Answer Key

CA- Intermediate Mock Test

Paper 5 – Advanced Accounting

Question 1. (5 Marks each)

a)
Statement of profit and Loss for the year ended 31st March, 2022 (An Extract)
Rs
Profit before taxes and depreciation 1,28,000
Less: Depreciation (56,000+ 6,000) 62,000
Profit before tax 66,000
Less: Current tax (W.N) (32,400)
Deferred Tax Nil
Profit after tax 33,600
Working Note:
Computation of taxable income
Rs
Profit before taxes and depreciation 1,28,000
Less: Depreciation (38,000+ 24,000) (62,000)
66,000
Add: Donation* 15,000
81,000
Current tax (40%) 32,400
Note: The profit of Rs 1,28,000 given in the question is before depreciation and taxes. It has been considered
that this amount is after making adjustment of donation amounting Rs 15,000.
Impact of various items in terms of deferred tax liability/deferred tax asset
Transactions Nature of difference Effect Amount
(1) Difference in Timing difference Reversal of DTL Rs 18,000
depreciation (old (56,000 – 38,000)
machinery) *40% =
(+) Rs 7,200
(2) Depreciation on Timing difference Creation of DTL Rs 18,000
new (24,000 – 6,000) x
machinery 40%
= (-) Rs 7,200
(3) Donation to Permanent difference Not applicable --
private trusts
Net Effect of Deferred Tax NIL

(b) Answer - Follow the approach followed in class. Answers will be same
Fair value of shares immediately prior to exercise of rights + Total amount received from exercise
Number of shares outstanding prior to exercise + Number of shares issued in the exercise
= 102 x 2,50,000 Shares +Rs 98 x 1,00,000 shares
3,50,000 shares
Theoretical ex-rights fair value per share = Rs 100.86

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Computation of adjustment factor:
Fair value per share prior to exercise of rights /Theoretical ex - rights value per share = 102/100.86 = 1.01

Computation of earnings per share:

EPS for the year 2017-18 as originally reported: Rs 50,00,000/2,50,000 shares = Rs 20
EPS for the year 2017-18 restated for rights issue: =Rs 50,00,000/ (2,50,000 shares x 1.01) = Rs
19.80
EPS for the year 2018-19 including effects of rights issue:
EPS = 75,00,000/3,25,625* = Rs 23.03
* [(2,50,000 x 1.01 x 3/12) + (3,50,000 x 9/12)] =63,125 + 2,62,500 = 3,25,625 shares
Note: Financial year (ended 31st March) is considered as accounting year while giving the above answer.

(c)Answer
The amounts of revenue, expenses and profit recognized in the statement of profit and loss in three years are
computed below:
Up to the reporting date Recognized in Recognized in
previous years current year
Year 1
Revenue (10,000 x30%) 3,000 - 3,000
Expenses (8,050 x 30%) 2,415 - 2,415
Profit 585 - 585
Year 2
Revenue (10,500 x75%) 7,875 3,000 4,875
Expenses (8,500 x 75%) 6,375 2,415 3,960
Profit 1,500 585 915
Year 3
Revenue (11,000 x 100%) 11,000 7,875 3,125
Expenses (8,500 x 100%) 8,500 6,375 2,125
Profit 2,500 1,500 1,000
Working Note - Calculation of stage of completion of contract
Year 1 Year 2 Year 3
Revenue after considering variations 10,000 10,500 11,000
Less: Estimated profit for whole contract 1,950 2,000 2,500
Estimated total cost of the contract (A) 8,050 8,500 8,500
Actual cost incurred upto the reporting date(B) 2,415 6,375 8,500
Degree of completion (B/A) 30% 75% 100%

(d) According to para 11 of AS 19 “Leases”, the lessee should recognise the lease as an asset and a liability at
an amount equal to the fair value of the leased asset at the inception of the finance lease. However, if the
fair value of the leased asset exceeds the present value of the minimum lease payments from the standpoint
of the lessee, the amount recorded as an asset and a liability should be the present value of the minimum
lease payments from the standpoint of the lessee.
In calculating the present value of the minimum lease payments the discount rate is the interest rate implicit
in the lease. Present value of minimum lease payments will be calculated as follows:

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 Year Minimum Lease Payment Internal rate of return Present value
Rs (Discount rate @10%) Rs
1 3,50,000 0.909 3,18,150
2 3,50,000 0.826 2,89,100
3 3,50,000 0.751 2,62,850
4 4,20,000 0.683 2,86,860
Total 14,70,000 11,56,960
Present value of minimum lease payments Rs 11,56,960 is more than fair value at the inception of lease i.e. Rs
11,50,000, therefore, the lease liability and machinery should be recognized in the books at Rs 11,50,000 as
per AS 19.

