Business Laws and Business Correspondence and Reporting (Paper-2) - December 2021 (Answer Key) | Business Laws for CA Foundation PDF Download

 Page 1


PAPER – 1: PRINCIPLES AND PRACTICE OF ACCOUNTING  
Question No. 1 is compulsory. 
Attempt any four questions from the remaining five questions. 
Wherever necessary, suitable assumptions should be made and disclosed by way of note 
forming part of the answer. Working Notes should form part of the answer. 
Question 1 
(a) State with reasons, whether the following statements are True or False:  
(i) Any amount spent to minimize the working expenses is revenue expenditure.  
(ii) Expenses incurred on the repairs for the first time on purchase of an old building 
are capital expenditure.  
(iii) The provision for bad debts is debited to sundry debtors account.  
(iv) Non-participating preference shareholders enjoy voting rights. 
(v) There is no entry passed by the consignee in his books for the remaining stock 
of goods lying with him.  
(vi) Discount column of the cash book is never balanced. (6 x 2 = 12 Marks) 
(b) The following are the details of the spare parts of an Oil Mill:  
1-1-2021  Opening Inventory   Nil  
1-1-2021,  Purchases   10 units @ ` 300 per unit  
15-1-2021  Issued for consumption   5 units  
1-2-2021  Purchases   20 units @ ` 400 per unit  
15-2-2021  Issued for consumption   10 units  
20-2-2021  Issued for consumption   10 units  
 Find out the value of Inventory as on 31.3.2021,if the company follows Weighted Average 
Method. (4 Marks) 
(c) Explain the followings: 
(i) Accrual Basis of Accounting 
(ii) Amortisation 
(iii) Contingent Assets 
(iv) Contingent Liabilities  (4 Marks) 
© The Institute of Chartered Accountants of India
Page 2


PAPER – 1: PRINCIPLES AND PRACTICE OF ACCOUNTING  
Question No. 1 is compulsory. 
Attempt any four questions from the remaining five questions. 
Wherever necessary, suitable assumptions should be made and disclosed by way of note 
forming part of the answer. Working Notes should form part of the answer. 
Question 1 
(a) State with reasons, whether the following statements are True or False:  
(i) Any amount spent to minimize the working expenses is revenue expenditure.  
(ii) Expenses incurred on the repairs for the first time on purchase of an old building 
are capital expenditure.  
(iii) The provision for bad debts is debited to sundry debtors account.  
(iv) Non-participating preference shareholders enjoy voting rights. 
(v) There is no entry passed by the consignee in his books for the remaining stock 
of goods lying with him.  
(vi) Discount column of the cash book is never balanced. (6 x 2 = 12 Marks) 
(b) The following are the details of the spare parts of an Oil Mill:  
1-1-2021  Opening Inventory   Nil  
1-1-2021,  Purchases   10 units @ ` 300 per unit  
15-1-2021  Issued for consumption   5 units  
1-2-2021  Purchases   20 units @ ` 400 per unit  
15-2-2021  Issued for consumption   10 units  
20-2-2021  Issued for consumption   10 units  
 Find out the value of Inventory as on 31.3.2021,if the company follows Weighted Average 
Method. (4 Marks) 
(c) Explain the followings: 
(i) Accrual Basis of Accounting 
(ii) Amortisation 
(iii) Contingent Assets 
(iv) Contingent Liabilities  (4 Marks) 
© The Institute of Chartered Accountants of India
2 FOUNDATION EXAMINATION: DECEMBER, 2021 
 
