Advanced Accounting (Group I) Model Test Paper - 5 (Questions) | Model Test Papers for CA Intermediate PDF Download

 Page 1


MODEL TEST PAPER 5 
INTERMEDIATE COURSE: GROUP - I 
PAPER – 1 : ADVANCED ACCOUNTING 
Time Allowed – 3 Hours Maximum Marks – 100 
1. The question paper comprises two parts, Part I and Part II. 
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs) 
3. Part II comprises questions which require descriptive type answers. 
PART I – Case Scenario based MCQs (30 Marks) 
Part I is compulsory. 
Case Scenario 1 
AB Ltd. is engaged in manufacturing a variety of products, including modules, dyes, 
infrastructure goods, etc. The company caters to a broad customer base across 
sectors like automobiles, infrastructure, construction, and others, both in India and 
internationally. Its financial statements are prepared annually as of 31st March. 
Additional details for the financial year ending 31st March 2024 are provided below:  
Segment Information 
AB Ltd. has identified five segments. The details are as follows: 
Segment Sale  Total sale  Profit Asset  
 Export Domestic    
K 54,00,000 - 54,00,000 4,50,000 9,00,00,000 
L 1,12,50,000 36,00,000 1,48,50,000 13,50,000 2,25,00,000 
M 2,02,50,000 - 2,02,50,000 22,50,000 3,15,00,000 
M 1,21,50,000 27,00,000 148,50,000 13,50,000 4,50,00,000 
O 18,00,000 22,50,000 40,50,000 9,00,000 6,75,00,000 
   5,94,00,000 63,00,000 25,65,00,000 
Additional Information 
1. Machinery Purchase 
On 1st April 2023, AB Ltd. purchased machinery worth ?15,00,000 for 
producing specific items for a particular customer. The cost is deductible over 
two years for tax purposes: ?10,00,000 in year 1 and the balance in year 2. 
The applicable tax rate is 30%. 
2. Trademark and Process Development: 
AB Ltd. introduced a new manufacturing process and incurred the following 
costs: 
o Trademark acquisition: ?70,00,000 
o Product promotion: ?2,00,000 
o Employee benefits for testing: ?3,00,000 
47
Page 2


MODEL TEST PAPER 5 
INTERMEDIATE COURSE: GROUP - I 
PAPER – 1 : ADVANCED ACCOUNTING 
Time Allowed – 3 Hours Maximum Marks – 100 
1. The question paper comprises two parts, Part I and Part II. 
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs) 
3. Part II comprises questions which require descriptive type answers. 
PART I – Case Scenario based MCQs (30 Marks) 
Part I is compulsory. 
Case Scenario 1 
AB Ltd. is engaged in manufacturing a variety of products, including modules, dyes, 
infrastructure goods, etc. The company caters to a broad customer base across 
sectors like automobiles, infrastructure, construction, and others, both in India and 
internationally. Its financial statements are prepared annually as of 31st March. 
Additional details for the financial year ending 31st March 2024 are provided below:  
Segment Information 
AB Ltd. has identified five segments. The details are as follows: 
Segment Sale  Total sale  Profit Asset  
 Export Domestic    
K 54,00,000 - 54,00,000 4,50,000 9,00,00,000 
L 1,12,50,000 36,00,000 1,48,50,000 13,50,000 2,25,00,000 
M 2,02,50,000 - 2,02,50,000 22,50,000 3,15,00,000 
M 1,21,50,000 27,00,000 148,50,000 13,50,000 4,50,00,000 
O 18,00,000 22,50,000 40,50,000 9,00,000 6,75,00,000 
   5,94,00,000 63,00,000 25,65,00,000 
Additional Information 
1. Machinery Purchase 
On 1st April 2023, AB Ltd. purchased machinery worth ?15,00,000 for 
producing specific items for a particular customer. The cost is deductible over 
two years for tax purposes: ?10,00,000 in year 1 and the balance in year 2. 
The applicable tax rate is 30%. 
2. Trademark and Process Development: 
AB Ltd. introduced a new manufacturing process and incurred the following 
costs: 
o Trademark acquisition: ?70,00,000 
o Product promotion: ?2,00,000 
o Employee benefits for testing: ?3,00,000 
47
3. Government Grant: 
AB Ltd. was engaged in the process of development of a manufacturing unit 
in one of the specified industrial areas.  The development of the manufacturing 
unit shall be completed within 2 years.  To encourage industrial promotion in 
specified areas, the government provides government grants in the form of 
subsidies.  The cost of the project for the company is ` 700 lakhs against 
which the government provided a grant of ` 500 lakhs & this grant was in 
nature of the promoter’s contribution.  
