CORPORATE FINANCIAL REPORTING
Time Allowed: 3 Hours Full Marks: 100
The figures in the margin on the right side indicate full marks.
Answer all the questions. 5X 2=10
1. Answer any two of the following:
(a) X has 60% interest in a joint venture with Y. X sold a plant with w.d.v. `60 lacs for `80 lacs.
Calculate how much profit X should recognize in its books as per AS-27 in case the joint
venture is
(i) jointly controlled operation
(ii) jointly controlled asset
(iii) jointly controlled entity
(b) Jupiter Ltd. has an asset, which is carried in the Balance Sheet on 31.03.2012 of `500 lakhs.
As of that date, the value in use is `400 lakhs and the net selling price is `375 lakhs.
From the above data:
(i) Calculate Impairment Loss
(ii) Prepare Journal Entries for adjustment of Impairment Loss
(iii) Show how the Impairment Loss will be shown in the Balance Sheet
(c) From the following information for Rishab Ltd. for the year ended 31.03.2013, calculate the
deferred tax asset/liability as per AS-22.

Accounting Profit `10,00,000
Book Profit as per MAT (Minimum Alternate Tax) `9,00,000
Profit as per Income Tax Act `1,00,000
Tax Rate 30%
MAT Rate 10%

Answer :
1. (a)
According to AS 27, in the case of Jointly Controlled Operations (JCO) and Jointly
Controlled Assets (JCA), there are no separate financial statements for the Joint Venture.
The venturer may prepare accounts for internal reporting purposes. In JCO, venturers’
assets are used. In JCA, the assets are dedicated to the venture. In the case of Jointly
Controlled Entity (JCE), there is a separate legal entity for the venture and it operates like
any other enterprise.
When X sells the plant to the venture at a profit of 20 lacs, the following is the treatment
according to AS 27 – transactions of the venture with the venture:

JCO/JCA JCE
X should consider in its Separate Financial Statements (SFS):
The extent of profit attributable to the other venturers, i.e. 40
% of 20 lacs 8
Suggested Answer_Syl12_Dec13_Paper 18
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X should consider the full amount of profit in its SFS 20
In the Consolidated Financial Statements (CFS) of X, its
share should be eliminated and hence, only the other
venturer’s profit is considered 8 8
If the candidate assumes that X sells the plant to a third party, then,
(i) in the case of a JCO, X would have used its own asset for X’s own business and that of
the venture’s. Since it is X’s own asset, all the profit of 20 lacs would be considered in the
SFS of X as well as in the CFS of X.
(ii)In the case of JCA, the asset would have been dedicated to the venture. Hence X will
recognize its share viz. 60 % of 20 lacs = 12 lacs in both the SFS and the CFS.
(iii)In the case of a JCE, the venture considers its interest in the JCE. Hence 12 lacs will be
considered as ‘income from investment’, since the interest in a JCE is reported as an
investment rather than a line item of the individual asset.
1. (b)
(i) Calculation of Impairment Loss
Recoverable amount is higher of value in use `400 and Net Selling Price ` 375
Thus, Recoverable Amount = `400
Impairment Loss = Carried Amount – Recoverable Amount
= ` 500 lakhs – ` 400 lakhs = `100 lakhs
(ii) Journal Entries.

Particulars Dr. (Rupees in lakhs) Cr. (Rupees in lakhs)
a) Impairment Loss A/c Dr.
To, Asset
(Being the entry for accounting
for impairment loss) 100 100
b) Profit and Loss A/c
To, Impairment Loss A/c Dr.
(Being the entry to transfer
impairment loss to P/L A/c) 100 100
(iii) Balance Sheet of Jupiter Ltd. as on 31.03.2012 (Extracts)

Amt. in Lakhs
Asset less. Depreciation
Less: Impairment Loss 500
100
400
1. (c)

Tax as per accounting profit:
Tax as per income tax profit:
Tax as per MAT: 10, 00,000 x 30%
1,00,000 x30%
9, 00,000 x 10% = ` 3, 00,000
= ` 30,000
= ` 90,000
Tax Expense = Current Tax + Deferred Tax
Therefore Deferred Tax Liability as on 31.03.2013= ` 3, 00,000 – ` 30,000
= ` 2, 70,000
Amount of Tax to be debited in Profit and Loss A/c for the year 31.03.2013:
= Current Tax + Deferred Amount of Tax liability + Excess of MAT over current tax
= 30,000 + 2, 70,000 + (90,000 – 30,000)
= ` 3, 60,000
Alternative answer for second part of the answer
Amount of tax to be debited in Profit and Loss A/c for the year 31.03.2013:
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 3
= Current Tax (MAT) + Deferred Tax
= 90,000 + 2,70,000
= 3,60,000
Both the options can be considered favorably.
2.
(a) The summarized Balance Sheets of A Ltd. and its subsidiary B Ltd. as on 31.03.2013 are as
follows:

A Ltd. BLtd.
Equity and Liabilities
Shareholder’s Funds
Share Capital in equity shares of ` 10 each 40,00,000 8,00,000
Reserves and Surplus
General reserve 30,00,000 20,00,000
Profit and Loss A/c 20,00,000 50,00,000 10,00,000 30,00,000
Non-Current liabilities
Secured loans 10,00,000 3,00,000
Current Liabilities
Trade payables 18,00,000 2,00,000
Total 118,00,000 43,00,000

A Ltd. BLtd.
Assets
Non-current assets
Tangible assets 40,00,000 15,00,000
Non-current investments
Equity shares in B Ltd. (60,000 shares) 6,00,000
Current Assets
Inventories
Trade receivables
Cash and cash equivalents 27,00,000
30,00,000
15,00,000 72,00,000 20,00,000
5,00,000
3,00,000 28,00,000
Total 118,00,000 43,00,000
A Ltd. holds 75% of the paid-up capital of B Ltd. and the balance is held by a foreign
company.
A memorandum of understanding has been entered into with the foreign company by A Ltd. to
the following effect:
(i) The shares held by the foreign company will be sold to A Ltd. at a price per share to
be calculated by capitalizing the yield at 25%. Yield for this purpose would mean
60% of the average pre-tax profits for the last 4 years, which were ` 14 lacs, 20 lacs, 22
lacs and 24 lacs respectively.

(ii) The actual cost of shares to the foreign company was `2,00,000 only. Gains
accruing to the foreign company are taxable at 20%. The tax payable will be deducted
from the sale proceeds and paid to the Government by A Ltd. 60% of the consideration
(after payment of tax) will be remitted by A Ltd. to the foreign company.
(iii) A Ltd. will issue its shares at their intrinsic value for the balance consideration. Cash will
be paid for any fractional shares in the computation.
(iv) It was also then decided that A Ltd. would absorb B Ltd. by simultaneously writing down
the fixed assets of B Ltd. by 10%. Stock of A Ltd. included stock of `1,00,000 purchased
from B Ltd., which sold it at cost + 25%.
The entire arrangement was approved and made effective from 1.4.2013.
Suggested Answer_Syl12_Dec13_Paper 18
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You are required to show the Balance Sheet of A Ltd. after the arrangement was made
effective as at 1.4.2013. Present the Balance Sheet in the revised Schedule VI format. Fill in
the figures to the extent available. Workings should form part of your answer. 15
OR
(b) The Statement of Affairs of S Ltd. as at 31st March 2012 is given below, with the respective
shares of the company’s two Divisions A and B in the various items of assets and
liabilities:

(Amounts in ` lacs)
Division A Division B Total
Fixed Assets:
Cost
Less: Depreciation 850
350 250
80
Written Down Value 500 170 670
Investments 100
Net Current Assets:
Current Assets 455 580
Less: Current Liabilities 275 95
Net Current Assets 180 485 665
Total 1435
Financed by: —
Loan Funds 20 425
Own Funds
Equity Share Capital (Shares
of `10 each) 350
Reserves and Surplus 660
Total 1435
Loan Funds included Bank Loans of ` 20 lacs specially taken for B Division and Debentures of
paid up value of `120 lacs redeemable at any time between October 1st 2011 and 30th
September 2012. On 1st April 2012, the company sold all of its investments for `120 lacs and
redeemed all the debentures at par, the cash transactions being recorded in the Bank A/c
pertaining to Division A.
Then, a new company T Ltd. was incorporated with an authorized capital of `1,000 lacs
divided into shares of `10 each . All the assets and liabilities pertaining to Division B were
transferred to the newly formed company, with T Ltd. allotting to S Ltd’s shareholders its fully
paid equity shares of `10 each at par for every fully paid equity share of `10 each held in S
Ltd. as discharge of consideration for the division taken over.
T Ltd. recorded in its books the fixed assets at `225 lacs and all the other assets and
liabilities at the same values at which they appeared in the books of S Ltd.
You are required to:
(i) Show the journal entries in the books of S Ltd.
(ii) Prepare the Balance Sheet of S Ltd. immediately after the demerger.
(iii) Prepare the initial Balance Sheet of T Ltd.
(Schedules are not required in both the cases). 15
Answer:
2. (a)