Answer  
(a) (i) False: It may be reasonably presumed that money spent for reducing revenue 
expenditure would have generated long-term benefits to the entity. So this is capital 
expenditure. 
(ii) True: Repairs for the first time of an old building are incurred to put the building in 
usable condition. This is a part of the cost of building. Accordingly, this is a capital 
expenditure. 
(iii) False: The provision for bad debts is debited to Profit and loss Account, in Balance 
Sheet it is shown either on liability side or deducted from the head debtors. 
(iv) False: A share on which only a fixed rate of dividend is paid every year, without any 
accompanying additional rights in profits and in the surplus on winding-up, is called 
'Non-participating Preference Shares. Non-participating preference shareholders do 
not enjoy voting rights. 
(v) True: It is the consignor who has to record the closing stock of the consigned goods 
since he is the owner of the goods. There is no entry passed in the books of the 
consignee. 
(vi) True: Discount column is totalled and transferred to the discount allowed or 
received account. 
(b)        Oil Mill 
Calculation of the value of Inventory as on 31-3-2021 
 Receipts Issues Balance 
Date Units Rate Amount Unit
s 
Rate Amoun
t 
Units Rate Amount 
  ` `  ` `  ` ` 
1-1-2021 Balance       Nil  
1-1-2021 10 300 3,000    10 300 3,000 
15-1-2021    5 300 1,500 5 300 1,500 
1-2-2021 20 400 8,000    25 380 9,500 
15-2-2021    10 380 3,800 15 380 5,700 
20-2-2021    10 380 3,800 5 380 1,900 
 Therefore, the value of Inventory as on 31-3-2021 = 5 units @ `380 = `1,900 
(c) 1. Accrual Basis of Accounting 
The method of recording transactions by which revenues, costs, assets and 
liabilities are reflected in the accounts in the period in which they accrue. 
© The Institute of Chartered Accountants of India
Page 3


PAPER – 1: PRINCIPLES AND PRACTICE OF ACCOUNTING  
Question No. 1 is compulsory. 
Attempt any four questions from the remaining five questions. 
Wherever necessary, suitable assumptions should be made and disclosed by way of note 
forming part of the answer. Working Notes should form part of the answer. 
Question 1 
(a) State with reasons, whether the following statements are True or False:  
(i) Any amount spent to minimize the working expenses is revenue expenditure.  
(ii) Expenses incurred on the repairs for the first time on purchase of an old building 
are capital expenditure.  
(iii) The provision for bad debts is debited to sundry debtors account.  
(iv) Non-participating preference shareholders enjoy voting rights. 
(v) There is no entry passed by the consignee in his books for the remaining stock 
of goods lying with him.  
(vi) Discount column of the cash book is never balanced. (6 x 2 = 12 Marks) 
(b) The following are the details of the spare parts of an Oil Mill:  
1-1-2021  Opening Inventory   Nil  
1-1-2021,  Purchases   10 units @ ` 300 per unit  
15-1-2021  Issued for consumption   5 units  
1-2-2021  Purchases   20 units @ ` 400 per unit  
15-2-2021  Issued for consumption   10 units  
20-2-2021  Issued for consumption   10 units  
 Find out the value of Inventory as on 31.3.2021,if the company follows Weighted Average 
Method. (4 Marks) 
(c) Explain the followings: 
(i) Accrual Basis of Accounting 
(ii) Amortisation 
(iii) Contingent Assets 
(iv) Contingent Liabilities  (4 Marks) 
© The Institute of Chartered Accountants of India
2 FOUNDATION EXAMINATION: DECEMBER, 2021 
 
