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ANSWERS OF MODEL TEST PAPER 8 
INTERMEDIATE COURSE; GROUP I 
PAAPER 1 ADVANCED ACCOUNTING 
MCQ 
No. 
Answers 
1. (i) (b) 
(ii) (c) 
(iii) (a) 
(iv) (d) 
2 (i) (a) 
(ii) (c) 
(iii) (a) 
3. (c) 
4. (b) 
5. (b) 
6. (i) (b) 
(ii) (d) 
(iii) (a) 
(iv) (c) 
7 (b) 
1. (a) (i) In the following cases, record Journal Entries for amortization in the
books of  
Journal Entry for the year ended on 31
st
 March 2024 
`
in lakhs 
`
in lakhs  
31.3.24 Amortization A/c (340 × 350/ 1,190) Dr. 100 
To Patent Rights A/c 100 
P&L A/c Dr. 100 
To Amortization A/c 100 
Working note 
Huge Limited amortised ` 340 lakhs during next 4 years on the 
basis of net cash flows arising of the product.  The amortisation for 
second year will be worked out as under:  
` 340 x 350 /1,190 (140+350+280+420) = ` 100 lakhs 
386
Page 2


ANSWERS OF MODEL TEST PAPER 8 
INTERMEDIATE COURSE; GROUP I 
PAAPER 1 ADVANCED ACCOUNTING 
MCQ 
No. 
Answers 
1. (i) (b) 
(ii) (c) 
(iii) (a) 
(iv) (d) 
2 (i) (a) 
(ii) (c) 
(iii) (a) 
3. (c) 
4. (b) 
5. (b) 
6. (i) (b) 
(ii) (d) 
(iii) (a) 
(iv) (c) 
7 (b) 
1. (a) (i) In the following cases, record Journal Entries for amortization in the
books of  
Journal Entry for the year ended on 31
st
 March 2024 
`
in lakhs 
`
in lakhs  
31.3.24 Amortization A/c (340 × 350/ 1,190) Dr. 100 
To Patent Rights A/c 100 
P&L A/c Dr. 100 
To Amortization A/c 100 
Working note 
Huge Limited amortised ` 340 lakhs during next 4 years on the 
basis of net cash flows arising of the product.  The amortisation for 
second year will be worked out as under:  
` 340 x 350 /1,190 (140+350+280+420) = ` 100 lakhs 
386
(ii) 
Particulars ` in lakhs  ` in 
lakhs  
Prior period item Dr. 50 
Amortization A/c Dr. 10 
To Know-how A/c 60 
[Being amortization of 6 years (out of 
which amortization of 5 years charged as 
prior period item i.e. 80 x 6 /8 = 60 lakhs)] 
Profit and Loss A/c Dr. 60 
To Amortization A/c 10 
To Prior Period Item 
(Being amount transferred to Profit and 
Loss account) 
50 
(b) Computation of Expected and Actual Returns on Plan Assets
`
Return on ` 5,00,000 held for 12 months at 10.50% 52,500 
Return on ` 1,42,000 for 6 months at 10.50%  7,455 
Loss of interest on benefits paid for 4 months on ` 63,000 for 
4 months @ 10.50% 
(2,205) 
Expected return on plan assets for 2023-2024 57,750 
Fair value of plan assets as on 31
st
 March 2024 7,50,000 
Less: Fair value of plan assets as on 1 April,2023  5,00,000 
  Contributions received on 30.9.2023                1,42,000 (6,42,000) 
1,08,000 
Add: Benefits paid on 30
th
 Nov 2023 63,000 
Actual return on plan assets 1,71,000 
(c) Calculation of Deferred Tax Asset/Liability in Delta Limited
Year Accounting 
Income 
Taxable 
Income 
Timing 
Difference 
Timing 
Difference 
(balance) 
Deferred 
Tax 
Deferred 
Tax 
Liability 
(balance) 
2021 34,00,000 30,00,000 4,00,000 4,00,000 1,20,000 1,20,000 
2022 50,00,000 52,00,000 (2,00,000) 2,00,000 (60,000) 60,000 
2023 65,00,000 67,00,000 (2,00,000) NIL (60,000) NIL 
1,49,00,000 1,49,00,000 
Calculation of total tax 
Year Deferred Tax Current tax expense Total tax 
2021 1,20,000 9,00,000 
(30,00,000 x 30%) 
10,20,000 
387
Page 3


