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GUESS QUESTION PAPERS FOR NOV 2015 IPCC EXAMS

GROUP-I (RELEASED ON 11TH OCT 2015)

1

2

INDEX

S.No Subject Pages

1. ACCOUNTS

Guess paper 1 3 – 10


Guess Paper 3 18 – 26

2. Law, Ethics and B.C



3. Cost Accounting and Financial Management



4. Taxation


Guess paper 2 48 – 53 Dear Students:

Our main objective in releasing Guess Question papers for IPCC examinations is to help the CA Students to achieve good pass percentage. In addition to these Guess Question Papers we have already released Guess Questions for IPCC examinations. We hope that these sincere efforts will improve the self confidence of students, appearing for IPCC Examinations.

Even if you are not well prepared for Group – II, our advise is to attempt all the papers of Group – II, atleast by preparing Guess Questions and Guess Question Papers.

DISCLAIMER: Dear students,

a) Since CA is a professional course it is impossible to predict the questions / problems which may come in the public examination.

b) There are chances of getting questions / problems in the model which are similar to questions / problems given in question papers but don’t expect exact questions / problems to repeat in the public examination.

c) We have done this work based on the 33rd edition of IPCC materials.

d) These question papers are applicable for Nov 2015 attempt of IPCC only.

e) Don’t blame us even if you don’t get any questions from these question papers in the public exams of IPCC.

f) Even if you get good number of questions / problems from these question papers in the public examinations then it is purely coincidence.

IPCC _Nov 2015_ Guess Question Papers__________________________________ 3

No.1 for CA/CWA & MEC/CEC MASTER MINDS

IPCC GROUP I, PAPER: 1 – ACCOUNTING

GUESS PAPER 1, FOR NOV 2015 EXAMS

Total No. of Questions – 7 Time Allowed – 3 Hours

Total No. of printed pages – 8 Maximum Marks – 100

Instructions to candidates:-

1) Questions No. 1 is compulsory.

2) Candidates are also required to answer any five questions from the remaining six questions.

3) Working notes should form part of the answer.

4) "Wherever necessary, suitable assumptions should be made and indicated in answer by the

Candidates."

MARKS

1) Answer the following: (4x5 = 20)

a) The following information is available from the book of a trader from January 1 to March 31, 2011:

1. Total sales amounted to Rs.60,000 including the sale of old furniture for Rs.1,200 (book value Rs.3,500). The total cash sales were 80% less than the total credit sales.

2. Cash collection from debtors amounted to 60% of the aggregate of the opening debtors and credit sales for the period. Debtors were allowed cash discount for Rs.2,600.

3. Bills Receivable drawn during three months totalled Rs.6,000 of which bills amounting to Rs.3,000 were endorsed in favour of suppliers. Out of these endorsed B/R, a B/R for Rs.600 was dishonoured for non-payment, as the party became insolvent, his estate realising nothing.

4. Purchases totalled Rs.16,000 of which 10% was for cash.

5. A cheque received from a customer for Rs.6,000 was dishonoured; a sum of Rs.500 is irrecoverable: Bad Debts written off in the earlier years realised Rs.2,500.

6. Sundry debtors, as on 1st January, 2011 stood at Rs.40,000

You are required to show the Debtors' Ledger Adjustment Account in the General Ledger.

b) A Ltd. purchased 1,00,000 MT for Rs.100 each MT of raw material and introduced in the production process to get 85,000 MT as output. Normal wastage is 5%. In the process, company incurred the following expenses: Direct Labour Rs.10,00,000 Direct Variable Overheads Rs.1,00,000 Direct Fixed Overheads Rs.1,00,000 (including interest Rs.40,625) Out of the above 80,000 MT was sold during the year and remaining 5,000 MT remained in closing stock. Due to fall in demand in market the selling price for the finished goods on the closing day was estimated to be Rs.105 per MT. Calculate the value of closing stock.

c) In the Trial Balance of M/s. Sun Ltd. as on 31.3.2012, balance of machinery appears Rs.5,60,000. The company follows rate of depreciation on machinery @ 10% p.a. on Written Down Value Method. In scrutiny it was found that a machine appearing in the books on 1.4.2011 at Rs.1,60,000 was disposed of on 30.9.2011 at Rs.1,35,000 in part exchange of a new machine costing Rs.1,50,000. You are required to calculate:

i) Total depreciation to be charged in the Profit and Loss Account.

ii) Loss on exchange of machine.

iii) Book value of machinery in the Balance Sheet as on 31.3.2012


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d) M/s Excellent Construction Company Ltd. undertook a contract to construct a building for Rs. 3 crores on 1st September, 2011. On 31st March, 2012 the company found that it had already spent Rs.1 crore 80 lakhs on the construction. Prudent estimate of additional cost for completion was for Rs.1 crore 40 lakhs. What amount should be charged, to revenue in the final accounts for the year ended 31st March, 2012 as per provisions of Accounting Standard 7(Revised).

2) Answer the following: 16M S.P. Construction Co. finds itself in financial difficulty. The following is the balance sheet on 31st Dec.2005.

Name of the Company : S.P. Construction Co Ltd Balance Sheet as at : 31-12-2005

Particulars Notes No. Rs.

1 2 3

1 a b

EQUITY AND LIABILITIES: Shareholder’s funds Share capital Reserves and Surplus

1 2

2,70,000 (39,821)

2 a

Non-current liabilities Long tem borrowings

3

9,6000

3 a b

Current liabilities Trade Payable (Creditors) Other Current Liabilities

TOTAL

4

96,247 49,513

4,71,939 1

a

(i) (ii)

ASSETS: Non current assets Fixed assets Tangible assets Intangible assets- (Good will)

5

1,94,000 60,000

2 a b c

Current Assets Current investments (Investments (Quoted) in shares) Inventories (stock) Trade receivables(debtors)

TOTAL

27,000

1,20,247

70,692 4,71,939

Note to Accounts:

Particulars Rs.

1. Share capital 20,000 Equity Shares of Rs.10 each fully paid 5% Cum. Pref. Shares of Rs.10 each fully paid 2. Reserves and Surplus Profit and Loss A/c 3. Long tem borrowings 8% Debentures Loan from Directors 4. Other Current Liabilities Bank Overdraft Interest payable on Debentures 5. Tangible Assets Land Building (net) Equipment

2,00,000

70,000

(39,821)

80,000 16,000

36,713 12,800

1,56,000

27,246 10,754



The authorized capital of the company is 20,000 Equity Shares of Rs.10 each and 10,000 5% Cumulative Preference Shares of Rs.10 each. During a meeting of shareholders and Directors, it was decided to carry out a scheme of internal reconstruction. The following scheme has been agreed:

1. The equity shareholders are to accept reduction of Rs.7.50 per share and each equity share is to be re-designated as a share of Rs.2.50 each.

2. The equity shareholders are to subscribe for a new share on the basis of 1 for 1 at a price of Rs.3 per share.

3. The existing 7,000 preference Shares are to be exchanged for a new issue of 3,500 8% Cumulative preference shares of Rs.10 each and 14,000 Equity shares of Rs.2.50 each.

4. The Debenture holders are to accept 2,000 Equity Shares of Rs.2.50 each in lieu of interest payable. The interest rate is to be increased to 9 ½%. Further Rs.9,000 of this 9 1/2% Debentures are to be issued and taken up by the existing holders at Rs.90 for Rs.100.

5. Rs.6,000 of director’s Loan is to be credited. The balance is to be settled by issue of 1,000 Equity shares of Rs.2.50 each.

6. Goodwill and the profit and loss account balance are to be written off.

7. The investment in shares is to be sold at current market value of Rs.60,000.

8. The bank overdraft is to be repaid.

9. Rs.46,000 is to be paid to trade creditors now and balance at quarterly intervals.

10. 10% of the debtors are to be written off.

11. The remaining assets were professionally valued and should be included in the books of account as follows:

Particulars Rs.

Land Building Equipment Stock

90,000 80,000 10,000 50,000

It is expected that due to changed condition and new management operating profit will be earned at the rate of Rs.50,000 p.a. after depreciation but before interest and tax.

Due to losses brought forward it is unlikely that any tax liability will arise until 2007.

You are required to show the necessary journal entries to affect the reconstruction scheme: Prepare the balance sheet of the company immediately after the reconstruction.

3) Answer the following:

a) The B/s of New Light Ltd., for the years ended 31.3.01 and 2002 are as follows: 10M Name of the Company : New Light Ltd

Balance Sheet as at : 31.3.02 and 31.03.01

Particulars Note No.

Figures as at the end of

current reporting

period 31-03-02

Figures as at the end of

the previous reporting

period 31.03.01

1 2 3 4

1

a b


1 2

18,80,000 11,40,000

16,00,000 9,20,000



2 a

Non-current liabilities Long term borrowings (9% debentures)

2,80,000

4,00,000

3 a b c

Current liabilities Short – term provisions Other current liabilities

TOTAL

3 4

4,84,000 5,36,000

43,20,000

4,80,000 4,80,000

38,80,000

1 a

I

ASSETS: Non-current assets Fixed assets Tangible assets

5

26,40,000

22,80,000

2 a b c

Current Assets Current Investments Cash and cash equivalents (cash) Other current assets

TOTAL

6

3,20,000

10,000 13,50,000 43,20,000

4,00,000

10,000 11,90,000 38,80,000

Notes to Accounts:

Particulars 31.03.02 31.03.01

1. Share capital: Equity Share capital 10% redeemable preference share capital 2. Reserves and Surplus: Capital reserve General reserve Profit and loss A/c 3. Short – term provisions: Provision for tax Proposed dividend 4. Other current liabilities: Unpaid dividends Current liabilities 5. Tangible assets (Less) depreciations 6. Other current assets Preliminary expenses Other current assets

16,00,000 2,80,000

40,000

8,00,000 3,00,000

3,40,000 1,44,000

16,000

5,20,000

38,00,000 (11,60,000)

40,000

13,10,000

12,00,000 4,00,000

-

6,80,000 2,40,000

3,60,000 1,20,000

-

4,80,000

32,00,000 (9,20,000)

80,000

11,10,000

Additional Information:

a. The company sold one fixed asset for Rs.1,00,000, the cost of which was 2,00,000 and the depreciation provided on it was Rs.80,000.

b. The company also decided to write off another fixed asset costing Rs.56,000 on which depreciation amounting to Rs.40,000 has been provided.

c. Depreciation on fixed assets provided Rs.3,60,000.

d. Company sold some investment at a profit of Rs.40,000, which was credited to capital reserve.

e. Debentures and preference share capital redeemed at 5% premium.



f. Company decided to value stock at cost, whereas previously the practice was to value stock at cost less 10%. The stock according to books on 31-3-2001 was Rs.2,16,000. The stock on 31-3-2002 was correctly valued at Rs.3,00,000.

Prepare Cash Flow Statement as per revised Accounting Standard-3 by indirect method

b) Mr. Hemant had Rs. 1,65,000 in the bank account on 1.1.2013 when he started his business. He closed his accounts on 31st March, 2014. His single entry books (in which he did not maintain any account for the bank) showed his position as follows: 6M

Particulars 31.3.2013

Rs. 31.3.2014

Rs.

Cash in hand Inventory in trade Debtors Creditors

1,100 10,450

550 2,750

1,650 15,950

1,100 1,650

On and from 1.2.2013, he began drawings Rs. 385 per month for his personal expenses from the cash box of the business. His account with the bank had the following entries:

Particulars Deposits

Rs. Withdrawals

Rs.

1.1.2013 1.1.2013 to 31.3.2013 1.4.2013 to 31.3.2014

1,65,000 -

1,26,500

- 1,22,650 1,48,500

The above withdrawals included payment by cheque of Rs. 1,10,000 and Rs. 33,000 respectively during the period from 1.1.2013 to 31.3.2013 and from 1.4.2013 to 31.3.2014 respectively for the purchase of machineries for the business. The deposits after 1.1.2013 consisted wholly of sale price received from the customers by cheques.

Draw up Mr. Hemant’s statement of affairs as at 31.3.2013 and 31.3.2014 respectively and work out his profit or loss for the year ended 31.3.2014.

4) Answer the following: 16M

Anuj, Ayush and Piyush are in partnership sharing profits and losses in the ratio 2 : 2 : 1.

Their Balance Sheet as on 31.3 .2014 is as follows:

Liabilities Rs. Assets Rs.

8,80,000

1,88,000

2,16,000

7,87,000

1,03,000

1,56,000

2,25,000

13,000

Capital accounts:

Anuj 3,75,000

Ayush 2,80,000

Piyush 2,25,000

General Reserve

Creditors

12,84,000

Fixed assets:

Plant

Current assets:

Stock

Debtors

Bank FD

Bank balance

12,84,000

Anuj decided to retire with effect from 1.4.2014.

The remaining partners agreed to share profits and losses equally in future.

The following adjustments were agreed to be made upon retirement of Anuj.

(i) Goodwill was to be valued at 1 year purchase of the average profits of the preceding 3 years on the date of retirement.

The average profits of the past 3 years were as follows:



Year ended Rs.

31.3.2014

31.3.2013

31.3.2012

3,30,000 (as per draft accounts)

2,32,000

2,20,900

The partners decided not to raise goodwill account in the books.

(ii) The assets were revalued as follows:

Plant to be depreciated by 10%

Creditors amounting to Rs. 10,000 were omitted to be recorded;

Rs. 6,000 is to be written off from stock;

Provision for doubtful debts to be created @ 5% of the debtors;

Interest accrued on FD amounting to Rs. 9,000 was omitted to be recorded.

The above adjustments were to be made from the profit for the year ended 31.3.2014 before calculation of goodwill.

(iii) Anuj agreed to take over the bank FD including interest accrued thereon in part payment of his dues and the balance would remain as a loan, carrying interest of 8% p.a.

(iv) Ayush and Piyush agreed to bring in sufficient cash to make their capital proportionate and maintain a bank balance of Rs. 1,50,000.

You are required to prepare

a. Capital accounts of partners as on 1.4.2014 giving effect to the above adjustments.

b. Balance Sheet as on 1.4.2014 after Anuj’s retirement.


a) A firm acquired two tractors under hire purchase agreements, details of which were as follows: 8M

Particulars Tractor A 1.4.2002

Tractor B 1.10.2002

Cash price Deposit Interest (Deemed to accrue evenly over the period of agreement)

14,000 2,000 2,400

19,000 2,680 2,880

Both agreements provided for payment to be made in twenty-four monthly instalments, commencing on the last day of the month following purchase, all instalments being paid on due dates.