Answer  
(a) (i) False: It may be reasonably presumed that money spent for reducing revenue 
expenditure would have generated long-term benefits to the entity. So this is capital 
expenditure. 
(ii) True: Repairs for the first time of an old building are incurred to put the building in 
usable condition. This is a part of the cost of building. Accordingly, this is a capital 
expenditure. 
(iii) False: The provision for bad debts is debited to Profit and loss Account, in Balance 
Sheet it is shown either on liability side or deducted from the head debtors. 
(iv) False: A share on which only a fixed rate of dividend is paid every year, without any 
accompanying additional rights in profits and in the surplus on winding-up, is called 
'Non-participating Preference Shares. Non-participating preference shareholders do 
not enjoy voting rights. 
(v) True: It is the consignor who has to record the closing stock of the consigned goods 
since he is the owner of the goods. There is no entry passed in the books of the 
consignee. 
(vi) True: Discount column is totalled and transferred to the discount allowed or 
received account. 
(b)        Oil Mill 
Calculation of the value of Inventory as on 31-3-2021 
 Receipts Issues Balance 
Date Units Rate Amount Unit
s 
Rate Amoun
t 
Units Rate Amount 
  ` `  ` `  ` ` 
1-1-2021 Balance       Nil  
1-1-2021 10 300 3,000    10 300 3,000 
15-1-2021    5 300 1,500 5 300 1,500 
1-2-2021 20 400 8,000    25 380 9,500 
15-2-2021    10 380 3,800 15 380 5,700 
20-2-2021    10 380 3,800 5 380 1,900 
 Therefore, the value of Inventory as on 31-3-2021 = 5 units @ `380 = `1,900 
(c) 1. Accrual Basis of Accounting 
The method of recording transactions by which revenues, costs, assets and 
liabilities are reflected in the accounts in the period in which they accrue. 
© The Institute of Chartered Accountants of India
 PAPER – 1 : PRINCIPLES AND PRACTICE OF ACCOUNTING 3 
2. Amortisation 
The gradual and systematic writing off of an asset or an account over an 
appropriate period. 
3. Contingent Asset 
An asset the existence, ownership or value of which may be known or determined 
only on the occurrence or non-occurrence of one or more uncertain future events. 
4. Contingent Liability 
An obligation relating to an existing condition or situation which may arise in future 
depending on the occurrence or non-occurrence of one or more uncertain future 
events. 
Question 2 
(a) From the following information, draw up a Trial Balance in the books of Shri M as on  
31
st
 March,2021: 
Particulars Amount (`) Particulars Amount (`) 
Capital 1,40,000 Purchases 36,000 
Discount Allowed 1,200 Carriage Inward 8,700 
Carriage Outwards 2,300 Sales 60,000 
Return Inward 300 Return Outwards 700 
Rent and Taxes 1,200 Plant and Machinery 80,700 
Stock on 1
st
 April 2020 15,500 Sundry Debtors 20,200 
Sundry Creditors 12,000 Investments 3,600 
Commission Received 1,800 Cash in Hand 100 
Cash at bank 10,100 Motor Cycle 34,600 
Stock on 31
st
 March, 2021 20,500   
(5 Marks) 
(b) On 1
st
 January, 2019 Kohinoor Transport Company purchased a Bus for ` 8,00,000.  On 
1
st
 July, 2020 this bus was damaged due to fire and was completely destroyed and  
` 6,00,000 were received by a cheque from the Insurance Company in full settlement on 
1
st
 October, 2020. On 1
st
 July, 2020 another Bus was purchased by the company for  
` 10,00,000. 
 The Company charges Depreciation @ 20% per annum under the WDV Method. 
Calculate the amount of depreciation for the year ended 31
st
 March, 2021 and gain or 
loss on the destroyed Bus. (5 Marks) 
© The Institute of Chartered Accountants of India
Page 4


