction workers will be capitalized to the cost of factory
building?
(a) ₹ 2,90,000
(b) ₹ 3,48,000
(c) ₹ 2,32,000
(d) ₹ 29,000
(3) What is the amount of net borrowing cost capitalized to the cost of the factory?
(a) ₹ 1,89,000
(b) ₹ 1,68,000
(c) ₹ 1,44,000
(d) ₹ 1,64,000
Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 3
 CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

(4) What will be the carrying amount (i.e. value after charging depreciation) of the factory in the Balance
Sheet of Shubham Limited as at 31st March, 2023?
(a) ₹ 30,00,000
(b) ₹ 57,78,125
(c) ₹ 27,78,125
(d) ₹ 58,00,000

4. Kesar Ltd., a company engaged in various business activities, has decided to initiate a share buy-back on 1st
April, 2023. The company plans to repurchase 25,000 equity shares of ₹ 10 each at a price of ₹ 20 per share.
This buy-back initiative is in compliance with the company's articles of association, and the necessary
resolution has been duly passed by the company. As part of the financial arrangement for the share buy-back,
Kesar Ltd. intends to utilize its current assets, particularly the bank balance, to make the payment for the
repurchased shares.
Here is a snapshot of Kesar Ltd.'s Balance Sheet as of 31 st March, 2023:
A. Share Capital: Equity share capital (fully paid-up shares of ₹ 10 each) - ₹ 12,50,000
B. Reserves and Surplus: Securities premium ₹ 2,50,000; Profit and loss account ₹ 1,25,000; Revenue
reserve ₹ 15,00,000;
C. Long term borrowings: 14% Debentures- ₹ 28,75,000, Unsecured Loans - ₹ 16,50,000
D. Land and building ₹ 19,30,000; Plant and machinery ₹ 18,00,000; Furniture and fitting ₹ 9,20,000 and
Other Current Assets - ₹ 30,00,000

Authorized, issued and subscribed capital: Equity share capital (fully paid up shares of 10 each) - 12,50,000.
(MTP I - MAY 24)

(1) By using the Shares Outstanding Test, the number of shares that can be bought back
(a) 1,25,000
(b) 31,250
(c) 25,000
(d) 30,000

(2) By using the Resources Test determine the number of shares that can be bought back:
(a) 25,000
(b) 31,250
(c) 28,750
(d) 39,062

(3) By using the Debt Equity Ratio Test determine the number of shares that can be bought back:
(a) 25,000
(b) 31,250
(c) 28,750
(d) 39,062

(4) On the basis of all three tests determine Maximum number of shares that can be bought back:
(a) 25,000
(b) 31,250
(c) 28,750
(d) 39,062

5. Mars Ltd. is a manufacturing enterprise which is starting a new manufacturing plant at X Village. It has
commenced construction of the plant on April 1, 2023 and has incurred following expenses:
 It has acquired land for installing Plant for ₹ 50,00,000
 It incurred ₹ 35,00,000 for material and direct labour cost for developing the Plant.
 The Company incurred ₹ 10,00,000 for head office expenses at New Delhi which included rent, employee
cost and maintenance expenditure.
 The Company borrowed ₹ 25,00,000 for construction work of Plant @12% per annum on April 1, 2023.
Director finance of the Company incurred travel and meeting expenses amounting to ₹ 5,00,000 during
the year for arranging this loan.

Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 4

 CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

 On November 1, 2023, the construction activities of the plant were interrupted as the local people
alongwith the activists have raised issues relating to environmental impact of plant being constructed.
Due to agitation the construction activities came to standstill for 3 months.
 With the help of Government and NGOs, the agitation was over by February 28, 2024 and the work
resumed. However, to balance the impact on environment, government ordered the company to install
certain devices for which the Company had to incur ₹ 6,00,000 in March 2024.
 The rate of depreciation on Plant is 10%.

Based on the above information, answer the following questions. (MTP II - MAY 24)

(1) Which of the following expenses cannot be included in the cost of plant:
(a) Cost of Land
(b) Construction material and labour cost
(c) Head office expenses
(d) Borrowing cost

(2) How much amount of borrowing cost can be capitalised with the plant:
(a) ₹ 300,000
(b) ₹ 2,00,000
(c) ₹ 7,00,000
(d) ₹ 6,00,000

(3) The total cost of plant as on march 31, 2024 will be:
(a) ₹ 85,00,000
(b) ₹ 98,00,000
(c) ₹ 93,00,000
(d) ₹ 95,00,000

(4) The amount of depreciation to be charged for the year end March 31,2024
(a) ₹ 4,30,000
(b) ₹ 9,30,000
(c) ₹ 9,80,000
(d) Nil

6. Beloved Finance Ltd. is a financial enterprise which is in the business of lending loan to small businesses and
earn interest on loans.
 During the year the Company has lend 50 crores and earned ₹ 1.5 crore as interest on loans.
 The Company had surplus funds during the year and invested then in Fixed Deposits with bank and
earned interest on fixed deposits of ₹ 20 lacs.
 The Company also acquired a gold loan unit for ₹ 10 crore during the year and the Company provided
interest free loan of ₹ 15 crore to its wholly-owned subsidiary.
 The Company paid a total income tax of ₹ 75 lacs for the year.

Based on the above information, answer the following questions. (MTP II - MAY 24)

(1) In the Cash Flow Statement as per AS 3, the interest income of ₹ 1.5 crore earned on earned on loans
given by the Company will be disclosed as:
(a) Cash Flow from Operating Activities
(b) Cash Flow from Investing Activities
(c) Cash Flow from Financing Activities
(d) Non-cash Items

(2) In the Cash Flow Statement as per AS 3, the interest income of ₹ 20 Lacs earned fixed deposits with bank
will be disclosed as:
(a) Cash Flow from Operating Activities
(b) Cash Flow from Investing Activities
(c) Cash Flow from Financing Activities
(d) Non-cash Items
Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 5
 CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

(3) In the Cash Flow Statement as per AS 3, amount paid for acquiring gold loan unit will be disclosed as:
(a) Cash Flow from Operating Activities
(b) Cash Flow from Investing Activities
(c) Cash Flow from Financing Activities
(d) Non-cash Items
(4) In the Cash Flow Statement as per AS 3, total income tax of ₹ 75 lacs paid for the year will be disclosed
as:
(a) Cash Flow from Operating Activities
(b) Cash Flow from Investing Activities
(c) Cash Flow from Financing Activities
(d) Non-cash Items
(5) Is any specific disclosures required to made in relation to the interest free loan of ₹ 15 crore provided by
the Company to its wholly-owned subsidiary, if yes, as per which Accounting Standard:
(a) Yes, disclosure is required to be made as per AS 3, Cash Flow Statements.
(b) Yes, disclosure is required to be made as per AS 18, Related Party Disclosures
(c) Yes, disclosure is required to be made as per AS 13, Accounting for Investments
(d) No specific disclosures are required.