On 30th June, 2003 Tractor B was completely destroyed by fire. In full settlement, on 10th July, 2003 an insurance company paid Rs.15,000 under a comprehensive policy out of which Rs.10,000 was paid to the hire purchase company in termination of the agreement. Any balance on the hire purchase company's account in respect of these transactions was to be written off.

The firm prepared accounts annually to 31st December and provided depreciation on tractors on a straight-line basis at a rate of 20% per annum rounded off to nearest ten rupees, apportioned as from the date of purchase and up to the date of disposal.

You are required to record these transactions in the following accounts, carrying down the balances on 31st December, 2002 and 31st December, 2003:

a. Tractors on hire purchase

b. Provision for depreciation of tractors.

c. Disposal of tractors

d. Hire purchase Company.

b) Mr. Purohit furnishes the following details relating to his holding in 8% Debentures (Rs.100 each) of P Ltd., held as Current assets: 8M



1.04.2009 Opening balance – Face value Rs.1,20,000, Cost Rs.1,18,000

1.07.2009 100 Debentures purchased ex-interest at Rs.98

1.10.2009 Sold 200 Debentures ex-interest at Rs.100

1.01.2010 Purchased 50 Debentures at Rs.98 cum-interest

1.02.2010 Sold 200 Debentures ex-interest at Rs.99

Due dates of interest are 30th September and 31st March.

Mr. Purohit closes his books on 31.3.2010. Brokerage at 1% is to be paid for each transaction. Show Investment account as it would appear in his books. Assume FIFO method. Market value of 8% Debentures of P Limited on 31.3.2010 is Rs.99.


Following is the Receipts and Payments Account of Mayur Club (not registered under Companies Act, 2013) for the year ended 31st March, 2015:

Receipts Rs. Payments Rs.

39,100 50,000

18,000 9,63,000

4,500

45,000

3,04,500 3,15,000

60,000 1,50,000 1,48,500

22,120 38,400

3,450 5,880

31,750 40,000

Opening balance (1.4.2014) Cash on hand Cash at bank Receipts: Subscriptions For the year 2013-14 For the year 2014-15 For the year 2015-16 Interest on bank Fixed deposits @10%

11,19,600

Payments: Sports materials Salaries Equipment purchased on 1.10.2014 Bank fixed deposits on 31.3.2015 Rent Ground maintenance Insurance Stationery Sundry expenses Closing balance as on 31.3.2015 Cash on hand Cash at bank

11,19,600

Following additional information is provided to you:

(i) The club has 220 members. The annual subscription is Rs. 4,500 per member.

(ii) Depreciation to be provided on furniture at 10% p.a. and on sports equipment at 15% p.a.

(iii) On 31st March, 2015, stock of sports material in hand (after members use during the year) is valued at Rs. 78,000 and stock of stationery at Rs. 3,150. Rent for 1 month is outstanding. Unexpired insurance amounts to Rs. 9,600.

(iv) On 31st March, 2014 the club had the following assets:

Furniture Sports equipment Bank fixed deposit Stock of stationery Stock of sports material Unexpired insurance Subscription in arrear

Rs. 2,70,000 Rs. 1,80,000 Rs. 4,50,000

Rs. 1,500 Rs. 73,500 Rs. 8,400

Rs. 22,500

Note: There was no liability on 31.3.2014. You are required to prepare:

a. Income and Expenditure Account; and

b. Balance Sheet as at 31st March, 2015.

7) Answer any four out of the following: (4 x 4 = 16)

a) List the conditions to be fulfilled as per Accounting Standard 14 for an amalgamation to be in the nature of merger, in the case of companies.

b) Mr. Green and Mr. Red had the following mutual dealings and desire to settle their account on the average due date:



Purchase by Green from Red Amount ( Rs.) 6th January, 2011 6,000

2nd February, 2011 2,800

31st March, 2011 2,000

Sales by Green to Red:

sales by Green to Red Amount ( Rs.)

6th January, 2011 6,600

9th March, 2011 2,400

20th March 2011 500

You are asked to ascertain the average due date.

c) Rama Udyog Limited was incorporated on 1st August, 2008. It had acquired a running business of Rama & Co. with effect from April 1, 2008. During the year 2008-09, the total sales were Rs.36,00,000. The sales per month in the first half year were half of what they were in the later half year. The net profit of the company, Rs.2,00,000 was worked out after charging the following expenses:

(i) Depreciation Rs.1,08,000 (ii) Audit fees Rs.15,000 (iii) Directors’ fees Rs.50,000 (iv) Preliminary expenses Rs.12,000 (v) Office expenses Rs.78,000 (vi) Selling expenses Rs.72,000 and (vii) Interest to vendors upto August 31, 2008 Rs.5,000.

Please ascertain pre-incorporation and post incorporation profit for the year ended 31st March, 2009.

d) On 20-7-2004, the godown and business premises of a merchant were affected by fire and from accounting records salvaged; the following information is made available to you.

Stock of goods at cost on 1-4-2003 Stock of goods at 10% lower than cost as on 31-3-2004 Purchases of goods for the year from 1-4-2003 to 31-3-2004 Sales for the same period Purchases less returns for the period from 1-4-2004 to 20th July 2004 Sales less returns for the above period

1,00,000 1,08,000 4,20,000 6,00,000 1,40,000 3,10,000

Sales upto 20th July, 2004 included Rs.40,000 for which goods had not been dispatched. Purchases upto 20th July, 2004 did not include Rs.20,000 for which purchase invoices had not been received from suppliers though goods have been received at the godown. Goods salvaged from the accident were worth Rs.12,000 and these were handed over to the insured. Ascertain the value of the claim for loss of goods which could be preferred on the insurer.

e) On 25th September, 2009, Planet Advertising Limited obtained advertisement rights for world cup hockey tournament to be held in November / December 2009 for Rs. 520 lakhs. They furnish the following information:

(i) The company obtained the advertisements for 70% of available time for Rs. 700 lakhs by 30th September, 2009.

(ii) For the balance time they got the bookings in October 2009 for Rs. 240 lakhs

(iii) All the advertisers paid the full amount at the time of booking the advertisement.

(iv) 40% of the advertisements appeared before the public in November 2009 and balance 60% appeared in the month of December 2009.

You are required to calculate the amount of profit / loss to be recognized for the month of November and December 2009, as per Accounting standard – 9

THE END





Total No.of Questions – 7 Time Allowed – 3 Hours






4) "Wherever necessary, suitable assumptions should be made and indicated in answer by the Candidates."

MARKS

1) Answer the following: (4x5 = 20)

a) The premises of XY Limited was partially destroyed by fire on 1st March, 2004 and as a result, the business was practically disorganized up to 31st August 2004. The company is insured under a loss of profits policy for Rs.1,65,000 having an indemnity period of 6 months. From the following information, ascertain the claim for loss of profit.

Actual turnover during the period of dislocating (1.3.04 to 31.8.04)

Turnover for the corresponding period in the (1.3.03 to 31.8.03)

Turnover for the 12 months immediately preceding the fire (1.3.03 to 28.2.04)

Net profit for the last financial year

Insured standing charge for the last financial year

Uninsured standing charges

Turnover for the last financial year

80,000

2,40,000

6,00,000

90,000

60,000

5,000

5,00,000

Due to substantial increase in trade, before and upto the time of the fire, it was agreed that an adjustment of 10% should be made in respect of the upward trend in turnover. The company incurred additional expenses amounting to Rs.9,300, immediately after the fire and but for this expenditure, the turnover during the period of dislocation would have been only Rs.55,000. There was also a saving during the indemnity period of Rs.2,700 in insured standing charges as a result of the fire.

b) Anil pharma Ltd. ordered 16,000 kg of certain material at Rs. 160 per unit The purchase price includes excise duty Rs. 10per kg. in respect of which full CENVAT Credit is admissible. Freight incurred amounted to Rs. 1,40,160. Normal transit Loss is 2%. The Company actually received 15,500 kg. and consumed 13,600 kg. of material. Compute cost of inventory under AS-2 and amount of abnormal loss

c) An item of machinery was purchased on 1.4.2008 for Rs. 2,00,000. The WDV depreciation rate applicable to the machinery was 15%. The written down value of the machinery as on 31.3.2010 was Rs. 1,44,500. On 1.4.2010, the enterprise, decided to change the method from written down value (WDV) to straight line method (SLM). The enterprise decided to write off the book value of Rs. 1,44,500, over the remaining useful life of machinery i.e. 5 years. Out of the total useful life 7 years, 2 years have already elapsed.

Comment whether the accounting treatment is correct. If not, give the correct accounting treatment with reasons.

d) On 31st October, 2009, Bharat Construction Co. Ltd. undertook a contract to construct a flyover for Rs.215 crores. On 31st March, 2010 the company found that its Work certified for Rs.100 Crores and work to be certified for Rs. 35 crores. Prudent estimate of additional cost for completion was Rs. 90 Crores. What amount should be charged to Revenue in the financial accounts for the year ended 31st March, 2010 as per provisions of Accounting Standard 7.




The Balance Sheet of A & Co. Ltd. as on 31-12-2005 is as follows:

Name of the Company : A & Co. Ltd Balance Sheet as at : 31-12-2005

Particulars Notes No. Rs.

1 2 3 1

a b


1 2

11,50,000 (4,35,000)

2 a

Non-current liabilities Long tem borrowings 3 4,75,000

3 a b

Current liabilities Trade Payable-(Creditors) Other Current Liabilities

TOTAL

4

3,00,000 2,17,500

17,07,500 1

a

(i) (ii)

ASSETS: Non current assets Fixed assets Tangible assets Intangible assets

5 6

4,75,000 1,67,500

2 a b c d

Current Assets Current investments (At cost) Inventories (Stock) Trade receivables (Debtors) Other current assets- (Deferred Advertising )

TOTAL

55,000

4,25,000 4,85,000

1,00,000

17,07,500

Note to Accounts:

Particulars Rs. 1. Share capital 4,000 6% Cumulative Preference Shares of Rs.100 each 75,000 Equity shares of Rs.10 each 2. Reserves and Surplus Profit and Loss A/c 3. Long tem borrowings 6% Debentures (Secured on Freehold Property) Directors’ Loans 4. Other Current Liabilities Bank Overdraft Accrued interest(on debentures) 5. Tangible Assets Free hold property Plant 6. Intangible Assets Goodwill Patent

4,00,000 7,50,000

(4,35,000)

3,75,000

1,00,000

1,95,000

22,500

4,25,000 50,000

1,30,000

37,500

The court approved a Scheme of re organization to take effect on 1-1-2006, whereby:

1. The Preference Share to be written down to Rs.75 each and Equity Shares to Rs.2 each.

2. Of the Preference Share dividends which are in arrears for four years, three fourth to be waived and Equity Shares of Rs.2 each to be allotted for the remaining quarter.



3. Accrued interest on debentures to be paid in cash.

4. Debentures holders agreed to take over freehold property, book value Rs.1,00,000 at a valuation of Rs.1,20,000 in part repayment of their holdings and, to provide additional cash of Rs.1,30,000 secured by a floating charge on company’s assets at an interest rate of 8% p.a.

5. Patents, Goodwill and Deferred Advertising to be written off.

6. Stock to be written off by Rs.65,000.

7. Amount of Rs.68,500 to be provided for bad debts.

8. Remaining freehold property to be re-valued at Rs.3,87,500.

9. Trade Investments be sold for Rs.1,40,000

10. Directors to accept settlement of their loans as to 90% thereof by allotment of equity shares of Rs.2 each and as to 5% in cash, and balance 5% being waived.

11. There were capital commitments totaling Rs.2,50,000. These contracts are to be cancelled on payment of 5% of the contract price as a penalty.

12. Ignore taxation and cost of the scheme.

You are requested to show Journal entries reflecting the above transactions (including cash transactions) and prepare the Balance Sheet of the company after completion of the Scheme.


a) The Sport writers Club gives the following Receipts and Payments Account for the year ended March 31, 2008: 10M Dr. Receipts and Payments A/c Cr.

Receipts Rs. Payments Rs.

4,820 28,600

700 2,000

12,000 7,220 1,000 2,172

10,278 1,000 2,450

To Balance b/d To Subscriptions To Miscellaneous Income To Interest on Fixed deposit

36,120

By Salaries By Rent and Electricity By Library books By Magazines and news papers By sundry expenses By Sports equipments By Balance c/d

36,120

Figures of other assets and liabilities are furnished as follows:

As at March 31

Particulars 2007 2008

Salaries outstanding Outstanding rent & electricity Outstanding for magazines and newspapers Fixed deposit (10%) with bank Interest accrued thereon Subscription receivables Prepaid expenses Furniture Sports equipments Library books

710 864 226

20,000 500

1,263 417

9,600 7,200 5,000

170 973 340

20,000 500

1,575 620

The closing values of furniture and sports equipments are to be determined after charging depreciation at 10% and 20% p.a. respectively inclusive of the additions, if any, during the year. The Club’s library books are revalued at the end of every year and the value at the end of March 31, 2008 was Rs.5,250. From the above information you are required to prepare:

(i) The Club’s Balance Sheet as at March 31, 2007;



(ii) The Club’s Income and Expenditure Account for the year ended March 31, 2008.

(iii) The Club’s Closing Balance Sheet as at March 31, 2008.

b) Raj Ltd. gives you the following information for the year ended 31st March, 2011: 6M

(i) Sales for the year Rs.48,00,000. The Company sold goods for cash only.

(ii) Cost of goods sold was 75% of sales.

(iii) Closing inventory was higher than opening inventory by Rs.50,000.

a. Trade creditors on 31.3.2011 exceed the outstanding on 31.3.2010 by Rs.1,00,000.

b. Tax paid during the year amounts to Rs.1,50,000.

c. Amounts paid to Trade creditors during the year Rs.35,50,000.

d. Administrative and Selling expenses paid Rs.3,60,000.

e. One new machinery was acquired in December, 2010 for Rs.6,00,000.

f. Dividend paid during the year Rs.1,20,000.

g. Cash in hand and at Bank on 31.3.2011 Rs.70,000.

h. Cash in hand and at Bank on 1.4.2010 Rs.50,000.