Answer 2(a)
Date Particulars Rs Rs
31.3.2017 Employees compensation expense A/c Dr. 17,10,000
To ESOS outstanding A/c 17,10,000
(Being compensation expense
recognized in respect of the ESOP i.e.
100 options each granted to 1,200 employees
at a discount of Rs 30 each,
amortized on straight line basis over vesting
years (Refer W.N.)
Profit and Loss A/c Dr. 17,10,000
To Employees compensation expenses A/c 17,10,000

(Being expenses transferred to profit and Loss

A/c)
31.3.2018 Employees compensation expenses A/c Dr. 4,70,000
To ESOS outstanding A/c 4,70,000
(Being compensation expense recognized in
respect of the ESOP- Refer W.N.)

Profit and Loss A/c Dr. 4,70,000

To Employees compensation 4,70,000
expenses A/c
(Being expenses transferred to profit and Loss
A/c)
31.3.2019 Employees compensation Expenses A/c Dr. 9,70,000
To ESOS outstanding A/c 9,70,000
(Being compensation expense recognized in
respect of the ESOP- Refer W.N.)

Profit and Loss A/c 9,70,000

To Employees compensation 9,70,000
expenses A/c

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 (Being expenses transferred to profit and Loss
A/c)
2019-20 Bank A/c (1,00,000 x Rs 30) Dr. 30,00,000
ESOS outstanding A/c Dr. 30,00,000
[(31,50,000/1,05,000) x 1,00,000]
To Equity share capital (1,00,000 x 10,00,000
Rs 10)
To Securities premium A/c (1,00,000 50,00,000
x Rs 50)
(Being 1,00,000 options exercised at an
exercise price of Rs 30 each)
31.3.2020 ESOS outstanding A/c Dr. 1,50,000
To General Reserve A/c 1,50,000
(Being ESOS outstanding A/c on lapse of 5,000
options at the end of exercise of option period
transferred to General Reserve A/c)

Working Note:
Statement showing compensation expense to be recognized at the end of:
Particulars Year 1 Year 2 Year 3
(31.3.2017) (31.3.2018) (31.3.2019)
Number of options expected to 1,14,000 options 1,09,000 options 1,05,000 options
vest
Total compensation expense Rs 34,20,000 Rs 32,70,000 Rs 31,50,000
accrued (60-30)
Compensation expense of the year 34,20,000 x 1/2 = 32,70,000 x 2/3
Rs 17,10,000 = Rs 21,80,000 Rs 31,50,000
Compensation expense recognized
previously Nil Rs 17,10,000 Rs 21,80,000
Compensation expenses to be
recognized for the year Rs 17,10,000 Rs 4,70,000 Rs 9,70,000

2(b) Statement showing classification as per Non-Banking Financial Company - Systemically Important Non-
Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016
(Rs in lakhs)
Standard Assets:
Accounts (Balancing figure) 43.00
400 accounts overdue for a period of 1 month 20.00
24 accounts overdue for a period of 2 months 12.00 75.00
Sub-Standard Assets:
4 accounts identified as sub-standard asset for a period less than 12 months 7.00
Doubtful Debts:
6 accounts identified as sub-standard for a period more than 12 months 3.00

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 4 accounts identified as sub-standard for a period more than 3 years 10.00
Loss Assets
1 account identified by management as loss asset 5.00
Total overdue 100.00

Answer 2(c)
Journal Entries in the books of Umesh Ltd.
Rs Rs
1. Bank A/c Dr. 10,00,000
To 11% Preference share application & allotment
A/c 10,00,000
(Being receipt of application money on preference
shares)
2. 11% Preference share application & allotment A/c
Dr. 10,00,000
To 11% Preference share capital A/c 10,00,000
(Being allotment of 1 lakh preference shares)
General reserve A/c Dr. 30,00,000
To Capital redemption reserve A/c 30,00,000
(Being creation of capital redemption reserve for buy back
of shares)
Equity share capital A/c Dr. 40,00,000
Premium payable on buyback A/c Dr. 48,00,000
To Equity shareholders/Equity shares buy back A/c
88,00,000
(Amount payable to equity shareholder on buy back)
Equity shareholders/ Equity shares buy back A/c Dr. 88,00,000
To Bank A/c 88,00,000
(Being payment made for buy back of shares)
Securities Premium A/c Dr. 16,00,000
General reserve A/c 32,00,000
To Premium payable on buyback A/c 48,00,000
(Being premium on buyback charged from securities
premium and general reserve)

Answer 3(a)
Consolidated Balance Sheet of H Ltd. with its subsidiary S Ltd. as on 31st March, 2015
Particulars Note No. (in 000’s)
I. Equity and Liabilities
(1) Shareholder's Funds
(a) Share Capital 1 4,000