7. Kumar Ltd., a privately-held company, operates in the manufacturing industry. Founded in 2008, the company
has steadily grown its operations and established a strong presence in the market. As of 31st March, 2023, the
company's capital structure reflects a blend of equity and debt financing.
Capital Structure Overview:
 Equity Share Capital: The company has a total of ₹ 30,00,000 invested in equity shares, each valued at ₹
10 and fully paid.
 Reserves & Surplus: Kumar Ltd. has accumulated reserves and surplus totaling ₹49,00,000, comprising
contributions from various sources including General Reserve (₹ 32,50,000), Security Premium Account
(₹ 6,00,000), Profit & Loss Account (₹ 4,30,000), and Revaluation Reserve (₹ 6,20,000).
 Loan Funds: The company has acquired loan funds amounting to ₹ 42,00,000 to support its operational
and growth initiatives.

Buy-Back Decision:
Considering its financial position and market conditions, Kumar Ltd. has decided to initiate a share buy-back
program. The company intends to repurchase its shares at a price of ₹30 per share.
In accordance with financial regulations and internal policies, Kumar Ltd. aims to assess the maximum
number of shares it can repurchase while maintaining a prudent debt-equity ratio. By utilizing the Debt Equity
Ratio Test, the company seeks to strike a balance between its equity base and debt obligations.
Based on the above information, answer the following questions. (MTP II - MAY 24)

(1) What is the minimum equity Kumar Ltd. needs to maintain after buy- back, according to the Debt Equity
Ratio Test?
(a) ₹ 12,95,000
(b) ₹ 21,00,000
(c) ₹ 32,50,000
(d) ₹ 6,00,000
(2) What is the maximum permitted buy-back of equity for Kumar Ltd.?
(a) ₹ 38,85,000
(b) ₹ 42,00,000
(c) ₹ 12,95,000
(d) ₹ 59,85,000
(3) How many shares of Kumar Ltd. can be bought back at ₹ 30 per share according to the Debt Equity Ratio
Test?
(a) 43,000
(b) 1,29,500
(c) 2,00,000
(d) 78,000
Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 6
 CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

8. XY Ltd. agrees to construct a building on behalf of its client GH Ltd. on 1st April 20X1. The expected
completion time is 3 years. XY Ltd. incurred a cost of Rs 30 lakh up to 31st March 20X2. It is expected that
additional costs of Rs. 90 lakh. Total contract value is Rs 112 lakh. As at 31st March 20X2, XY Ltd. has billed
GH Ltd. For Rs. 42 lakh as per the agreement. Assume that the work is completed to the extent of 75% by the
end of Year 2 (MTP II - MAY 24)
(1) Revenue to be recognized by XY Ltd. for the year ended 31st March 20X2 is
(a) 28
(b) 42
(c) 30
(d) 32
(2) Total expense to be recognised in Year 1 is
(a) 30
(b) 120
(c) 38
(d) 36
(3) Revenue to be recognised for year 2 is
(a) 84
(b) 42
(c) 56
(d) 28

9. Om Ltd. has authorized capital of Rs. 50 lakhs divided into 5,00,000 equity shares of Rs. 10 each.
Their books show the following ledger balances as on 31st March, 2021:
₹ ₹
Inventory 1.4.2020 6,65,000 Bank Current Account (Dr. balance) 20,000
Discounts & Rebates allowed 30,000 Cash in hand 11,000
Carriage Inwards 57,500 Calls in Arrear @ Rs. 2 per share 10,000
Purchases 12,32,500 Equity share capital 20,00,000
Rate, Taxes and Insurance 55,000 (2,00,000 shares of Rs. 10 each)
Furniture & Fixtures 1,50,000 Trade Payables 2,40,500
Business Expenses 56,000 Sales 36,17,000
Wages 14,79,000 Rent (Cr.) 30,000
Freehold Land 7,30,000 Transfer fees received 6,500
Plant & Machinery 7,50,000 Profit & Loss A/c (Cr.) 67,000
Engineering Tools 1,50,000 Repairs to Building 56,500
Trade Receivables 4,00,500 Bad debts 25,500
Advertisement Expenses 15,000
Commission & Brokerage Expenses 67,500
The inventory (valued at cost or market value, which is lower) as on 31st March, 2021 was Rs. 7,05,000.
Outstanding liabilities for wages Rs. 25,000 and business expenses Rs. 36,500. It was decided to transfer Rs.
10,000 to reserves.
Charge depreciation on written down values of Plant & Machinery @ 5%, Engineering Tools @ 20% and
Furniture & Fixtures @10%. Provide Rs. 25,000 as doubtful debts for trade receivables. Provide for income
tax @ 30%. It was decided to transfer Rs. 10,000 to reserves.

(1) What is the total value of Equity Share Capital in Om Ltd.'s balance sheet as of March 31, 2021?
(a) Rs. 19,50,000
(b) Rs. 19,90,000
(c) Rs. 20,00,000
(d) Rs. 20,40,000
(2) What is the total value of Short-term Provisions in Om Ltd.'s balance sheet as of March 31, 2021?
(a) Rs. 1,35,000
(b) Rs. 1,60,000
(c) Rs. 1,85,000
(d) Rs. 2,00,000
Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 7
 CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

(3) What is the value of Profit for the period reported in Om Ltd.'s Statement of Profit and Loss for the year
ended March 31, 2021?
(a) Rs. 2,82,000
(b) Rs. 3,15,000
(c) Rs. 3,72,000
(d) Rs. 4,50,000
(4) What is the total value of Other Income reported in Om Ltd.'s Statement of Profit and Loss for the year
ended March 31, 2021?
(a) Rs. 30,000
(b) Rs. 36,500
(c) Rs. 40,000
(d) Rs. 67,500
10. Galaxy Ltd. and Glory Ltd., are two companies engaged in the same business of chemicals. To mitigate
competition, a new company Glorious Ltd, is to be formed to which the assets and liabilities of the existing
companies, with certain exception, are to be transferred. The summarized Balance Sheet of Galaxy Ltd. and
Glory Ltd. as at 31st March, 2020 are as follows:

Galaxy Ltd. Glory Ltd.

