Title 5.Paper 17.pdf ✅

CA CMA NOTES COMMUNITY JOIN OUR ALL GROUPS AND COMMUNITY FOR LATEST NOTES AND OTHER IMPORTANT UPDATES TELEGRAM WHATSAPP INSTAGRAM CLICK HERE CLICK HERE CLICK HERE OUR MAIN GROUP - CLICK HERE ***ALL SUGGESTED ANSWERS HAVE BEEN DOWNLOADED FROM OFFICIAL WEBSITE OF ICMAI*** (SUGGESTED ANSWERS - https://icmai.in/studentswebsite/exam_suggestedanswers.php) ***WE ARE HELPING ALL THE CMA STUDENTS BY GETTING ALL THE PAST PAPERS AT ONE PLACE.*** ALL THANKS TO ICMAI FOR UPLOADING THIS SUGGESTED ANSWERS
Suggested Answer_Syllabus 2016_Jun2017_Paper 17 Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 1 FINAL EXAMINATION GROUP - IV (SYLLABUS 2016) SUGGESTED ANSWERS TO QUESTIONS JUNE - 2017 Paper-17 : CORPORATE FINANCIAL REPORTING Time Allowed : 3 Hours Full Marks : 100 The figures in the right side indicate full marks. Where considered necessary, suitable assumptions may be made and clearly indicated in the answer. Both the sections are to be answered subject to instructions given against each. [All working must form part of your answer.] Section – A Answer the following questions. 1. Choose the most appropriate answer from the four alternatives given: (1 Mark for right choice & 1 Mark for justification): 2x10=20 (i) Jaggu Ltd. obtained a contract for a construction of a building for ` 95 Lakhs. As on 31st March, 2017, it incurred a cost of ` 22 Lakhs and expected that there will be ` 58 Lakhs more needed for completing the building. It has received ` 18 Lakhs as progress payment. Degree of completion will be (A) 23.16% (B) 27.5% (C) 22.5% (D) 84.21% (ii) In case of amalgamation in the nature of purchase, Fixed Assets; Current Assets; Total Debts; Debit balance of Profit and Loss A/c and Purchase Consideration are `25,60,000; `12,50,000; `11,30,000; `2,20,000; and `24,00,000 respectively. The amount of Capital Reserve of Goodwill will be (A) Goodwill ` 60,000 (B) Goodwill ` 2,80,000 (C) Capital Reserve ` 60,000 (D) Capital Reserve ` 1,60,000 (iii) Chandra Ltd. acquired a machine for ` 65 Lakhs on 1st July, 2014. It has a life of 5 years with a salvage value of ` 7 Lakhs. As on 31st March, 2017, if present value of future cash flows is `28 Lakhs and net selling price is `25 Lakhs, impairment loss will be (A) ` 3 Lakhs (B) ` 30 Lakhs (C) ` 18.15 Lakhs (D) `5.10 Lakhs (iv) Roshan Ltd. agreed to absorb Richa Ltd. For this purpose Richa Ltd's 5000, 9% Preference shares are valued at ` 124.50 each and 65,000 Equity shares are valued at ` 32 each. If Roshan Ltd. discharged purchase consideration by issuing its Equity shares of ` 10 each which is having intrinsic value of ` 46 each. No. of Equity shares issued by Roshan Ltd. to Richa Ltd. will be (A) 45214 (B) 270250
Suggested Answer_Syllabus 2016_Jun2017_Paper 17 Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 2 (C) 58750 (D) 70000 (v) At the time of absorption of B Ltd. by A Ltd., trade receivable of both companies shown in their Balance Sheets were ` 35 Lakhs and ` 18 Lakhs. On that date trade payable of B Ltd. includes payable to A Ltd. ` 4.5 Lakhs. After absorption, the amount of trade receivables will be shown in the A Ltd.'s Balance Sheet as (A) `35 Lakhs (B) ` 53 Lakhs (C) ` 48.50 Lakhs (D) ` 44 Lakhs (vi) X Ltd. holds 69% of Y Ltd., Y Ltd. holds 51% of W Ltd., Z Ltd. holds 49% of W Ltd. As per AS 18 related parties are: (A) X Ltd., Y Ltd. & W Ltd. (B) X Ltd. & Z Ltd. (C) Y Ltd. & Z Ltd. (D) X Ltd. & Y Ltd. (vii)Peeru Ltd. acquired 80% Equity shares of Pimo Ltd. on 1st April, 2016. On 31st March, 