Name of the Company: A Ltd.
Balance Sheet as at 1.04.2013
Suggested Answer_Syl12_Dec13_Paper 18
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Ref
No. Particulars Note
No. As at 1st
April, 2013 As at 31st
March, 2013
(`) (`)
I. Equity and Liabilities
1 Shareholders’ funds
(a) Share capital 1 41,33,330 40,00,000
(b) Reserves and surplus 2 70,96,660 50,00,000
2 Non-current liabilities
(a) Long-term borrowings 3 13,00,000 10,00,000
4 Current Liabilities
(a) Trade payables 4 20,00,000 18,00,000
Total (1+2+3+4) 1,45,29,990 1,18,00,000
II. Assets
1 Non-current assets
(a)Fixed assets
– Tangible assets 5 53,50,000 40,00,000
(b) Non-current Investment 6,00,000
2 Current assets
(a) Inventories 6 46,80,000 27,00,000
(b) Trade receivables 7 35,00,000 30,00,000
(c) Cash and cash equivalents (W.N. 7) 9,99,990 15,00,000
Total (1+2) 1,45,29,990 1,18,00,000
Notes to the accounts

Note 1. Share Capital As at 1st
April, 2013
Authorised, Issued, Subscribed & Paid up :-
4,13,333 equity shares of `10/- each [of the above shares
13,333 equity shares are allotted as fully paid up for
consideration other than cash] 41,33,330
Total 41,33,330
Suggested Answer_Syl12_Dec13_Paper 18
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FOR EQUITY SHARE :- As at 1st April, 2013 As at 31st March,
2013
Nos. Amount
(`) Nos. Amount
(`)
Opening Balance as on 01.04.11 4,00,000 40,00,000 4,00,000 40,00,000
Add: Fresh Issue ( Incld Bonus shares , Right
shares, split shares, shares issued other than
cash) 13,333 1,33,330 – –
Total 4,13,333 41,33,330 4,00,000 40,00,000

Note 2. Reserve and surplus As at 1st April, 2013 As at 31st
March, 2013
Capital Reserve 18,50,000 –
General Reserve 30,00,000 30,00,000
Securities Premium (13,333 x `20) 2,66,660 –
Profit & Loss A/c 20,00,000 20,00,000
Less: Unrealised profit on stock 20,000 19,80,000
Total 70,96,660 50,00,000

Note 3. Long Term Borrowing As at 1st April,
2013 As at 31st
March, 2013
Secured loan (10,00,000 + 3,00,000) 13,00,000 10,00,000
Total 13,00,000 10,00,000

Note 4. Trade Payable As at 1st April,
2013 As at 31st
March, 2013
Creditors 20,00,000 18,00,000
Total 20,00,000 18,00,000

Note 5. Tangible assets As at 1st April,
2013 As at 31st
March, 2013
Fixed Assets (40,00,000 + 13,50,000) 53,50,000 40,00,000
Total 53,50,000 40,00,000

Note 6. Inventories As at 1st April,
2013 As at 31st
March, 2013
Inventories (27,00,000 + 20,00,000) 47,00,000 27,00,000
Less: Unrealised profit 20,000 –
Suggested Answer_Syl12_Dec13_Paper 18
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Total 46,80,000 27,00,000

Note 7. Trade receivable As at 1st April,
2013 As at 31st
March, 2013
Trade receivable (30,00,000 + 5,00,000) 35,00,000 30,00,000
Total 35,00,000 30,00,000
Working Notes :
1. Average of pre tax profit = 14+20+22+24/4 = ` 20 lakhs Yield = 20 x 60/100 = `12 lakhs

2. Price per share of B. Ltd.
Capitalized value of yield of B. Ltd. = 12 lakhs x 100/25 = ` 48 lakhs
No. of shares = 80,000. price per share = ` 48 lakhs / 80,000 = `60 per share
3. Purchase consideration for 25% of share capital of B. Ltd.
= 80,000 x 60 x 25/100 = `12,00,000
4. Caculation of intrinsic value of shares of A. Ltd.

` `
Total assets excluding investments in B Ltd.
Value of investments 60,000 x 60 1,12,00,000
36,00,000
1,48,00,000
Less: Outstanding liabilities
Secured loan
Current liabilities 10,00,000
18,00,000 28,00,000
Net Assets 120,00,000
Intrinsic value per share = Net assts / No. of shares = ` 30
5. Discharge of purchase consideration by A. Ltd.

Equity
share
capital
` Cash
` Total
`
(i) Payment of Tax (12 – 2) x 20/ 100 2,00,000 2,00,000
(i) Issue of shares to foreign company
[40% of (12 – 2)] = `4,00,000
No. of shares issued by A. Ltd = `4,00,000/ `30
= 13,333.33 shares
Value of share capital = 13,333 x `30 = 3,99,990 3,99,990
(ii) Cash payment [60% of (12 – 2)] 6,00,000 6,00,000
(iii)Cash for fractional shares (0.33 x `30) 10 10
3,99,990 8,00,010 12,00,000
6. Calculation of goodwill/capital reserve of A. Ltd.

` `
Total assets as per balance sheet of B. Ltd. 43,00,000
Less: 10% reduction in value of fixed assets (15,00,000 x
10%) 1,50,000
41,50,000
Less: Secured loan 3,00,000
Suggested Answer_Syl12_Dec13_Paper 18
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Current liabilities 2,00,000 5,00,000
Net assets 36,50,000
Less : Purchase consideration (outside shareholders) 12,00,000
24,50,000
Less : Investment in B. Ltd. As per balance sheet of A. Ltd. 6,00,000
Capital reserve 18,50,000
7. Cash and bank balance of A. Ltd. After acquisition of shares

`
Opening balance (A Ltd. & B. Ltd.) 18,00,000
Les: remitted foreign company (6,00,010)
Less : T. D. S. paid to Government (2,00,000)
9,99,990
8. Unrealized profit in stock of A. Ltd. = 1,00,000 x 25/125 = `20,000

2. (b) (i) ln S Ltd’s Books
Journal entries

` In Lakhs
Dr. Cr.
Bank Account (current assets) Dr.
To Investment A/c
To profit & Loss A/c (reserves & surplus)
(Sale of Investment at profit) 120 100
20
Debentures (Loan Funds) Dr.
To bank A/c (Current assets)
(Redemption of debentures at par) 120 120
Current Liabilities Dr.
Bank Loan (Loan Funds) Dr.
Provision for Depreciation Dr.
Reserves & Surplus (Loss on Demerger) Dr.
To Fixed Assets
To Current Assets
(Assets and Liabilities pertaining to B Division taken out of the
books on transfer of the division to T Ltd.) 95
20
80
635 250
580
(ii)

Name of the Company: S Ltd.
Balance Sheet as at 01.04.2012
Ref
No. Particulars Note No. April, 2012 As at 1st April, 2011 As at 1st
(` in Lakhs) (` in Lakhs)
I. Equity and Liabilities
1 Shareholders’ funds
(a) Share capital 350.00
(b) Reserves and surplus 45.00
Suggested Answer_Syl12_Dec13_Paper 18
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2 Non-current liabilities
– Long-term borrowings 285.00
3 Current Liabilities
– Current liabilities 275.00
Total (1+2+3) 955.00
II. Assets
1 Non-current assets
(a) Fixed assets
– Tangible assets 500.00
2 Current assets
– Current assets 455.00
Total (1+2) 955.00
WN # 1: Revenue Reserves
Particulars ` in Lakhs
Balance as 31.03.2012 660
Add : Profit on sale of investment 20
Less: Loss on demerger (635)
Balance as on 01.04.2012 45
WN # 2 : Loan Funds
Particulars ` in Lakhs
Balance as 31.03.2012 425
Less: Bank Loan transferred to Y Ltd. (20)
Less: Debentures redeemed (120)
Balance as on 01.04.2012 285
WN # 3: Current Assets
Particulars ` in
Lakhs
Balance as 31.03.2012 455
Add: Cash received on sale of investments 120
Less: Cash paid on redemption of debentures (120)
Balance as on 01.04.2012 455
(iii)
Suggested Answer_Syl12_Dec13_Paper 18
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Name of the Company: T Ltd.
Balance Sheet as at 01.04.2012
Ref
No. Particulars Note No. As at 01st April, 2012
(` in Lakh)
I. Equity and Liabilities
1 Shareholders’ funds
(a) Share capital 350.00
(b) Reserves and surplus 340.00
2 Non-current liabilities
(a) Long-term borrowings 20.00
3 Current Liabilities
(a) Current Liabilities 95.00
Total (1+2+3) 805.00
II. Assets
1 Non-current assets
(a) Fixed assets
– Tangible assets 225.00
2 Current assets
– Other current assets 580.00
Total 805.00
WN # 4 : Capital Reserves
Particulars ` in Crores ` in Crores
i. Purchase consideration 350
ii. Less: Net Assets taken over
Assets taken over (225 + 580) 805
Less: Liabilities taken over (95+20) (115) (690)
iii. Capital reserves [(i) – (ii)} 340
Suggested Answer_Syl12_Dec13_Paper 18
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3.(a) The Balance Sheet of Big Ltd., Small Ltd. and Little Ltd. as at 31st March 2013 are given
below:

Big Ltd. Small Ltd. Little Ltd.
Equity and Liabilities
Shareholder’s Funds
Share Capital
Equity Shares of ` 10 each, fully paid up
Reserves and Surplus
General reserve
Profit and Loss A/c
Current Liabilities
Trade payables
Big Ltd. 2,00,000
60,000
50,000
35,000 1,00,000
50,000
40,000
30,000
15,000 60,000
40,000
30,000
40,000
5,000
Total 3,45,000 2,35,000 1,75,000
Assets
Non-current assets
Tangible assets
Plant and machinery
Non-current investments (at cost)
Equity shares in Small Ltd.
Equity shares in Little Ltd.
Current Assets
Inventories
Trade receivables
Small Ltd.
Little Ltd.
Cash and cash equivalents 80,000
90,000
40,000
60,000
35,000
18,000
7,000
15,000 1,10,000
–
60,000
35,000
20,000
10,000 1,15,000
35,000
15,000
10,000
Total 3,45,000 2,35,000 1,75,000
(i) Big Ltd. held 8000 shares of Small Ltd. and 1800 shares of Little Ltd.
(ii) Small Ltd. held 3600 shares of Little Ltd.
(iii) All investments were made on 1st July 2012
(iv) The following balances were there on 1st July 2012:

Small Ltd.
` Little Ltd.
`
Reserves
Profit and Loss A/c 25,000
30,000 15,000
25,000
(v) Small Ltd. invoiced goods to Big Ltd. at cost + 25% in December 2012. The closing
stock of Big Ltd. includes goods with invoice value `6000.
(vi) Little Ltd. sold to Small Ltd. an equipment costing `24,000 at a profit of 25% on
selling price on 1st January 2013. Depreciation at 10% p.a. was provided by Small
Ltd. on this equipment.
(vii)Big Ltd. proposes dividend at 10%.
Prepare the Consolidated Balance Sheet of the group as at 31st March 2013 by the direct
approach. Workings should form part of the answer. Present the Balance Sheet as per the
revised format. 15
OR
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 12
(b) The Balance Sheets of A Ltd. and B Ltd. as on 31.03.2012 are as follows:

A Ltd. BLtd.
Equity and Liabilities
Shareholder’s Funds
Share Capital
Equity Shares of ` 10 each, fully
paid up
14% Preference Sharers of `100
each,
fully paid up
Reserves and Surplus
General reserve
Profit and Loss A/c
Current Liabilities
Trade payables ` `
40,00,000
– 40,00,000
18,00,000
17,00,000 35,00,000
5,00,000 ` `
8,00,000
5,00,000 13,00,000
50,000
6,50,000 7,00,000
3,00,000
Total 80,00,000 23,00,000
Assets
Non-current assets
Tangible assets
Plant and machinery
Furniture and fixtures
Non-current investments
Equity shares in B Ltd.
Preference shares in B Ltd.
Current Assets
Inventories
Trade receivables
Cash and cash equivalents 26,50,000
8,00,000 34,50,000
19,80,000
4,00,000 23,80,000
8,70,000
7,50,000
5,50,000 21,70,000 8,00,000
5,40,000 13,40,000
– –
4,60,000
3,70,000
1,30,000 9,60,000
Total 80,00,000 23,00,000
A Ltd. acquired 80% of both classes of shares in B Ltd. on 01.04.2011. Additional
information:
(i) The balance in Profit and Loss A/c of B Ltd. on 1.4.2011 was `2,50,000, out of which
dividend of 15% p.a. on the Equity Capital of `8,00,000 was paid for the year 2010-
2011.
(ii) General reserve balances of B Ltd. was the same as on 1.4.2011.
(iii) The dividend in respect of preference shares of B Ltd. for the year 2011-12 was still
payable as on 31.3.2012.
(iv) A Ltd. credited its Profit and Loss A/c for the dividend received by it from B Ltd. for the
year 2010-11.
(v) At the time of acquisition by A Ltd., while determining the price to be paid for the shares
in B Ltd. it was decided that the value of plant and machinery was to be increased by
20% and that of furniture and fixtures to be reduced by 30%. There was no transaction of
purchase or sale of these assets during the year. The effect to these revaluations are to
be given in the consolidated balance sheet.
(vi) Sundry creditors of A Ltd. included an amount of ` 2,20,000 for purchases from B Ltd., on
which B. Ltd. made a loss of ` 20,000.
(vii) 60% of the above goods were still with the closing stock of A Ltd. as at 31.03.2012.
Prepare the Consolidated Balance Sheet as at 31st March, 2012, assuming the rate of
depreciation charged as 20% p.a. on plant and machinery and 10% p.a. on furniture and
fixtures. 15
Workings should be part of the answer.
Suggested Answer_Syl12_Dec13_Paper 18
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Answer:
3. (a)Consolidated Balance Sheet of Big Ltd. And its subsidiaries Small Ltd. and Little Ltd. as at
31st March, 2013
` in Lakhs

Ref
No. Particulars Note
No. As at 31st
March,2013
1 EQUITY AND LIABILITIES
(a) Share capital 1 2,00,000
(b) Reserves and surplus 2 1,57,420
2 Minority Interest (W.N.4) 53,580
3 Current Liabilities
(a) Trade payables 3 1,05,000
(b) Short-term provisions 4 20,000
Total (1+2+3) 5,36,000
II ASSETS
1 Non-current assets
Fixed assets
– Tangible assets 5 2,97,200
2 Current assets
(a) inventories 6 1,28,800
(b ) trade receivables 7 70,000
(c) Cash and cash equivalents 8 35,000
(d) Other current assets 9 5,000
Total (1+2) 5,36,000
Notes to the accounts

Note 1. Share Capital As at 31st
March,2013
Authorized, Issued, Subscribed and paid-up Share capital:-
20,000 Equity share of `10 each 2,00,000
Total 2,00,000
RECONCILIATION OF SHARE CAPITAL

FOR EQUITY SHARE As at 31st March,2013
Nos. Amount (`)
Opening Balance as on 01.04.11 20,000 2,00,000
Suggested Answer_Syl12_Dec13_Paper 18
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Add: Fresh Issue (Including Bonus shares, right shares, split
shares, share issued other than cash)
20,000 2,00,000
Less: Buy Back of share
Total 20,000 2,00,000

Note 2. Reserve & Surplus As at 31st
March,2013
Capital Reserve (W.N. 3) 24,000
Revenue reserve (W.N. 7) 99,500
Profit and loss A/c (W.N. 6) 33,920
Total 1,57,420

Note 3. Trade Payables As at 31st
March,2013
Sundry Creditors (35,000+30,000+40,000) 1,05,000
Total 1,05,000

Note 4. Short- term provisions As at 31st
March,2013
Proposed dividend 20,000
Total 20,000

Note 5. Tangible Assets As at 31st
March,2013
Fixed Assets less depreciation- Big Ltd 80,000
Small Ltd 1,10,000
Little Ltd 1,15,000 3,05,000
Less: Unrealised Profit (W.N. 5) 7,800
Total 2,97,200

Note 6. Inventories As at 31st
March,2013
Stock (60,000+35,000+35,000) 1,30,000
Less: Unrealised profit 1,200
Total 1,28,800
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 15

Note 7. Trade Receivables As at 31st
March,2013
Debtors (more than six months considered good) –
(35,000+20,000+15,000) 70,000
Total 70,000

Note 8. Cash and cash equivalents As at 31st
March,2013
Cash and Bank balance (15,000+10,000+10,000) 35,000
Total 35,000

Note 9. Other current assets As at 31st
March,2013
Bills receivables- (18,000+7,000) 25,000
Less: mutual debts (15,000+5,000) 20,000
Total 5,000
Working Notes :
1. Analysis of profit of Little Ltd.

Particulars Capital Profit
` Revenue
Reserve
` Revenue
Profit
`
Reserve on 01.07.2012 15,000
Profit and loss A/c on 01.07.2012 25,000
Increase in Reserves 25,000
Increase in profit 5,000
40,000 25,000 5,000
Less: Minority Interest (10%) (4,000) (2,500) (500)
36,000 22,500 4,500
Share of Big Ltd. (30%) 12,000 7,500 1,500
Share of Small Ltd. (60%) 24,000 15,000 3,000
2. Analysis of profit of Small Ltd. (by direct approach)

Particulars Capital Profit
` Revenue
Reserve
` Revenue Profit
`
Reserve on 01.07.2012 25,000
Profit and loss A/c on 01.07.2012 30,000
Increase in Reserves 25,000
Increase in profit – 10,000
55,000 25,000 10,000
Share in Little Ltd. 15,000 3,000
55,000 40,000 13,000
Less : Minority interest (20%) (11,000) (8,000) (2,600)
Share of Big Ltd. (80%) 44,000 32,000 10,400
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 16
3. Cost of Control :

Particulars Amount
` Amount
` Amount
`
Invest in Small Ltd. 90,000
Invest in Little Ltd. 1,00,000
1,90,000
Less : Paid up value of investment
In Small Ltd. 80,000
In Little Ltd. 54,000 1,34,000
Capital profit
In Small Ltd. 44,000
In Little Ltd. 36,000 80,000 2,14,000
Capital reserve 24,000
4. Minority Interest

Particulars Small Ltd.
` Little Ltd.
`
Share capital 20,000 6,000
Capital profit 11,000 4,000
Revenue reserves 8,000 2,500
Revenue profit 2,600 500
41,600 13,000
Less : Unrealised profit on stock
(20% of ` 6000 x 25/125) (240)
Unlealised profit on equipment (10% of `7,800) (780)
41,360 12,220
5. Unrealised profit on equipment sold

Particulars `
Selling price (24,000 x 100/75 32,000
Less : Cost (24,000)
Profit 8,000
Unrealised profit = (8,000 – 8,000 x 10/100 x 3/12) = 7,800
6. Profit and loss account – Big Ltd.