Rs. Rs.
(I) Equity & Liabilities
(1) Shareholders' fund
Share Capital
Equity shares of Rs. 10 8,40,000 4,55,000
eachReserves & Surplus .
General Reserve 4,48,000 40,000
Profit & Loss A/c 1,12,000 72,000
(2) Non-current Liabilities
Secured Loan
6% Debentures - 3,30,000
(3) Current Liabilities
Trade Payables 4,20,000 1,83,000
Total 18,20,000 10,80,000
(II) Assets
(1) Non-current assets
Property, Plant & Equipment
Freehold property, at cost 5,88,000 3,36,000
Plant & Machinery, at cost less 1,40,000 84,000
depreciation
Motor vehicles, at cost less 56,000 -
depreciation
(2) Current Assets
Inventories 3,36,000 4,38,000
Trade Receivables 4,62,000 1,18,000
Cash at Bank 2,38,000 1,04,000
Total 18,20,000 10,80,000

Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 8

 CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

Assets and Liabilities are to be taken at book value, with the following exceptions:
(i) The Debentures of Glory Ltd. are to be discharged, by the issue of 8% Debentures of Glorious Ltd. at a
premium of 10%.
(ii) Plant and Machinery of Galaxy Ltd. are to be valued at Rs. 2,52,000.
(iii) Goodwill is to be valued at : Galaxy Ltd. Rs. 4,48,000 Glory Ltd. Rs. 1,68,000
(iv) Liquidator of Glory Ltd. is appointed for collection from trade debtors and payment to trade creditors. He
retained the cash balance and collected Rs. 1,10,000 from debtors and paid
Rs. 1,80,000 to trade creditors. Liquidator is entitled to receive 5% commission for collection and 2.5%
for payments. The balance cash will be taken over by new company.

(1) What is the total value of Share Capital (in Rs.) in Glorious Ltd.'s balance sheet as of April 1, 2020?
(a) Rs. 23,80,000
(b) Rs. 26,80,000
(c) Rs. 29,80,000
(d) Rs. 33,00,000

(2) What is the total value of Intangible Assets (Goodwill) in Glorious Ltd.'s balance sheet as of April 1,
2020?
(a) Rs. 4,48,000
(b) Rs. 5,16,000
(c) Rs. 6,16,000
(d) Rs. 8,64,000

(3) What is the total value of Current Liabilities in Glorious Ltd.'s balance sheet as of April 1, 2020?
(a) Rs. 4,20,000
(b) Rs. 4,62,000
(c) Rs. 7,74,000
(d) Rs. 13,16,000

(4) What is the total value of Long-term Borrowings in Glorious Ltd.'s balance sheet as of April 1, 2020?
(a) Rs. 30,000
(b) Rs. 3,00,000
(c) Rs. 3,30,000
(d) Rs. 3,40,000

11. Smart Investments made the following investments in the year 2013-2014:
12% State Government Bonds having face value Rs. 100

Date Particulars
01.04.2013 Opening Balance (1200 bonds) book value of Rs. 1,26,000.
02.05.2013 Purchased 2,000 bonds @ Rs. 100 cum-interest.
30.09.2013 Sold 1,500 bonds at Rs. 105 ex-interest.
Interest on the bonds is received on 30th June and 31st Dec. each year
Equity Shares of X Ltd.
15.04.2013 Purchased 5,000 equity @ Rs. 200 on cum right basis. Brokerage of 1% was paid in addition
(Face Value of shares Rs. 10)
03.06.2013 The company announced a bonus issue of 2 shares for every 5 shares held.
16.08.2013 The company made a right issue of one share for every 7 shares held @ Rs. 250 per share.
The entire money was payable by 31.08.2013
22.08.2013 Rights to the extent of 20% were sold @ Rs. 60. The remaining rights were subscribed.
02.09.2013 Dividend @ 15% for the year ended 31.03.2013 was received on 16.09.2013
15.12.2013 Sold 3,000 shares @ Rs.300. Brokerage of 1% was incurred extra.
15.01.2014 Received interim dividend @ 10% for the year 2013-14
31.03.2014 The shares were quoted in the stock exchange @ Rs.220.

Assume that the average cost method is applied and no dividend is received on bonus shares as bonus
shares are declared on 3.6.20X1 and dividend pertains to the year ended 31.03.20X1.

Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 9

 CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

(1) What was the total dividend received by Smart Investments from its equity shares of X Ltd. during the
year?
(a) Rs. 7,500
(b) Rs. 4,800
(c) Rs. 15,000
(d) Rs. 16,000

(2) How many right shares of X Ltd. were subscribed by Smart Investments?
(a) 800 shares
(b) 1,000 shares
(c) 1,200 shares
(d) 1,400 shares

(3) What was the total profit on the sale of equity shares of X Ltd. made by Smart Investments during the
year?
(a) Rs. 4,62,500
(b) Rs. 4,28,500
(c) Rs. 8,91,000
(d) Rs. 10,56,000

(4) What was the total interest income transferred into Statement of P&L on the State Government Bonds
held by Smart Investments during the year?
(a) Rs. 27,400
(b) Rs. 17,200
(c) Rs. 21,600
(d) Rs. 25,500

12. Mr. Z has made following transactions during the financial year 2020-21:
Investment 1: 8% Corporate Bonds having face value ₹ 100.

