Page 1
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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