Based on the information given in above Case Scenario, answer the following 
Question  
(i) Based on the quantitative threshold which of the above segment K to O would 
be considered as reportable segment? 
(a) Segment M 
(b) Segment M, N & L 
(c) Segment L, M, N & O 
(d) All Segment 
(ii) What will be the tax effect on the financial statement for the year 2023-24 in 
respect of machinery purchased on 1
st
 April 2023? 
(a) Create DTA ` 75,000 
(b) Reverse DTA ` 75,000 
(c) Create DTL ` 75,000 
(d) Reverse DTL ` 75,000 
(iii) What is the total cost that should be capitalized for a trademark related to the 
new process? 
(a) ` 75,00,000 
(b) ` 73,00,000 
(c) ` 72,00,000 
(d) ` 70,00,000 
(iv) How should subsidy received be accounted in the books of the company? 
(a) Credit into capital reserve 
(b) Credit it as “Other income” in the statement of profit & Loss A/c in the 
year of commencement of commercial operation. 
(c) Both A & B are permitted 
(d) Credit it to General Reserve.  
Case Scenario 2 
G Ltd. is an automotive supplier and is in the business of manufacturing 
components & parts to be used by various automotive companies.  The company 
has its registered office in North Delhi and is listed in a stock exchange.  Following 
48
Page 3


MODEL TEST PAPER 5 
INTERMEDIATE COURSE: GROUP - I 
PAPER – 1 : ADVANCED ACCOUNTING 
Time Allowed – 3 Hours Maximum Marks – 100 
1. The question paper comprises two parts, Part I and Part II. 
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs) 
3. Part II comprises questions which require descriptive type answers. 
PART I – Case Scenario based MCQs (30 Marks) 
Part I is compulsory. 
Case Scenario 1 
AB Ltd. is engaged in manufacturing a variety of products, including modules, dyes, 
infrastructure goods, etc. The company caters to a broad customer base across 
sectors like automobiles, infrastructure, construction, and others, both in India and 
internationally. Its financial statements are prepared annually as of 31st March. 
Additional details for the financial year ending 31st March 2024 are provided below:  
Segment Information 
AB Ltd. has identified five segments. The details are as follows: 
Segment Sale  Total sale  Profit Asset  
 Export Domestic    
K 54,00,000 - 54,00,000 4,50,000 9,00,00,000 
L 1,12,50,000 36,00,000 1,48,50,000 13,50,000 2,25,00,000 
M 2,02,50,000 - 2,02,50,000 22,50,000 3,15,00,000 
M 1,21,50,000 27,00,000 148,50,000 13,50,000 4,50,00,000 
O 18,00,000 22,50,000 40,50,000 9,00,000 6,75,00,000 
   5,94,00,000 63,00,000 25,65,00,000 
Additional Information 
1. Machinery Purchase 
On 1st April 2023, AB Ltd. purchased machinery worth ?15,00,000 for 
producing specific items for a particular customer. The cost is deductible over 
two years for tax purposes: ?10,00,000 in year 1 and the balance in year 2. 
The applicable tax rate is 30%. 
2. Trademark and Process Development: 
AB Ltd. introduced a new manufacturing process and incurred the following 
costs: 
o Trademark acquisition: ?70,00,000 
o Product promotion: ?2,00,000 
o Employee benefits for testing: ?3,00,000 
47
3. Government Grant: 
AB Ltd. was engaged in the process of development of a manufacturing unit 
in one of the specified industrial areas.  The development of the manufacturing 
unit shall be completed within 2 years.  To encourage industrial promotion in 
specified areas, the government provides government grants in the form of 
subsidies.  The cost of the project for the company is ` 700 lakhs against 
which the government provided a grant of ` 500 lakhs & this grant was in 
nature of the promoter’s contribution.  
Based on the information given in above Case Scenario, answer the following 
Question  
(i) Based on the quantitative threshold which of the above segment K to O would 
be considered as reportable segment? 