Date Particulars
01-06-2020 Purchased 36,000 Bonds at ₹ 86 cum-interest. Interest is payable on 30th
September and 31st March every year
15-02-2021 Sold 24,000 Bonds at ₹ 92 ex-interest
Interest on the bonds is received on 30th September and 31st March.
Investment 2: Equity Shares of G Ltd having face value ₹ 10
Date Particulars
01-04-2020 Opening balance 8,000 equity shares at a book value of ₹ 190 per share.
01-05-2020 Purchased 7,000 equity shares@ ₹ 230 on cum right basis; Brokerage of 1% was
paid in addition.
15-06-2020 The company announced a bonus issue of 2 shares for every 5 shares held
01-08-2020 The company made a rights issue of 1 share for every 7 shares held at ₹ 230 per
share. The entire money was payable by 31.08.2020
25-08-2020 Rights to the extent of 30% of his entitlements was sold @ ₹ 75 per share. The
remaining rights were subscribed.
16-09-2020 Dividend @ ₹ 6 per share for the year ended 31.03.2020 was received on
16.09.2020. No dividend payable on Right issue and Bonus issue.
01-12-2020 Sold 7,000 shares @ 260 per share. Brokerage of 1% was incurred extra.
25-01-2021 Received interim dividend @ ₹ 3 per share for the year 2020-21.
31-03-2021 The shares were quoted in the stock exchange @ ₹ 260.

Both investments have been classified as Current investment in the books of Mr. Z. On 15th May 2021, Mr. Z
decides to reclassify investment in equity shares of G Ltd. as Long term Investment. On 15th May 2021, the
shares were quoted in the stock exchange @ ₹ 180.

Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 10

 CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

(1) What was the total interest income earned by Mr. Z from the 8% Corporate Bonds during the financial
year 2020-21?
(a) ₹ 2,16,000
(b) ₹ 2,64,000
(c) ₹ 3,12,000
(d) ₹ 3,48,000

(2) What was the total profit on the sale of Equity Shares of G Ltd. made by Mr. Z during the financial year
2020-21?
(a) ₹ 7,14,800
(b) ₹ 7,60,800
(c) ₹ 7,88,000
(d) ₹ 8,10,000

(3) What was the total dividend income earned by Mr. Z from the Equity Shares of G Ltd. during the
financial year 2020-21?
(a) ₹ 42,000
(b) ₹ 48,300
(c) ₹ 96,300
(d) ₹ 1,44,300

(4) What was the average cost per share for the Equity Shares of G Ltd. as of 31st March 2021?
(a) ₹ 155.29
(b) ₹ 180
(c) ₹ 260
(d) ₹ 260.29

(5) How much profit was transferred to the Profit & Loss Account from the Investment in 8% Corporate
Bonds Account for the year 2020-21?
(a) ₹ 1,76,000
(b) ₹ 2,16,000
(c) ₹ 2,64,000
(d) ₹ 3,12,000

13. From the following balance sheets of H Ltd. and its subsidiary S Ltd. drawn up at 31st March, 2010, prepare a
consolidated balance sheet as at that date, having regard to the following :
(i) Reserves and Profit and Loss Account of S Ltd. stood at Rs. 25,000 and Rs. 15,000 respectively on the
date of acquisition of its 80% shares by H Ltd. on 1st April, 2009.
(ii) Machinery (Book-value Rs. 1,00,000) and Furniture (Book value Rs. 20,000) of S Ltd. were revalued at
Rs. 1,50,000 and Rs. 15,000 respectively on 1.4.2009 for the purpose of fixing the price of its shares.
[Rates of depreciation: Machinery 10%, Furniture 15%.]
Balance Sheet of H Ltd. as on 31st March, 2010
Liabilities H Ltd. (₹) S. Ltd. (₹) Assets H Ltd. (₹) S Ltd. (₹)
Share Capital Machinery 3,00,000 90,000
Shares of Furniture 1,50,000 17,000
Rs. 100 each 6,00,000 1,00,000 Other assets 4,40,000 1,50,000
Reserves 2,00,000 75,000 Shares in
Profit and Loss S Ltd.:
Account 1,00,000 Rs. 25,000 800 shares at
Creditors 1,50,000 57,000 Rs. 200 each 1,60,000 —
10,50,000 2,57,000 10,50,000 2,57,000
(1) What was the total pre-acquisition profit and reserves of S Ltd. as of 31st March 2010?
(a) ₹ 15,000
(b) ₹ 25,000
(c) ₹ 32,000
(d) ₹ 40,000

Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 11

 CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

(2) What was the total minority interest in S Ltd. as of 31st March 2010?
(a) ₹ 8,000
(b) ₹ 32,000
(c) ₹ 40,000
(d) ₹ 48,150

(3) What was the cost of control or goodwill acquired by H Ltd. in acquiring 80% shares of S Ltd.?
(a) ₹ 8,000
(b) ₹ 12,000
(c) ₹ 32,000
(d) ₹ 40,000

(4) What was the net profit on revaluation of assets in S Ltd.?

(a) ₹ 50,000
(b) ₹ 45,000
(c) ₹ 36,000
(d) ₹ 5,000

14. From the following details relating to the Accounts of Grow More Ltd. Prepare Cash Flow Statement:
31.3.2002(Rs.) 31.3.2001(Rs.)
Liabilities:
Share Capital 10,00,000 8,00,000
General Reserve 2,00,000 1,50,000
Profit and Loss Account 1,00,000 60,000
Debentures 2,00,000 ---
Provision for taxation 1,00,000 70,000
Dividend Payable - 1,00,000
Sundry Creditors 7,00,000 8,20,000
23,00,000 20,00,000
Assets:
Plant and Machinery 7,00,000 5,00,000
Land/Building 6,00,000 4,00,000
Investments 1,00,000 ---
Sundry Debtors 5,00,000 7,00,000
Stock 4,00,000 2,00,000
Cash on hand/bank - 2,00,000
23,00,000 20,00,000
Other Information:
1. Depreciation @ 25% was charged on the opening value of Plant and Machinery.
2. During the year one old machine costing 50,000 (WDV 20,000) was sold for Rs. 35,000.
3. Rs. 50,000 was paid towards Income tax during the year.
4. Construction of the building got completed on 31.03.2002 and hence no depreciation may be charged
on the same.