PAPER – 1: PRINCIPLES AND PRACTICE OF ACCOUNTING  
Question No. 1 is compulsory. 
Attempt any four questions from the remaining five questions. 
Wherever necessary, suitable assumptions should be made and disclosed by way of note 
forming part of the answer. Working Notes should form part of the answer. 
Question 1 
(a) State with reasons, whether the following statements are True or False:  
(i) Any amount spent to minimize the working expenses is revenue expenditure.  
(ii) Expenses incurred on the repairs for the first time on purchase of an old building 
are capital expenditure.  
(iii) The provision for bad debts is debited to sundry debtors account.  
(iv) Non-participating preference shareholders enjoy voting rights. 
(v) There is no entry passed by the consignee in his books for the remaining stock 
of goods lying with him.  
(vi) Discount column of the cash book is never balanced. (6 x 2 = 12 Marks) 
(b) The following are the details of the spare parts of an Oil Mill:  
1-1-2021  Opening Inventory   Nil  
1-1-2021,  Purchases   10 units @ ` 300 per unit  
15-1-2021  Issued for consumption   5 units  
1-2-2021  Purchases   20 units @ ` 400 per unit  
15-2-2021  Issued for consumption   10 units  
20-2-2021  Issued for consumption   10 units  
 Find out the value of Inventory as on 31.3.2021,if the company follows Weighted Average 
Method. (4 Marks) 
(c) Explain the followings: 
(i) Accrual Basis of Accounting 
(ii) Amortisation 
(iii) Contingent Assets 
(iv) Contingent Liabilities  (4 Marks) 
© The Institute of Chartered Accountants of India
2 FOUNDATION EXAMINATION: DECEMBER, 2021 
 
Answer  
(a) (i) False: It may be reasonably presumed that money spent for reducing revenue 
expenditure would have generated long-term benefits to the entity. So this is capital 
expenditure. 
(ii) True: Repairs for the first time of an old building are incurred to put the building in 
usable condition. This is a part of the cost of building. Accordingly, this is a capital 
expenditure. 
(iii) False: The provision for bad debts is debited to Profit and loss Account, in Balance 
Sheet it is shown either on liability side or deducted from the head debtors. 
(iv) False: A share on which only a fixed rate of dividend is paid every year, without any 
accompanying additional rights in profits and in the surplus on winding-up, is called 
'Non-participating Preference Shares. Non-participating preference shareholders do 
not enjoy voting rights. 
(v) True: It is the consignor who has to record the closing stock of the consigned goods 
since he is the owner of the goods. There is no entry passed in the books of the 
consignee. 
(vi) True: Discount column is totalled and transferred to the discount allowed or 
received account. 
(b)        Oil Mill 
Calculation of the value of Inventory as on 31-3-2021 
 Receipts Issues Balance 
Date Units Rate Amount Unit
s 
Rate Amoun
t 
Units Rate Amount 
  ` `  ` `  ` ` 
1-1-2021 Balance       Nil  
1-1-2021 10 300 3,000    10 300 3,000 
15-1-2021    5 300 1,500 5 300 1,500 
1-2-2021 20 400 8,000    25 380 9,500 
15-2-2021    10 380 3,800 15 380 5,700 
20-2-2021    10 380 3,800 5 380 1,900 
 Therefore, the value of Inventory as on 31-3-2021 = 5 units @ `380 = `1,900 
(c) 1. Accrual Basis of Accounting 
The method of recording transactions by which revenues, costs, assets and 
liabilities are reflected in the accounts in the period in which they accrue. 
© The Institute of Chartered Accountants of India
 PAPER – 1 : PRINCIPLES AND PRACTICE OF ACCOUNTING 3 
2. Amortisation 
The gradual and systematic writing off of an asset or an account over an 
appropriate period. 
3. Contingent Asset 
An asset the existence, ownership or value of which may be known or determined 
only on the occurrence or non-occurrence of one or more uncertain future events. 
4. Contingent Liability 
An obligation relating to an existing condition or situation which may arise in future 
depending on the occurrence or non-occurrence of one or more uncertain future 
events. 
Question 2 
(a) From the following information, draw up a Trial Balance in the books of Shri M as on  
31
st
 March,2021: 
Particulars Amount (`) Particulars Amount (`) 
Capital 1,40,000 Purchases 36,000 
Discount Allowed 1,200 Carriage Inward 8,700 
Carriage Outwards 2,300 Sales 60,000 
Return Inward 300 Return Outwards 700 
Rent and Taxes 1,200 Plant and Machinery 80,700 
Stock on 1
st
 April 2020 15,500 Sundry Debtors 20,200 
Sundry Creditors 12,000 Investments 3,600 
Commission Received 1,800 Cash in Hand 100 
Cash at bank 10,100 Motor Cycle 34,600 
Stock on 31
st
 March, 2021 20,500   
(5 Marks) 
(b) On 1
st
 January, 2019 Kohinoor Transport Company purchased a Bus for ` 8,00,000.  On 
1
st
 July, 2020 this bus was damaged due to fire and was completely destroyed and  
` 6,00,000 were received by a cheque from the Insurance Company in full settlement on 
1
st
 October, 2020. On 1
st
 July, 2020 another Bus was purchased by the company for  
` 10,00,000. 
 The Company charges Depreciation @ 20% per annum under the WDV Method. 
Calculate the amount of depreciation for the year ended 31
st
 March, 2021 and gain or 
loss on the destroyed Bus. (5 Marks) 
© The Institute of Chartered Accountants of India
4 FOUNDATION EXAMINATION: DECEMBER, 2021 
 