ANSWERS OF MODEL TEST PAPER 8 
INTERMEDIATE COURSE; GROUP I 
PAAPER 1 ADVANCED ACCOUNTING 
MCQ 
No. 
Answers 
1. (i) (b) 
(ii) (c) 
(iii) (a) 
(iv) (d) 
2 (i) (a) 
(ii) (c) 
(iii) (a) 
3. (c) 
4. (b) 
5. (b) 
6. (i) (b) 
(ii) (d) 
(iii) (a) 
(iv) (c) 
7 (b) 
1. (a) (i) In the following cases, record Journal Entries for amortization in the
books of  
Journal Entry for the year ended on 31
st
 March 2024 
`
in lakhs 
`
in lakhs  
31.3.24 Amortization A/c (340 × 350/ 1,190) Dr. 100 
To Patent Rights A/c 100 
P&L A/c Dr. 100 
To Amortization A/c 100 
Working note 
Huge Limited amortised ` 340 lakhs during next 4 years on the 
basis of net cash flows arising of the product.  The amortisation for 
second year will be worked out as under:  
` 340 x 350 /1,190 (140+350+280+420) = ` 100 lakhs 
386
(ii) 
Particulars ` in lakhs  ` in 
lakhs  
Prior period item Dr. 50 
Amortization A/c Dr. 10 
To Know-how A/c 60 
[Being amortization of 6 years (out of 
which amortization of 5 years charged as 
prior period item i.e. 80 x 6 /8 = 60 lakhs)] 
Profit and Loss A/c Dr. 60 
To Amortization A/c 10 
To Prior Period Item 
(Being amount transferred to Profit and 
Loss account) 
50 
(b) Computation of Expected and Actual Returns on Plan Assets
`
Return on ` 5,00,000 held for 12 months at 10.50% 52,500 
Return on ` 1,42,000 for 6 months at 10.50%  7,455 
Loss of interest on benefits paid for 4 months on ` 63,000 for 
4 months @ 10.50% 
(2,205) 
Expected return on plan assets for 2023-2024 57,750 
Fair value of plan assets as on 31
st
 March 2024 7,50,000 
Less: Fair value of plan assets as on 1 April,2023  5,00,000 
  Contributions received on 30.9.2023                1,42,000 (6,42,000) 
1,08,000 
Add: Benefits paid on 30
th
 Nov 2023 63,000 
Actual return on plan assets 1,71,000 
(c) Calculation of Deferred Tax Asset/Liability in Delta Limited
Year Accounting 
Income 
Taxable 
Income 
Timing 
Difference 
Timing 
Difference 
(balance) 
Deferred 
Tax 
Deferred 
Tax 
Liability 
(balance) 
2021 34,00,000 30,00,000 4,00,000 4,00,000 1,20,000 1,20,000 
2022 50,00,000 52,00,000 (2,00,000) 2,00,000 (60,000) 60,000 
2023 65,00,000 67,00,000 (2,00,000) NIL (60,000) NIL 
1,49,00,000 1,49,00,000 
Calculation of total tax 
Year Deferred Tax Current tax expense Total tax 
2021 1,20,000 9,00,000 
(30,00,000 x 30%) 
10,20,000 
387
2022 (60,000) 15,60,000 
(52,00,000 x 30%) 
15,00,000 
2023 (60,000) 20,10,000 
(67,00,000 x 30%) 
19,50,000 
Note: It is assumed that the revenue and the taxable profit is the same. 
2. Shivam Limited 
Balance Sheet as at 31
st
 March 2024 
Particulars Note 
No. 
` (in 000) 
I. Equity and Liabilities
1. Shareholders' funds 
(a) Share capital 1 300.00 
(b) Reserves and Surplus 2 232.70 
2. Non-Current liabilities 
(a) Long term borrowings 3 135.00 
3. Current liabilities 
(a) Trade Payables 35.00 
(b) Short-Term Provisions 30.30 
Total 733.00 
II. Assets
1. Non-current assets 
(a) Property, Plant and Equipment and 
Intangible assets 
(i) Property, Plant and Equipment
4 596.00 
2. Current assets 
(a) Inventories 58.00 
(b) Trade receivables 65.00 
(c) Cash and cash equivalents  14.00 
Total 733.00 
Shivam Limited 
Statement of Profit and Loss for the year ended 31
st
 March 2024 
Particulars Notes ` (in ‘000) 
I. Revenue from operations 473.00 
II. Other Income  5 1.00 
III. Total Income 474.00 
IV. Expenses: 
Purchases 226.00 
Finance costs 14.00 
388
Page 4