(a) Segment M 
(b) Segment M, N & L 
(c) Segment L, M, N & O 
(d) All Segment 
(ii) What will be the tax effect on the financial statement for the year 2023-24 in 
respect of machinery purchased on 1
st
 April 2023? 
(a) Create DTA ` 75,000 
(b) Reverse DTA ` 75,000 
(c) Create DTL ` 75,000 
(d) Reverse DTL ` 75,000 
(iii) What is the total cost that should be capitalized for a trademark related to the 
new process? 
(a) ` 75,00,000 
(b) ` 73,00,000 
(c) ` 72,00,000 
(d) ` 70,00,000 
(iv) How should subsidy received be accounted in the books of the company? 
(a) Credit into capital reserve 
(b) Credit it as “Other income” in the statement of profit & Loss A/c in the 
year of commencement of commercial operation. 
(c) Both A & B are permitted 
(d) Credit it to General Reserve.  
Case Scenario 2 
G Ltd. is an automotive supplier and is in the business of manufacturing 
components & parts to be used by various automotive companies.  The company 
has its registered office in North Delhi and is listed in a stock exchange.  Following 
48
are some outstanding issues not yet solved towards the finalization of the financial 
statement for the year ending on 31.3.2024. 
G Ltd. installed new machinery in its plant during 2023-2024.   
G Ltd. incurred the following costs: 
The basic price of machinery       ` 50,00,000 
Initial delivery & handling cost     `10,00,000 
Cost of site preparation      `5,00,000 
The interest charge for deferred credit paid to the supplier  `1,00,000. 
The present value of estimated dismantling costs to be incurred after 15 years is  
` 5,00,000. 
Operating losses after commercial production ` 4,00,000.  The plant was ready for 
its intended use on 1
st
 July 2023 but commercial production started on 1
st
 August 
2023.  The estimated life of the machine is 10 years with no residual value. 
To acquire the above machinery G Ltd. is to borrow US $ 62,500 on 1.4.2023 which 
will be repaid on 1.7.2024.  Rate of exchange between reporting currency (INR) 
and foreign currency (USD) on different dates are as under:  
On 1.4.2023  1 US $ = ` 80 
31.03.2024  1 US$ = ` 82.50 
G Ltd., acquired a machine on 1
st
 April, 2018 for ` 25 lakhs that had an estimated 
useful life of 8 years.  The machine is depreciated on straight line basis and does 
not carry any residual value.  On 31.3.2022 assets was revalued 18 lakhs with 
revised useful life of 5 years.  The surplus arising on revaluation was credited to 
Revaluation Reserve A/c.   
G Ltd., had followed the policy of writing down the revaluation surplus by the 
increased charge of depreciation resulting from the revaluation. 
 As on 31.3.2024 the condition indicating impairment of the asset existed & its 
recoverable value came down to ` 6 lakhs.  The company sold the asset as on  
1 May 2024 for ` 2.8 lakh.  G Ltd. acquired 35% shares of Build Ltd. as on 1.7.2023 
for ` 14,00,000.  By such acquisition, it can exercise significant influence over Build 
Ltd. the following balance of Build Ltd. as on the date of acquisition:  
Particular 
Share capital         15,00,000 
Reserve & Surplus (includes current year profit for 3 months)    8,50,000 
Build ltd. paid a dividend of ` 1,50,000 on 15.7.2023 for the year ending 31.3.2023. 
The profit earned by Build Ltd. during the year ending 31.3.2024 amounts to  
` 4,80,000 (assume profit to be accure evenly)  
Based on the information given in above Case Scenario, answer the following 
Question  
(i) What is the carrying value of machinery on 31.3.2024 installed in the plant? 
(a) ` 65,33,333 
(b) ` 64,75,000 
49
Page 4


MODEL TEST PAPER 5 
INTERMEDIATE COURSE: GROUP - I 
PAPER – 1 : ADVANCED ACCOUNTING 
Time Allowed – 3 Hours Maximum Marks – 100 
1. The question paper comprises two parts, Part I and Part II. 
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs) 
3. Part II comprises questions which require descriptive type answers. 
PART I – Case Scenario based MCQs (30 Marks) 
Part I is compulsory. 
Case Scenario 1 
AB Ltd. is engaged in manufacturing a variety of products, including modules, dyes, 
infrastructure goods, etc. The company caters to a broad customer base across 
sectors like automobiles, infrastructure, construction, and others, both in India and 
internationally. Its financial statements are prepared annually as of 31st March. 