Particulars `
Balance 50,000
Less : Proposed dividend (20,000)
30,000
Add: Share in Small Ltd. 10,400
Share in Little Ltd. 1,500
41,900
Less: Unrealised profit on equipment (90% of 7,800) (7,020)
34,880
Less: Unrealised profit on stock (6,000 x 25/125 x 80%) (960)
33,920
7. Revenue reserves – Big Ltd.

Particulars `
Balance 60,000
Share in Small Ltd. 32,000
Share in Little Ltd. 7,500
99,500
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 17
OR
3. b)
Consolidated Balance Sheet of A Ltd. And its subsidiaries B Ltd. as on 31st March, 2012
` in Lakhs

Ref
No. Particulars Note
No. As at 31st
March,2012
1 EQUITY AND LIABILITIES
(a) Share capital 1 40,00,000
(b) Reserves and surplus 2 38,12,000
2 Minority Interest (W.N.4) 4,02,000
3 Current Liabilities
– Trade payables 3 5,80,000
Total (1+2+3) 87,94,000
II ASSETS
1 Non-current assets
(a) Fixed assets
(i) Tangible assets 4 47,88,000
(ii) Intangible assets 5 10,84,000
2 Current assets
(a) inventories 6 13,42,000
(b ) trade receivables 7 9,00,000
(c) Cash and cash equivalents 8 6,80,000
Total (1+2) 87,94,000
Notes to the accounts

Note 1. Share Capital As at 31st
March,2012
Authorized, Issued, Subscribed and paid-up Share capital:-
40,000 Equity share of `10 each 4,00,000
Total 4,00,000
RECONCILIATION OF SHARE CAPITAL

FOR EQUITY SHARE As at 31st March,2012
Nos. Amount (`)
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 18

Opening Balance as on 01.04.11 40,000 2,00,000
Add: Fresh Issue (Including Bonus shares, right shares, split
shares, share issued other than cash)
40,000 4,00,000
Less: Buy Back of share
Total 40,000 4,00,000

Note 2. Reserve & Surplus As at 31st
March,2012
General Reserve 18,00,000
Profit and loss A/c (W.N. 6) 20,12,000
Total 38,12,000

Note 3. Trade Payables As at 31st
March,2012
Sundry Creditors – A Ltd. 5,00,000
B Ltd. 3,00,000
8,00,000
Less: Mutual Owing 2,20,000
Total 5,80,000

Note 4. Tangible Assets As at 31st
March,2012
Plant and Machinery – A Ltd 26,50,000
B Ltd 9,60,000 36,10,000
Furniture and Fixture – A Ltd 8,00,000
B Ltd. 3,78,000 11,78,000
Total 47,88,000

Note 5. Intangible Assets As at 31st
March,2012
Goodwill (W.N. 5) 10,84,000
Total 10,84,000

Note 6. Inventories As at 31st
March,2012
Stock – A Ltd. 8,70,000
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 19

B Ltd. 4,60,000
Add: Unrealised Loss 12,000
Total 13,42,000

Note 7. Trade Receivables As at 31st
March,2012
Debtors – A Ltd. 7,50,000
B Ltd. 3,70,000
11,20,000
Less: Mutual Owing 2,20,000
Total 9,00,000

Note 8. Cash and cash equivalents As at 31st
March,2012
Cash and Bank balance – A Ltd. 5,50,000
B Ltd. 1,30,000
Total 6,80,000
Working Notes :
1. Calculation of Capital Profits (Pre – acquit ion)

` `
General reserve balance as on 01.04.2011 50,000
Profit & Loss A/c balance 2,50,000
Less : Dividend at 15% p.a. On Equity capital of `8,00,000
for the year 2010 – 11 1,20,000 1,30,000
1,80,000
Add: Profit on revaluation of plant & machinery (W. N. 7) 2,00,000
3,80,000
Less: Loss on revaluation of furniture & fixtures (W. N. 8) 1,80,000
2,00,000
Share of A Ltd. (80%) 1,60,000
Share of Minority Interest (20%) 40,000
2. Calculation of Revenue Profits (Post Acquition)

` `
Profits during the year 2011-12 (6,50,000 -1,30,000) 5,20,000
Less : Preference dividend in [email protected] 14% on ` 5,00,000 70,000
4,50,000
Less : Under charging of depreciation on plant &
machinary due to upward revaluation (` 2,00,000×20%) 40,000
4,10,000
Add : Overcharging of depreciation on furniture &
fixtures due to downward revaluation (` 1,80,000×10%) 18,000
4,28,000
Share of A. Ltd. (80%) 3,42,400
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 20

Share of Minority Interest (20%) 85,600
3. Calculation of dividend on preference shares of B Ltd.

`
Dividend on preference shares (` 5,00,000 x 40%) 70,000
Share of A Ltd. (80%) 56,000
Share of Minority Interest (20%) 14,000
4. Calculation of Minority Interest

`
Equity share capital (20%) 1,60,000
Preference Share Capital (20%) 1,00,000
Share of Capital profits (W.N.1) 40,000
Share of Revenue profit (W.N.2) 85,600
Share of Preference dividend (W.N.3) 14,000
Add: Unrealized Loss 2,400
4,02,000
5. Calculation of Cost of Control – Goodwill

` `
Investment by A Ltd. In Equity shares of B Ltd. 19,80,000
Less: Dividend received for 2010-11 15% of
(8,00,000 x 80%) 96,000 18,84,000
Preference shares 4,00,000
22,84,000
Less : Paid up value of
Equity shares (80%) 6,40,000
Preference Shares (80%) 4,00,000
Share in Capital Profit (W. N. 1) 1,60,000 12,00,000
Goodwill 10,84,000
6. Calculation of Consolidated Profit & Loss A/c

`
Balance in Profit & Loss A/c 17,00,000
Add : Revenue Profit from B Ltd. (W.N.2) 3,42,400
Preference dividend of B Ltd. (W.N.3) 56,000
Share of unrealised loss on stock (20,000×60%×80%) 9,600
21,10,400
Less : Dividend wrongly credited 96,000
20,12,000
7. Value of Plant & Machinary of B Ltd.

` `
Value as on 01.04.2011 (8,00,000×100/80) 10,00,000
Add : Appreciation on revaluation (20%) 2,00,000
Revalued figure 12,00,000
Less : Depreciation
Already charged (12,00,000 – 10,00,000) 2,00,000
Due to upward revaluation (2,00,000 x 20%) 40,000 2,40,000
9,60,000
8. Value of Furniture & Fixture of B Ltd.

` `
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 21

Value as on 01.04.2011 (5,40,000 x 100/90) 6,00,000
Less : Diminution on revaluation (30%) (1,80,000)
Revalued Figure 4,20,000
Less : Depreciation already charged (6,00,000 -5,40,000) 60,000
Less: Depreciation written back due to down word
revaluation (1,80,000×10%) 18,000 (42,000)
3,78,000
4. (a) On 31.03.2011, A Ltd. acquired 1,05,000 shares of B Ltd. for `12,00,000. The Balance Sheet of
B Ltd. as on that date was as under:
The Balance Sheets of B Ltd. as on 31.03.2011

(Figures in ` in 000’s)
Equity and Liabilities
Shareholder’s Funds
Share Capital
Equity Shares of ` 10 each, fully paid up
(1,50,000 shares) 1,500
Reserves and Surplus
Securities Premium –
Pre-Incorporation Profits 30
Profit and Loss A/c 60
Current Liabilities
Trade payables 75
Total 1,665
Assets
Non-current assets
Tangible assets 1,050
Current Assets 615
Total 1,665
The Balance Sheets of A Ltd. and B Ltd. as on 31.03.2012 are as follows:

(Figures in ` in 000’s)
A. Ltd.
` B. Ltd
`
Equity and Liabilities
Shareholder’s Funds
Share Capital
Equity Shares of ` 10 each, fully paid up
(before bonus issue)
Reserves Surplus
Securities Premium
Pre-Incorporation Profits
General reserve
Profit and Loss A/c
Current Liabilities
Trade payables 4,500
900
–
6,000
1,575
555 1,500
30
1,905
420
210
Total 13,530 4,065
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 22

