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ACCOUNTS
CASE STUDIES
Q1) Advice
to BPLT Ltd about the treatment of the following in the final statement of
accounts for the year ended on 31st March 2002. A claim lodged with
the railways in March 1999 for loss of goods of Rs 2,00,000 had been passed for
payment in March 2002 for Rs 1,50,000. No entry was passed in the books of
company, when the claim was lodged.
Q2) Y.
Co Ltd used certain resources of X Co Ltd. In return X Co. Ltd receives Rs 10
lakhs and Rs 15 lakhs as interest and royalties, respectively from Y Co Ltd
during the year 2001-2002 you are required to state whether and on what basis
their revenue can be recognized by X Co Ltd?
Q3) On
December 1, 2001 Royal Co. purchased Rs 4,00,000 worth of land for a factory
site. Royal razed an old building on the property and sold the material its
salvaged from the demolition. Royal incurred additional costs and realised
salvage proceeds during December 2001 as follows :
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Demolition of old building
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Rs. 50,000
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Legal fees for purchase contract and
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Rs. 10,000
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recording
ownership
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Title guarantee insurance
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Rs. 12,000
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Proceeds from Sale of Salvaged Materials
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Rs. 8,000
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In its
December 31, 2001 Balance Sheet Royal Co. should report a balance in the land
account.
Q4) The information of cash flow generated by two
companies X Ltd and Y Ltd. Belonging to same industry is as follows?
F. Y. 2004-2005 Cash Flow Statement
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X Ltd.
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Y Ltd
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Rs.
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Rs.
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Opening
Balance
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18,000
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20,000
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Cash Flow
from Operating activities
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Receipts
from Sale of goods
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5,000
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30,000
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Sale of
fixed assets
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20,000
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3,000
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Cash Flow
from financing
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activities
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20,000
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2,000
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amount
borrowed
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Company X
claims that its cash generating ability is better than that of Y Ltd. Do you
agree?
Comment on the
cash generating ability of both companies?
Q5) SSS
Ltd. Acquired the fixed assets of Rs 500 lakhs on which it received the grant
of 10%. What will be the cost of the fixed assets as per AS-12 and its
presentation in the Balance Sheet?
Q6) On
01/04/2001 Shekhar had 25,000 equity shares of DNA Ltd at a book value of Rs 15
per share (Face value of Rs 10) on 20/06/2001 he purchased another 5000 shares
of the company at Rs 16 per share. The director of DNA Ltd announced a bonus
and right issue. No dividend was payable on those issues. The terms of the issue
were follows?
Bonus Basis 1:6 (dated
16.08.2001), Rights basis 3:7 (dated 31.08.2001), Price Rs 15 per share. Due
date for payment (30.09.2001) shareholders can transfer their rights in full or
in part. Accordingly, Shekhar sold 33% of his entitlement to Sundar for
consideration of Rs 2 per share. Dividends for the year ended 31.03.2001 at the
rate of 20% were declared by DNA Ltd and received by Shekhar on 31.10.2001. On
15.11.2001 Shekhar sold 25000 equity shares at premium of Rs 5 per share. You are
required to prepare in the books of Shekhar : a) Investment account b) Profit
& Loss Account. For your exercise, assume that books are closed on
31.12.2001 and market price of shares on that date is Rs 13 per share.
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