(1) What was the net cash generated from financing activities for Grow More Ltd. during the year ended 31st
March, 20X1?
(a) ₹ 2,00,000
(b) ₹ 3,00,000
(c) ₹ 1,00,000
(d) ₹ Nil

(2) How much cash was paid towards income tax by Grow More Ltd. during the year ended 31st March,
20X1?
(a) ₹ 70,000
(b) ₹ 80,000
(c) ₹ 50,000
(d) ₹ 1,00,000

Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 12

 CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

(3) What was the net decrease in cash and cash equivalents for Grow More Ltd. during the year ended 31st
March, 20X1?
(a) ₹ 2,00,000
(b) ₹ 50,000
(c) ₹ 3,00,000
(d) Nil

(4) What was the net cash generated from operating activities for Grow More Ltd. during the year ended 31st
March, 20X1?
(a) ₹ 1,60,000
(b) ₹ 1,10,000
(c) ₹ 2,80,000
(d) ₹ 50,000

(5) What was the net cash used in investing activities for Grow More Ltd. during the year ended 31st March,
20X1?
(a) ₹ 6,10,000
(b) ₹ 3,45,000
(c) ₹ 2,00,000
(d) ₹ 35,000

15. X Ltd. has constructed a Building as on 1st April 2014. The total cost of the building Rs. ₹ 152,000 which has
been following components, details of which are given below.

Component Original cost(₹) Estimated Scrap Value (₹) Estimated useful life
Building (Other than roof) 100,000 4,000 30
Roof 40,000 5,000 14
Furniture and Fixtures 12,000 Nil 10
Method of depreciation: Straight-line method
Till 31st March 2021 no further capital expenditure had been incurred on the building.
Due to the unavoidable reason as on 1st April 2021, the furniture and fixtures abolished and the company
decide to replace the whole of the furniture and fixtures at a cost of ₹ 20,000. The useful life of the new
furniture and fixtures is 9 years with ₹ 2,000 Scrap Value.
At the same time X Ltd. incurred a cost of ₹ 8,000 on repairing of Building.

(1) What is the amount of depreciation charged for the year ended 2018-2019?
(a) ₹ 7,390 (b) ₹ 6,900 (c) ₹ 5,500 (d) ₹ 8,200

(2) What is the carrying amount of the PPE at 31st March 2020?
(a) ₹ 117,500 (b) ₹ 103,700 (c) ₹ 110,600 (d) ₹ 96,800

(3) What is the charge to profit or loss (other than depreciation) for the year ended 21-22?
(a) ₹ 7,700 (b) ₹ 11,300 (c) ₹ 3,600 (d) 11,600

(4) What is the amount of depreciation charged for the year ended 2021-2022?
(a) ₹ 7,700 (b) ₹ 6,900 (c) ₹ 8,900 (d) ₹ 5,700

(5) What is the carrying amount of the total Building at 31st March 2023?
(a) ₹ 112,400 (b) ₹ 104,700 (c) ₹ 97,000 (d) ₹103,900

Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 13

 CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

ANSWER KEYS
1.
(1) (b)

(2) (d)

(3) (d)

2.
(1) (a)

(2) (d)

(3) (c)

(4) (c)

3.

(1) (a)

(2) (c)

(3) (d)

(4) (b)

4.
(1) (b)

(2) (d)

(3) (c)

(4) (c)

5.
(1) (c)

(2) (b)

(3) (c)

(4) (d)

6.
(1) (a)

(2) (a)

(3) (b)

(4) (a)

(5) (b)
Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 14
 CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

7.
(1) (b)

(2) (a)

(3) (b)

8.
(1) (a)

(2) (d)

(3) (c)

9.
(1) (b)

Explanation: The Equity Share Capital is calculated as the total number of issued and subscribed shares
multiplied by their face value. It equals Rs. 19,90,000.

(2) (a)

Explanation: Short-term Provisions include the provision for tax, which is Rs. 1,35,000.

(3) (b)

Explanation: Profit for the period is calculated as the difference between Total Income and Total
Expenses, which equals Rs. 3,15,000.

(4) (b)

Explanation: Other Income includes Miscellaneous Income (Transfer fees) and Rental Income, which
total Rs. 36,500.

10.
(1) (b)

Explanation: Share Capital includes the value of equity shares issued for consideration other than cash. It
equals the total number of shares issued multiplied by their face value, which is Rs. 10 each, totaling Rs.
2,68,000.

(2) (c)

Explanation: Intangible Assets include the value of Goodwill transferred from Galaxy Ltd. and Glory
Ltd., totaling Rs. 6,16,000.

(3) (a)

Explanation: Current Liabilities include Trade Payables, which equals Rs. 4,20,000.

(4) (b)

Explanation: Long-term Borrowings include the value of 8% Debentures issued by Glorious Ltd., which
equals Rs. 3,00,000.

Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 15

 CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

11.
(1) (b)

(2) (a)

(3) (b)

(4) (a)

Solution: In the books of Smart Investments

12% Govt. Bonds for the year ended 31st March, 20X2

Date Particulars Nos. Interest Amount Date Particulars Nos. Interest Amount

1.4.X1 To Opening 1,200 3,600 1,26,000 30.6.X1 By Bank A/c - 19,200 -

balance b/d (Interest)
(W.N.7) (3,200 x 100
x 12% x
6/12)
2.5.X1 To Bank A/c 2,000 8,000 1,92,000 30.9.X1 By Bank A/c 1,500 4,500 1,57,500
(W.N.8) (W.N.1 &
W.N.9)
30.9.X1 To P & L A/c 8,437.50 31.12.X1 By Bank A/c - 10,200 -
(Profit on (Interest)
Sale) (W.N.1) (1,700 x 100
x 12% x
6/12)
31.3.X2 To P & L A/c 27,400 31.3.X2 By Bal. c/d 1,700 5,100 1,68,937.50
(Interest) (W.N.2 &
W.N.10)

3,200 39,000 3,26,437.50 3,200 39,000 3,26,437.50

Investments in Equity shares of X Ltd. for year ended 31.3.20X2

Date Particulars Nos. Dividend Amount Date Particulars Nos. Dividend Amount
15.4.X1 To Bank A/c 5,000 10,10,000
(W.N.3)

3.6.X1 To Bonus 2,000 - - 16.9.X1 By Bank - - 7,500

Issue (Dividend)
(5,000 x 10
x 15%)
(refer note
1 and 2)

31.8.X1 To Bank A/c 800 2,00,000 15.12.X1 By Bank (Sale) 3,000 - 8,91,000
(W.N.11) (W.N.4)

15.12.X1 To P & L A/c 4,28,500 15.1.X2 By Bank 4,800

(W.N.5) (interim
dividend)
(W.N.12)

