prime academy 31st session model exam - ipcc – .prime / me31 / ipcc 1 prime academy 31st session

Download PRIME ACADEMY 31st SESSION MODEL EXAM - IPCC – .prime / me31 / ipcc 1 prime academy 31st session

Post on 18-Jul-2018




0 download

Embed Size (px)


  • PRIME / ME31 / IPCC 1



    ACCG No. of Pages: 5 Total Marks: 100 No of Questions: 6 Time Allowed: 3 Hrs

    All are compulsory

    Working notes should form part of the answers


    (i) What are adjusting events as per AS-4.

    (ii) List the order of payment to creditors,on dissolution of partnership.

    (iii) As per AS-16, what are qualifying assets.

    (iv) When is a change in accounting policy,not deemed to be a change?

    (v) When should capitalization of borrowings costs cease?

    (vi) What does economic life of an asset mean?

    (vii) A liquidator is entitled to receive remuneration @2% of the assets realized and 3% of the amount distributed among the unsecured creditors and preferential creditors. The assets realized Rs.25,00,000 against which payment is made as follows:

    Liquidation expenses:Rs.25,000 Preferential creditors: Rs.75,000 Secured creditors -Rs.10,00,000. Calculate the remuneration payable to the liquidator.

    (viii) A ltd. issued 1,00,000 equity shares .The whole of the shares were underwritten by X-40% Y-30% and Z- 30%.Application for 80,000 shares were received in all, out of which application for 20,000 shares were marked X,10,000 had that of Y and 20,000 shares had that of Z .The remaining applications did not bear any stamp .Show the liability of the under writers.

    (ix) What are loss assets?

    (x) How would the following expenditure be allocated among the departments

  • PRIME / ME31 / IPCC 2

    a) Advertisement expenses b) Interest on borrowed capital c) Rent d) Depreciation on assets

    (10x2 =20 Marks)

    2. The following is the Trial Balance of the Nairobi Branch of B Ltd of Bombay as on 31st March, 2010:

    Shillings Shillings Land and Buildings 1,50,000 Plant and Machinery 3,00,000 Furniture and Fittings 20,000 Stock April 1, 2009 56,000 Purchases 2,40,000 Goods from head office 80,000 Wages 30,000 Carriage inwards 5,000 Sales 6,16,000 Salaries 25,000 Rent, Rates and Taxes 5,000 Insurance 4,000 Trade expenses 3,000 Head office Account 2,40,000 Sundry creditors 18,000 Sundry debtors 30,000 Cash in hand and at Bank 10,000 Bills payable 84,000 9,58,000 9,58,000

    The stock at Nairobi on 31st March, 2010 was 30,000 shillings. The following were the exchange rates:

    When fixed assets were acquired Re 1=1.50 shillings On April 1, 2009 Re 1=0.90 shilling On March 31, 2010 Re 1=0.92 shilling Average Re 1=0.91 shilling

    Goods from head office were invoiced in head office books at Rs 90,000. The branch account in head office books shows a debit balance of Rs 1,62,000.Convert the Nairobi Trial Balance and prepare the Nairobi trading and profit and loss account after charging 10% depreciation on Plant and Furniture. Also give the Nairobi Branch A/c in H.O. Books.

    (16 Marks)

  • PRIME / ME31 / IPCC 3

    3. White Ltd. agreed to acquire the business of Green Ltd. As on March 31, 2010. The summarised balance sheet of Green Ltd. at that date was as follows.

    Liabilities Rs Assets Rs Share Capital in fully paid equity shares of Rs 10 each 6,00,000 Goodwill 1,00,000 General Reserve 1,70,000 Land and Buildings 2,30,000 Profit and loss account 1,10,000 Plant and Machinery 4,10,000 12% Debentures 1,00,000 Stock in trade 1,68,000 Creditors 20,000 Debtors 36,000 Cash at Bank 56,000 10,00,000 10,00,000

    The consideration payable by White Ltd was agreed as follows:

    (1) A 0cash payment equivalent to Rs 2.50 for every Rs 10 share in Green Ltd. (2) The issue of 90,000 Rs. 10 equity shares, fully paid in White Ltd. having an agreed value for Rs 15

    per share. White Ltd also agreed to discharge the 12% debentures of Green Ltd at a premium of 20% by allotment of its 14% debentures at 96 per cent.

    When computing the agreed consideration, the directors of White Ltd valued the following assets at values noted against them:

    Rs Land and Buildings 7,50,000 Plant and Machinery 4,50,000 Stock in trade 1,42,000 Debtors Subject to an allowance of 5% to cover doubtful debts The cost of liquidation of Green Ltd came to Rs 5,000 which was borne be White Ltd. Give Ledger accounts to close the books of the Green Ltd and draft journal entries required in the books of White Ltd.