Assets
Non-current assets
Tangible assets
Non-current investments
Equity shares in B Ltd. at cost
Current Assets 7,920
1,200
4,410 2,310
1,755
Total 13,530 4,065
Directors of B Ltd. made a bonus Issue on 31.03.2012 in the ratio of one equity share of `10
each fully paid for every two equity shares held on that date.
Calculate as on 31.03.2012 the following:
• Cost of Control/Capital Reserve
• Minority Interest
• Consolidated Profit and Loss Account in each of the following cases
Before Issue of Bonus Shares
Immediately after the issue of Bonus Shares
It may be assumed that Bonus Shares were issued out of Post-Acquisition Profits by using
General reserve. 10
OR
(b) In preparing the Consolidated Balance Sheet of A Ltd. as on 31.12.2012. You are required
to show clearly what amount, if any, you would include in respect of B Ltd. with regard
to:
(a) Cost of Control;
(b) Profit or Loss, and
(c) Minority Interest
Under each of the following assumptions:
1. 48,000 of the shares then in issue of B Ltd. were acquired at a cost of `75,000 on 1st
March, 2010. A Ltd. participated in the proposed dividend of ` 8,000.
2. 48,000 of the shares then in issue of B Ltd., were acquired at a cost of ` 60,000 on 31st
Dec. 2010: A Ltd. participated in the bonus issue but not in the proposed dividend of
`9,000.
3. 60,000 of the shares then in issue of B Ltd. were acquired at a cost of `80,000 on 1st
July, 2012. A Ltd. did not participate in the proposed dividend of ` 6,000.
The Balance Sheet of B Ltd. as on 31st December, 2012 showed:

Particulars Amount
(a) Share Capital, authorised and issued of ` 1 each
(b) Undistributed Profits
(c) 7% Debentures `80,000
`24,000
`40,000
The Profit and Loss appropriation, for the four years ending 31.12.2012 were as
followings:

Particulars 2009 2010 2011 2012
(a) Balance at the beginning of the year 16,000 22,000 43,000 28,000
(b) Bonus Issue of 1 share for every 4
shares: 1st Jan. 2011 Nil Nil (16,000) Nil
(c) Profit for the year / (loss) 14,000 30,000 7,000 (4,000)
(d) Profits available for appropriation 30,000 52,000 34,000 24,000
(e) Proposed Dividends (8,000) (9,000) (6,000) Nil
(f) Balance c/f 22,000 43,000 28,000 24,000
10
Answer:
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 23
4.(a)
1. Basic Information:

Company Status Relevant Dates Holding Status
Holding Company – A ltd Acquired on 31.03.2011 Holding = 70%
Subsidiary – B ltd Consolidated on 31.03.2012 Minority Int. = 30%
2. Analysis of Reserves and Surplus of B Ltd
(a) Pre – Incorporation Profits = ` 30,000 – Capital Profits
(b) General Reserve

(i) Before Bonus Issue
As on 31.03.2012 – ` 19,05,000
As on 01.04.2011 NIL (Capital)
Between 01.04.2011 and 31.03.2012 = ` 19,05,000 (Revenue)
(ii) After Bonus Issue
As on 31.03.2012
Less. Bonus Issue
Corrected Balance
(as on 01.04.2011) ` 19, 05,000
` 7,50,000
` NIL – Capital (15 Lakhs x 1/2)
Between 01.04.2011 and 31.03.2012 – ` 11, 55,000 (Revenue)
(iii) Profit and Loss Account
As on 31.03 2012 – ` 4,20,000
As on 01.04 2011 – ` 60,000 ( Capital)
Profits between 01.04.2011 and 31.03 2012 – ` 3,60,000 (Revenue)
3. Analysis of Net Worth of B Ltd

Particulars Before Bonus Issue After Bonus Issue
Total A Minority Total A Minority
100% 70% 30% 100% 70% 30%
(a) Share Capital 15,00,000 15,00,000
Add. Bonus Issue NIL 7,50,000
15,00,000 10,50,000 4,50,000 22,50,000 15,75,000 6,75,000
(b) Capital Profits
Pre – incorporation
Profits 30,000 30,000
General Reserves NIL NIL
Profit and Loss A/c 60,000 60,000
90,000 63,000 27,000 90,000 63,000 27,000
(c)Revenue Reserve :
Gen. Reserve 19,05,000 13,33,500 5,71,500 11,55,000 8,08,500 3,46,500
(c) Rev. Profits
= P/L a/c 3,60,000 2,52,000 1,08,000 3,60,000 2,52,000 1,08,000
Minority Interest 11,56,500 11,56,500
4. Cost of Control

Particulars Before Bonus Issue After Bonus Issue
Cost of Investment 12,00,000 12,00,000
Less: Normal Value of Share Capital (10,50,000) (15,75,000)
Less: Share in Capital Profit (63,000) (63,000)
Goodwill / Capital Reserve on Consolidation 87,000 (4,38,000)
5. Consolidation of Reserves and Surplus

Particulars Before Bonus Issue After Bonus Issue
Gen. Reserve P/L A/c Gen. Res. P/L A/c
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 24

Balance as per B/ Sheet 60,00,000 15,75,000 60,00,000 15,75,000
Add: Share of Revenue Profit 13,33,500 2,52,000 8,08,500 2,52,000
Consolidated Balance 73,33,500 18,27,000 68,08,500 18,27,000
OR
4 (b)
Case ; 1
A. Cost of Control

Particulars ` `
a) Cost of Investment
1.Amount Invested 75,000
2.Less : Pre – Acquisition Dividend (WN. 1) (7,125) 67,875
b) Share of net Asset represented by :
1. Share Capital (including bonus : 48,000 + 48,000 x ¼) 60,000
2. Capital Profit (W N.2) 7,125 67,125
c) Goodwill (a- b) 750
WORKING NOTES :
1. Pre – Acquisition dividend

1. Year 2009 = = `6,000
2. Year 2010 = = `1,125
Total `7,125
64,000
48,000 x 8,000
64,000 x 12
48,000 x2 x 9,000
*Share capital before Bonus Issue = 80,000 x 4/5 = `64,000
2. Capital Profit:

a) Pre Acquisition profit upto 2009 `22,000
b) Pre Acquisition profit of 2010
(30,000 – 9,000) x 2/12 `3,500
c) Less : Bonus Issue ` (16,000)
d) Remaining capital Profits `9,500
e) A Ltd’s share of above (48/64 x 9,500) `7,125
B. Consolidated Profit and Loss Account:
a) Closing Balance ` 24,000
b) Minority Interest: 24,000 x 25% = ` 6,000
c) Capital Profit

Upto 2009 22,000
Upto 2010
(2 months) 3,500
__________
25,500
Less:
Bonus Share 16,000
Rem. CP 9,500
A Ltd’s Share of Capital Profit = ` 7,125 (75%)
A Ltd’s Share of RP. For consolidation (bal. fig.)
= ` 24,000 – ` 6,000 – 7,125
= ` 10,875
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 25
C. Minority Interest

Particulars Amount (`)
1. Share Capital (¼ x ` 80,000)
2. Share of Profit (as per B above) 20,000
6,000
Total 26,000
Case (ii)
A. Cost of control

Particulars ` `
(a) Cost of Investment
1. Amount Invested
(b) A Ltd’s share of Net Assets of B Ltd as on the date of acquisition
represented by
a) Paid up share capital (including bonus) 48,000 + 48,000 x ¼)
b) Capital Profit (48,000/64,000 x (43,000 – 16,000)
(c) Capital Reserve 60,000
20,250 60,000
80,250
20,250
B. Consolidated Profit and Loss Account
a) Closing Balance = ` 24,000
b) Minority Interest ( 20,000 x 24,000
80,000
) = ` 6,000
c) Pre-Acquisition Profit
Closing Balance as on 31.12.2010 ` 43,000
Less: Bonus Issue ` 16,000
Balance ` 27,000
A Ltd’s Share of Capital Profit ` 20,250
d) A Ltd’s Share of RP for consolidation: (Bal. Fig.)
= ` (24,000 – 6,000 – ` 20,250)
= ` 2,250 (Dr.) (Bal. Fig.)
C. Minority Interest

Particulars
(a) Share Capital (25% x 80,000) Amount (`)
20,000
(b) Share of Profit (as per B above) 6,000
Total 26,000
Case (iii)
A. Cost of Control

Particulars Amount (`) Amount (`)
(a) Cost of Investment
1. Amount Invested
(b) Share of Net Assets represented by
1) Share Capital
2) Pre-acquisition Profit
Upto year 2011 – 60/80 x 28,000
Year 2012 – 60/80 x 4,000 x 6/12
(c) Goodwill (a – b) 60,000
21,000
(1,500) 80,000
79,500
500
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 26
B. Consolidated Profit and Loss Account :
a) Closing Balance = ` 24,000
b) Minority Interest ( 20,000 x 24,000
80,000
) = ` 6,000
c) Pre-Acquisition Profit
Closing Balance as on 31.12.2011 ` 28,000
Less: Loss for 2012 upto 30.06.2012 (` 2,000)
Balance of A Ltd’s Share of Capital Profit ` 19,500
A Ltd’s Share of RP for consolidation. (bal. fig.)
= ` (24,000 – 6,000 – ` 19,500)
= ` 1,500 (Dr.) (Bal. Fig.)
C. Minority Interest

Particulars
(1) Share Capital Amount (`)
20,000

(2) Share of Profit (as per B above) 6,000
Total 26,000
5. (a) MANASI Ltd. leased a machine to SB Ltd. on the following terms:

Particulars ` in Lakhs
Fair Value of the Machine 4.00
Lease Term
(Payable at each year-end) 5 years
Lease Rental per annum 1.00
Guaranteed Residual Value 0.20
Expected Residual Value 0.40
Internal Rate of Return 15%
Depreciation is provided on straight line method at 10% per annum. Ascertain Unearned
Financial Income. Show necessary Journal Entries in the books of the Lessee in the first
year of operation. Tabulate for the lease period, the lease rentals segregated into
Finance charges and reduction of outstanding liability. 10
OR
(b) (i) A company purchased a plant for `50 lakhs during financial year 2012-2013 and installed
the same immediately. The price charged by the vendor included Excise Duty (Cenvat
Credit Available) of `5 lakhs. During this year, the Company also produced exciseable
goods on which Excise Duty chargeable is `4.5 lakhs. Assume that deferred Cenvat credit
will be available in the subsequent years.
Show the Journal Entries showing Cenvat Credit Treatment in 2012-13 and its disclosure in
the Balance Sheet as at 31.3.2013. 5
(ii) An investor buys a Stock option of X Ltd. in September 2009 with a strike price on 30th
September, `260 to be expired on 30th October, 2012. The premium is `30 per unit and the
market lot is 100. The margin to be paid is `120 per unit.
Show the accounting treatment in the books of investor (buyer) when:
(i) the option is settled by delivery of the asset, and
(ii) the option is settled in cash and the index price is `270 per unit. 5
Answer:
5. (a)As per AS-19 on Leases, Unearned Finance Income is the difference between (a) the
gross investment in the lease and (b) the present value of minimum lease payments
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 27
under a finance lease from the standpoint of the lessor, and any unguaranteed
residual value accruing to the lessor, at the interest rate implicit in the lease.
Gross Investment in the lease is the aggregate of
(a) minimum lease payments from the standpoint of the lessor, and
(b) any unguaranteed residual value according to the lessor.
Gross Investment= Minimum Lease Payments + Unguaranteed residual value
= (Total lease rent + Guaranteed Residual Value) + Unguaranteed
Residual Value
= [( ` 1,00,000 x 5 years) + (` 20,000)] + ` 20,000
= ` 5, 40,000 (i)
(i) Table showing present value of minimum lease payments (MLP) and
unguaranteed residual value (URV)

YEAR MLP (INCLUSIVE OF
URV) ` IRR – DISC. FACTOR @
15% PRESENT VALUE
1 1,00,000 0.8696 86,960
2 1,00,000 0.7561 75,610
3 1,00,000 0.6575 65,750
4 1,00,000 0.5718 57,180
5 1,00,000 0.4972 49,720
20,000 (GRV) 0.4972 9,944
5,20,000 3,45,164 (i)
20,000 (URV) 0.4972 9,944 (ii)
5,40,000 (a) (i) + (ii) 3,55,108 (b)
Unearned Finance Income = (a) – (b)
= ` (5, 40,000-3, 55,108)
= ` 1,84,892
JOURNAL ENTRIES IN THE BOOKS OF SB L TD.

Particulars Amount (`) Amount (`)
At the inception of lease
Machinery A/c Dr.
To, Manasi Ltd A/c
(Being lease of machinery recorded at present
value of minimum lease payments.) 3,45,164 3,45,164
At the end of first year of lease
Finance Charge A/c Dr.
To, manasi’s Ltd. A/c
(Being finance charges due for the 1st year) 51,775 51,775
Manasi’s Ltd A/c Dr.
To, bank A/c
(Being the lease rent paid to the lessor which
includes o/s liability of `48,225 and finance
charges of `51,775) 1,00,000 1,00,000
Depreciation A/c Dr.
To, machinery A/c
(being the depreciation provided @10% on
Straight Line Method) 34,516 34,516
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 28

Profit and Loss A/c Dr.
To, Depreciation A/c
To, Finance Charges A/c
(Being the transfer of depreciation and
finance charges to profit anf Loss A/c) 86,291 34,516
51,775
WORKING NOTES:
Table showing apportionment of lease payments by SB Ltd. between the finance
charges and the reduction of outstanding liability.

YEAR O/S LIAB. –
OP. BAL MINIMUM
LEASE FINANCE
CHARGES REDUCTION
IN
PRINCIPAL
AMOUNT O/S. LIAB
– CLOSING
BALANCE
1 3,45,164 1,00,000 51,775 48,225 2,96,939
2 2,96,939 1,00,000 44,541 55,459 2,41,480
3 2,41,480 1,00,000 36,222 63,778 1,77,702
4 1,77,702 1,00,000 26,655 73,345 1,04,357
5 1,04,357 1,00,000 15,654 84,346 20,011
5. b) (i)
Journal Entries

Particulars Amount (`) Amount (`)
1. Fixed assets A/c Dr.
CENVAT Credit Receivable
Capital Goods A/c Dr.
CENVAT Credit deferred
(capital Goods) A/c Dr.
To, Asset/ vendor/ Bank A/c
(being plant purchased, recorded, including
immediate CENVAT Credit available at 50%)
(Assumed credit is available in subsequent
years) 45,00,000
2,50,000
2,50,000 50,00,000
2. Excise Duty A/c Dr.
To, CENVAT credit receivable A/c
(Capital Goods)
(Being set off of CENVAT Credit during the year 2,50,000 2,50,000
3. Excise Duty A/c Dr.
To, bank
(Being balance Excise Duty payable `4,50,000,
`2,50,000 set off, now settled 2,00,000 2,00,000
Cenvat credit Deferred (Capital Goods) A/C will be shown under Assets- “Long term
Loan and Advances”
-Other Loans &Advances.
5. (b) (ii)
Journal entries in the books of investor/buyer
1. When the option is settled by delivery of the asset

Date Particulars Dr. Cr.
30.09.2012 Equity stock option premium (x ltd.) A/c Dr.
To Bank account
(Being premium paid on stock option of X Ltd. Puchase4
at ` 30 per unit for 100 units constituting one lot) 3,000 3,000
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 29

30.10.2012 Equity share of X Ltd. A/c Dr.
To Bank A/c
(Being call option exercised and share acquired) 26,000 26,000
30.10.2012 Profit and loss A/c Dr.
To Equity stock option premium A/c
(Being premium on option written off on exercise of
option 3,000 3,000
Note : No entries are made in respect of Margin payments since the buyer of option
contract is not required to pay any margin
2. When the option is settled in cash and the index price is `270 per unit

Date Particulars Dr. Cr.
30.09.2012 Equity stock option premium (X Ltd.) A/c Dr.
To Bank account
(Being premium paid on stock option of X. Ltd. purchased
at ` 30 per unit for 100 units constituting one lot) 3,000 3,000
30.10.2012 Bank A/c Dr. 1,000
To profit and loss A/c
[Being the profit on exercise of option received
Profit = market lot of 100 X (index price ` 270 – strike price `
260)] 1,000
30.10.2012 Profit & loss A/c Dr.
To Equity stock option premium
(Being premium on option written off on exercise of option) 3,000 3,000
6. (a)(i) From the following information you are required to calculate EVA: 8

12% Debt Capital `2,000 crores
Equity Capital `500 crores
Reserves and Surplus `7,500 crores
Capital Employed `10,000 crores
Risk Free Rate 9%
Beta Factor 1.05
Market Rate of return 19%
Equity (market) risk premium 10%
Operating Profit after Tax ` 2,100
Tax Rate 30%
(ii) From the following details, compute according to Lev and Schwartz model, the total
value of human resources of the employees skilled and unskilled groups.

Skilled Unskilled
(a) Annual average earning of an
employee till the age of retirement ` 80,000 `60,000
(b) Age of retirement 68 years 65 years
(c) Discount rate 20% 20%
(d) Number of employees in the group 40 30
(e) Average age 65 years 62 years
7
OR
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 30
(b) (i) From the information contained in the following income statements and Balance Sheet of X
Ltd. prepare the Cash Flow Statement for the year ended 31st March 2013 in accordance
with AS-3 (Revised):
Income Statement for the year ended March 31, 2013.