Prepare Cash Flow Statement for the year ended 31.3.2011 as per the prescribed Accounting standard.


a) X Transport Ltd. purchased from Delhi Motors 3 Tempos costing Rs. 50,000 each on the hire purchase system on 1-1-2010. Payment was to be made Rs. 30,000 down and the remainder in 3 equal annual instalments payable on 31-12-2010, 31-12-2011 and 31-12-2012 together with interest @ 9%. X Transport Ltd. write off depreciation at the rate of 20% on the diminishing balance. It paid the instalment due at the end of the first year i.e. 31-12-2010 but could not pay the next on 31-12-2011. Delhi Motors agreed to leave one Tempo with the purchaser on 1-1-2012 adjusting the value of the other 2 Tempos against the amount due on 31-12-2011. The Tempos were valued on the basis of 30% depreciation annually. Show the necessary accounts in the books of X Transport Ltd. for the years 2010, 2011 and 2012. 8M

b) AVL is an unemployed science graduate with typewriting qualification. Being unable to get employment for more than Rs.500 p.m. he decided to start his own typewriting institute. He approached U.B.C. Bank which sanctioned him a loan of Rs.20,000 on 1.1.2010. His father gifted him Rs.5,000 on 1.1.2010. He purchased 6 typewriters worth Rs.24,000. Unable to understand the accounts properly, he seeks your help in preparing a Profit and Loss Account and Balance Sheet relating to the year ending 31.12.2010. His pass book reveals the following: 8M

S. No. Particulars Rs. a. Expenses of the institute 8,400 b. Salary to self 4,000 c. Monthly fees collected 32,700 d. Examination fees collected 4,200

The following are the additional details available:

1. During the year AVL purchased a second-hand cycle costing Rs.400 from a student who owed monthly fees of Rs.100. The balance was paid. The cycle is used for the institute only.

2. AVL helped a friend by encashing a cheque for Rs.1,000 which was dishonoured. The friend has so far repaid only Rs.400.

3. AVL has taken 600 per month for personal expenses in addition to his salary.

4. AVL runs the institute from his house for which a rent of Rs.600 p.m. is paid. 50% may reasonably be allocated for his own living

5. The following are outstanding as at end of 31.12.2010



S. No. Particulars Rs.

a. Fees receivable 2,200

b. Expenses payable 1,000

c. Salary of self for Nov. and Dec.

d. Stock of stationery on hand 200

6. Provide depreciation 20% on typewriters and cycle

7. The loan from bank is repayable at Rs.500 p.m. from the beginning of July onwards. Interest is payable at 12% per annum in addition to installments for principal

Assume that all transactions are routed through bank and no cash is handled.


A, B and C are in partnership sharing profits & losses in the ratio 3:2:1 respectively. The Balance Sheet of the partnership firm as on 31.12.1997 is as under:

Liabilities Rs. Assets Rs.

1,85,000

5,883 28,000 19,036

4,200

90,000 37,000 15,000

2,000 62,379 34,980

760

Capital A/cs: A 85,000 B 65,000 C 35,000

Current A/cs: A 3,714

B (2,509) C 4,678

Loan C Sundry Creditors Bank Overdraft

2,42,119

Premises . Plant Vehicles Fixtures Stock Debtors Cash

2,42,119

C decides to retire from the business as on the above date and D is admitted as a partner on that date. The following matters are agreed:

1. Assets revalued as: Premises - Rs.1,20,000; Plant - Rs.35,000; Stock - Rs.54,179.

2. A provision of Rs.3,000 is to be created against debtors.

3. Goodwill is to be recorded in the books on the day C retires at Rs.42,000. The partners in the new firm do not wish to maintain a Goodwill A/c so that amount is to be written-off against the New partners’ Capital A/cs.

4. A & B are to share profit in the same ratio as before, D is to have the same share of profits as B.

5. C is to take a car at its book value of Rs.3,900 in part payment, and the balance of all he is owed by the firm in cash except Rs.20,000 which he is willing to leave as a Loan A/c.

6. The partners in the new firm are to start on an equal footing so far as Capital and Current A/cs are concerned. D is to contribute cash to bring his Capital & Current A/cs to the same amount as the original partner from the old firm who has the lower investment in the business. The original partner in the old firm who has the higher investment will draw out cash so that his Capital & Current A/c balances equal those of his new partners.

Revaluation profit (or) loss is to be adjusted in the Partners’ Current A/c. Prepare necessary Ledger Accounts to record the above transactions and to prepare the Balance Sheet of the new firm as at 1.1.98.



6) Answer the following: a) Prepare the General Ledger Adjustment Accounts as will appear in the Debtors and Creditors Ledger

from the information given below: 10M

Particulars Dr. Cr. Debtor’s Ledger Creditor’s Ledger

Transaction for the year ended 31.3.99 Total Sales Cash Sales Total Purchases Credit Purchases Creditors paid off (in full settlement of Rs.40,000) Received from Debtors (in full settlement of Rs.59,000) Returns from debtors Returns to Creditors Bills Accepted for Creditors Bills Payable matured Bills Accepted by Customers Bills Receivables Dishonoured Bills Receivables Discounted Bills Receivables Endorsed to Creditors Endorsed Bills Dishonoured Bad Debts Written off (After deducting bad debts recovered Rs.300) Provision for Doubtful Debts Transfer from Debtors Ledger to Creditors Ledger Transfer from Creditors Ledger to Debtors Ledger

Balances on 31.3.99 Debtors Ledger (Cr.) Creditors Ledger (Dr.)

47,200 280

420

240 26,300

1,20,000 8,100

89,500 67,000 30,500 58,200

2,600 1,800 5,500 8,000

20,100 1,500 5,000 4,000 1,000 2,200

550

1,100 1,900

380

b) On 1st April, 2009, XY Ltd. has 15,000 equity shares of ABC Ltd. at a book value of Rs.15 per share (face value Rs.10 per share). On 1st June, 2009, XY Ltd. acquired 5,000 equity shares of ABC Ltd. for Rs.1,00,000 on cum right basis. ABC Ltd. announced a bonus and right issue.

1. Bonus was declared, at the rate of one equity share for every five shares held, on 1st July 2009.

2. Right shares are to be issued to the existing shareholders on 1st September 2009. The company will issue one right share for every 6 shares at 20% premium. No dividend was payable on these shares.

3. Dividend for the year ended 31.3.2009 were declared by ABC Ltd. @ 20%, which was received by XY Ltd. on 31st October 2009. XY Ltd. (i) Took up half the right issue.

(ii) Sold the remaining rights for Rs. 8 per share.

(iii) Sold half of its share holdings on 1st January 2010 at Rs.16.50 per share. Brokerage being 1%.

You are required to prepare Investment account of XY Ltd. for the year ended 31st March 2010 assuming the shares are being valued at average cost. 6M


a) BHARAT Ltd. provides you the following information:

Year Dividend Paid up capital 2001-2002 9% Rs.1,00,000 2002-2003 8% Rs.1,00,000 2003-2004 10% Rs.1,00,000 2004-2005 7% Rs.1,00,000 2005-2006 6% Rs.1,00,000



Equity share capital Rs. 1,00,000 Reserve as on 01.04.2006 Rs.50,000 Loss after charging depreciation for the year 2006-2007 Rs.6,000

Depreciation for year 2006-2007 Rs.6,000 Required: X Ltd. desires to declare divided for the loss year 2006-2007. Can it do so? If yes, at what rate, it may declare dividend?

b) Mr.Black accepted the following bills drawn by Mr. White.

Date of Bill Period Amount (Rs.) 09.03.2010 16.03.2010 07.04.2010 18.05.2010

4 months 3 months 5 months 3 months

4,000 5,000 6,000 5,000

He wants to pay all the bills on a single date. Interest chargeable is @ 18% p.a. and Mr. Black wants to save Rs.150 on account of interest payment. Find out the date of on which he has to effect the payment to save interest of Rs.150. Base date to be taken shall be the earliest due date.

c) What are the advantages of customised accounting packages?

d) Arjun Ltd. sells equipments through its dealers. One of the Conditions at the time of sale is payment of consideration in 14 days and in the event of delay interest chargeable @ 15 % per annum. The company has not realized interest from the dealers in the past. However, for the year ended 31.3.2006, it wants to recognize interest due on the balances due from dealers. The amount is ascertained at Rs. 9 Lakhs. Decide whether the income by way of interest from dealers is eligible for recognition as per AS-9.

e) ABC. Ltd is constructing a fixed asset. Following are the expenses incurred on the construction:

Rs. Materials 10,00,000 Direct Expenses 2,50,000 Total direct labour (1/10th of the labour time was chargeable to the construction)

5,00,000

Total office & administrative expenses (5% is chargeable to the construction)

8,00,000

Depreciation on the assets used for the construction of this asset 10,000

Calculate the cost of fixed assets.

THE END

IPCC _ Nov 2015_ Guess Question Papers__________________________________ 18











MARKS 1) Answer the following: (4x5 = 20)

a) On the basis of the following information prepare a Cash Flow Statement for the year ended 31st March, 2013:

(i) Total sales for the year were Rs. 199 crore out of which cash sales amounted to Rs. 131 crore.

(ii) Cash collections from credit customers during the year, totalled Rs. 67 crore.

(iii) Cash paid to suppliers of goods and services and to the employees of the enterprise amounted to Rs. 159 crore.

(iv) Fully paid preference shares of the face value of Rs. 16 crore were redeemed and equity shares of the face value of Rs. 16 crore were allotted as fully paid up at a premium of 25%.

(v) Rs. 13 crore were paid by way of income tax.

(vi) Machine of the book value of Rs. 21 crore was sold at a loss of Rs. 30 lakhs and a new machine was installed at a total cost of Rs. 40 crore.

(vii) Debenture interest amounting Rs. 1 crore was paid.

(viii) Dividends totalling Rs. 10 crore was paid on equity and preference shares. Corporate dividend tax @ 17% was also paid.

(ix) On 31st March, 2012 balance with bank and cash on hand totalled Rs. 9 crore.

b) M/s Omega & Co. (a partnership firm), had a turnover of Rs. 1.25 crores (excluding other income) and borrowings of Rs. 0.95 crores in the previous year. It wants to avail the exemptions available in application of Accounting Standards to non-corporate entities for the year ended 31.3.2013. Advise the management of M/s Omega & Co in respect of the exemptions of provisions of ASs, as per the directive issued by the ICAI.

c) Gear Ltd is engaged in manufacturing supply of gear boxes to Indian Automobile Ltd. As per terms of supply, full price of the goods are not released by Indian Automobile Ltd. But 10 % thereof is retained and paid after one year, if there is satisfactory performance of the parts supplied. Gear Ltd. Accounts for only 90% of the invoice value as sale at the time of supply and balance 10% is accounted as sale in the year of receipt of payment.

d) Fire Ltd. purchased equipment for its power plant from Urja Ltd. during the year 2006-07 at a cost of Rs.100 lakhs out of this they paid only 90% and 10% was to be paid after one year on satisfactory performance of the equipment. During the financial year 2007-08, Urja Ltd. waived of the balance 10% amount which was credited to profit and loss account by Fire Ltd. as discount received.


K Ltd. and L Ltd. amalgamate to form a new company LK Ltd. The financial position of these two companies on the date of amalgamation was as under:



Name of the Companies : k Ltd and L Ltd. Balance Sheet as at:

Particulars Notes No. K ( Rs.) L Ltd ( Rs.)

1 2 3 4

1 a b


1 2

12,00,000 4,31,375

6,00,000 1,97,175

2 a

Non-current liabilities Long term borrowings 5% Debentures Secured loan

2,00,000 -

-

2,00,000

3 a

Current liabilities Trade Payable (Creditors)

TOTAL

1,00,000

19,31,375

2,10,000

12,07,175 1

a

(i) (ii)

ASSETS Non-current assets Fixed assets Tangible assets In tangible assets

3 4

11,30000 80,000

8,20,000 -

2 a b c d

Current Assets Inventories (Stock) Trade receivables (Debtors) Cash and cash equivalents Other current assets

TOTAL

5 6

2,25,000 2,75,000 1,61,375

60,000 19,31,375

1,40,000 1,75,000

72,175 -

12,07,175

Note to Accounts:

Particulars K Ltd ( Rs.)

L Ltd ( Rs.)

1. Share capital Equity Shares of Rs.100 each 7% Preference Share of Rs.100 each 2. Reserves and Surplus General Reserve Profit and Loss A/c 3. Tangible Assets Land & Building Plant & Machinery Furniture & Fittings 4. In Tangible Assets Goodwill 5. Cash and cash equivalents Cash at Bank Cash in hand 6. Other current assets Preliminary Exp.

8,00,000 4,00,000

-

4,31,375

4,50,000 6,20,000

60,000

80,000

1,20,000 41,375

60,000

3,00,000 3,00,000

1,00,000

97,175

3,00,000 5,00,000

20,000

-

55,000 17,175

-

The terms of amalgamation are as under:

(A)

a. The assumption of liabilities of both the Companies

b. Issue of 5 Preference shares of Rs.20 each in LK Ltd @ Rs.18 paid up at premium of Rs.4 per share for each preference share held in both the Companies.



c. Issue of 6 Equity shares of Rs.20 each in LK Ltd. @ Rs.18 paid up at a premium of Rs.4 per share for each equity share held in both the Companies. In addition necessary cash should be paid to the Equity Shareholders of both the Companies as is required to adjust the rights of shareholders of both the companies in accordance with the intrinsic value of the shares of both the companies.

d. Issue of such amount of fully paid 6% debentures in LK Ltd. as is sufficient to discharge the 5% debentures in K Ltd at a discount of 5% after takeover.

(B)

a. The assets and liabilities are to be taken at book values stock and debtors for which provisions at 2% and 2 ½ % respectively to be raised.

b. The sundry debtors of K Ltd. included Rs.20,000 due from L Ltd.

(C) The LK Ltd is to issue 15,000 new equity shares of Rs.20 each, Rs.18 paid up at premium of Rs.4 per shares so as to have sufficient working capital. Prepare ledger accounts in the books of K Ltd. and L Ltd. to close their books.