31.3.X2 To P & L A/c 4,800 31.3.X2 By Bal. c/d 4,800 7,40,000

(W.N.6)
7800 4,800 16,38,500 7800 4,800 16,38,500
Working Notes:
1. Profit on sale of bonds on 30.9.X1
= Sales proceeds – Average cost
Sales proceeds = Rs.1,57,500 (i.e., 1,500 x 105)
Average cost = Rs. [(1,26,000+1,92,000) X 1,500/3,200] = 1,49,062.50
Profit = 1,57,500– Rs.1,49,062.50=Rs.8,437.50
2. Valuation of bonds on 31st March, 20X2
Cost = Rs.3,18,000/3,200 x1,700 = 1,68,937.50
Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 16
 CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

3. Cost of equity shares purchased on 15/4/20X1

= Cost + Brokerage
= (5,000 X Rs. 200) + 1% of (5,000 X Rs.200) =Rs. 10,10,000
4. Sale proceeds of equity shares on 15/12/20X1
= Sale price – Brokerage
= (3,000 X Rs.300) – 1% of (3,000 X Rs.300) =Rs. 8,91,000.
5. Profit on sale of shares on 15/12/20X1 = Sales proceeds – Average cost
Sales proceeds = Rs.8,91,000
Average cost
= Rs.[(10,10,000+2,00,000-7,500) X 3,000/7,800]
= Rs.[12,02,500 X 3,000/7,800] = Rs. 4,62,500
Profit = Rs.8,91,000 – Rs.4,62,500 =Rs.4,28,500.

6. Valuation of equity shares on 31st March, 20X2

Cost = Rs.[12,02,500 X 4,800/7,800] = Rs.7,40,000
Market Value = 4,800 shares × Rs.220 = Rs.10,56,000
Closing stock of equity shares has been valued at Rs. 7,40,000 i.e. cost being lower than the market value.
7. Interest accrued on opening balance of bonds = 1,200 x 100 x 12% x 3/12 = Rs.3,600
8. Interest element in bonds purchased on 02.05.20X1 = 2,000 x 100 x 12% x 4/12 = Rs.8,000
Cost of investment (amount in investment column) = (2,000 x 100) – 8,000 = Rs.1,92,000
9. Interest element in bonds sold on 30.09.20X1 = 1,500 x 100 x 12% x 3/12 = Rs.4,500
10. Interest accrued on closing balance of bonds = 1,700 x 100 x 12% x 3/12 = Rs.5,100
11. Right shares
No. of right shares issued = (5,000 + 2,000) x 1/7 = 1,000 shares
No. of right shares sold = 1,000 x 20% = 200 shares
Proceeds from sale of right shares = 200 x 60 = Rs.12,000
to be credited to statement of profit and loss
No. of right shares subscribed = 1,000 – 200 = 800 shares
Amount of right shares subscribed = 800 x 250 = Rs.2,00,000

12. Amount of interim dividend = (5,000 + 2,000 + 800 – 3,000) x 10 x 10% = Rs. 4,800

12.
(1) (a)

(2) (a)

(3) (c)

(4) (a)

(5) (a)

Solution: In the books of Mr. Z

Investment in 8% Corporate Bonds Account
For the period 01 April 2020 to 31 March 2021

Date Particulars Nos Interest Amount Date Particulars Nos Interest Amount
(₹) (₹) (₹) (₹)
1/6/20 To Bank 36,000 48,000 30,48,000 30/9/20 By Bank A/c 1,44,000
A/c (WN1) (Interest
36,000 x 100 x
8% x 6/12)
15/2/21 To Profit & 1,76,000 15/2/21 By Bank A/c 24,000 72,000 22,08,000
Loss A/c (WN2)
(WN 3)
31/3/21 To Profit & 2,16,000 31/3/21 By Bank A/c 48,000
Loss A/c (Interest
12,000 x 100 x
8% x 6/12)

Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 17

CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL
By Balance c/d 12,000 10,16,000
(WN 4)
Total 36,000 2,64,000 32,24,000 Total 36,000 2,64,000 32,24,000

Note: For computing the interest on the bonds sold on 15 Feb 2021, if number of days (138 days) is taken
instead of months, the interest received on 15.02.2021 should be ₹72,592 and the total interest transferred
to Profit & Loss Account should be ₹ 2,16,592.

Investment in Equity Shares of G Ltd

For the period 1st April 2020 to 31 March 2021
Date Particulars Nos Dividend Amount Date Particulars Nos Dividend Amount
(₹) (₹) (₹) (₹)
01/4/20 To Balance 8,000 15,20,000 16/9/20 By Bank A/c 48,000 42,000
b/d (WN 7)
01/5/20 To Bank A/c 7,000 16,26,100 1/12/20 By Bank A/c 7000 18,01,800
(WN 5) (WN 8)
15/6/20 To Bonus 6,000 25/1/21 By Bank A/c 48,300
Shares (WN 10)
25/8/20 To Bank A/c 2,100 4,83,000 31/3/21 By Balance c/d 16,100 25,00,100
(Right (WN 11)
Shares)
(WN 6)
01/12/20 To Profit & 7,14,800
Loss A/c
(Sale of
shares)
(WN 9)
31/3/21 To Profit & 96,300
Loss A/c
Total 23,100 96,300 43,43,900 Total 23,100 96,300 43,43,900

Working Notes:

(1) Computation of the Interest element in the bonds purchased on 01 June 2020
No of Bonds purchased 36,000
Face value per bond ₹ 100
Face value of the bonds purchased ₹ 36,00,000
Interest Rate 8%
Interest Amount (36,00,000 x 8% x 2/12) ₹ 48,000
Cum-interest per bond ₹ 86
Value of bond excluding interest [(36,000 x ₹ 86) – ₹48,000] ₹ 30,48,000
(2) Computation of the Interest element in the bonds sold on 15 Feb 2021
No of Bonds sold 24,000
Face value per bond ₹ 100
Face value of the bonds sold ₹ 24,00,000
Interest Rate 8%
Interest Amount (₹ 24,00,000 x 8% x 4.5/12) = ₹ 72,000
(3) Computation of Profit on Sale of Bonds on 15 Feb 2021
No of Bonds sold 24,000
Face value per bond ₹ 100
Ex- interest Rate per bond ₹ 92
Sales proceeds ₹ 22,08,000
Average Cost of Bonds (30,48,000/36,000) x 24,000 ₹ 20,32,000
Profit on sale of bonds
Sale Proceeds – Average Cost = (₹ 22,08,000 – ₹ 20,32,000) ₹ 1,76,000
(4) Valuation of Bonds as on 31 March 2021
No of Bonds held as on 31 Mar 2021 12,000
Average Cost of Bonds (₹ 30,48,000/36,000) x 12,000 ₹ 10,16,000

Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 18

CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

(5) Computation of the cost of the equity shares purchased on 01 May 2020
No of shares purchased 7,000
Cum right price per share ₹ 230
Cost of purchase ₹ 16,10,000
Brokerage @1% ₹ 16,100
Cost including brokerage ₹ 16,26,100
(6) Right Shares
No of Right Shares Issued (8,000+7,000+6,000)/7 = 3,000 shares
No of right shares sold 3,000 shares x 30% = 900 shares
Proceeds from sale of right shares to be credited to
statement of profit & loss 900 shares x ₹ 75 = ₹ 67,500
No of right shares subscribed 3,000-900 = 2,100 shares
Amount of right shares subscribed 2,100 x 230 = ₹ 4,83,000
(7) Computation of Dividend Received on 16 Sept 2020
No of shares held during the period of dividend 8,000 shares
Dividend per share ₹6
Dividend Amount 8,000 x 6 = ₹ 48,000
No of shares received after the period of dividend
(excluding bonus & right shares) 7,000 shares
Dividend per share ₹6
Dividend Amount 7,000 x ₹ 6 = ₹ 42,000
The amount of dividend for the period for which the shares were not held by the investor has been treated
as capital receipt. Thus ₹ 42,000 shall be treated as capital receipt.

(8) Sale Proceeds for the shares sold on 1st Dec. 2020
No of shares sold 7,000 Shares
Sale price per share ₹ 260
Proceeds from sale of share 7,000 x 260 = ₹ 18,20,000
Less: Brokerage @ 1% ₹ 18,200
Net Sale Proceeds ₹ 18,01,800
(9) Profit on sale of shares on 1st Dec. 2020
Sales Proceeds ₹ 18,01,800
Average Cost
(15,20,000+16,26,100+4,83,000-42,000)/23,100x7,000 = ₹ 10,87,000
Profit on sale of shares
Sales Proceeds – Average Cost = ₹ 18,01,800 - ₹ 10,87,000 = ₹ 7,14,800
(10) Computation of Amount of Interim Dividend
No of shares held (8,000+7,000+6,000+2,100-7,000) = 16,100
Dividend per share ₹ 3 per share
Dividend Received 16,100 shares x ₹ 3 per share = ₹ 48,300
(11) Valuation of Shares as on 31 March 2021
Cost of Shares
(15,20,000 + 16,26,100 + 4,83,000 – 42,000) / 23,100 X 16,100 = ₹ 25,00,100
Market Value of Shares ₹ 260 x 16,100 = ₹ 41,86,000
Closing stock of equity shares has been value at ₹ 25,00,100 i.e. cost being lower than its market value.
(i) Profit & Loss Account (Extract)
For the period 01 April 2020 to 31 March 2021

Particulars Amount (₹) Particulars Amount (₹)

To Balance c/d 12,70,600 By Investment in 8% Corporate Bonds 1,76,000
Account (Profit on sale of bonds)
By Investment in 8% CorporateBonds 2,16,000
Account (Interest on bonds)
By Sale of Right Shares 67,500
Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 19
 CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

By Investment in Equity Shares of GLtd 7,14,800

(Profit on sale of shares)
By Investment in Equity Shares of GLtd 96,300
(Dividend Income)
(ii) As per AS 13, when investments are classified from Current Investments to Long term Investments,
transfer is made at Cost and Fair value, whichever is less (as on the date of transfer). So, in the given case
valuation shall be done as follows:
Date of reclassification/transfer = 15 May 2021
Per Unit Cost of 16,100 shares held = ₹ 25,00,100/16,100 shares = ₹ 155.29
Market Price/Fair Value per share = ₹ 180
As the cost per unit is lower than its fair value, the shares are to be transferred at its cost i.e., at ₹ 155.29
per share on 15 May 2021
Note: The entire amount of sale proceeds from rights has been credited to Profit and Loss account in the above
solution. However, the sale proceeds of rights in respect of 7,000 shares (purchased cum right on 1.5.20) can
be applied to reduce the carrying amount of such investments (without crediting it to profit and loss account)
considering that the value of these shares has reduced after becoming their ex-right. In that case, ₹ 22,500
(67,500X 7/21) will be applied to reduce the carrying amount of investment and ₹ 45,000 will be credited to
profit and loss account.

13.
(1) (d)

Explanation: The total pre-acquisition profit and reserves of S Ltd. as of 31st March 2010 were ₹ 40,000,
comprising reserves of ₹ 25,000 and profit of ₹ 15,000.

(2) (d)

Explanation: The total minority interest in S Ltd. as of 31st March 2010 was ₹ 48,150, comprising the
paid-up value of shares held by outsiders and their share of pre-acquisition profits, reserves, profit on
revaluation, post-acquisition reserves, and post-acquisition profit.

(3) (b)

Explanation: The cost of control or goodwill acquired by H Ltd. in acquiring 80% shares of S Ltd. was ₹
12,000, calculated as the price paid by H Ltd. for 800 shares minus the intrinsic value of the shares on the
date of acquisition.

(4) (b)

Explanation: The net profit on revaluation of assets in S Ltd. was ₹ 45,000, calculated by considering the
difference between the revalued amounts of machinery and furniture and their respective book values.

Solution: Consolidated Balance Sheet of H Ltd. and its Subsidiary S Ltd. as at 31st March, 2010
Particulars Note (₹)
No.