Additional details for the financial year ending 31st March 2024 are provided below:  
Segment Information 
AB Ltd. has identified five segments. The details are as follows: 
Segment Sale  Total sale  Profit Asset  
 Export Domestic    
K 54,00,000 - 54,00,000 4,50,000 9,00,00,000 
L 1,12,50,000 36,00,000 1,48,50,000 13,50,000 2,25,00,000 
M 2,02,50,000 - 2,02,50,000 22,50,000 3,15,00,000 
M 1,21,50,000 27,00,000 148,50,000 13,50,000 4,50,00,000 
O 18,00,000 22,50,000 40,50,000 9,00,000 6,75,00,000 
   5,94,00,000 63,00,000 25,65,00,000 
Additional Information 
1. Machinery Purchase 
On 1st April 2023, AB Ltd. purchased machinery worth ?15,00,000 for 
producing specific items for a particular customer. The cost is deductible over 
two years for tax purposes: ?10,00,000 in year 1 and the balance in year 2. 
The applicable tax rate is 30%. 
2. Trademark and Process Development: 
AB Ltd. introduced a new manufacturing process and incurred the following 
costs: 
o Trademark acquisition: ?70,00,000 
o Product promotion: ?2,00,000 
o Employee benefits for testing: ?3,00,000 
47
3. Government Grant: 
AB Ltd. was engaged in the process of development of a manufacturing unit 
in one of the specified industrial areas.  The development of the manufacturing 
unit shall be completed within 2 years.  To encourage industrial promotion in 
specified areas, the government provides government grants in the form of 
subsidies.  The cost of the project for the company is ` 700 lakhs against 
which the government provided a grant of ` 500 lakhs & this grant was in 
nature of the promoter’s contribution.  
Based on the information given in above Case Scenario, answer the following 
Question  
(i) Based on the quantitative threshold which of the above segment K to O would 
be considered as reportable segment? 
(a) Segment M 
(b) Segment M, N & L 
(c) Segment L, M, N & O 
(d) All Segment 
(ii) What will be the tax effect on the financial statement for the year 2023-24 in 
respect of machinery purchased on 1
st
 April 2023? 
(a) Create DTA ` 75,000 
(b) Reverse DTA ` 75,000 
(c) Create DTL ` 75,000 
(d) Reverse DTL ` 75,000 
(iii) What is the total cost that should be capitalized for a trademark related to the 
new process? 
(a) ` 75,00,000 
(b) ` 73,00,000 
(c) ` 72,00,000 
(d) ` 70,00,000 
(iv) How should subsidy received be accounted in the books of the company? 
(a) Credit into capital reserve 
(b) Credit it as “Other income” in the statement of profit & Loss A/c in the 
year of commencement of commercial operation. 
(c) Both A & B are permitted 
(d) Credit it to General Reserve.  
Case Scenario 2 
G Ltd. is an automotive supplier and is in the business of manufacturing 
components & parts to be used by various automotive companies.  The company 
has its registered office in North Delhi and is listed in a stock exchange.  Following 
48
are some outstanding issues not yet solved towards the finalization of the financial 
statement for the year ending on 31.3.2024. 
G Ltd. installed new machinery in its plant during 2023-2024.   
G Ltd. incurred the following costs: 
The basic price of machinery       ` 50,00,000 
Initial delivery & handling cost     `10,00,000 
Cost of site preparation      `5,00,000 
The interest charge for deferred credit paid to the supplier  `1,00,000. 
The present value of estimated dismantling costs to be incurred after 15 years is  
` 5,00,000. 
Operating losses after commercial production ` 4,00,000.  The plant was ready for 
its intended use on 1
st
 July 2023 but commercial production started on 1
st
 August 
2023.  The estimated life of the machine is 10 years with no residual value. 
To acquire the above machinery G Ltd. is to borrow US $ 62,500 on 1.4.2023 which 
will be repaid on 1.7.2024.  Rate of exchange between reporting currency (INR) 
and foreign currency (USD) on different dates are as under:  
On 1.4.2023  1 US $ = ` 80 
31.03.2024  1 US$ = ` 82.50 
G Ltd., acquired a machine on 1
st
 April, 2018 for ` 25 lakhs that had an estimated 
useful life of 8 years.  The machine is depreciated on straight line basis and does 
not carry any residual value.  On 31.3.2022 assets was revalued 18 lakhs with 
revised useful life of 5 years.  The surplus arising on revaluation was credited to 
Revaluation Reserve A/c.   