3) Answer the following: a) 8M

(i) On 1.1.2011 Shaan Ltd. purchased a machine on hire purchase basis. The terms of agreement provided for 40% as cash down payment and the balance in three installments of Rs. 1,63,000 on 31.12.2012, Rs. 1,20,000 on 31.12.2013 and Rs. 1,10,000 on 31.12.2014. The rate of interest charged by the vendor is 10% p.a. compound annually. You are required to calculate the cash Price and periodic interest charged by hire vendor.

(ii) On 1.1.2011 Beeta Ltd. purchased a machine from Yama Ltd. on hire purchase basis. The terms of agreement provided for 40% as cash down payment and the balance in three installment of Rs. 1,30,000 on 31.12.2011, Rs. 1,42,000 on 31.12.2013 and Rs. 1,10,000 on 31.12.2014. The rate of interest charged by the vendor is 10% p.a. compounded annually. You are required to calculate the cash price when 2nd installment is payable after two years.

b) The following is the Balance Sheet of a concern on 31st March, 2010: 8M

Liabilities Rs. Assets Rs. 10,00,000

1,40,000 60,000

4,00,000 3,00,000 1,50,000 3,50,000

Capital Creditors (Trade) Profit & Loss A/c

12,00,000

Fixed Assets Stock Debtors Cash & Bank

12,00,000

The management estimates the purchases and sales for the year ended 31st March, 2011 as under:

Particulars Upto 28.2.2011 ( Rs.) March 2011 ( Rs.)

Purchases 14,10,000 1,10,000

Sales 19,20,000 2,00,000 It was decided to invest Rs.1,00,000 in purchases of fixed assets, which are depreciated @ 10% on cost.

The time lag for payment to Trade Creditors for purchase and receipt from Sales is one month. The business earns a gross profit of 30% on turnover. The expenses against gross profit amount to 10% of the turnover. The amount of depreciation is not included in these expenses.

Draft a Balance Sheet as at 31st March, 2011 assuming that creditors are all Trade Creditors for purchases and debtors for sales and there is no other item of current assets and liabilities apart from stock and cash and bank balances.


Q, R are three doctors who are running a Polyclinic. Their capital on 31st March, 2009 was Rs.1,00,000 each. They agreed to admit X, Y and Z as partners w.e.f. 1st April 2009. The terms for sharing profits & losses were as follows:



(a) 70% of the visiting fee is to go to the specialist concerned.

(b) 50% of the chamber fee will be payable to the individual specialist.

(c) 40% of operation fee and fee for pathological reports, X-rays and ECG will accrue in favour of the doctor concerned.

(d) Balance of profit or loss is shared equally.

(e) All the partners are entitled for 6% interest on capital employed.

They further agreed that:

i. X, Y and Z brought in Rs.20,000 each as goodwill. Goodwill is shared by the existing partners equally.

ii. X, Y and Z brought in Rs.50,000 each as capital. Each of the original partners also contributed Rs.50,000 by way of capital.

The receipts for the year after admission of new partners were:

Name of Doctors

Particulars Visiting

Fees ( Rs.) Chambers Fees ( Rs.)

Fees for reports, operation etc.

( Rs.)

P Q

R X Y

Z

General Physician Gynecologist

Cardiologist Child Specialist Pathologist

Radiologist

1,50,000 25,000

- 1,00,000

-

-

2,00,000 1,75,000

1,00,000 1,50,000

-

40,000

- 1,00,000

75,000 -

1,00,000

2,00,000

Total 2,75,000 6,65,000 4,75,000

Expenses for the year were as follows:

Particulars Rs.

Medicines, injections and other consumables Printing and stationery Telephone expenses Rent Power and light Nurses salary Attendants wages Total Depreciation: X-Ray machines ECG equipments Furniture Surgical equipments Total Depreciation

1,00,000 5,000 5,000

42,000 10,000 20,000 20,000

2,02,000

15,000 5,000 5,000 5,000

30,000

You are requested to:

i. Pass necessary journal entries on admission of partners.

ii. Prepare the Profit and Loss Account of the polyclinic for the year ended 31st March, 2010.

iii. Prepare capital accounts of all the partners at the end of the financial year 2009-10. Also show the distribution of profit among partners.


a) Smart Investments made the following investments in the year 2013-14: 8M

12% State Government Bonds having face value Rs. 100



Interest on the bonds is received on 30th June and 31st Dec. each year.

Prepare Investment Accounts in the books of Smart Investments. Assume that the average cost method is followed.

b) The following is the Trial Balance of Subhash Limited as on 31.3.2012: 8M (Figures in ‘000)

Debit Rs. Credit Rs.

Land at cost Plant & Machinery at cost Debtors Stock (31.3.2012) Bank Adjusted Purchases Factory Expenses Administration Expenses Selling Expenses Debenture Interest Interim Dividend Paid

110 385

48 43 10

160 30 15 15 10

9 835

Equity Capital (Shares of Rs 10 each) 10% Debentures General Reserve Profit & Loss A/c Securities Premium Sales Creditors Provision for Depreciation Suspense account

150

100 65 36 20

350 26 86

2

835


(a) On 31.3.2012, the company issued bonus shares to the shareholders on 1 : 3 basis. No entry relating to this has yet been made.

(b) The authorised share capital of the company is 25,000 shares of Rs.10 each.

(c) The company on the advice of independent valuer wish to revalue the land at Rs.1,80,000.

(d) Proposed final dividend 10%.



(e) Suspense account of Rs.2,000 represents cash received for the sale of some of the machinery on 1.4.2011.The cost of the machinery was Rs.5,000 and the accumulated depreciation thereon being Rs.4,000.

(f) Depreciation is to be provided on plant and machinery at 10% on cost.

You are required to prepare Subhash Limited’s Statement of Profit & Loss for the year ended 31.3.2012 and a balance sheet on that date in vertical form as per the provisions of Revised Schedule VI of the Companies Act, 1956. Your answer to include detailed notes only for the following:

(1) Share Capital (2) Reserves & Surplus (3) Fixed Assets

Ignore previous years’ figures & taxation .


Surya Trust runs a charitable hospital and a dispensary and for the year ended 31.03.1998, the following balances were extracted from its books:

Particulars Rs. Dr. ( Rs.) Cr. ( Rs.)

Capital Fund: Donation received in the year – Capitalize. Fees received from patients Recovery for amenities – rent etc. Recovery for food supplies Surgical equipments Buildings theatres etc. Consumption of: Medicines Foodstuffs Chemicals etc. Closing Stock of: Medicines Foodstuffs Chemicals etc. Sales of Medicines (dispensary) Opening Stock of Medicines (dispensary) Purchases of medicines (dispensary) Salaries: Administrative staff Doctors, nurses, etc. Assistants at dispensary Electricity and power charges etc. Hospital Dispensary Furniture, fittings and equipments Ambulance Postage, Telephone charges etc. less recovery Subscription to medical journals Ambulance maintenance charges less recoveries Consumption of linen, bed sheets, etc Fixed Deposit (made on 10.08.1996 for 3 years. At @ 11% p.a. interest) Cash in hand

2,40,000 1,80,000

60,000

40,000 8,000 2,000

60,000 3,00,000

30,000

2,10,000 4,000

9,10,000 6,40,000

4,80,000

50,000

1,10,000 6,00,000

3,90,000

2,14,000 1,60,000

60,000 52,000 42,000

1,80,000

10,00,000

12,100

18,00,000 12,00,000 6,00,000 5,50,000 2,80,000

6,20,000

1,600



70,500 1,21,000

42,000

82,000

Cash at Bank Sundry Debtors (dispensary) Sundry Creditors (dispensary) Remuneration to trustees, trust office expenses etc.

51,33,600 51,33,600


a. The dispensary supplies medicines to Hospital on requisitions and delivery notes: for which no adjustment has been made in the books. Cost of such supplies in the year was Rs.1,20,000.

b. Stock of medicines at close at dispensary was Rs.80,000;

c. Donations were received towards the corpus of the trust;

d. Stock of medicines on 31st March, 1998 at the Hospital included Rs.8,000 worth of medicines belonging to patients; this has not considered in arriving of the figure of consumption of medicines:

e. One of the well-wishers donated Surgery Equipment, whose market value was Rs.80,000 on 15th August, 1997;

f. The Hospital is to receive a grant of 25% of the amount spent on treatment of poor patients from the local branch of the Red Cross Society. Such expenditure in the year was Rs.1 lakhs.

g. Out of the fees recovered from the patients, 10% is to be given to specialists as retained.

h. Depreciations on assets, on closing balances, is to be provided on: Surgical Equipments 20% Buildings 5%

Furniture and fittings 10%

Ambulance 30%

Prepare the Income and Expenditure Account of the dispensary, Trust and the Hospital for the year ended 31st March, 1998 and statement of affairs of the Trust as at that date.


a) The following is statement of profit and loss of Mudra Ltd., the year ended 31st march, 2011.

Name of the Company : Mudra Ltd

Profit and Loss Statement for the year ended : 31st March, 2011

Particulars Note no Rs.

I II

Revenue from operations Other Income Total Revenue Expenses: Employee benefits expense Finance costs Depreciation and amortization expenses Other expenses Total Expenses

Profit in the current year before tax (I-II) (-) Provision for tax Profit in the current year after tax Add last year profit Less transfer to reserves Less investment allowance reserve Profit transfer to balance sheet

1

2 3 4 5

40,25,365 2,73,925

42,99,290

3,52,100 31,240

5,22,543 890572

17,96,455

25,02,835 (1242500) 12,60,335 5,72,350

(4,00,000) (12,500)

14,20,185

Note to Accounts:

Particulars Rs. 1. Other Income: (a) Subsidies received from Govt. (b) Interest on Investments (c) Transfer fee

2,32,560

15,643 722



(d) Profit on sale of Machinery: Amount realized 55,000 Written down value 30,000

TOTAL 2. Employee benefits Expense: (a) Director fee (b) Managerial remuneration

TOTAL 3. Finance Costs: (a) Interest on debentures 4. Depreciation and amortization expenses 5. Other Expenses: (a) Donation to charitable funds (b) Compensation for breach of contract (c) Administration & selling

TOTAL

25,000 2,73,925

66,750

2,85,350 3,52,100

31,240

5,22,543

25,500 42,530

8,22,542 8,90,572


1. Original Cost of the machinery sold was Rs.40,000

2. Depreciation on fixed assets as per the Companies Act, 2013 was Rs.5,75,345. You are required to comment on the managerial remuneration in the following situation: a) There is only one whole time director; b) There are two whole time directors. c) There are two whole time directors, a part time director and a manager.

b) Following transaction took place between X and Y during the month of April, 2012.

April Particulars Rs. 1 7

10

10 12 15 20 20

Amount payable by X to Y Received acceptance of X to Y for 2 months Bills receivable (accepted by Y) on 7.2.2012 is honoured on this due date X sold goods to Y (invoice dated 10.5.2012) X received cheque form Y dated 15.5.2012 Y sold goods to X (invoice dated 15.5.2012) X returned goods sold by Y on 15.4.2012 Bill accepted by Y is dishonoured on this due date

10,000 5,000

15,000 7,500 6,000 1,000 5,000

You are required to make out an account current by products method to be rendered by X to Y as on 30.4.2012, taking interest into account @ 10% p.a. (assume 1 year = 365 days).

c) The promoters of Glorious Ltd. took over on behalf of the company a running business with effect from 1st April, 2012. The company got incorporated on 1st August, 2012. The annual accounts were made up to 31st March, 2013 which revealed that the sales for the whole year totalled Rs.1,600 lakhs out of which sales till 31st July, 20I2 were for Rs.400 lakhs. Gross profit ratio was 25%. The expenses from 1st April 2012, till 31st March, 2013 were as follows:

Particulars (Rs. in lakhs) Salaries Rent, Rates and Insurance Sundry Office Expenses Travelers' Commission Discount Allowed Bad Debts Directors' Fee Audit Fee Depreciation on Tangible Assets Debenture Interest

69 24 66 16 12 4

25 9

12 11



Prepare a statement showing the calculation of Profits for the pre-incorporation and post incorporation periods.

d) What is an Enterprise Resource Planning (ERP) software? What are the factors which you will take into consideration while choosing an ERP software?

e) The closing inventory at cost of a company amounted to Rs.2,84,700. The following items were included at cost in the total:

(i) 400 coats, which had cost Rs.80 each and normally sold for Rs.150 each owing to a defect in manufacture, they were all sold after the balance sheet date at 50% of their normal price. Selling expenses amounted to 5% of the proceeds.

(ii) 800 skirts, which had cost Rs.20 each. These two were found to be defective. Remedial work in April cost Rs. 5 per skirt, and selling expenses for the batch totaled Rs. 800. They were sold for Rs.28 each.

What should the inventory value be according to AS 2 after considering the above items?

THE END



IPCC GROUP I, PAPER : 2 –BUSSINESS LAW, ETHICES & BUSSINESS COMUNICATION





Questions No. 1 is compulsory.

Answer any five questions from the remaining six questions.


a) X invites Y (a film Actor) to his daughter’s engagement and dinner party Y accept the invitation and promises to attend. X made special arrangement for Y at the party but he did not turn up. x enraged with y’s behavior, wanted to Sue for loss incurred in making special arrangement. X is seeking your advise. 5M

b) Procedure for incorporation of a one person company. 5M

c) State with reasons whether the following statements are correct or incorrect. i) Business does not sub-serve the environmental ethics. 3M

ii) Consumer for personal use and consumer for Commercial use are synonymous. 2M

d) Write short notes on formal Communication. 5M

2) Answer the following: (4X4=16M)

a) Enumerate the difference & dissimilarities between wagering agreements and Contingent contract.

b) Outline the importance of ethical behavior at the workplace.

c) Explain the meaning of critical thinking what are the process involved in critical thinking? What are required qualities of critical thinker?

d) What are the modes of issue of securities by the company under the provisions of companies Act, 2013.

