Financial Reporting - November 2017 MTP

A Ltd. leased a machinery to B Ltd. on the following terms: (` in Lakhs) Fair value of the machinery Lease term 20.00 5 years Lease Rental per annum Guaranteed Residual value 5.00 1.00 Expected Residual value Internal Rate of Return 2.00 15% Depreciation is provided on straight line method @ 10% per annum. Ascertain unearned financial income. (b) ABC Ltd. is installing a new plant at its production facility. It has incurred these costs:

Please advise ABC Ltd. on the costs that can be capitalized in accordance with AS 10 (Revised). (c) Prakash Ltd. purchased assets costing Rs. 5,000 lakh on 01.04.2016 payable in foreign currency (US$) on 05.04.2017. Exchange rate of 1 US $ = Rs. 50.00 and Rs. 54.98 as on 01.04.2016 and 31.03.2017 respectively. The company also obtained a soft loan of US $ 1 lakh on 01.04.2016 payable in three annual equal instalments. First instalment was due on 01.05.2017. You…