G Ltd., had followed the policy of writing down the revaluation surplus by the 
increased charge of depreciation resulting from the revaluation. 
 As on 31.3.2024 the condition indicating impairment of the asset existed & its 
recoverable value came down to ` 6 lakhs.  The company sold the asset as on  
1 May 2024 for ` 2.8 lakh.  G Ltd. acquired 35% shares of Build Ltd. as on 1.7.2023 
for ` 14,00,000.  By such acquisition, it can exercise significant influence over Build 
Ltd. the following balance of Build Ltd. as on the date of acquisition:  
Particular 
Share capital         15,00,000 
Reserve & Surplus (includes current year profit for 3 months)    8,50,000 
Build ltd. paid a dividend of ` 1,50,000 on 15.7.2023 for the year ending 31.3.2023. 
The profit earned by Build Ltd. during the year ending 31.3.2024 amounts to  
` 4,80,000 (assume profit to be accure evenly)  
Based on the information given in above Case Scenario, answer the following 
Question  
(i) What is the carrying value of machinery on 31.3.2024 installed in the plant? 
(a) ` 65,33,333 
(b) ` 64,75,000 
49
(c) ` 69,06,667 
(d) ` 68,45,000 
(ii) What is the amount of exchange loss/gain to be recognized and what will be 
the amount of foreign loan to be shown in the financial statement on 
31.3.2024? 
(a) ` 1,56,250 exchange loss and ` 50,00,000 of foreign loan. 
(b) ` 1,56,250 exchange gain and ` 51,56,250 of foreign loan. 
(c) ` 1,56,250 exchange gain and ` 50,00,000 of foreign loan. 
(d) ` 1,56,250 exchange loss and ` 51,56,250 of foreign loan. 
(iii) What is the amount of impairment loss on 31.3.2024? 
(a) ` 5.5 lakh   
(b) ` 7.2 lakh   
(c) ` 4.8 lakh   
(d) ` 3 lakh   
(iv) What will be the carrying amount of investment in the separate financial 
statement of G Ltd. as on 31.3.2024? 
(a) ` 14,00,000 
(b) ` 8,22,500 
(c) ` 13,47,500 
(d) ` 14,52,500 
Case Scenario 3 
Perrotte Ltd. (a non-listed company) has the following Capital Structure as on 
31.03.2024: 
 Particulars (`) 
(1) Equity Share Capital (Shares of ` 10 each fully 
paid) 
- 24,00,000 
(2) Reserves and Surplus    
 General Reserve 20,50,000 - 
 Securities Premium Account 7,50,000 - 
 Profit & Loss Account 2,00,000 - 
 Infrastructure Development Reserve 20,00,000  
 Revaluation reserve 1,70,000 51,70,000 
(3) Loan Funds  52,00,000 
The Shareholders of Perrotte Ltd., on the recommendation of their Board of 
Directors, have approved on 12.09.2024 a proposal to buy-back the maximum 
permissible number of Equity shares considering the large surplus funds available 
at the disposal of the company. 
50
Page 5


MODEL TEST PAPER 5 
INTERMEDIATE COURSE: GROUP - I 
PAPER – 1 : ADVANCED ACCOUNTING 
Time Allowed – 3 Hours Maximum Marks – 100 
1. The question paper comprises two parts, Part I and Part II. 
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs) 
3. Part II comprises questions which require descriptive type answers. 
PART I – Case Scenario based MCQs (30 Marks) 
Part I is compulsory. 
Case Scenario 1 
AB Ltd. is engaged in manufacturing a variety of products, including modules, dyes, 
infrastructure goods, etc. The company caters to a broad customer base across 
sectors like automobiles, infrastructure, construction, and others, both in India and 
internationally. Its financial statements are prepared annually as of 31st March. 