`
Net sales (A) 250,00,000
Less:
Cash Cost of Sales 195,00,000
Depreciation 8,00,000
Salaries and Wages 25,00,000
Operating Expenses 7,00,000
Provision for Taxation 9,50,000
(B) 244,50,000
Net Operating Profit (A – B) 5,50,000
Non- recurring Income – Profit on sale equipment 1,10,000
6,60,000
Retained Earnings and profits brought forward 12,50,000
19,10,000
Dividends declared and paid during the year 6,40,000
Profit and Loss account balance on 31.3.2013 12,70,000

The Balance Sheets of X Ltd. as on 31.03.2012 31.03.2013
` ` ` `
Equity and Liabilities
Shareholder’s Funds
Share Capital
Equity Shares of ` 10 each, fully paid up 35,00,000 45,00,000
Reserves and Surplus
Profit and Loss A/c 12,50,000, 12,70,000
Current Liabilities
Trade payables 26,60,000 25,50,000
Other payables:
Outstanding expenses 3,20,000 7,40,000
Income tax payable 1,30,000 31,10,000 1,45,000 34,35,000
Total 78,60,000 92,05,000
Assets
Non-current assets
Tangible assets
Land 5,00,000 10,00,000
Plant and machinery (at cost) 35,00,000
Less: Accumulated Depreciation 13,00,000 56,00,000
14,50,000 41,50,000
51,50,000
22,00,000
27,00,000
Current Assets
Inventories 25,50,000 10,40,000
Trade receivables 18,50,000 20,60,000
Cash and cash equivalents 7,00,000 8,80,000
Advances 60,000 51,60,000 75,000 40,55,000
Total 78,60,000 92,05,000
The original cost of the machine sold in 2012-13 was `8,00,000. 10
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 31
(ii) A Non-Banking Finance Company presents the following details of its advances as at 31st
March 2013:

Particulars ` lakhs
Standard Assets 16,800
Sub-Standard Assets 1,820
Secured Portion of Doubtful Debts:
Upto 1 year 320
One to three years 140
More than 3 years 40
Unsecured Portion of Doubtful Debts 174
Loss Assets 48
Compute the amount of provisions that must be made against the advances. 5
Answer:
6.(a) (i)

EVA = NOPAT – COCE
NOPAT = Net Operating Profit after Tax
COCE = cost of capital Employed

Debt Capital = `2,000 crores
Equity Capital = ` (500 + 7,500) crores = `8,000 crores
Capital employed = `(2,000 + 8,000) crores = `10,000 crores
Debt to Capital Employed = 2,000/10,000 = 0.20
Equity to capital employed = 8,000/10,000 = 0.80
Debt cost before tax
Less: Tax (30% of 12%)
Debt cost after tax = 12%
= 3.6%
= 8.4%
As per capital Asset Pricing Model (CAPM):

Cost of equity capital = Risk Free rate + beta Equity Risk Premium
OR
= Risk Free rate + Beta (Market rate – Risk Free rate)
= 9 + 1.05 x (19 – 9)
= 9 + 1.05 x 10 = 19.5%

WACC = Equity to CE x cost of Equity capital + debt to CE x
cost of debt
= 0.8 x 19.5% + 0.20 x 8.40%
= 15.60% + 1.68% = 17.28%

COCE = WACC x Capital employed
= 17.28 x 10,000 crores = 1,728 crores.
= `2,100 – `1,728
= `372.00
6.a (ii)

According to Lev and Schwartz’s model, the value of human capital is the present value of his
future earnings from employment.
Skilled Unskilled
Average annual earning of an
employee till retirement 80,000 60000
Age until retirement 3 3
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 32

Present value per employee
Discount factor (annuity
factor)at 20 % for 3 years = 2.1065 2.1065 0.833333 p.v. factor year 1
Present value of future earnings
until retirement 1,68,518.52 1,26,388.89 0.694444 p.v. factor year 2
Number of employees 40 30 0.578704 p.v. factor year 3
Value of Human resources 6740740.74 3791666.67 2.106481 annuity factor
year 3
Total Value 1,05,32,407.41
The value will change depending on the number of decimal places that the student has used.
There should be no penalty for a variation by a few thousands due to the decimals in the pv
factor.
If he student does not show the annuity factor, but has correctly worked out the figures, full credit
up to the stage may be given.
Instead of annuity factor, students may also take the factors shown on the last column and do
extra calculations for the same figures.
Then, the marks for the annuity factor may be awarded for
the annual discount factors.
In this case, the present
values will be: Skilled
per employee for 40
employees
Year 1 66,666.67 26,66,666.67
year 2 55,555.56 22,22,222.22
year 3 46,296.30 18,51,851.85
Total 1,68,518.52 67,40,740.74
Unskilled
per employee for 30
employees
Year 1 50,000 15,00,000
year 2 41,666.67 12,50,000
year 3 34,722.22 10,41,666.67
Total 1,26,388.89 37,91,666.671
Total 1,05,32,407.41
or
6.b(i)
Cash Flow Statement of company X Ltd for the year ending March, 31st, 2013

Particulars Amount (`)
Cash flow from operating activities
Net profit before tax and extra ordinary item 15,00,000
Add : Depreciation 8,00,000
Opening profits before working capital charges 23,00,000
Increase in Debtors (2,10,000)
Decrease in stock 15,10,000
Increase in Advances (15,000)
Decrease in Sundry Creditors (1,10,000)
Increase in outstanding expenses 4,20,000
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 33

Cash generated from operations 38,95,000
Income tax paid 9,35,000
Net cash from operation (A) 29,60,000
Cash flows from Investment activities:
Purchase of land (5,00,000)
Purchase of plants machinary (29,00,000)
Sale of machinery 2,60,000
Net cash used in investment activities (B) (31,40,000)
Cash flows from Financing activities :
Issue of share capital 10,00,000
Dividends paid (6,40,000)
Net Cash from Financing Activities 3,60,000
Net increase in cash and cash equivalents (A+B+C) 1,80,000
Cash and cash equivalents at the beginning 7,00,000
Cash and cash equivalents at the end 8,80,000
Workings :
Plant & Machinery Account

Dr. ` Cr. `
To balance b/d 35,00,000 By sales of assets 8,00,000
To cash/Bank (Purchase)
(bal. fig.) 29,00,000 By balance c/d 56,00,000
64,00,000 64,00,000
Accumulated Depreciation on Plant & Machinary Account

Dr. ` Cr. `
To sale of assets (accumulated
depreciation) 6,50,000 By balance b/d 13,00,000
To balance c/d 14,50,000 By Profit & Loss
(provisional) 8,00,000
21,00,000 21,00,000
Sale of Asset (Machinary) Account

Particulars `
Original Cost 8,00,000
Less : Accumulated depreciation 6,50,000
Net cost 1,50,000
Profit on sale of asset 1,10,000
Sale Proceeds from Asset sales 2,60,000
6) b) (ii)
The amount of provision that must be made by the NBFC as on 31st March against its
advances is:

Particulars Amt as on 31-
3-2013 Provision % Of
Outstanding Provision
Amount
Standard Assets 16800 -Nil- 0
Sub Standard Assets 1820 10 % 182
Secured Portion of Doubtful Debts
Up to 1 year 320 20 % 64
1-3 years 140 30 % 42
> 3 years 40 50 % 20
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 34

Unsecured Portion of Doubtful Debts 174 100 % 174
Loss Assets 48 100 % 48
Total 530
7. (a) Srihari Ltd. granted 500 options to each of its 2,500 employees in 2005 at an exercise price
of `50 when the market price was the same. The constructual life (vesting and exercise
period) of the options granted is 6 years with the vesting period and exercise period being 3
years each. The expected life is 5 years and the annual forfeitures are expected at 3%. The
fair value per option is arrived at ` 15. During 2006, the management decides to revise its
estimated forfeiture rate at 10% per annum. Of the 2,500 employees, 1,900 employees have
completed the 3 year vesting period. 1,000 employees exercise their right to obtain shares
vested in them in pursuance of ESOP at the end of 2009 and 500 employees exercise their
right at the end of 2010. The rights of the remaining employees expire unexercised at the
end of 2010. The face value per share is ` 10.
Show the necessary Journal Entries for the above information. 10
OR
(b) Explain the working principle and the features of XBRL (Extensible Business Reporting
Language). 10
Answer:
7. (a) JOURNAL ENTRIES IN THE BOOKS OF SR1HARI LTD,

Year Particulars Dr. (`) Cr. (`)
2005 a) Employee Compensation Expenses A/c Dr.
To, Employees Stock Options Outstanding
(Being the compensation expenses recognised
in respect of the ESOP) 57,04,205 57,04,205
b) Profit and Loss A/c Dr.
To, Employees Compensation Expenses A/c
(Being expenses of the year transferred to Profit
and Loss A/c 57,04,205 57,04,205
2006 a) Employee Compensation Expenses A/c Dr.
To, Employee Stock Options Outstanding
(Being the compensation expenses recognised
in respect of ESOP) 34,08,295 34,08,295
b) Profit and Loss A/c Dr.
To, Employee Compensation Expenses A/c
(Being expenses of the year transferred to Profit
and Loss A/c 34,08,295 34,08,295
2007 a) Employee Compensation Expenses A/c Dr.
To, Employee Stock Options Outstanding
(Being the compensation expenses recognised
in respected of ESOP) 51,37,500 51,37,500
b) Profit and Loss A/c Dr.
To, Employee Compensation Expenses A/c
(Being expenses of the year transferred to Profit
and Loss A/c) 51,37,500 51,37,500
2009 a) Bank A/c Dr.
Employee Stock Options Outstanding A/c Dr.
To, Share capital A/c
To, Securities Premium A/c
(Being shares issued to employees against
options vested in them in pursuance of ESOP) 2,50,00,000
75,00,000 50,00,000
2,75,00,000
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 35

2010 a) Bank A/c Dr.
Employees Stock Options Outstanding A/c Dr.
To, Share capital A/c
To, Securities Premium A/c
(being shares issued to employed against
options vested in them in pursuance of the
ESOP) 1,25,00,000
37,50,000 25,00,000
1,37,50,000
b) Employees Stock Options Outstanding A/c Dr.
To, general reserve
(Being the balance standing to the credit of
stock options outstanding account, in respect of
vested options expired unexercised, transferred
to General Res. A/c) 30,00,000 30,00,000
WORKING NOTES:
1. FAIR VALUE OF OPTIONS RECOGNISED AS EXPENSES