3) Answer the following: (4X4=16M)

a)

i) who is entitled and who is not entitled to claim Bonus under the payment of Bonus Act, 1965. 4M

ii) When an employee becomes disabled due to any accident or disease and is unable to do the same work and re-employed on the reduced wages, how the gratuity of such employee shall be computed. 4M

b) Write short notes on Global warming what is the impact of climate change? 4M

c) Explain the law relating to “Resolutions requiring special Notice”. When is such a special notice is required. 4M


a) State with reasons whether following statements are correct or incorrect. 2 x 2 = 4M

i) In critical thinking Ideas are rigid.

ii) Rumors tend to focus on people.

b) Are there any circumstances under which a contract is without consideration is valid? Explain. 4M

c) Distinguish between consumer interest are public interest. 4M

d) Write short notes on conditions for the issue of equity shares with differential rights. 4M




a)

i) Who is a Holder and who is holder in due course:? What re the rights/special privileges of a Holder in Due course? 4M

ii) A issues an open bearer cheque for Rs. 10,000 in favor of B who strikes out the word bearer and puts crossing the cheque. The cheque is there after to c and D. When it is finally presented by D;s Banker, it is returned with remarks” payment countermanded” by drawer. In response to this legal notice from D, a pleads that the cheque was altered after it had been issued and therefore he is not bound to pay the cheque. Referring to the provisions of the NT Act, 1881 decide, whether A’s Argument is valid or not. 4M

b) Explain front office and bank office process W.r.t MCA-21 project? 4M

c) List the benefits of corporate social responsibility. 4M


a) Distinguish between ‘Reduction of share Capital’ and diminution of share capital? 4M

b) State whether following statements are correct or incorrect? 1x4=4M

i) Where there are co-sureties, a release one of them by the creditor does not discharge the others?

ii) No consideration is necessary to create an Agency?

iii) Television Advertisements and visual clips giving all required details can be treated as prospectus?

iv) Every share holder is a member, but every member may not be a shareholder of the company?

c) Draft a circular for Employees insisting on Punctuality? 4M

d) Explain the provision relating to satisfactions of charge? 4M


a) Explain clearly the meaning of the term ‘Basic wages’ as defined under the EPF Act. State also which is not included in the term ‘Basic wages? 4M

b) RSP Limited allotted 500 fully paid up shares of Rs 100 each to Z, a minor in response to his application without knowing that he was a minor entered his name in the Register of members. Later on, the company came to know of this fact. The company cancelled the allotment and struck off is name from the register member and also forfeited his entire share money. He filed a suit against the action of the company. Decide whether Z would be given any relief by the court under the provision of the companies Act. 4M

c) Write short notes on Environmental Ethics? 4M

d) What do you understand by non-verbal communication? Explain its methods. 4M

e) Define the terms (2 X 2 = 4M)

i) Associated company.

ii) Officer who is in default.

THE END



IPCC GROUP I, PAPER : 2 –BUSSINESS LAW, ETHICES & BUSSINESS COMUNICATION








a) Sunil delivered his car to Mahesh for repairs Mahesh completed the work but did not returned the car to sunil within the reasonable time. Though sunil repeatedly reminded Mahesh for the return of car in reasonable time. A big fire occurred in neighborhood and the car was destroyed. Decide whether Mahesh can be held liable under the provisions of Indian contract Act, 1872. 5M

b) What are the effects of ultra virus transactions? 5M

c) State with reasons whether the following transactions are correct or incorrect.

i) Depletion of ozone layer will have adverse effect on human beings and not on vegetation. 3M

ii) The Governance model position management is accountable solely to Investors. 2M

d) Explain the steps involved in the negotiation process. 5M


a) Explain the validity of agreements in restraint of Trade. 4M

b) Distinguish between Morals and ethics. 4M

c) Draft an affidavit for declaration of income. 4M

d) Distinguish between coercion and undue influence. 4M

3) Answer the following: a)

i) Explain the term Minimum and Maximum bonus under the payment of Bonus Act 1965. 4M

ii) Explain the “continuous service” u/s 2A of the payment of Gratuity Act 1972. 4M

b) Write a short note on Harassment, in the context of work place ethics? 4M

c) State with reasons whether following statements are correct or incorrect. 2 x 2 = 4M

i) Ethical communication requires effective critical thinking skills.

ii) Communicators will not be held responsible for misinterpretations.


a) What is the meaning of ‘proxy’? Discuss the law related to proxy in brief. 4M

b) Explain the reasons for unethical behavior among finance and accounting professionals. 4M

c) Write about oral communication? What are advantages and disadvantages of oral communication? 4M

d) Explain the concept of “shelf prospectus” in the light of companies Act,2013. 4M




a)

i) What is a promissory note? State the essential Features of a Promissory note? 4M

ii) J accepted a bill of exchange and gave it to K for the purpose of getting it discounted and handing over the proceeds to J. K having failed to discount it, returned the bill to J. J tore the bill in two pieces and pasted the two pieces together, in such manner that the bill seemed to have been folded for safe custody, rather than cancelled. K put it into circulation and it ultimately reached L, who took it in good faith and for value. Is J liable to pay for the bill under the provisions of the Negotiable instrument Act,1881. 4M

b) What is the prohibition on accepting deposits from public? From whom a company can accept deposits as per the companies Act, 2013? 4M

c) What are the fundamental principles of ethics in the context of finance and accounts? 4M


a) Who is an expert? When is he liable for any mis-statement in the prospectus? When is he not liable? 4M

b) State whether the following statements are correct or incorrect. 1 X 4 = 4M

i) Proxy has no right to speak at the general meeting of a company.

ii) In the case of public issue of shares, the subscription list is to be kept open for a minimum period of 3 working days.

iii) In case of alternative promise, one branch of which is legal and the other is illegal, the whole contract cannot be performed.

iv) In contract of guarantee, forbearance by the creditor to use the principal debtor discharges the surety.

c) Explain the functions of inter personal communication. 4M

d) What are the circumstances under which corporate entity will be disregarded? 4M


a) Write about the “Employee’s deposit linked insurance scheme” regulated under EPF Act, 1952?

b) What is “Annual Return”? Discuss the provisions of the companies Act, 2013 relating to same.

c) Define the term “relative” as per provisions of the companies Act, 2013.

d) Explain guidelines to handle communication Ethics Dilemma.

e) Outline the importance of conservation of natural resources.

THE END



IPCC GROUP I, PAPER : 3 – COST ACCOUNTING & FINANCIAL MANAGEMENT







Working notes should form part of the answer.


a) Aditya Brothers supplies surgical gloves to nursing homes and polyclinics in the city. These surgical gloves are sold in pack of 10 pairs at price of Rs. 250 per pack. For the month of November 2015, it has been anticipated that a demand for 60,000 packs of surgical gloves will arise. Aditya Brothers purchases these gloves from the manufacturer at Rs. 228 per pack within a 4 to 6 days lead time. The ordering and related cost is Rs. 240 per order. The storage cost is 10% p.a. of average inventory investment.

Required:

i) Calculated the Economic Order Quantity (EOQ)

ii) Calculate the number of orders needed every year

iii) Calculate the total cost of ordering and storage of the surgical gloves.

iv) Determine when should the next order to be placed. (Assuming that the company does maintain a safety stock and that the present inventory level is 10,033 packs with a year of 360 working days).

b) X Ltd, having fifteen different types of automatic machines furnishes information as under for current year.

i) Overhead expenses: Factory rent, Rs 96,000 (floor area 80,000 sq. ft.); Heat and gas, Rs 45,000, and Supervision, Rs 1,20,000.

ii) Wages of the operator are Rs 48 per day of 8 hours. He attends to one machine when it is under set-up and two machines while they are under operation.

iii) Cost of machine - 45,000; Life - 10 years, and scrap value at the end of its life, Rs 5,000.

iv) Annual expenses on special equipment attached to the machine are estimated at Rs 3,000.

v) Estimated operation time of machine is 3,600 hours while set-up time is 400 hours per annum.

vi) The machine occupies 5,000 sq. ft. floor area.

vii) Power costs Rs 2 per hour while machine is in operation.

Find out the comprehensive machine-hour rate of machine B. Also find out machine costs to be absorbed in respect of use of machine B on the following two work orders:

Work order 31 Work order 32 Machine set-up time (hours) Machine operation time (hours)

10 90

20 180

c) You need a sum of Rs. 1,00,000 at the end of 10 years. You know that the best you can do is to deposit some lump sum amount today at 6% rate of interest or to make equal payments into a bank account, starting a year from now on which you can earn 6% interest. Find out

i) What amount to be deposited today or

ii) What amount must be deposited annually?



d) A company issued 40,000, 12% Redeemable Preference Share of Rs. 100 each at a premium of Rs. 5 each, redeemable after 10 years at a premium of Rs. 10 each. The floatation cost of each share is Rs. 2.

You are required to calculate cost of preference share capital ignoring dividend tax.


a) The following standards have been set to manufacture a product: 8M

Direct Material: (Rs.)

2 units of A @ Rs. 4 per unit 8.00

3 units of B @ Rs.3 per unit 9.00

15 units of C @ Rs.1 per unit 15.00

32.00

Direct Labour: 3 hrs @ Rs.8 per hour 24.00

Total standard prime cost 56.00

The company manufactured and sold 6,000 units of the product during the year. Direct material costs were as follows:

12,500 units of A at Rs.4.40 per unit

18,000 units of B at Rs.2.80 per unit

88,500 units of C at Rs.1.20 per unit

The company worked 17,500 direct labour hours during the year. For 2,500 of these hours, the company paid at Rs.12 per hour while for the remaining, the wages were paid at standard rate. Calculate materials price variance and usage variance and labour rate and efficiency variances.

b) X Co. has made plans for the next year. It is estimated that the company will employ total assets of Rs. 8,00,000; 50 per cent of the assets being financed by borrowed capital at an interest cost of 8 per cent per year. The direct costs for the year are estimated atRs. 4,80,000 and all other operating expenses are estimated at Rs. 80,000. the goods will be sold to customers at 150 per cent of the direct costs. Tax rate is assumed to be 50 %. 8M

You are required to calculate: (i) net profit margin; (ii) return on assets; (iii) asset turnover and (iv) return on owners’ equity.


a) From the following particulars compute a conservative estimate of profit by 4 methods on a contract which has 80 percent complete: 8M

Rs. Total expenditure to date 8,50,000 Estimate further expenditure to complete the contract 1,70,000 Contract Price 15,30,000 Work Certified 10,00,000 Work not certified 85,000 Cash received 8,16,000

b) The summarized Balance Sheet of Xansa Ltd. as on 31-12-2012 and 31-12-2013 are as follows: 8M



During 2013, the company –

a) Sold one machine for Rs. 25,000 the cost of the machine was Rs. 64,000 and depreciation provided for it amounted to Rs. 35,000.

b) Provided Rs. 95,000 as depreciation.

c) Redeemed 30% of debentures at Rs. 103.

d) Sold investments at profit and credited to capital reserve; and

e) Decided to value the stock at cost, whereas earlier the practice was to value stock at cost less 10%. The stock according to books on 31-12-2012 was Rs. 54,000 and stock on 31-12-2013 was Rs. 75,000, which was correctly valued at cost.

You are required to prepare the following statements:

(i) Funds from Operations

(ii) Sources and application of funds and statement of changes in working capital.

(iii) Fixed assets account and loss on sale of machinery account.


a) A, B and C are three industrial workers working in Sports industry and are experts in making cricket pads. A, B and C are working in Mahi Sports, Virat Sports and Sikhar Sports companies respectively. Workers are paid under different incentive schemes. 8M

Company wise incentive schemes are as follows:

Company Incentive scheme Mahi Sports Emerson’s efficiency system Virat Sports Merrick differential piece rate system Sikhar Sports Taylor’s differential piece work system

The relevant information for the industry is as under:

Standard working hours 8 hours a day Standard output per hour (in units) 2 Daily wages rate Rs. 360 No. of working days in a week 6 days

Actual outputs for the week are as follows:

A B C

132 units 108 units 96 units

You are required to calculate effective wages rate and weekly earnings of all the three workers.

b) BT Pathology Lab Ltd. is using a X-ray machines which reached at the end of their useful lives. Following new X-ray machines of two different brands with same features are available for the purchase. 8M



Residual Value of both of above machines shall be dropped by 1/3 of Purchase price in the first year and thereafter shall be depreciated at the rate mentioned above. Alternatively, the machine of Brand ABC can also be taken on rent to be returned back to the owner after use on the following terms and conditions:

• Annual Rent shall be paid in the beginning of each year and for first year it shall be Rs. 1,02,000.

• Annual Rent for the subsequent 4 years shall be Rs. 1,02,500.

• Annual Rent for the final 5 years shall be Rs. 1,09,950.

• The Rent Agreement can be terminated by BT Labs by making a payment of Rs. 1,00,000 as penalty. This penalty would be reduced by Rs. 10,000 each year of the period of rental agreement.

You are required to:

(i) Advise which brand of X-ray machine should be acquired assuming that the use of machine shall be continued for a period of 20 years.

(ii) Which of the option is most economical if machine is likely to be used for a period of 5 years?

The cost of capital of BT Labs is 12%.

5) Answer the following: (4 x 4 = 16M)

a) Given below is a list of eight industries. Give the method of costing against each industry.

(i) Nursing Home

(ii) Coal

(iii) Bicycles

(iv) Bridge Construction

(v) Interior Decoration

(vi) Advertising

(vii) Furniture

(viii) Sugar company having its own sugarcane fields.

b) What are the different types of cost audit?

c) What is Leverage? Write about types of Leverages.

d) Write about Net Operating Income approach?


a) A Ltd. produces product ‘AXE’ which passes through two processes before it is completed and transferred to finished stock. The following data relate to October 2012 : 8M



Output of Process I is transferred to Process II at 25% profit on the transfer price.

Output of Process II is transferred to finished stock at 20% profit on the transfer price. Stock in process is valued at prime cost. Finished stock is valued at the price at which it is received from process II. Sales during the period are Rs. 1,40,000.

Prepare Process cost accounts and finished goods account showing the profit element at each stage.

b) Slow Payers are regular customers of Goods Dealers Ltd., Calcutta and have approached the sellers for extension of a credit facility for enabling them to purchase goods from Goods Dealers Ltd. On an analysis of past performance and on the basis of information supplied, the following pattern of payment schedule emerges in regard to Slow Payers: 8M

Pattern of Payment Schedule

At the end of 30 days




15% of the bill

34% of the bill.

30% of the bill.

20% of the bill.

Non-recovery 1% of the bill.