ANSWERS OF MODEL TEST PAPER 8 
INTERMEDIATE COURSE; GROUP I 
PAAPER 1 ADVANCED ACCOUNTING 
MCQ 
No. 
Answers 
1. (i) (b) 
(ii) (c) 
(iii) (a) 
(iv) (d) 
2 (i) (a) 
(ii) (c) 
(iii) (a) 
3. (c) 
4. (b) 
5. (b) 
6. (i) (b) 
(ii) (d) 
(iii) (a) 
(iv) (c) 
7 (b) 
1. (a) (i) In the following cases, record Journal Entries for amortization in the
books of  
Journal Entry for the year ended on 31
st
 March 2024 
`
in lakhs 
`
in lakhs  
31.3.24 Amortization A/c (340 × 350/ 1,190) Dr. 100 
To Patent Rights A/c 100 
P&L A/c Dr. 100 
To Amortization A/c 100 
Working note 
Huge Limited amortised ` 340 lakhs during next 4 years on the 
basis of net cash flows arising of the product.  The amortisation for 
second year will be worked out as under:  
` 340 x 350 /1,190 (140+350+280+420) = ` 100 lakhs 
386
(ii) 
Particulars ` in lakhs  ` in 
lakhs  
Prior period item Dr. 50 
Amortization A/c Dr. 10 
To Know-how A/c 60 
[Being amortization of 6 years (out of 
which amortization of 5 years charged as 
prior period item i.e. 80 x 6 /8 = 60 lakhs)] 
Profit and Loss A/c Dr. 60 
To Amortization A/c 10 
To Prior Period Item 
(Being amount transferred to Profit and 
Loss account) 
50 
(b) Computation of Expected and Actual Returns on Plan Assets
`
Return on ` 5,00,000 held for 12 months at 10.50% 52,500 
Return on ` 1,42,000 for 6 months at 10.50%  7,455 
Loss of interest on benefits paid for 4 months on ` 63,000 for 
4 months @ 10.50% 
(2,205) 
Expected return on plan assets for 2023-2024 57,750 
Fair value of plan assets as on 31
st
 March 2024 7,50,000 
Less: Fair value of plan assets as on 1 April,2023  5,00,000 
  Contributions received on 30.9.2023                1,42,000 (6,42,000) 
1,08,000 
Add: Benefits paid on 30
th
 Nov 2023 63,000 
Actual return on plan assets 1,71,000 
(c) Calculation of Deferred Tax Asset/Liability in Delta Limited
Year Accounting 
Income 
Taxable 
Income 
Timing 
Difference 
Timing 
Difference 
(balance) 
Deferred 
Tax 
Deferred 
Tax 
Liability 
(balance) 
2021 34,00,000 30,00,000 4,00,000 4,00,000 1,20,000 1,20,000 
2022 50,00,000 52,00,000 (2,00,000) 2,00,000 (60,000) 60,000 
2023 65,00,000 67,00,000 (2,00,000) NIL (60,000) NIL 
1,49,00,000 1,49,00,000 
Calculation of total tax 
Year Deferred Tax Current tax expense Total tax 
2021 1,20,000 9,00,000 
(30,00,000 x 30%) 
10,20,000 
387
2022 (60,000) 15,60,000 
(52,00,000 x 30%) 
15,00,000 
2023 (60,000) 20,10,000 
(67,00,000 x 30%) 
19,50,000 
Note: It is assumed that the revenue and the taxable profit is the same. 
2. Shivam Limited 
Balance Sheet as at 31
st
 March 2024 
Particulars Note 
No. 
` (in 000) 
I. Equity and Liabilities
1. Shareholders' funds 
(a) Share capital 1 300.00 
(b) Reserves and Surplus 2 232.70 
2. Non-Current liabilities 
(a) Long term borrowings 3 135.00 
3. Current liabilities 
(a) Trade Payables 35.00 
(b) Short-Term Provisions 30.30 
Total 733.00 
II. Assets
1. Non-current assets 
(a) Property, Plant and Equipment and 
Intangible assets 
(i) Property, Plant and Equipment
4 596.00 
2. Current assets 
(a) Inventories 58.00 
(b) Trade receivables 65.00 
(c) Cash and cash equivalents  14.00 
Total 733.00 
Shivam Limited 
Statement of Profit and Loss for the year ended 31
st
 March 2024 
Particulars Notes ` (in ‘000) 
I. Revenue from operations 473.00 
II. Other Income  5 1.00 
III. Total Income 474.00 
IV. Expenses: 
Purchases 226.00 
Finance costs 14.00 
388
Depreciation and Amortisation expenses (10% 
of 510
*
) 
51.00 
Other expenses 6 82.00 
Total Expenses 373.00 
V. Profit before Tax (III-IV) 101.00 
Tax Expense:  
Current tax  (30.30) 
Profit for the period (after tax) 70.70 
Notes to accounts 
` (in 000) 
1. Share Capital 
 