Additional details for the financial year ending 31st March 2024 are provided below:  
Segment Information 
AB Ltd. has identified five segments. The details are as follows: 
Segment Sale  Total sale  Profit Asset  
 Export Domestic    
K 54,00,000 - 54,00,000 4,50,000 9,00,00,000 
L 1,12,50,000 36,00,000 1,48,50,000 13,50,000 2,25,00,000 
M 2,02,50,000 - 2,02,50,000 22,50,000 3,15,00,000 
M 1,21,50,000 27,00,000 148,50,000 13,50,000 4,50,00,000 
O 18,00,000 22,50,000 40,50,000 9,00,000 6,75,00,000 
   5,94,00,000 63,00,000 25,65,00,000 
Additional Information 
1. Machinery Purchase 
On 1st April 2023, AB Ltd. purchased machinery worth ?15,00,000 for 
producing specific items for a particular customer. The cost is deductible over 
two years for tax purposes: ?10,00,000 in year 1 and the balance in year 2. 
The applicable tax rate is 30%. 
2. Trademark and Process Development: 
AB Ltd. introduced a new manufacturing process and incurred the following 
costs: 
o Trademark acquisition: ?70,00,000 
o Product promotion: ?2,00,000 
o Employee benefits for testing: ?3,00,000 
47
3. Government Grant: 
AB Ltd. was engaged in the process of development of a manufacturing unit 
in one of the specified industrial areas.  The development of the manufacturing 
unit shall be completed within 2 years.  To encourage industrial promotion in 
specified areas, the government provides government grants in the form of 
subsidies.  The cost of the project for the company is ` 700 lakhs against 
which the government provided a grant of ` 500 lakhs & this grant was in 
nature of the promoter’s contribution.  
Based on the information given in above Case Scenario, answer the following 
Question  
(i) Based on the quantitative threshold which of the above segment K to O would 
be considered as reportable segment? 
(a) Segment M 
(b) Segment M, N & L 
(c) Segment L, M, N & O 
(d) All Segment 
(ii) What will be the tax effect on the financial statement for the year 2023-24 in 
respect of machinery purchased on 1
st
 April 2023? 
(a) Create DTA ` 75,000 
(b) Reverse DTA ` 75,000 
(c) Create DTL ` 75,000 
(d) Reverse DTL ` 75,000 
(iii) What is the total cost that should be capitalized for a trademark related to the 
new process? 
(a) ` 75,00,000 
(b) ` 73,00,000 
(c) ` 72,00,000 
(d) ` 70,00,000 
(iv) How should subsidy received be accounted in the books of the company? 
(a) Credit into capital reserve 
(b) Credit it as “Other income” in the statement of profit & Loss A/c in the 
year of commencement of commercial operation. 
(c) Both A & B are permitted 
(d) Credit it to General Reserve.  
Case Scenario 2 
G Ltd. is an automotive supplier and is in the business of manufacturing 
components & parts to be used by various automotive companies.  The company 
has its registered office in North Delhi and is listed in a stock exchange.  Following 
48
are some outstanding issues not yet solved towards the finalization of the financial 
statement for the year ending on 31.3.2024. 
G Ltd. installed new machinery in its plant during 2023-2024.   
G Ltd. incurred the following costs: 
The basic price of machinery       ` 50,00,000 
Initial delivery & handling cost     `10,00,000 
Cost of site preparation      `5,00,000 
The interest charge for deferred credit paid to the supplier  `1,00,000. 
The present value of estimated dismantling costs to be incurred after 15 years is  
` 5,00,000. 
Operating losses after commercial production ` 4,00,000.  The plant was ready for 
its intended use on 1
st
 July 2023 but commercial production started on 1
st
 August 
2023.  The estimated life of the machine is 10 years with no residual value. 
To acquire the above machinery G Ltd. is to borrow US $ 62,500 on 1.4.2023 which 
will be repaid on 1.7.2024.  Rate of exchange between reporting currency (INR) 
and foreign currency (USD) on different dates are as under:  
On 1.4.2023  1 US $ = ` 80 
31.03.2024  1 US$ = ` 82.50 
G Ltd., acquired a machine on 1
st
 April, 2018 for ` 25 lakhs that had an estimated 
useful life of 8 years.  The machine is depreciated on straight line basis and does 
not carry any residual value.  On 31.3.2022 assets was revalued 18 lakhs with 
revised useful life of 5 years.  The surplus arising on revaluation was credited to 
Revaluation Reserve A/c.   
G Ltd., had followed the policy of writing down the revaluation surplus by the 
increased charge of depreciation resulting from the revaluation. 