I. Equity and Liabilities

(1) Shareholder's Funds
(a) Share Capital 1 6,00,000
(b) Reserves and Surplus 2 3,44,600
(2) Minority Interest 3 48,150

Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 20

CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

(3) Current Liabilities

2,07,000
(a) Trade Payables
11,99,750
Total

II. Assets
(1) Non-current assets
4 5,97,750
(a) Property, Plant and Equipment
5 12,000
(b) Intangible assets
6 5,90,000
(c) Other non-current investments
11,99,750
Total
Notes to Accounts
₹
1. Share capital
6,000 equity shares of ₹ 100 each,
fully paid up
6,00,000
Total 6,00,000
2. Reserves and Surplus
Reserves 2,00,000
Add: 4/5th share of S Ltd.’s post-
acquisition reserves (W.N.3) 40,000 2,40,000
Profit and Loss Account 1,00,000
Add: 4/5th share of S Ltd.’s post-
acquisition profits (W.N.4) 4,600 1,04,600
Total 3,44,600
3. Minority interest in S Ltd. (WN 5) 48,150
4. Property, plant and equipment
Machinery
H. Ltd. 3,00,000
S Ltd. 1,00,000
Add: Appreciation 50,000
1,50,000
Less: Depreciation (1,50,000 X 10%)* (15,000) 1,35,000
Furniture
H. Ltd. 1,50,000
S Ltd. 20,000
Less: Decrease in value (5,000)
15,000
Less: Depreciation (15,000 X 15%)* (2,250) 12,750 5,97,750

Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 21

CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

5. Intangible assets
Goodwill [WN 6] 12,000
6. Other non-current investments
H Ltd. 4,40,000
S Ltd. 1,50,000
Total 5,90,000
* As an alternative manner of presentation, the solution contains only the ‘additional depreciation’.

Working Notes:
1. Pre-acquisition profits and reserves of S Ltd. ₹
Reserves 25,000
Profit and Loss Account 15,000
40,000
H Ltd.’s = 4/5 (or 80%) × 40,000 32,000
Minority Interest= 1/5 (or 20%) × 40,000 8,000
2. Profit on revaluation of assets of S Ltd.
Profit on Machinery ₹ (1,50,000 – 1,00,000) 50,000
Less: Loss on Furniture ₹ (20,000 – 15,000) 5,000
Net Profit on revaluation 45,000
H Ltd.’s share 4/5 × 45,000 36,000
Minority Interest 1/5 × 45,000 9,000
3. Post-acquisition reserves of S Ltd.
Post-acquisition reserves (Total reserves less pre-acquisition 50,000
reserves = ₹ 75,000 – 25,000)
H Ltd.’s share 4/5 × 50,000 40,000
Minority interest 1/5 × 50,000 10,000
4. Post -acquisition profits of S Ltd.
Post-acquisition profits (Profit & loss account balance lesspre-
acquisition profits = ₹ 25,000 – 15,000) 10,000
Add: Excess depreciation charged on furniture @ 15%
on ₹ 5,000 i.e. (20,000 – 15,000) 750
10,750
Less: Under depreciation on machinery @ 10%
on ₹ 50,000 i.e. (1,50,000 – 1,00,000) (5,000)
Adjusted post-acquisition profits 5,750
H Ltd.’s share 4/5 × 5,750 4,600
Minority Interest 1/5 × 5,750 1,150
5. Minority Interest
Paid-up value of (1,000 – 800) = 200 shares
held by outsiders i.e. 200 × ₹ 100 (or 1,00,000 X 20%) 20,000
Add: 1/5th share of pre-acquisition profits and reserves 8,000

Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 22

 CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

1/5th share of profit on revaluation 9,000

1/5th share of post-acquisition reserves 10,000
1/5th share of post-acquisition profit 1,150
48,150
6. Cost of Control or Goodwill
Price paid by H Ltd. for 800 shares(A) 1,60,000
Intrinsic value of the shares-
Paid-up value of 800 shares held by H Ltd. i.e. 800 × ₹ 100 80,000
(or 1,00,000 X 80%)
Add: 4/5th share of pre-acquisition profits and reserves 32,000
4/5th share of profit on the revaluation 36,000
Intrinsic value of shares on the date of acquisition (B) 1,48,000
Cost of control or Goodwill (A – B) 12,000

14.
(1) (b)

(2) (c)

(3) (a)

(4) (b)

(5) (a)

Solution: Cash Flow Statement of Grow More Ltd. for the year ended 31st March, 20X1

Cash Flow from Operating Activities

₹
Increase in balance of Profit and Loss Account 40,000
(1,00,000 – 60,000)
Provision for taxation (W.N.1) 80,000
Transfer to General Reserve (2,00,000 – 1,50,000) 50,000
Depreciation (W.N.2) 1,25,000
Profit on sale of Plant and Machinery (15,000)
Operating Profit before Working Capital changes 2,80,000
Increase in Inventories (2,00,000)
Decrease in Trade receivables 2,00,000
Decrease in Trade payables (1,20,000)
Cash generated from operations 1,60,000
Income tax paid (50,000)
Net Cash generated from operating activities 1,10,000
Cash Flow from Investing Activities
Purchase of fixed assets (3,45,000)
Expenses on building (6,00,000 – 4,00,000) (2,00,000)
Increase in investments (1,00,000)
Sale of old machine 35,000
Net Cash used in investing activities (6,10,000)
Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 23
 CA INTER ADVANCED ACCOUNTING - CASE SCENARIO FOR MAY 2024 CA P. S. BENIWAL

Cash Flow from Financing activities

Proceeds from issue of shares 2,00,000
(10,00,000 – 8,00,000)
Proceeds from issue of debentures 2,00,000
Dividend paid (1,00,000)
Net cash generated from financing activities 3,00,000
Net decrease in cash and cash equivalents (2,00,000)
Cash and Cash equivalents at the beginning of the year 2,00,000
Cash and Cash equivalents at the end of the year Nil

Working Notes:
1. Provision for taxation account

₹ ₹
To Cash (Paid) 50,000 By Balance b/d 70,000
To Balance c/d 1,00,000 By Profit and Loss 80,000
A/c
(Balancingfigure)

1,50,000 1,50,000
2. Plant and Machinery account

₹ ₹
To Balance b/d 5,00,000 By Depreciation 1,25,000
To Profit and Loss A/c 15000
(profit on sale of
machine)
To Cash (Balancing 3,45,000 35,000
figure) By Cash (sale of
_______ machine) 7,00,000
8,60,000 By Balance c/d 8,60,000

15.
(1) (b)

(2) (c)

(3) (d)

(4) (a)

(5) (b)

Telegram channel “t.me/capsbeniwalclasses” capsbeniwal.com https://bit.ly/332doKz 24

CA LEGENDS - LEGENDSWALE

Follow us On Instagram
( Click on icon to follow )

Follow us On Telegram
( Click on icon to follow )

Subscribe On Youtube
( Click on icon to Subscribe )

For Buying Classes @

Best Price

Visit Our Website