(c) According to the cash-book of G there was balance of ` 4,45,000 in his bank on  
30
th
 June, 2021 On investigation you find that : 
(i) Cheques amounting to 60,000 issued to creditors have not been presented for 
payment till the date 
(ii) Cheques paid into bank amounting to 1,10,500 out of which cheques amounting to 
` 55,000 only collected by bank up to 30th June 2021  
(iii) A dividend of ` 4,000 and rent amounting to 60,000 received by the bank and 
entered in the pass-book but not recorded in the cash book.  
(iv) Insurance premium (up to 31
st
 December, 2020) paid by the bank ` 2,700 not 
entered in the cash book. 
(v) The payment side of the cash book had been under cast by ` 500 
(vi) Bank charges ` 150 shown in the pass book had not been entered in the cash book. 
(vii) A bill payable of ` 20,000 had been paid by the bank but was not entered in the 
cash book and bill receivable for ` 6,000 had been discounted with the bank at a 
cost of ` 100 which had also not been recorded in cash book. 
 You are required: 
(1) To make the appropriate adjustments in the cash book, and  
(2) To prepare a statement reconciling it with the bank pass book. (10 Marks) 
Answer 
(a) 
Trial Balance of Shri. M as on 31
st
 March, 2021 
Particulars Dr. Amount ` Cr. Amount ` 
Capital  1,40,000 
Purchases 
36,000  
Discount Allowed 1,200  
Carriage Inward 
Carriage Outwards 
8,700 
2,300 
 
 
Sales  60,000 
Return Inward 300  
Return Outwards  700 
Rent and taxes 
Plant and Machinery 
1,200 
80,700 
 
 
© The Institute of Chartered Accountants of India
Page 5


PAPER – 1: PRINCIPLES AND PRACTICE OF ACCOUNTING  
Question No. 1 is compulsory. 
Attempt any four questions from the remaining five questions. 
Wherever necessary, suitable assumptions should be made and disclosed by way of note 
forming part of the answer. Working Notes should form part of the answer. 
Question 1 
(a) State with reasons, whether the following statements are True or False:  
(i) Any amount spent to minimize the working expenses is revenue expenditure.  
(ii) Expenses incurred on the repairs for the first time on purchase of an old building 
are capital expenditure.  
(iii) The provision for bad debts is debited to sundry debtors account.  
(iv) Non-participating preference shareholders enjoy voting rights. 
(v) There is no entry passed by the consignee in his books for the remaining stock 
of goods lying with him.  
(vi) Discount column of the cash book is never balanced. (6 x 2 = 12 Marks) 
(b) The following are the details of the spare parts of an Oil Mill:  
1-1-2021  Opening Inventory   Nil  
1-1-2021,  Purchases   10 units @ ` 300 per unit  
15-1-2021  Issued for consumption   5 units  
1-2-2021  Purchases   20 units @ ` 400 per unit  
15-2-2021  Issued for consumption   10 units  
20-2-2021  Issued for consumption   10 units  
 Find out the value of Inventory as on 31.3.2021,if the company follows Weighted Average 
Method. (4 Marks) 
(c) Explain the followings: 
(i) Accrual Basis of Accounting 
(ii) Amortisation 
(iii) Contingent Assets 
(iv) Contingent Liabilities  (4 Marks) 
© The Institute of Chartered Accountants of India
2 FOUNDATION EXAMINATION: DECEMBER, 2021 
 
