Financial Reporting - November 2023

1. The extracts of the Balance Sheets of Hammer Ltd. and its subsidiary Sleek 49 Ltd. as on 315 March, 2023 are given below : Note | Hammer Ltd. | Sleek Ltq, Particulars No. ® ®) I ASSETS A. Non- Current Assets Property, Plant and Equipment 1 6,00,000 | — 3,25,000 Intangible Assets 2 1,25,000 75,000 Investments 6,25,000 |} —1,25,000 B. Current Assets Inventories 1,25,000 | —1,60,000 Financial Assets Trade receivables 3,25,000| — 2,90,000 Cash and Cash equivalents 1,50,000 |…

2. (a) As per the provisions of section 135 of the Companies Act, 2013 read 8 with relevant rules, circulars and notifications related to ‘Corporate Social Responsibility’ (CSR), discuss the following situations : (i) A company is formed under section 8 of the Companies Act, 2013 to undertake charitable activities. The management of the Company is of the opinion that since all the activities of the Company are charitable in the normal course of business, the CSR provisions are not…

Ore Exploration Ltd. is engaged in the manufacturing of drilling and 14 mining equipment for over last 25 years. The management of the company is planning to expand the manufacturing activities for which funds are needed. On 1* April, 2019, to meet out the financial requirement Ore Exploration Ltd. issued 50,000, Compulsory Convertible Cumulative Preference Shares (CCCPS) of % 100 each. These preference shares carry a coupon rate of 12% p.a. and is payable every year. The Company has substantial…

(a) A Ltd. announced a stock appreciation right (SAR) on 1* April, 2020 for each of its employees. The scheme gives the employees the Tight to claim cash payment equivalent to an excess of market price of Company shares on exercise date over the exercise price of % 250 per share in respect of 100 shares, subject to a condition of continuous employment of 3 years. The SAR is exercisable after 31 March, 2023 but before 30" June, 2023. The…

(c) Beauty Ltd. purchased a patent right of a face-wash on 1* April, 2020 for % 4,20,000; which has a legal life of 10 years. Due to the highly competitive nature of the product, the management of the company estimates a useful life of only 6 years. Straight line amortization is determined by the management to be the best method. As at 1st April, Marks 2021, management is uncertain that the process can actually be made economically feasible and decides…