Slow Payers want to enter into a firm commitment for purchase of goods of Rs. 15 lakhs in 2013, deliveries to be made in equal quantities on the first day of each quarter in the calendar year. The price per unit of commodity is Rs. 150 on which a profit of Rs. 5 per unit is expected to be made. It is anticipated by Goods Dealers Ltd., that taking up of this contract would mean an extra recurring expenditure of Rs. 5,000 per annum. If the opportunity cost of funds in the hands of Goods Dealers is 24% per annum, would you as the finance manager of the seller recommend the grant of credit to Slow Payers? Workings should form part of your answer. Assume year of 360 days.


a) Discuss basic assumptions of Cost Volume Profit analysis.

b) Explain Miller-Orr cash Management model.

c) Discuss the role of Chief Financial Officer (CFO) in an organisation.

d) Distinguish between Marginal costing and Absorption costing.

e) Write a short note on Venture Capital Financing?

THE END



IPCC GROUP I, PAPER : 3 – COST ACCOUNTING & FINANCIAL MANAGEMENT







Working notes should form part of the answer.


a) The Megatherm Corporation has just acquired a large account. As a result, it needs an additional Rs. 75,000 in working capital immediately. It has been determined that there are three feasible sources of funds:

(i) Trade credit: The company buys about Rs. 50,000 of materials per month on terms of 3/30, net 90. Discounts are taken.

(ii) Bank loan: The firm’s bank will lend Rs. 1,00,000 at 13 per cent. A 10 per cent compensating balance will be required, which otherwise would not be maintained by the company.

(iii) A factor will buy the company’s receivables (Rs. 1,00,000 per month), which have a collection period of 60 days. The factor will advance up to 75 per cent of the face value of the receivables at 12 per cent on an annual basis. The factor will also charge a 2 per cent fee on all receivables purchased. It has been estimated that the factor’s services will save the company a credit department expense and bad-debt expenses of Rs. 1,500 per month.

On the basis of annual percentage cost, which alternative should the company select?

b) A company proposes to install machine involving a capital cost of Rs. 3,60,000. The life of the machine is 5 years and its salvage value at the end of the life is nil. The machine will produce the net operating income after depreciation of Rs. 68,000 per annum. The company's tax rate is 45%.

The Net Present Value factors for 5 years are as under:

You are required to calculate the internal rate of return of the proposal.

Discounting rate : 14% 15% 16% 17% 18%

Cumulative factor : 3.43 3.35 3.27 3.20 3.13

c) Service departments’ expenses

(Rs.)

Boiler House 3,000

Pump Room 600

3,600

The allocation is :

Production Departments

A B Boiler House Pump Room

Boiler House 60% 35% - 5%

Pump Room 10% 40% 50% -

d) Calculate the earnings of worker from the following information under Bedeaux system :

Standard time for a product A-30 seconds plus relaxation allowance of 50%. Standard time for a product B-20 second plus relaxation allowance of 50%.



During 8 hour day Actual output of product A 500 units. Actual output of product B 300 units Wage rate Rs.10 per hour


a) The following information is available from the financial books of a company having a normal production capacity of 60,000 units for the year ended 31st March, 2013: 8M

a. Sales Rs. 10,00,000 (50,000 units).

b. There was no opening and closing stock of finished units.

c. Direct material and direct wages cost were Rs. 5,00,000 and Rs. 2,50,000 respectively.

d. Actual factory expenses were Rs. 1,50,000 of which 60% are fixed.

e. Actual administrative expenses were Rs. 45,000 which are completely fixed.

f. Actual selling and distribution expenses were Rs. 30,000 of which 40% are fixed.

g. Interest and dividends received Rs. 15,000.

You are required to:

(i) Find out profit as per financial books for the year ended 31st March,2013;

(ii) Prepare the cost sheet and ascertain the profit as per cost accounts for the year ended 31st March, 2013 assuming that the indirect expenses are absorbed on the basis of normal production capacity; and

(iii) Prepare a statement reconciling profits shown by financial and cost books.

b) PQ Ltd., a company newly commencing business in 2013 has the under mentioned projected Profit and Loss Account: 8M

Rs. Rs.

Sales 2,10,000

Cost of goods sold 1,53,000

Gross Profit 57,000

Administrative Expenses 14,000

Selling Expenses 13,000 27,000

Profit before tax 30,000

Provision for taxation 10,000

Profit after tax 20,000

The cost of goods sold has been arrived at as under: Materials used Wages and manufacturing Expenses Depreciation Less: Stock of Finished goods (10% of goods produced not yet sold)

84,000 62,500 23,500

1,70,000 17,000

1,53,000

The figure given above relate only to finished goods and not to work-in-progress. Goods equal to 15% of the year’s production (in terms of physical units) will be in process on the average requiring full materials but only 40% of the other expenses. The company believes in keeping materials equal to two month’s consumption in stock. All expenses are paid one month in Advance. Suppliers of materials will extend 1- 1/2 months credit. Sales will be 20% for cash and the rest at two months’ credit. 70% of the Income tax will be paid in advance in quarterly installments. The company wishes to keep Rs.8,000 in cash. 10% has to be added to the estimated figure for unforeseen contingencies. Prepare an estimate of working capital.

Note: All workings should form part of the answer.




a) S.V. Ltd. has furnished the following data: 6M

Budget Actual, July (2012) No. of working days Production in units Fixed overheads

25 20,000

Rs. 30,000

27 22,000

Rs. 31,000

Budgeted fixed overhead rate is Rs. 1.00 per hour. In July, 2012, the actual hours worked were 31,500.

Calculate the following variances:

(i) Volume variance.

(ii) Expenditure variance.

(iii) Total overhead variance.

b) Balance Sheets of RIO Ltd. as on 31st March, 2014 and 2015 were as follows: 10M


1) Investments were sold during the year at a profit of Rs. 15,000.

2) During the year an old machine costing Rs. 80,000 was sold for Rs. 36,000. Its written down value was Rs. 45,000.

3) Depreciation charged on Plants and Machinery @ 20 per cent on the opening balance.

4) There was no purchase or sale of Land and Building.

5) Provision for tax made during the year was Rs. 96,000.

6) Preference shares were issued for consideration of cash during the year.

You are required to prepare:

(i) Cash flow statement as per AS- 3.

(ii) Schedule of Changes in Working Capital.




a) XYZ Ltd. has a production capacity of 2,00,000 units per year. Normal capacity utilisation is reckoned as 90%. Standard variable production costs are Rs.11 per unit. The fixed costs are Rs.3,60,000 per year. Variable selling costs are Rs.3 per unit and fixed selling costs are Rs.2,70,000 per year. The unit selling price is Rs.20. 8M

In the year just ended on 30th June, 2006, the production was 1,60,000 units and sales were 1,50,000 units. The closing inventory on 30th June was 20,000 units. The actual variable production costs for the year were Rs. 35,000 higher than the standard.

(i) Calculate the profit for the year

- by absorption costing method and

- by marginal costing method.

(ii) Explain the difference in the profits.

b) The net sales of A Ltd. is Rs. 30 crores. Earnings before interest and tax of the company as a percentage of net sales is 12%. The capital employed comprises Rs. 10 crores of equity, Rs. 2 crores of 13% Cumulative Preference Share Capital and 15% Debentures of Rs. 6 crores. Income-tax rate is 40%. 8M

(i) Calculate the Return-on-equity for the company and indicate its segments due to the presence of Preference Share Capital and Borrowing (Debentures).

(ii) Calculate the Operating Leverage of the Company given that combined leverage is 3.

5) Answer the following: (4 x 4 = 16M)

a) What is labour turnover? Explain methods for calculating it.

b) A management trainee of an engineering firm while attending a meeting with the Director Finance of his company, heard the term “Cost Control” and “Cost Reduction”. Management Trainee is curious to know the difference between the above two terms. You are requested to satisfy his curiousity.

c) Explain (i) Operating Ratios and (ii) Price Earning Ratio.

d) Discuss the factors to be taken into consideration while determining the requirement of working capital.


a) On 31st March, 2013, the following balances existed in a firm’s Cost Ledger: 10M



You are required to pass the Journal Entries; write up the accounts and schedule the balances, stating what each balance represents.

b) Company P and Q are identical in all respects including risk factors except for debt/equity, company P having issued 10% debentures of Rs. 18 lakhs while company Q is unlevered. Both the companies earn 20% before interest and taxes on their total assets of Rs. 30 lakhs. 6M

Assuming a tax rate of 50% and capitalization rate of 15% from an all-equity company. Compute the value of companies P and Q using (i) Net Income Approach and (ii) Net Operating Income Approach.


a) What do you understand by Operating Costs? Describe its essential features and state where it can be usefully implemented?

b) Explain:

(i) Pre-production Costs

(ii) Research and Development Costs

(iii) Training Costs

c) “The profit maximization is not an operationally feasible criterion.”Comment on it.

d) Write short notes on the following:

(i) Bridge Finance

(ii) Floating Rate Bonds

(iii) Packing Credit.

e) Identify the types of costing for the following:

(i) All costs (variable and Fixed) are charged to Product/process.

(ii) Where costs are recorded after they have incurred.

(iii) Standardized principles and practices of costing are used by a number of different industries.

(iv) Standard costs are compared with actual costs to determine variances.

THE END



IPCC GROUP I, PAPER: 4 – TAXATION









MARKS


a) Rajat is a Chartered Accountant in practice. He maintains his accounts on cash basis. He is a Resident and ordinarily resident in India. His profit and loss account for the year ended March 31, 2015 reads as follows: 10M

Expenditure Rs. Income Rs.

Salary to staff 5,25,000 Fees earned: Stipend to articled assistants 18,000 Audit 6,65,800 Incentive to articled assistants 5,000 Taxation services 4,68,600 Office rent 24,000 Consultancy 3,82,000 15,16,400 Printing and stationery 6,600 Dividend on shares of

Indian companies (gross) 9,635

Meeting, seminar and conference

38,600 Income from Unit Trust of India

6,600

Repairs, maintenance and petrol of car

22,400 Profit on sale of shares (STT paid)

15,620

Subscription and periodicals 15,000 Honorarium received from various institutions for valuation of answer Papers

16,350

Postage, telegram and fax 32,500 Rent received from residential flat let out

84,000

Depreciation 29,500 Travelling expenses 55,000 Municipal tax paid in respect of house property

1,000

Net profit 8,76,005 16,48,605 16,48,605

i) The total travelling expenses incurred on foreign tour was Rs.20,000 which was within the RBI norms.

ii) Incentive to articled assistants represent amount paid to two articled assistants for passing IPCC Examination at first attempt.

iii) Repairs and maintenance of car includes Rs.1,600 for the period from 1.10.2014 to 30.9.2015

iv) Salary include Rs.30,000 to a computer specialist in cash for assisting Mr. Rajat in one professional assignment



Particulars Rs. Mode of payment Self 10,000 By Cheque Dependent brother 5,000 By Cheque Major son dependent on him 3,000 By Cash Minor married daughter 2,000 By Cheque Wife dependent on assessee 6,000 By Cheque

v) Shares sold were held for 10 months before sale.

vi) Mr. Rajat paid life membership subscription of Rs. 1,000 to Chartered Accountants Benevolent Fund. The amount was debited to his drawings account. The Chartered Accountants Benevolent Fund is an approved fund under section 80G of Income-tax, 1961.

vii) Depreciation debited to income and expenditure account is as per the rates of Income tax Rules, 1962.

Compute the total income and tax payable of Mr. Rajat for the Assessment year 2015-16.

b) ABC & Co. received the following amounts during the half year ended 31-3-2015: 5M

Particulars Rs. i) For services performed prior to the date of levy of service tax (Assume service tax was levied from a specified date by change of law) 3,50,000

ii) Advance amount received in March, 2015 (No service was rendered and the amount was refunded to the client in July 2015)

75,000

iii) For free services rendered to customers, amount reimbursed by the manufacturer of such product. (for the period after the imposition of service tax)

50,000

iv) Amounts realized and on which service tax is payable (excluding the items (i) to (ii) above)

14,26,500

Calculate the service tax liability duly considering the threshold limit.

c) What will be the assessable value of the excisable goods in the following cases? 5M

a) The price-cum-duty of excisable goods sold by ‘A’ is Rs. 200 per unit. Excise duty @ 8% has been charged by ‘A’ on such goods. However, ‘A’ comes to know that the actual rate of duty chargeable on the goods sold by him is 12% and not 8%. ‘A’ has collected only Rs. 200 per unit from the customers.

b) ‘B’ sells his excisable goods @ Rs. 200 per unit (inclusive of excise duty @ 12%). However, it has been found that ‘B’ has collected Rs. 50 per piece separately.

c) The price of the excisable goods sold by ‘C’ is Rs. 500 per unit. ‘C’ does not charge any duty of excise in his invoice on the belief that the goods sold by him are exempt from payment of duty vide an exemption notification. However, he comes to know that the goods are not exempt from excise duty but are liable to duty @ 12%.

In all the above cases education cesses have to be considered separately.


a) JK Ltd., a manufacturing company purchased the following plant and machinery: 8M

Date of Acquisition and Installation Actual Cost (in Rs. Crores)

25-05-2013 90.00

31-08-2014 20.00

15-04-2015 30.00



From the above information compute the amount of depreciation available under section 32(1), additional depreciation, if any, and deduction under section 32AC for the Assessment Years 2014-15, 2015-16 and 2016-17.

What will be the consequences if asset acquired on 31-08-2014 is sold on 01-05-2016?

b) Determine the interest payable under section 75 of Finance Act, 1994 on delayed payment of service tax from the following particulars: 4M

Service tax payable Rs. 60,500 Due date of payment 06.11.2014 Date of payment 06.01.2016

Note: Turnover of services in the preceding financial year wasRs. 80 lakh.

c) Spring Fresh is a leading manufacturer of bottled aerated water. Legal Metrology Act, 2009 requires declaration of retail sale price on the bottles of aerated water. 4M

Following information has been furnished by Spring Fresh:

Particulars Amount (Rs.) Abatement available on aerated water - 40% of retail sale price MRP marked on the bottles of aerated water Rs. 30 per bottle Price at which Spring Fresh sells the bottles of aerated water to their wholesalers Rs. 19 per bottle

Price at which wholesalers sell the bottles of aerated water to retail shop owners

Rs. 24 per bottle

Price at which bottles of aerated water are sold by retailers to final consumers

Rs. 28 per bottle (Rs. 2 offered as discount on

printed MRP)

Calculate the assessable value for the purpose of excise duty on the bottles of aerated water. Will your answer change, if Spring Fresh declares two MRPs namely, Rs. 30 and Rs. 40 on each bottle of aerated water?