Equity share capital 
Authorised 
  35,000 shares of ` 10 each 350.00 
Issued, subscribed & paid-up 
20,000 shares of ` 10 each fully paid up 200.00 
Add: 10,000 Bonus Shares issued during 
the year 
 100.00 
300.00 
2. Reserves and Surplus 
 
Securities Premium Account  
Opening Balance 
Less: Utilised for bonus issue 
27.00 
27.00 0.00 
Revaluation reserve  
(2,45,000 – 1,48,000) 
97.00 
General Reserve  90 
Less: Utilized for bonus issue (73) 17.00 
Add: Transfer from Profit & loss @ 10% 7.07 24.07 
Profit & loss Balance  
Opening balance 48.00 
 Profit for the period  70.70 
Appropriations 
Transfer to General Reserve @ 10% (7.07) 111.63 
232.70 
3. Long term borrowing 
 
10% Debentures 135.00 
4 Property, Plant and Equipment 
 
Land 
*
 520 (Plant and machinery at cost) – 10 (Cost of plant and machinery sold) 
389
Page 5


ANSWERS OF MODEL TEST PAPER 8 
INTERMEDIATE COURSE; GROUP I 
PAAPER 1 ADVANCED ACCOUNTING 
MCQ 
No. 
Answers 
1. (i) (b) 
(ii) (c) 
(iii) (a) 
(iv) (d) 
2 (i) (a) 
(ii) (c) 
(iii) (a) 
3. (c) 
4. (b) 
5. (b) 
6. (i) (b) 
(ii) (d) 
(iii) (a) 
(iv) (c) 
7 (b) 
1. (a) (i) In the following cases, record Journal Entries for amortization in the
books of  
Journal Entry for the year ended on 31
st
 March 2024 
`
in lakhs 
`
in lakhs  
31.3.24 Amortization A/c (340 × 350/ 1,190) Dr. 100 
To Patent Rights A/c 100 
P&L A/c Dr. 100 
To Amortization A/c 100 
Working note 
Huge Limited amortised ` 340 lakhs during next 4 years on the 
basis of net cash flows arising of the product.  The amortisation for 
second year will be worked out as under:  
` 340 x 350 /1,190 (140+350+280+420) = ` 100 lakhs 
386
(ii) 
Particulars ` in lakhs  ` in 
lakhs  
Prior period item Dr. 50 
Amortization A/c Dr. 10 
To Know-how A/c 60 
[Being amortization of 6 years (out of 
which amortization of 5 years charged as 
prior period item i.e. 80 x 6 /8 = 60 lakhs)] 
Profit and Loss A/c Dr. 60 
To Amortization A/c 10 
To Prior Period Item 
(Being amount transferred to Profit and 
Loss account) 
50 
(b) Computation of Expected and Actual Returns on Plan Assets
`
Return on ` 5,00,000 held for 12 months at 10.50% 52,500 
Return on ` 1,42,000 for 6 months at 10.50%  7,455 
Loss of interest on benefits paid for 4 months on ` 63,000 for 
4 months @ 10.50% 
(2,205) 
Expected return on plan assets for 2023-2024 57,750 
Fair value of plan assets as on 31
st
 March 2024 7,50,000 
Less: Fair value of plan assets as on 1 April,2023  5,00,000 
  Contributions received on 30.9.2023                1,42,000 (6,42,000) 
1,08,000 
Add: Benefits paid on 30
th
 Nov 2023 63,000 
Actual return on plan assets 1,71,000 
(c) Calculation of Deferred Tax Asset/Liability in Delta Limited
Year Accounting 
Income 
Taxable 
Income 
Timing 
Difference 
Timing 
Difference 
(balance) 
Deferred 
Tax 
Deferred 
Tax 
Liability 
(balance) 
2021 34,00,000 30,00,000 4,00,000 4,00,000 1,20,000 1,20,000 
2022 50,00,000 52,00,000 (2,00,000) 2,00,000 (60,000) 60,000 
2023 65,00,000 67,00,000 (2,00,000) NIL (60,000) NIL 
1,49,00,000 1,49,00,000 
Calculation of total tax 
Year Deferred Tax Current tax expense Total tax 
2021 1,20,000 9,00,000 
(30,00,000 x 30%) 
10,20,000 
387
2022 (60,000) 15,60,000 
(52,00,000 x 30%) 
15,00,000 
2023 (60,000) 20,10,000 
(67,00,000 x 30%) 
19,50,000 
Note: It is assumed that the revenue and the taxable profit is the same. 
2. Shivam Limited 
Balance Sheet as at 31
st
 March 2024 
Particulars Note 
No. 
` (in 000) 
I. Equity and Liabilities
1. Shareholders' funds 
(a) Share capital 1 300.00 
(b) Reserves and Surplus 2 232.70 
2. Non-Current liabilities 
(a) Long term borrowings 3 135.00 
3. Current liabilities 
(a) Trade Payables 35.00 
(b) Short-Term Provisions 30.30 
Total 733.00 
II. Assets
1. Non-current assets 
(a) Property, Plant and Equipment and 
Intangible assets 
(i) Property, Plant and Equipment
4 596.00 
2. Current assets 
(a) Inventories 58.00 
(b) Trade receivables 65.00 
(c) Cash and cash equivalents  14.00 
Total 733.00 
Shivam Limited 
Statement of Profit and Loss for the year ended 31
st
 March 2024 
Particulars Notes ` (in ‘000) 
I. Revenue from operations 473.00 
II. Other Income  5 1.00 
III. Total Income 474.00 
IV. Expenses: 
Purchases 226.00 
Finance costs 14.00 
388
Depreciation and Amortisation expenses (10% 
of 510
*
) 
51.00 
Other expenses 6 82.00 
Total Expenses 373.00 
V. Profit before Tax (III-IV) 101.00 
Tax Expense:  
Current tax  (30.30) 
Profit for the period (after tax) 70.70 
Notes to accounts 
` (in 000) 
1. Share Capital 
 