 As on 31.3.2024 the condition indicating impairment of the asset existed & its 
recoverable value came down to ` 6 lakhs.  The company sold the asset as on  
1 May 2024 for ` 2.8 lakh.  G Ltd. acquired 35% shares of Build Ltd. as on 1.7.2023 
for ` 14,00,000.  By such acquisition, it can exercise significant influence over Build 
Ltd. the following balance of Build Ltd. as on the date of acquisition:  
Particular 
Share capital         15,00,000 
Reserve & Surplus (includes current year profit for 3 months)    8,50,000 
Build ltd. paid a dividend of ` 1,50,000 on 15.7.2023 for the year ending 31.3.2023. 
The profit earned by Build Ltd. during the year ending 31.3.2024 amounts to  
` 4,80,000 (assume profit to be accure evenly)  
Based on the information given in above Case Scenario, answer the following 
Question  
(i) What is the carrying value of machinery on 31.3.2024 installed in the plant? 
(a) ` 65,33,333 
(b) ` 64,75,000 
49
(c) ` 69,06,667 
(d) ` 68,45,000 
(ii) What is the amount of exchange loss/gain to be recognized and what will be 
the amount of foreign loan to be shown in the financial statement on 
31.3.2024? 
(a) ` 1,56,250 exchange loss and ` 50,00,000 of foreign loan. 
(b) ` 1,56,250 exchange gain and ` 51,56,250 of foreign loan. 
(c) ` 1,56,250 exchange gain and ` 50,00,000 of foreign loan. 
(d) ` 1,56,250 exchange loss and ` 51,56,250 of foreign loan. 
(iii) What is the amount of impairment loss on 31.3.2024? 
(a) ` 5.5 lakh   
(b) ` 7.2 lakh   
(c) ` 4.8 lakh   
(d) ` 3 lakh   
(iv) What will be the carrying amount of investment in the separate financial 
statement of G Ltd. as on 31.3.2024? 
(a) ` 14,00,000 
(b) ` 8,22,500 
(c) ` 13,47,500 
(d) ` 14,52,500 
Case Scenario 3 
Perrotte Ltd. (a non-listed company) has the following Capital Structure as on 
31.03.2024: 
 Particulars (`) 
(1) Equity Share Capital (Shares of ` 10 each fully 
paid) 
- 24,00,000 
(2) Reserves and Surplus    
 General Reserve 20,50,000 - 
 Securities Premium Account 7,50,000 - 
 Profit & Loss Account 2,00,000 - 
 Infrastructure Development Reserve 20,00,000  
 Revaluation reserve 1,70,000 51,70,000 
(3) Loan Funds  52,00,000 
The Shareholders of Perrotte Ltd., on the recommendation of their Board of 
Directors, have approved on 12.09.2024 a proposal to buy-back the maximum 
permissible number of Equity shares considering the large surplus funds available 
at the disposal of the company. 
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The in order to induce the existing shareholders to offer their shares for buy-back, 
it was decided to offer a price of buy back price per share is ` 25. 
You are also informed that the Infrastructure Development Reserve is created to 
satisfy Income-tax Act requirements. 
You are required to compute the maximum number of shares that can be bought 
back in the light of the above information and also under a situation where the loan 
funds of the company were either ` 1,200 crores or ` 1,500 crores. 
Assuming that the entire buy-back is completed by 09.12.2024. 
Based on the information given in above Case Scenario, answer the following 
Question  
(i) What is the maximum number of shares to be bought back as per debt-equity 
ratio? 
(a) 1,12,000 shares 
(b) 80,000 shares 
(c) 54,000 shares 
(d) 60,000 shares 
(ii) What is the maximum permitted equity as per debt- equity ratio test. 
(a) 20,00,000 shares 
(b) 28,00,000 shares 
(c) 15,00,000 shares 
(d) 13,50,000 shares 
(iii) What will be the future equity shareholding fund if a company buys back 
shares as per the result of the debt-equity ratio test? 
(a) 48,000  
(b) 48,60,000  
(c) 42,80,000  
(d) 46,00,000  
(iv) What is the maximum number of shares that can be buy back as per resource 
test? 
(a) 54,000  
(b) 75,700 
(c) 55,700  
(d) 74,000 
4. If expenses of liquidation of the vendor company are paid by the purchasing 
company then, in purchasing company’s book, the account debited is 
(a) Goodwill account. 
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