Note: Aerated waters are notified under section 4A of Central Excise Act, 1944 (RSP based valuation provisions).


a) Mr. Ram, working as a CEO with ABC Ltd., furnishes the following particulars of assets transferred by him during the P.Y.2014-15 – 8M

Mr. Ram made the following investments, out of net consideration arising on sale of residential house -



Compute the total income and tax liability of Mr. Ram for A.Y.2015-16, if his salary income (computed) is Rs. 24 lakh and interest on fixed deposits with banks is Rs. 1 lakh. Assume that he has contributed Rs. 1,50,000 to PPF and paid medical insurance premium of Rs. 12,000 to insure his health.

Cost Inflation Index of F.Y.1999-2000: 389; F.Y.2009-10: 632; F.Y.2012-13: 852; F.Y.2014-15: 1024.

b) Mr. Harish is a registered dealer in Delhi. You are required to compute the central sales tax payable by him from the details furnished below:- 4M

Particulars Rs.

Total inter-State sales (including CST)

(i) Weighment dues (Weighing is incidental to the goods being sold)

(ii) Deposits for returnable container

(iii) Excise duty

(iv) Freight charges recovered separately in the invoice

(v) Goods returned by dealers within six months of sale, but after the

end of the financial year

16,00,000

48,000

25,000

80,000

60,000

40,000

Amounts given in points (i) to (v) above are included in total inter-State sales of Rs. 16,00,000 Buyers have issued ‘C’ forms for all purchases Sales tax rate within the State is 1%.

c) Life Insurance Services: A life insurance company provides the following information for the month of May, 2014. Compute the service tax payable by it: 4M

A. Variable Insurance Policies issued: Premiums collected 100 lakhs (11% of the premiums charged under variable insurance policies are towards mortality, commission and expenses). The premium receipt issued to policyholder shows his break-up.

B. Risk Cover Policies: Premiums collected 25 lakhs (the entire premium is only for risk cover).

C. Other policies: Premiums collected 200 lakhs (Savings Plan). The break up of amount invested is not shown separately in the premium receipt. Out of this, 50 lakhs is towards the insurance policies issued in the current year and balance towards insurance policies issued in earlier years.

Compute the service tax payable by the company assuming that the life insurance company has opted for option under Rule 6(7A) of the Service Tax Rules, 1994.


a) The gross total income of Mr. Nepal for the Assessment Year 2015-16, was Rs. 12,00,000. He has made the following investment/payments during the year 2014-15- 4M

S.No. Particulars Rs.

1. L.I.C. premium paid (Policy value Rs. 1,00,000) (taken on 1.03.2012)

25,000

2. Contribution to Public Provident Fund (PPF) 70,000

3. Repayment of housing loan to Indian Bank 50,000

4. Payment made to L.I.C. pension fund 20,000

5. Medical insurance premium for self, wife and dependent children. 18,000

6. Mediclaim premium for parents (aged over 80 years) 30,000

Compute eligible deduction under Chapter VI-A for the Assessment Year 2015-16.



b) An importer has imported a machinery to be used for providing the service of construction of commercial buildings. The assessable value of imported machinery as approved by customs is Rs. 1,00,000. Customs duty payable is 10%. If the machinery is manufactured in India, excise duty @ 12% is leviable on such machinery. Education cess and secondary and higher education cess are as applicable. Special CVD is payable on said machinery. You are required to: 8M

i) Calculate the total customs duty payable.

ii) Examine whether the importer can avail any CENVAT credit? If yes, how much?

c) Mr. Rajesh is a registered dealer and gives the following information. You are required to compute the net tax liability and total sales value, under Value Added Tax 4M

i) Rajesh sells his products to dealers in his state and in other states.

ii) The profit margin in 15% of the cost of production and VAT rate is 12.5% of sales.

iii) Intra State purchases of raw material costs Rs. 2,50,000/- (excluding VAT at 4%)

iv) Purchases of raw material from an unregistered dealer for a cost of Rs. 80,000/- (including VAT at 12.5%)

v) High seas purchases of raw material are for Rs.1,85,000 (excluding the custom duty, at 10% of Rs.18,500)

vi) Purchases of raw materials from other states (excluding CST at 2%) Rs. 50,000.

vii) Transportation charges, wages and other manufacturing expenses, excluding tax, amounts Rs.1,45,000.

viii) Interest paid on bank loan is Rs. 70,000


a) State, with reasons in brief, whether the following statements are true or false with reference to the provisions of the Income-tax Act, 1961: 8M

i) Mr. Arun, a member of a HUF, received Rs. 50,000 as his share from the income of the HUF. The same is to be included in his total income.

ii) A public charitable trust registered under section 12AA, running a hospital has claimed the cost of a laptops (acquired for hospital on 23.03.2014) amounting to Rs.1,20,000 as application of income for the P.Y.2013-14. It can also claim depreciation @ 60% thereon for P.Y. 2014-15, as deduction while computing income for the purpose of application.

iii) Ramji charitable trust, registered under section 12AA, earned income from mutual funds specified under section 10(23D) to the tune of Rs. 2 lakh in the P.Y. 2014-15 and claims exemption under section 10(35) in respect of such income. It also earned dividend income of Rs. 1 lakh and agricultural income of Rs. 5 lakh in the same year, and claims exemption under section 10(34) and 10(1), respectively, in respect of such income, without complying with the conditions laid down under section 11. All the three claims for exemption under section 10 are tenable.

iv) Agricultural income from a land situated in Malaysia would be taxable in the hands of Mr. Anand, a resident in India.

v) Mr. X is a ‘Maha Vir Chakra’ awardee who was in the service of the Central Government. Pension of Rs. 3,50,000 received by him during the financial year 2014- 15 is chargeable to tax in his hands.

b) Briefly answer the following questions with reference to the provisions of CENVAT Credit Rules, 2004:- 4M

i) Mr. Q, a manufacturer, receives an invoice dated 05.03.2015 for inputs purchased by it. Mr. Q has been advised by his consultant that CENVAT credit on said inputs cannot be taken after six months of the date of invoice. You are required to offer your comments, if any.

ii) Mr. P, an output service provider, receives some capital goods within his premises and immediately sends them to a job worker for reconditioning on 22.03.2015. Mr. P has been informed by his consultant that for the purpose of availing CENVAT credit, he should get back the capital goods in his premises within 180 days of their being sent from his premises.



c) Mediatek Pvt. Ltd.’s total inter-State sales @ 4% CST for the Financial Year 2014-15 is Rs. 2,00,00,000 (CST not shown separately). In this regard, following additional information is available: 4M

i) Goods sold to Amit for Rs. 1,50,000, on 10.07.2014 were returned by him on 08.12.2014.

ii) A buyer, Sumit, to whom goods worth Rs. 45,000 were dispatched on 25.08.2014, rejected such goods. The said goods were received back on 10.03.2015.

iii) Goods sold to Shyam for Rs. 3,00,000, on 11.07.2014 were returned by him on 12.02.2015.

Determine the amount of taxable turnover of Mediatek Pvt. Ltd.


a) Ronak owns a house in Bangalore. During the previous year 2014-15, 2/3rd portion of the house was self-occupied and 1/3rd portion was let out for residential purposes at a rent of Rs. 9,200 p.m. Municipal value of the property is Rs. 3,30,000 p.a., fair rent is Rs. 3,00,000 p.a. and standard rent is Rs. 3,60,000. He paid municipal taxes @10% of municipal value during the year. 6M

A loan of Rs. 38,00,000 was taken by him during the year 2012 for acquiring the property. Interest on loan paid during the previous year 2014-15 was Rs. 3,90,000. Compute Ronak’s income from house property for the A.Y.2015-16.

b) Shubh Ltd. exported some goods to Riddhi Inc. of USA. It received US $ 8,000 as consideration for the same and sold the foreign currency @ Rs. 62 per US dollar. Compute the value of taxable service under rule 2B of the Service Tax (Determination of Value) Rules, 2006 in the following cases:- ` 5M

i) RBI reference rate for US dollar at that time is Rs. 63 per US dollar.

ii) RBI reference rate for US dollars is not available.

What would be the value of taxable service if US $ 8,000 are converted into UK £ 4,000. RBI reference rate at that time for US $ is Rs. 64 per US dollar and for UK £ is Rs. 102 per UK Pound.

c) Famous Hero Motors Ltd. purchases raw material and supplies it to JBK Engineering Company. JBK Engineering Company manufactures automobile components as per the design supplied by Famous Hero Motors. Such components bear brand name of Famous Hero Motors Ltd. namely, ‘Famous Hero’. JBK Engineering Company supplies these components to Famous Hero Motors Ltd., who in turn sells them in market as spare parts of automobiles. Who is liable to pay central excise duty on such components? 5M

7) Question 7(a) is compulsory Answer any two from remaining: (8 + 4 X 2 = 16M)

a) Examine the applicability of the provisions for tax deduction at source in the following cases - 8M

i) On 12.02.2015, payment of Rs. 2,20,000 made to Mr. Arvind for purchase of diaries made according to specifications of M/s Sutra Ltd. However, no material was supplied for such diaries to Mr. Arvind by M/s Sutra Ltd.

ii) Mr. Mohit sold his house property in Ranchi as well as rural agricultural land for a consideration of Rs. 68,00,000 and Rs. 27,00,000, respectively, to Mr. Rajesh on 01.12.2014.

iii) Miss Sonia, a resident, is due to receive Rs. 2,30,000 on 31.10.2014 on maturity of her life insurance policy taken 01.11.2010. The policy sum assured is Rs. 2,00,000 and the annual premium is Rs. 45,000.

iv) Rent of Rs. 1,75,000 paid for hire of plant and machinery by a partnership firm.

v) Compensation of Rs. 2,00,000 paid to Mr. Devesh for compulsory acquisition of his urban land by the State Government.

b) LMN (Pvt.) Ltd. is engaged in providing taxable services to its clients. Its service tax liability for the month of January, 2014 is Rs. 3,50,000. LMN (Pvt.) Ltd. intends to make e-payment of service tax on the due date i.e., on 06.02.2014. 4M

Break-up of CENVAT credit available with LMN Ltd. as on 01.01.2014 is given below:



Particulars (Rs.) Inputs 50,000 Capital goods 1,00,000 Input services 15,000

LMN (Pvt.) Ltd. has provided the following further details:

Excise duty Particulars Inputs

(Rs.) Capital

goods (Rs.)

Service tax (Rs.) [Input services]

Inputs received on 10.01.2014 30,000 Inputs received on 15.01.2014 50,000 Capital goods received on 20.01.2014 70,000 Invoices (for input services) dated 23.01.2014 received on same day

35,000

Invoices (for input services) dated 02.02.2014 received on same day

35,000

Inputs received on 04.02.2014 45,000

Out of total duty of Rs. 50,000 paid on inputs received on 15.01.2014, Rs. 15,000 represented National Calamity Contingent Duty.

You are required to determine the service tax payable by LMN (Pvt.) Ltd. in cash, if any. [Ignore EC and SHEC.]

Note: LMN (Pvt.) Ltd. is not eligible for the small service provider exemption under Notification No. 33/2012-ST dated 20.06.2012.

c) Explain the requirements of registration under the service tax law? 4M

d) Distinguish between tariff rate of excise duty and effective rate of excise duty. 4M

THE END



IPCC GROUP I, PAPER: 4 – TAXATION









MARKS


a) Mr. Yashwant carries on his own business. An analysis of his trading and profit & loss for the year ended 31-3-2015 revealed the following information: 10M

i) The net profit was Rs. 13,47,000.

ii) The following incomes were credited in the profit and loss account : a) Income from UTI Rs. 28,000. b) Interest on debentures (Gross) Rs. 34,200. c) Winnings from races (net of TDS) Rs. 33,600.

iii) It was found that some stocks were omitted to be included in both the opening and closing stocks, the value of which were:

Opening stock Rs. 10,500.

Closing stock Rs. 14,000.

iv) Rs. 1,25,000 was debited in the profit and loss account, being contribution to a University approved and notified under section 35(1)(ii).

v) Salary includes Rs. 27,000 paid to his brother which is unreasonable to the extent of Rs. 5,000.

vi) Advertisement expenses include 20 gift packets of dry fruits costing Rs. 1,250 per packet presented to important customers.

vii) Total expenses on car was Rs. 95,000. The car was used both for business and personal purposes. ¾ th is for business purposes.

viii) Miscellaneous expenses included Rs.33,500 paid to Shiva & Co., a goods transport operator in cash on 28-2-2015 for distribution of the company’s product to the warehouses.

ix) Depreciation debited in the books was Rs. 95,000. Depreciation allowed as per Income-tax Rules, 1962 was Rs. 82,000.

x) Drawings Rs. 18,000.

xi) Investment in NSC Rs. 27,000.