2017, goods worth ` 65,000 purchased from Peeru Ltd., were included in stock of Pimo Ltd. Peeru Ltd. made a profit of 25% on cost. At the time of preparation of consolidated Balance Sheet the amount of unrealized profit on stock will be (A) ` 1,62,500 (B) ` 21,667 (C) ` 13,000 (D) NIL (viii)Nikku Ltd. is a Non-banking finance company. It made a provision against the advances as on 31st March, 2017 of `248 Lakhs. Out of its advances, Sub-standard assets, Doubtful up to one year and one to three years were `910 Lakhs; `150 Lakhs and `210 Lakhs respectively. The amount of Doubtful Assets more than three years will be (A) ` 1210 Lakhs (B) ` 121 Lakhs (C) ` 64 Lakhs (D) NIL (ix) In a company net assets available for share holders is `1450 Lakhs; Equity share capital 60 Lakhs shares of `10 each; An average dividend is `3.20 per equity share and normal rate of dividend for the company is 10%. The fair value of each share will be (A) `32 (B) `24.17 (C) ` 27.81 (D) ` 28.09 (x) Members of Public Accounts Committee are elected by Lok Sabha and Rajya Sabha and comprise of not more than (A) 15 members of Lok Sabha and 7 members of Rajya Sabha. (B) 22 members of Lok Sabha and 7 members of Rajya Sabha. (C) 22 members of Lok Sabha and 15 members of Rajya Sabha. (D) No any limit. Answer: 1. (i) — (B) Degree of Completion
Suggested Answer_Syllabus 2016_Jun2017_Paper 17 Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 3 = Cost to Date Accumulated Cost Incurred + Estimated Cost to Complete ×100 = 22 lakhs 22 lakhs + 58 lakhs ` ` ` ×100 = 27.5% (ii) — (C) Net Assets = ` (25,60,000 + 12,50,000 – 11,30,000 – 2,20,000) = ` 24,60,000 Capital Reserve = Net Assets - Purchase Consideration = ` 24,60,000 – ` 24,00,000 = ` 60,000 (iii) — (D) Carrying amount on 31st March 2017 = 65 - [(65 - 7)×33/60] = 65-31.90 = ` 33.10 Lakhs Recoverable amount (Present value) = ` 28 Lakhs i.e. higher of `28 Lakhs and `25 Lakhs Hence, Impairment loss = ` 33.10 – ` 28 = ` 5.10 Lakhs (iv) — (C) Value of preference shares: 5000 × ` 124.50 = ` 6,22,500 Add: Value of Equity shares: 65000 × ` 32 = ` 20,80,000 Total Amount to be discharged ` 27,02,500 No. of Equity shares Issued by Roshan Ltd. = ` 27,02,500 ÷ ` 46 = 58750 shares. (v) — (C) ` 35 Lakhs + ` 18 Lakhs – ` 4.50 Lakhs = ` 48.50 Lakhs. (vi) — (A) Explanation - As per AS 18 holding of 20% or more is necessary to become a related party. Hence related parties are X Ltd. Y Ltd. and W Ltd. (vii) — (C) ` 65,000 × 25/(100+25 = ` 13,000) (viii) — (C) ` 248 – ` [(910 × 10%)+(150 × 20%)+(210 × 30%)] = ` 248 – ` (91+30+63) = ` 248 – `184 = ` 64 Lakhs (ix) — (D) Fair value = Intrinsic Value + Dividend Yield Value 2 = 24.17+ 32 2 = `28.085 per shear Intrinsic value = 1450 60 ` = `24.17 Yield value = 32% × 10 = ` 32 Average Dividend Rate = ` 3.2 / ` 10×100 = 32%. (x) — (A) Justification not required, as per requirement. Section – B Answer any five questions out of seven questions. 16x5=80 2. (a) Shiva Infrastructures Limited obtained a contract for construction of a bridge for ` 100 Lakhs. The contract will be completed within 3 years for which total cost to be incurred is ` 85 Lakhs. The following data pertain to the construction period: (` in Lakhs) Particulars/Year I II III Cumulative costs incurred to date 30 70 85 Estimated cost yet to be incurred at year end 60 10 — Progressive billing made during the year 20 65 15 Collections of billings 15 60 25 You are required to calculate the stage of completion and profit recognized in Statement of Profit and Loss as per AS-7 8