Answer  
(a) (i) False: It may be reasonably presumed that money spent for reducing revenue 
expenditure would have generated long-term benefits to the entity. So this is capital 
expenditure. 
(ii) True: Repairs for the first time of an old building are incurred to put the building in 
usable condition. This is a part of the cost of building. Accordingly, this is a capital 
expenditure. 
(iii) False: The provision for bad debts is debited to Profit and loss Account, in Balance 
Sheet it is shown either on liability side or deducted from the head debtors. 
(iv) False: A share on which only a fixed rate of dividend is paid every year, without any 
accompanying additional rights in profits and in the surplus on winding-up, is called 
'Non-participating Preference Shares. Non-participating preference shareholders do 
not enjoy voting rights. 
(v) True: It is the consignor who has to record the closing stock of the consigned goods 
since he is the owner of the goods. There is no entry passed in the books of the 
consignee. 
(vi) True: Discount column is totalled and transferred to the discount allowed or 
received account. 
(b)        Oil Mill 
Calculation of the value of Inventory as on 31-3-2021 
 Receipts Issues Balance 
Date Units Rate Amount Unit
s 
Rate Amoun
t 
Units Rate Amount 
  ` `  ` `  ` ` 
1-1-2021 Balance       Nil  
1-1-2021 10 300 3,000    10 300 3,000 
15-1-2021    5 300 1,500 5 300 1,500 
1-2-2021 20 400 8,000    25 380 9,500 
15-2-2021    10 380 3,800 15 380 5,700 
20-2-2021    10 380 3,800 5 380 1,900 
 Therefore, the value of Inventory as on 31-3-2021 = 5 units @ `380 = `1,900 
(c) 1. Accrual Basis of Accounting 
The method of recording transactions by which revenues, costs, assets and 
liabilities are reflected in the accounts in the period in which they accrue. 
© The Institute of Chartered Accountants of India
 PAPER – 1 : PRINCIPLES AND PRACTICE OF ACCOUNTING 3 
2. Amortisation 
The gradual and systematic writing off of an asset or an account over an 
appropriate period. 
3. Contingent Asset 
An asset the existence, ownership or value of which may be known or determined 
only on the occurrence or non-occurrence of one or more uncertain future events. 
4. Contingent Liability 
An obligation relating to an existing condition or situation which may arise in future 
depending on the occurrence or non-occurrence of one or more uncertain future 
events. 
Question 2 
(a) From the following information, draw up a Trial Balance in the books of Shri M as on  
31
st
 March,2021: 
Particulars Amount (`) Particulars Amount (`) 
Capital 1,40,000 Purchases 36,000 
Discount Allowed 1,200 Carriage Inward 8,700 
Carriage Outwards 2,300 Sales 60,000 
Return Inward 300 Return Outwards 700 
Rent and Taxes 1,200 Plant and Machinery 80,700 
Stock on 1
st
 April 2020 15,500 Sundry Debtors 20,200 
Sundry Creditors 12,000 Investments 3,600 
Commission Received 1,800 Cash in Hand 100 
Cash at bank 10,100 Motor Cycle 34,600 
Stock on 31
st
 March, 2021 20,500   
(5 Marks) 
(b) On 1
st
 January, 2019 Kohinoor Transport Company purchased a Bus for ` 8,00,000.  On 
1
st
 July, 2020 this bus was damaged due to fire and was completely destroyed and  
` 6,00,000 were received by a cheque from the Insurance Company in full settlement on 
1
st
 October, 2020. On 1
st
 July, 2020 another Bus was purchased by the company for  
` 10,00,000. 
 The Company charges Depreciation @ 20% per annum under the WDV Method. 
Calculate the amount of depreciation for the year ended 31
st
 March, 2021 and gain or 
loss on the destroyed Bus. (5 Marks) 
© The Institute of Chartered Accountants of India
4 FOUNDATION EXAMINATION: DECEMBER, 2021 
 