Compute the total income of Mr. Yashwant for the assessment year 2015-16.

b) XY Travels Pvt. Ltd., located in New Delhi, is engaged in providing services of renting of motor cab and discharges its service tax liability by availing abatement granted under Notification No. 26/2012 ST dated 20.06.2012. Value of services rendered by the company during the month of October, 2014 is Rs. 5,50,000 (before availing abatement). The company has sub-contracted part of its services to YZ Cabs Pvt. Ltd., which is also engaged in providing services of renting of motor cab. Total value of such sub-contracted services is Rs. 50,000 and service tax payable thereon is Rs. 6,180. 5M



Determine the net service tax liability of XY Travels Pvt. Ltd. (to be paid in cash) for the month of October 2014

c) Sowmya Enterprises, a dealer in Chandigarh, purchased the raw material worth Rs. 50,00,000 (excluding VAT) and manufactured finished goods worth Rs. 90,00,000 from such raw material in the month of April, 2014. It acquired Plant & Machinery worth Rs. 30,00,000 on which 100% input tax credit is available in the year of acquisition itself. Sowmya Enterprises incurred manufacturing expenses of revenue nature worth Rs. 12,00,000 for the manufacture of finished goods. It incurred manufacturing expenses of capital nature worth Rs. 22,00,000 for the manufacture of finished goods. Compute the VAT liability of Sowmya Enterprises for the month of April, 2014 under gross product variant and consumption variant of VAT. Input and output VAT rate is 4%. State which variant is beneficial to Sowmya Enterprises. 5M

2) Answer the following: a) For the Assessment year 2015-16, the gross total income of Mr. Shivpal, a resident in India, was

Rs. 9,25,600 which includes long-term capital gain of Rs. 3,15,000 and short-term capital gain under section 111A of Rs.64,500. The gross total income also includes interest income of Rs. 13,500 from savings bank deposits with banks. Mr. Shivpal has invested in PPF Rs. 1,50,000 and also paid a medical insurance premium Rs. 24,000 to insure his health. Mr. Shivpal also contributed Rs. 68,000 to public charitable trust eligible for deduction under section 80G by way of an account payee cheque. Compute the total income and tax thereon of Mr. Shivpal, who is 72 years old as on 31.3.2015. 4M

b) Madhavpur Sugar Ltd. produces khandsari molasses and supplies the same to TP Ltd. which, in turn uses it in the manufacture of a non-excisable commodity. Khandsari molasses worth Rs. 2,00,000 have been supplied by Madhavpur Sugar Ltd. to TP Ltd. Compute the duty payable from the following information: 8M

Particulars Date Applicable rate of duty (inclusive of 3% education cess)

Date of production 26.02.2013 10.30% Date of removal from the factory of Madhavpur Sugar Ltd.

28.02.2013 10.30%

Date of receipt of molasses by TP Ltd. 18.03.2013 12.36% Date of manufacture of non-excisable product in which molasses have been used

12.04.2014 Molasses have been exempted vide an exemption notification

Who is liable to pay duty in the above case?

c) An importer imports a carton of goods containing 10,000 pieces with assessable value of Rs. 1,00,000 under section 14 of the Customs Act, 1962. On said product, rate of basic customs duty is 10% and rate of excise duty is 12% ad valorem. Similar product in India is assessable under section 4A of the Central Excise Act, 1944, after allowing an abatement of 30%. MRP printed on the package at the time of import is Rs. 25 per piece. Calculate the countervailing duty (CVD) under section 3(1) of the Customs Tariff Act, 1975 payable on the imported goods. 4M


a) Mr. Aaditya submits the following information for the financial year ending 31st March, 2015. He desires that you should: 8M

i) Compute his total income and

ii) Ascertain the amount of losses that can be carried forward.



b) Amiro Bank Ltd. furnishes the following information relating to services provided and the gross amount received (excluding service tax): 4M

Particulars Amount (Rs.)

Interest on overdraft 5,00,000

Interest on loans with a collateral security 6,00,000

Interest on corporate deposits 10,00,000

Administrative charges (over and above interest) on loans, advances and deposits

6,00,000

Sale of foreign exchange to general public 15,00,000*

Service charges relating to issuance of Certificates of Deposit (CDs) 20,00,000

Compute the value of taxable service and the service tax liability of Euro Bank Ltd. considering the rate of service tax at 12% assuming that it is not eligible for small service providers’ exemption under Notification No. 33/2012 – ST dated 20.06.2012. Service tax has been charged separately, wherever applicable.

*It represents the value of taxable service computed as per rule 2B of the Service Tax Valuation Rules.

c) X of Kolkata sells goods to Y of Chennai and hands over the goods to MKS Transport, Kolkata for transporting the same to Chennai. The lorry receipt is sent to Y by post. While goods are in transit, Y sells the goods to Z of Vijayawada by endorsing the lorry receipt and goods are diverted to Vijayawada. X, Y and Z are registered dealers. Is the second sale between Y and Z chargeable to tax? 4M


a) Mr. A commenced operations of the business of setting up a warehouse facility for storage of food grains, sugar and edible oil on 1-4-2014. He incurred capital expenditure of Rs.80 lakh, Rs.60 lakh and Rs.50 lakh, respectively, on purchase of land and building during the period January, 2014 to March, 2014 exclusively of the above businesses, and capitalized the same in its books of accounts as on 1st April, 2014. The cost of land included in the above figures are Rs.50 lakhs, Rs.40 lakh and Rs.30 lakh, respectively. Further, during the P.Y.2014-15, it incurred capital expenditure of Rs.20 lakh, Rs.15 lakh and Rs.10 lakh, respectively, for extension / reconstruction of the building purchased and used exclusively for the above businesses. Compute the income under the head “Profits and gains of business or profession” for the A.Y.2015-16 and the loss to be carried forward, assuming that Mr. A has fulfilled all the conditions specified for claim of deduction under section 35AD and has not claimed any deduction under Chapter VI-A under the heading “C” – deductions in respect of certain incomes”. The profits from the business of setting up a warehousing facility (before claiming deduction under section 35AD and section 32) for the A.Y.2014-15 is Rs.16 lakhs, Rs.14 lakhs and Rs.31 lakhs, respectively. 4M

b) ‘Rock Farmer Association’ is engaged in providing services relating to agriculture. It furnishes the following details with respect to the activities undertaken by them in the month of May, 2015: 8M



S.No. Particulars Amount(Rs.) i) Cultivation of ornamental flowers 42,000 ii) Packing of tomato ketchup 54,000 iii) Warehousing of potato chips 1,65,000 iv) Sale of tea on commission basis 68,000 v) Packaging of pulses in retail packs 42,000 vi) Training of farmers on use of scientific tools and agro machinery 10,000 vii) leasing of vacant land to a stud farm 1,63,000 viii) Grading of wheat according to its quality 42,000 ix) Testing of samples from plants for pest detection 1,21,500 x) Rearing of silk worms 83,500

Compute the service tax liability of ‘Rock Farmer Association’ for the month of May, 2015. Assume that the point of taxation in respect of all the activities mentioned above falls in the month of May, 2015 itself. ‘Rock Farmer Association’ has paid service tax of Rs. 7,14,000 during the Financial Year 2014-15.

c) Pulaka Ltd. of Hyderabad made a total purchases of input and capital goods of Rs. 60,00,000 during the month of November, 2015 including the following purchases:- 4M

i) Goods worth Rs. 8,00,000 were purchased from Mysore on which C.S.T. @ 2% was paid.

ii) Goods purchased for personal use amounted to Rs. 12,00,000 and goods purchased from unregistered dealers amounted to Rs. 18,00,000.

iii) It purchased capital goods (not eligible for input credit) worth Rs. 9,50,000 and those eligible for input credit for Rs. 9,00,000. The input VAT credit on eligible capital goods is available in 36 equal monthly installments.

(Note: All purchases given are exclusive of tax and VAT @ 4% is paid on them)

Pulaka ltd. sold goods in Hyderabad during the month of November, 2015 worth Rs. 12,00,000 on which VAT @ 12.5% is payable.

Calculate

i) The amount of input tax credit available for the month of November, 2015

ii) VAT payable for the month of November, 2015 and

iii) Input tax credit carried forward, if any.


a) During the previous year 2014-15, the following transactions occurred in respect of Mr. A. 4M

i) Mr. A had a fixed deposit of Rs. 5,00,000 in Bank of India. He instructed the bank to credit the interest on the deposit @ 9% from 1-4-2014 to 31-3-2015 to the savings bank account of Mr. B, son of his brother, to help him in his education.

ii) Mr. A holds 75% share in a partnership firm. Mrs. A received a commission of Rs. 25,000 from the firm for promoting the sales of the firm. Mrs. A possesses no technical or professional qualification.

iii) Mr. A gifted a flat to Mrs. A on April 1, 2014. During the previous year 2014-15, Mrs. A’s “Income from house property” (computed) was Rs. 52,000.

iv) Mr. A gifted Rs. 2,00,000 to his minor son who invested the same in a business and he derived income of Rs. 20,000 from the investment.

v) Mr. A’s minor son derived an income of Rs. 20,000 through a business activity involving application of his skill and talent.

During the year, Mr. A got a monthly pension of Rs. 10,000. He had no other income. Mrs. A received salary of Rs. 20,000 per month from a part time job.

Discuss the tax implications of each transaction and compute the total income of Mr. A, Mrs. A and their minor child.



b) Sofa Enterprises imported some goods from USA for being used in manufacture of its final product. Determine the exchange rate to be considered for computation of import duty from the following information: 4M

Date Particulars Rate of exchange notified by CBEC

21.10.14 Import general manifest was submitted by master of vessel

1 US Dollar = Rs. 64.20

25.10.14 Entry Inwards was granted by the customs officer 1 US Dollar = Rs. 64.30 27.10.14 Sofa Enterprises filed the Bill of Entry 1 US Dollar = Rs. 64.50 31.10.14 Goods were allowed to be cleared from the

customs port 1 US Dollar = Rs. 64.60.

c) With reference to the position of service tax law as applicable on or after 01.10.2014, determine the net service tax liability to be paid in cash in each of the following independent cases: 8M

i) Value of services provided by a radio taxi operator is Rs. 1,00,000. The operator does not avail CENVAT credit on inputs, capital goods and input services used for providing the said service. It intends to avail abatement, if any, granted for such service.

ii) Value of services provided by a Company running air-conditioned buses for point to point travel is Rs. 5,00,000. The buses do not stop to pick or drop the passengers during the journey. The Company does not avail CENVAT credit on inputs, capital goods and input services used for providing the said service. It intends to avail abatement, if any, granted for such service. The Company has sub-contracted part of its services to another Company running air-conditioned buses for point to point travel. Total value of such sub-contracted services is Rs. 50,000 and service tax payable thereon is Rs. 6,180.

iii) Value of services provided by a Company running non air-conditioned buses for point to point travel is Rs. 1,00,000. The buses do not stop to pick or drop the passengers during the journey. The Company does not avail CENVAT credit on inputs, capital goods and input services used for providing the said service. It intends to avail abatement, if any, granted for such service.


a) Mr. H has acquired a residential house property in Delhi on 1st April, 2001 for Rs. 22,00,000 and decided to sell the same on 3rd May, 2004 to Mrs. P and an advance of Rs. 70,000 was taken from her. The balance money was not paid by Mrs. P and hence, Mr. H has forfeited the entire advance sum. In April, 2014, he once again entered into negotiations for sale of the said property to Mr.Y, and received Rs. 2 lakh as advance, but the transfer did not materialize and hence, the advance was forfeited. On 3rd March, 2015, he finally sold this house to Mr. S for Rs. 95,00,000. In the meantime, on 4th February, 2015, he had purchased a residential house in Faridabad for Rs. 28,00,000 and made full payment for the same. However, Mr.H does not possess any legal title till 31st March, 2015, as such transfer was not registered with the registration authority.

Mr. H had purchased another old house in Madurai on 14th October, 2014 from Mr. X, an Indian resident, by paying Rs. 25,00,000 and the purchase was registered with the appropriate authority.

Determine the taxable capital gain arising from above transactions in the hands of Mr.H for Assessment Year 2015-16.

Cost Inflation Index - 2001-02: 426; 2004-05: 480; 2013-14: 939; 2014-15:1024. 8M

b) Briefly answer the following questions:- 4M

i) Armaan travelled by air in business class on 15.04.2015, by Origin Airlines. He booked the ticket on the same day. The airfare charges (value on which service tax was payable) was Rs. 1,00,000. Determine the amount of service tax payable on the service received by Armaan assuming that:

a) Origin Airlines opted for abatement under Notification No. 26/2012 ST dated 20.06.2012 and did not avail CENVAT credit on inputs and capital goods used for providing such service,

b) Rate of service tax is 12% and education cess is 3%, and

c) Origin Airlines is not eligible for small service provider’s exemption under Notification No. 33/2012 ST dated 20.06.2012.



ii) Raghav, a mutual fund agent, provided services to ABC Asset Management Company Ltd. on 20.04.2015. Raghav is of the view that services provided by him are exempted as per the Mega Exemption Notification No. 25/2012 ST dated 20.06.2012.

Examine whether Raghav’s view is correct and if not, discuss the correct legal position in the given case.

c) Calculate the assessable value and the excise duty payable from the following particulars: 4M

List price of the product (inclusive of taxes) Rs. 5,960

Trade discount 10%

VAT 12.5%

Excise duty 12%

Education cess as applicable

An exemption notification grants exemption of 50% of the duty payable on this product.

7) Question 7(a) is compulsory Answer any two from remaining: (8 + 4 X 2 = 16M)

a) From the following details, find out the salary income chargeable to tax in the hands of Mr. Vansh for the assessment year 2015-16: 8M

Mr. Vansh is a regular employee of X Ltd. in Delhi. He was appointed on 01-03- 2014 in the scale of 27,000-3200-35,000. He is paid dearness allowance (which forms part of salary for retirement benefits)@30% of basic pay and bonus equivalent to one and a half month's basic pay as at the end of the year. He contributes 18% of his salary (basic pay plus dearness allowance) towards recognized provident fund and the company contributes the same amount.

He is provided free housing facility which has been taken on rent by the company at Rs. 18,000 per month. He is also provided with following facilities:

i) The company reimbursed the medical treatment bill of Rs. 43,000 of his daughter, who is dependent on him.

ii) The monthly salary of Rs. 5,600 of a house keeper is reimbursed by the company.

iii) He is getting telephone allowance of Rs. 1,200 per month.

iv) A gift voucher of Rs. 4,900 was given on the occasion of his marriage anniversary.

v) The company pays medical insurance premium to effect an insurance on the health of Mr. Vansh Rs.10,500.

vi) Motor car running and maintenance charges of Rs. 48,200 fully paid by employer. (The motor car is owned and driven by Mr. Vansh. The engine cubic capacity is below 1.60 litres. The motor car is used for both official and personal purpose by the employee.)

vii) Value of free lunch provided during office hours is Rs.1,000.

viii) Facility of laptop and computer was provided to Mr. Vansh both for official and personal use. The cost of laptop and computer acquired by the company on 01.12.2014, are Rs. 45,000 and Rs. 35,000, respectively.

ix) Professional tax paid Rs. 3,000, of which Rs. 2,000 was paid by the employer.

b) Write a short note on (4 X 1 = 4M)

i) Import manifest/report

ii) Transit or transhipment of goods

iii) Abatement of customs duty under sec 22.

iv) Unloading of goods.

c) Write about manner of distribution of common input service credit under rule 7[d] of CENVAT credit rules. 4M

d) Distinguish between section 13 and section 23(1). ` 4M

THE END

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