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CA Intermediate: Mock Test Paper (1) -Accounting Nov 2020

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Test Series: October, 2020 MOCK TEST PAPER INTERMEDIATE (NEW) : GROUP I PAPER 1: ACCOUNTING Question No. 1 is compulsory. Answer any four questions from the remaining five questions. Wherever necessary suitable assumptions may be made and disclosed by way of a note. Working Notes should form part of the answer. (Time allowed: Three hours) 1. (Maximum Marks: 100) (a) Om Ltd. purchased an item of property, plant and equipment for US $ 50 lakh on 01.04.2019 and the same was fully financed by the foreign currency loan [US $] repayable in five equal instalments annually. (Exchange rate at the time of purchase was 1 US $ = ` 60]. As on 31.03.2020 the first instalment was paid when 1 US $ fetched ` 62.00. The entire loss on exchange was included in cost of goods sold. Om Ltd. normally provides depreciation on an item of property, plant and equipment at 20% on WDV basis and exercised the option to adjust the cost of asset for exchange difference arising out of loan restatement and payment. Calculate the amount of exchange loss, its treatment and depreciation on this item of property, plant and equipment. (b) On 01.04.2017, XYZ Ltd. received Government grant of ` 100 Lakhs for an acquisition of new machinery costing ` 500 lakhs. The grant was received and credited to the cost of the assets. The life span of the machinery is 5 years. The machinery is depreciated at 20% on WDV method. The company had to refund the entire grant in 2 nd April, 2020 due to non-fulfilment of certain conditions which was imposed by the government at the time of approval of grant. How do you deal with the refund of grant to the Government in the books of XYZ Ltd. as per AS 12? (c) (i) Entity A carried plant and machinery in its books at ` 2,00,000 which were destroyed in a fire. These machines were insured 'New for old' and were replaced by the insurance company with new machines of fair value ` 20,00,000. The old destroyed machines were acquired by the insurance company and the company did not receive any cash compensation. State, how Entity A should account for the same? (ii) Omega Ltd, a supermarket chain, is renovating one of its major stores. The store will have more available space for store promotion outlets after the renovation and will include a restaurant. Management is preparing the budgets for the year after the store reopens, which include the cost of remodelling and the expectation of a 15% increase in sales resulting from the store renovations, which will attract new customers. Decide whether Omega Ltd. can capitalize the remodelling cost or not as per provisions of AS 10 Property plant & Equipment . (d) What do you mean by the term cash and cash equivalent as per AS 3? From the following information of XYZ Limited, calculate cash and cash equivalent as on 31-03-2019. Particulars Amount (`) Cash balance with Bank Fixed Deposit created on 01-11-2018 and maturing on15-07-2019 Short Term Investment in highly liquid Sovereign Debt Mutual fund made on 01-03-2019 (having maturity period of less than 3 months) Bank Balance in a Foreign Currency Account in India 1 The Institute of Chartered Accountants of India 10,000 75,000 1,00,000 $ 1,000

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