Equity share capital 
Authorised 
  35,000 shares of ` 10 each 350.00 
Issued, subscribed & paid-up 
20,000 shares of ` 10 each fully paid up 200.00 
Add: 10,000 Bonus Shares issued during 
the year 
 100.00 
300.00 
2. Reserves and Surplus 
 
Securities Premium Account  
Opening Balance 
Less: Utilised for bonus issue 
27.00 
27.00 0.00 
Revaluation reserve  
(2,45,000 – 1,48,000) 
97.00 
General Reserve  90 
Less: Utilized for bonus issue (73) 17.00 
Add: Transfer from Profit & loss @ 10% 7.07 24.07 
Profit & loss Balance  
Opening balance 48.00 
 Profit for the period  70.70 
Appropriations 
Transfer to General Reserve @ 10% (7.07) 111.63 
232.70 
3. Long term borrowing 
 
10% Debentures 135.00 
4 Property, Plant and Equipment 
 
Land 
*
 520 (Plant and machinery at cost) – 10 (Cost of plant and machinery sold) 
389
Opening balance 148.00 
Add: Revaluation adjustment 97.00 
Closing balance 245.00 
Plant and Machinery 
Opening balance 520.00 
Less: Disposed off (10.00) 
510.00 
Less: Depreciation (1,16,000-8,000+51,000) (159.00) 
Closing balance 351.00 
Total 596.00 
5 Other Income  
 
Profit on sale of machinery:   
Sale value of machinery 3.00 
Less: Book value of machinery (10,000-
8,000) 
(2.00) 1.00 
6 Other expenses: 
 
Factory expenses 40.00 
Selling expenses 20.00 
Administrative expenses 22.00 82.00 
The final dividend will not be recognized as a liability at the balance sheet 
date (even if it is declared after reporting date but before approval of the 
financial statements) as per Accounting Standards. Hence, it has not been 
recognized in the financial statements for the year ended 31 March 2024. 
Such dividends will be disclosed in notes only.  
Working note:  
Bonus Shares Issue: 
• Bonus shares are issued in a 1:2 ratio, so for every 2 equity shares, 1
bonus share is issued.
• Equity Share Capital = ` 2,00,000 / ` 10 = 20,000 shares.
• Bonus Shares = 20,000 / 2 = 10,000 shares × ` 10 = ` 1,00,000.
Alternatively, since, the amount of interest on 10% 1,35,000 Debentures 
comes to Rs 13,500 while the Debenture Interest in the trial balance is listed 
as ` 14,000, the difference of ` 500 (`13,500 - `14,000) may be treated as an 
advance payment.  
3. (a) Cash flow statement 
for the year ended 31
st
 March 2024 
(` in lakhs) (` in 
lakhs)  
Cash flow from operating activities 
390
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