Year
2005 Number of Options expected to vest = 500 x 2,500 x 0.97 x 0.97 × 0.97
= 11, 40,841 options
Fair value of Options expected to vest = 1 1 , 40,841 x ` 15 = ` 1,71,12,615
One third of the fair value recognised as expenses = `1,71,12,615/3
= `57,04,205
2006 Fair value of Options revised in the year = 500 x 2,500 x 0.90 x 0.90 x 0.90 x `15
= ` 1,36, 68,750
Revised cumulative expenses in the year 2006 = `1,36, 68,750 x 2/3
= `91, 12,500
Less. Already recognised in year 2005 = ` 57, 04, 205
Expenses to be recognised in year 2006 = ` 34, 08,295
2007 Number of options actually vested = 1,900 x 500 = 9, 50,000
Fair value of options actually vested = 9, 50,000 x 15 = 1,42,50,000
Less. Expenses recognised till the year 2007 = 91,12,500
Balance amount to be recognised 51,37,500
2. AMOUNT RECORDED IN SHAME CAPITAL ACCOUNT AND SECURITIES PREMIUM ACCOUNT
UPON ISSUE OF SHARES

Particulars 2009 2010
Number of employees exercising option 1,000 500
Number of shares issued upon exercise of option @ 500
per employee 5,00,000 2,50,000
Exercise price received @ ` 50 per share 2,50,00,000 1,25,00,000
Corresponding amount recognised in the Employee
Stock Options Scheme A/c @ ` 15 per option 75,00,000 37,50,000
Total consideration 3,25,00,000 1,62,50,000
Amount to be recorded in Share capital
A/c @ ` per share 50,00,000 25,00,000
Amount to be recorded in Securities
Premium A/c @ `55 per share (`65 – `10) 2,75,00,000 1,37,50,000
3,25,00,000 1,62,50,000
7) b) Working principle and features of XBRL
Working principle:
XBRL is a member of the family of languages based on XML- Extensible Markup
Language, which is the standard for the electronic interchange of data between
Suggested Answer_Syl12_Dec13_Paper 18
Board of Studies, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 36
businesses and the internet. Under XML, ‘identifying tags’ are applied to items of data so
that they can be more efficiently processed by computer software.
XBRL is a more powerful and flexible version of XML and more suited specifically for
business and financial information. It enables unique identifying tags to items of financial
data. For example, ‘asset’ is tagged as a numerical value, the characteristic of having a
normal debit balance, its relationship with other items such as equity or liabilities, etc. The
items are also tagged as whether monetary, or a fraction or a percentage. XBRL allows
labels in any language for an item. XBRL provides efficient grouping, easier consolidation
and comparison among companies, supports standard tasks involved in compiling,
storing and using business data. Data is converted into XBRL by mapping process or
generated by XBRL software. Then the data can be searched, selected, exchanged,
analysed by the computer or published for ordinary viewing.
Main Features:
(i) Specifications: they provide the fundamental technical definition of how XBRL works.
New specifications are developed from requirements statements. They are initially
discussed as Internal Working Drafts within the consortium and then released as
Public Working Drafts. After careful review, they are released as official XBRL
Recommendations.
(ii) Taxonomies: These refer to classification of the different items. The items are also
given hierarchical structures and therefore taxonomies also represent relationships.
Taxonomies have further components:
(a) Schema: These store information like names, ids and other characteristics of the
taxonomy elements. The schema functions to show the computer how it should
process and represent accounting terms.
(b) Elements: These are defined in the schema and are business concepts- like ‘asset’ is
the element name, type is monetary, balance is ‘debit’, etc.
(c) Link bases: These are a collection of links, which themselves are a collection of
locators (that reference a concept and provide its label), arcs (that link concepts)
and resources.
(iii) Instance documents: These are business reports in electronic format containing facts
defined by the taxonomies, values and the context. These are created according to
the rules of XBRL.
These instant documents in turn contain business facts, which are either item facts
(holding a single value) or tuples (facts with multiple values).
8. (a) (i) Write a note on Indian Government Accounting Standard-5 relating to Loans and

Advances made by Governments. 7
(ii) Present a specimen report relating to the ‘Financial Position’ portion in the review of
accounts by the Comptroller and Auditor General of India.
OR 8
(b) (i) Write a note on the Indian Government Accounting Standard-3 (IGAS-3) on cash flow
statements of the Government. 10
(ii) What are the organisations that are subject to the audit of Comptroller and Auditor
General of India? 5
Answer:
8.(a) (i)
Indian Government Accounting Standard – 5 : Loans and Advances made by
Governments
This Standard applies only to government accounts maintained on a cash basis.
This Standard lays down the norms for recognition, measurement, valuation and reporting
of loans and advances made by the Union and State Governments in their respective
Suggested Answer_Syl12_Dec13_Paper 18
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financial statements to ensure adequate disclosure, accurate, realistic and uniform
accounting practices consistent with the best international practices.
The Government of India has been empowered under proviso (2) of Article 293 of the
Constitution of India to make loans to the States, subject to such conditions as may be
laid down by or under any law made by Parliament.
The sums required for making such loans are chargeable to the Consolidated Fund of
India.
The Union Government provides financial assistance to State Governments in the form of
plan and non-plan assistance, for both developmental and non-developmental
purposes.
The Union Government also provides loans to Foreign Governments, Government
Companies and Corporations, Non-Government Institutions and Local Bodies and also
recoverable advances to Government servants.
The State Governments disburse loans to Government Companies, Corporations, Local
Bodies Autonomous Bodies, Co-operative Institutions, Statutory Corporations, quasipublic bodies and other Non-Government/ private institutions for development and
socio-economic purposes. The State Governments also disburse recoverable advances
to government servants.
8)a)(ii)
Specimen Report relating to the ‘Financial Position’ portion for review by the
Comptroller and Auditor General of India.

2012 – 2013 2011 -12 2010- 2011
Liabilities
(a) Paid-up Capital
(i) Government
(ii)Deposits awaiting allotment of shares
(b) Reserves and Surplus
(i) Free Reserves and Surplus
(ii) Share premium account
(iii) Capital reserves
(c) Borrowings
(i) From Government of India
(ii) From Financial Institutions
(iii) Foreign Currency loans
(iv) Cash Credit
(v) Others
(vi) Interest accrued and due
(d) (i) Current Liabilities and Provisions
(ii) Provision for gratuity
Total
Assets
(e) Gross Block
(f) Less: Depreciation
Suggested Answer_Syl12_Dec13_Paper 18
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(g) Net Block
(h) Capital Work-in – progress
(i) Investments
(j) Current Assets, Loans and advances
(k) Miscellaneous expenditure not written off
Total
(m) Working Capital (j – d (i) – c(vi))
(n) Capital Employed (g + m)
(o) Net Worth (a + b(i) + b(ii) – k)
(p) Net Worth per rupee of paid capital (in `)
8)b)(i)
IGAS – 3 – Indian Government Accounting Standard – 3 relating to cash flow statements
of the Government.
The cash flow statement identifies the sources of cash inflows- whether from taxes, fines,
fees, borrowings or sale of capital assets and the ways it has been expended- whether
operating costs, acquisition of capital asset, retirement of debt, etc.
These details are disclosed by appropriate classification of changes in cash and cash
equivalents during the period into operating, investing and financing activities.
The Cash Flow Statement should be presented as an integral part of the Financial
Statements of the State and Union Governments and should comply with the
requirements of this Standard.
Transactions that do not require the use of cash or cash equivalent should be excluded
from this statement.
Some activities that do not have a direct impact on the cash flows- for example- interest
payable on provident fund deposits of employees or conversion of debt into equity of an
entity. These are to be excluded from the cash flow statements, but their impact should
be disclosed in the notes to the Cash Flow Statement in a way that provides all relevant
information about these activities.
Information about cash flows may be useful to users of the Government Financial
Statements in assessing its cash flows, compliance with legislation, regulations and
authority from budgets where appropriate.
Cash flow statements are used to predict the future cash requirements, give information
about the Government’s ability to generate cash flows and also determine the changes
in the nature and scope of its activities. It also is a means for the government to
discharge its accountability for the cash inflows and outflows during the reporting
period.
Cash Flow Statements, when used along with the other financial statements enable users
to study and evaluate the changes in financial structure in terms of liquidity and
sustainability and also the Government’s ability to adapt to changing circumstances and
opportunities.
Historical cash flows are used as an indicator of the timing and certainty of future cash
flow expectations.
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8) b) (ii)
Organisations subject to the audit of the Comptroller and Auditor General of India
The following are the organisations:
(i) All the Union and State government Departments and offices including Indian
Railways,Posts and Telecommunications.
(ii) About 1200 public commercial enterprises controlled by the Union and State
governments, i.e. Government companies and corporations.
(iii) Around 400 non-commercial autonomous bodies and authorities owned or controlled
by the union or the States.
(iv) Over 4400 authorities and bodies substantially financed from Union or State revenues.