    (16 Marks)

    4. (a) From the following figures appearing in the books of Fire Insurance division of a General Insurance Company , show the amount of claim as it would appear in the Revenue Account for the year ended 31st March , 2010:

    Direct Business Re-Insurance RS RS

    Claim paid during the year 46,70,000 7,00,000 Claim Payable 1stApril 2009 7,63,000 87,000 31stMarch 2010 8,12,000 53,000 Claims Received 2,30,000 Claims Receivable-1st April 2009 65,000 31st March 2010 1,13,000 Expenses of management 2,30,000

    (Expenses of management includes Rs 35,000 surveyors fee and Rs 45,000, legal expenses for settlement of claims)

  • PRIME / ME31 / IPCC 4

    (8 Marks) (b)The Balance sheet of A, B, C and D is given below as on 31st March 2010.

    Liabilities Rs Assets Rs Sundry creditors 20,000 Cash 1,000 Capital Accounts: Stock 8,000 A 60,000 Debtors 15,000 B 40,000 Plant and Equipment 80,000 C 6,000 Goodwill 20,000 Capital Account

    D 2,000 1,26,000 1,26,000

    The partners who have been hither to sharing the profits and losses in the ratio 4:3:2:1 decided to wind up the business as C and D become insolvent. A sum of Rs 10,000 is realised from C whereas nothing could be realised from D. Stock and debtors realised Rs 4,000 and Rs 9,000 respectively. Plant and equipment are sold for Rs 50,000 while Goodwill is valueless. The cost of realisation amount to Rs 6,000 while sundry creditors have to be paid their claims in full. One of the creditors for Rs 6,000 in the books of the firm actually claimed Rs 12,000 and the claim was settled at Rs 10,000 by arbitration .

    Close the books of the firm by showing the relevant ledger accounts.Follow the rule in Garner vs. Murray Case

    (8 Marks) 5. (a) D Electricity Co. earned a profit of Rs 26,98,500 after paying Rs 1,40,000 @ 14% as debenture

    interest for the year ended 31st March 2010. The following further information is supplied to you:- Rs

    Fixed Assets 3,60,00,000 Depreciation written off 1,00,00,000 Loan from electricity Board 80,00,000 Reserve Fund investments as par @ 10% 20,00,000 Contingencies Reserve Investments at par @ 10% 15,00,000 Tariff and dividends control reserve 2,00,000 Security deposits of customers 3,00,000 Customers contribution to assets 1,00,000 Preliminary expenses 80,000 Monthly average of current assets, including amount due from customers Rs 5,00,000


    Development reserve 5,00,000 Show the disposal of profits mentioned above.

    (8 Marks)

    (b) In liquidation which commenced on 1st April,2010 certain creditors could not receive payment out of the realization of assets and out of contribution from A list contributories. The following are details of certain transfers which took place after 1st April, 2009:

  • PRIME / ME31 / IPCC 5

    Shareholders Number of shares transferred

    Date of ceasing to be member

    Creditors remaining unpaid and outstanding on the date of ceasing to be member

    A 1,000 1st May,2009 6000 B 1,500 1st July,2009 7500 C 300 1st Nov,2009 8000 D 200 1st Feb 2010 9500 All the shares were of Rs.10 each,Rs.6 paid up. Ignoring expenses, remuneration to liquidator etc., Show the amount to be realized from the various parties listed above. (8 Marks)

    6. (a) Rs Net profit for the current year 1,00,00,000 No. of equity shares outstanding 50,00,000 Basic earnings per share 2.00 No. of 12% convertible debentures of Rs 100 each 1,00,000 Each debenture is convertible into 10 equity shares. Interest expense for the current year 12,00,000 Tax relating to interest expense (30%) 3,60,000 Compute Diluted Earnings Per Share. (4 Marks)

    b) Explain the treatment for refund of government grants as per AS-12. (4 Marks)

    c) A major riot occurred in a factory on the 10th of April,2010-10 days after the year end and closure of accounts. The loss was estimated at Rs 10 crores out of which 6 crores will be recovered from the insurers .Explain briefly how this loss should be treated in the final accounts for the year ending 31-3-2010 .

    (4 Marks) d) Write a short note on Intangible asset.

    (4 marks)

  • PRIME / ME31 / IPCC 6




    (i) Adjusting Events

    An event after the balance sheet may require adjustment of reported values of assets, liability, expenses, income and equity for the accounting period, if the event is such as to provide further evidence of conditions that existed at the balance sheet date. Such events are adjusting events. For example if a fraud during the accounting period is detected after the balance sheet date but before approval of the financial statement, it is necessary to recognize the loss and change the reported values concerned elements of financial statement.

    (ii) Payments are first to be made towards payment of government dues, followed by repayment

    to secured creditors Unsecured creditors, partners loa


View more >