Financial Reporting - Nov 2023 RTP

Mini Limited is a manufacturing entity in textile industry. Mini Limited decided to reduce the cost of manufacturing by setting up its own power plant for their captive consumption. As per market research report, there was non-operational power plant in nearby area. Hence, it decided to acquire that power plant which was having capacity of 80MW along with all entire labour force. This Power entity was owned by another entity Max Limited. Mini Limited approached Max Limited for acquisition of…

(a stand-alone entity) has a functional currency of USD and needs to translate its financial statements into the presentation currency (INR). The following is the draft financial statements of Infotech Global Ltd. prepared in accordance with its functional currency. Balance Sheet Particulars 31 st March, 20X3 31 st March, 20X2 Property, plant and equipment 50,000 55,000 Trade Receivables Inventory 68,500 8,000 56,000 5,000 Total assets 40,000 1,66,500 35,000 1,51,000 Share Capital 50,000 50,000 Retained earnings 29,500 18,000 Total Equity 79,500…

Entity A owns all the share capital of Entity B and controls Entity B. On 1 st April, 20X2, Entity A acquired a building from Entity B, for ` 600 lakhs, that the group plans to use as its new head office. Entity B had purchased the building from a third party on 1 st April, 20X1 for ` 525 lakhs. At that time, the building was assessed to have a useful life of 21 years and a residual value…

Ishwar Ltd. holds investments in Vinayak Ltd. The draft balance sheets of two entities at 31st March, 20X4 were as follows: Particulars Ishwar Ltd. ` in ‘000s Vinayak Ltd. ` in ‘000s 26,20,000 18,50,000 21,15,000 47,35,000 18,50,000 Inventories 6,00,000 3,75,000 Trade Receivables 4,50,000 3,30,000 Assets Non-current Assets Property, Plant and Equipment Investment Total non-current assets Current Assets PAPER – 1 : FINANCIAL REPORTING Cash and Cash Equivalents 15 75,000 60,000 11,25,000 7,65,000 58,60,000 26,15,000 Share Capital (` 1 shares) 7,00,000…

An entity opens a new factory and receives at the beginning of the year a government grant of ` 15,000 in respect of capital equipment costing ` 1,00,000. It depreciates all plant and machinery at 20% p.a. using straight-line method. Assume that there is reasonable assurance that the conditions attached to the grant will be fulfilled. For year 1, pass the necessary Journal Entries and show the presentation of the effect of this grant in both Balance Sheet and Statement…

In its financial statements for the year ended 31 st March, 20X2, Y Ltd. reported ` 73,500 revenue (sales), ` 53,500 cost of sales, ` 6,000 income tax expense, ` 20,000 retained earnings at 1 st April, 20X1 and ` 34,000 retained earnings at 31st March, 20X2. In 20X2-20X3, after the 20X1-20X2 financial statements were approved for issue, Y Ltd. discovered that some products sold in 20X1-20X2 were incorrectly included in inventories at 31 st March, 20X2 at their cost…

1st April, 20X1, an entity paying tax at 30% acquired a non-tax-deductible office building for ` 1,00,000 in circumstances in which Ind AS 12 prohibits recognition of the deferred tax liability associated with the temporary difference of ` 1,00,000. The building is depreciated over 10 years at ` 10,000 per year to a residual value of zero. The entity’s financial year ends on 31st March. On 1 st April, 20X2, the carrying amount of the building is ` 90,000, and…

A company engaged in the provision of Information Technology Products and Services incurred following expenditure during the development phase of its software product that is to be offered to its customers. The entity also purchases software from third parties for incorporating into its end software product offered to its customers. The company is in the process of launching it in the market for licensing to customers. The company also takes services of external professional software developers for such software development…