(c) According to the cash-book of G there was balance of ` 4,45,000 in his bank on  
30
th
 June, 2021 On investigation you find that : 
(i) Cheques amounting to 60,000 issued to creditors have not been presented for 
payment till the date 
(ii) Cheques paid into bank amounting to 1,10,500 out of which cheques amounting to 
` 55,000 only collected by bank up to 30th June 2021  
(iii) A dividend of ` 4,000 and rent amounting to 60,000 received by the bank and 
entered in the pass-book but not recorded in the cash book.  
(iv) Insurance premium (up to 31
st
 December, 2020) paid by the bank ` 2,700 not 
entered in the cash book. 
(v) The payment side of the cash book had been under cast by ` 500 
(vi) Bank charges ` 150 shown in the pass book had not been entered in the cash book. 
(vii) A bill payable of ` 20,000 had been paid by the bank but was not entered in the 
cash book and bill receivable for ` 6,000 had been discounted with the bank at a 
cost of ` 100 which had also not been recorded in cash book. 
 You are required: 
(1) To make the appropriate adjustments in the cash book, and  
(2) To prepare a statement reconciling it with the bank pass book. (10 Marks) 
Answer 
(a) 
Trial Balance of Shri. M as on 31
st
 March, 2021 
Particulars Dr. Amount ` Cr. Amount ` 
Capital  1,40,000 
Purchases 
36,000  
Discount Allowed 1,200  
Carriage Inward 
Carriage Outwards 
8,700 
2,300 
 
 
Sales  60,000 
Return Inward 300  
Return Outwards  700 
Rent and taxes 
Plant and Machinery 
1,200 
80,700 
 
 
© The Institute of Chartered Accountants of India
 PAPER – 1 : PRINCIPLES AND PRACTICE OF ACCOUNTING 5 
Stock on 1
st
 April,2020 
Sundry Debtors 
Sundry Creditors 
Investments 
Commission Received 
Cash in Hand 
Cash at Bank 
15,500 
20,200 
 
3,600 
 
100 
10,100 
 
 
12,000 
 
1,800 
Motor Cycle 34,600  
 2,14,500 2,14,500 
Note : Stock as on 31
st
 March,2021 will not appear in trail balance. 
(b) Calculation of Gain/Loss on Bus damaged by Fire 
Particulars ` 
Original cost as on 1.1.2019 8,00,000 
Less: Depreciation for 2018-19 (3 months) (40,000) 
WDV as on 31
st
 March,2019 7,60,000 
Less: Depreciation for 2019-20 (1,52,000) 
WDV as on 31
st
 March,2020 6,08,000 
Less: Depreciation for 2020-21 (3 months) (30,400) 
WDV as on 1
st 
July,2020 5,77,600 
Less: Amount received from Insurance company (6,00,000) 
Gain on Bus damaged by Fire 22,400 
Calculation of depreciation for the year ended 31
st
 March,2021 
   Machine Machine 
 I damaged on 1
st
 
July,2020 
(8,00,000)  
II Purchased on 1
st  
July,2020 
(10,00,000) 
 .` ` 
Book value as on 1
st
 April,2020 
Purchased on 1
st
 July,2020 
6,08,000  
10,00,000 
Depreciation @20% Machines  30,400 (for 3 months)   1,50,000 (for 9 months) 
   
Total depreciation ` 1,80,400 
 
© The Institute of Chartered Accountants of India