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 (b) Reserves and Surplus 2 3,063
(2) Minority Interest (W.N.6) 1,560
(3) Current Liabilities
Trade payables 3 1,118
Short term provisions 4 482
Total 10,223
II. Assets
(1) Non-current assets
Fixed assets
Tangible assets 5 5,904
(2) Current assets
(a) Inventories 6 1,759
(b) Trade receivables 7 1,598
(c) Cash and cash equivalents 8 512
(d) Short term loans and advances 9 450
Total 10,223
Notes to Accounts
(in 000’s) (in 000’s)
1. Share Capital
Authorised share capital
5 lakhs equity shares of 10 each 5,000
Issued, Subscribed and Paid up
4 lakhs equity shares of 10 each fully paid 4,000
2. Reserves and surplus
Capital Reserve (Note 5) 679.80
General Reserve (928+54) 982
Profit and Loss Account:
H Ltd. 1,305
Add: Share in S Ltd 286.2
1591.2
Less: Dividend wrongly credited (180)
1411.20
Less: Unrealised profit (50 X 1/5) (10) 1,401.20 3,063
3. Trade payables
H Ltd. 611
S Ltd. 507 1,118
4. Short –term provisions
Provision for Taxation H Ltd. 220
S Ltd. 180 400
Other Provisions H Ltd 65
S Ltd. 17 82 482
5. Tangible Assets
Plant and Machinery
H Ltd. 2,541
S Ltd. 2,450 4,991

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 Furniture and fittings
H Ltd. 615
S Ltd. 298 913 5,904
6. Inventories
Inventory H Ltd. 983
S Ltd. 786 1,769
Less: Unrealised profit ( 50 x 1/5) (10) 1,759
7. Trade receivables
H Ltd. 820
S Ltd. 778 1,598
8. Cash and cash equivalents
Cash and Bank Balances H Ltd 410
S Ltd. 102 512
9. Short term loans and advances
Sundry Advances H Ltd. 260
S Ltd. 190 450

Working Notes:
Share holding pattern
Particulars Number of Shares % of
holding
S Ltd.
(i) Purchased on 01.04.2014 90,000
(ii) Bonus Issue (90,000/5 x 3) 54,000
Total 1,44,000 60%
b. Minority Interest 96,000 40%

1. S Ltd. General Reserve

( in 000) (in 000)
To Bonus to equity 900 By Balance b/d 1,500
shareholders
(2400*3)/8
To Balance c/d 690 By Profit and Loss A/c 90
(Balancing figure)
1,590 1,590

2. S Ltd.’s Profit and Loss Account

(in 000) (in 000)
To General Reserve 90 By Balance b/d 633
To dividend paid on 14.7.2014 is 300 By Net profit for the year
(1500*20)/100
To Balance c/d 810 (Balancing figure) 567
1200 1200
Out of 5,67,000 profit for the year, 90,000 has been transferred to reserves by S Ltd.

3. Distribution of Revenue Profits in ’000

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 P&L General
Reserve
Revenue Profit as above 477.00 90
Share of H Ltd. (60%) 286.20 54
Share of Minority shareholders (628 – 376.80) 190.80 36

4. Computation of Capital Profits

in 000 in 000
General Reserve on the date of acquisition 1,500
Less: Bonus issue of shares (900)
600
Profit and Loss Account balance on the date of 633
acquisition
Less: Dividends paid 300
333
933
Share of H Ltd. (60%) 559.8
Share of Minority shareholders 373.2

5. Computation of Goodwill or Capital Reserve(Cost of Control)

in ’000
Cost of Investment net of pre Acquisition Dividend 1320
Received (1500 – 180)
Note: Share of Preacquisition Dividend is 300 *0.6 = 180
Share of Net Assets as on date of Acquisition
60% of share capital of S Ltd. 1,440
Share of H Ltd. in the capital profits as in working note (4) 559.8
1999.8
Capital Reserve 679.80

6. Calculation of Minority Interest

in ’000
40% of share capital of S Ltd. 960.00
Add: Share of Revenue Profits (Note 3) 226.80
Share of Capital Profits (Note 4) 373.2
1,560.00

Answer 4(a)
Particulars Cash Creditors Capitals
Rs. Rs. P (Rs.) Q (Rs.) R (Rs.)
Balance due after loan 16,000 52,000 43,500 32,000
January
Balance available 9,000

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Realization less expenses and cash 10,000
retained
Amount available and paid 19,000 (16,000) - - (3,000)
Balance due - - 52,000 43,500 29,000
February
Opening Balance 6,000
Expenses paid and cash carried 3,000
forward

Available for distribution 3,000

Cash paid to Q and - 3,000 9,000
Machinery given to R
Balance due - 52,000 40,500 20,000
March
Opening Balance 2,000
Amount realized less
expenses 87,300
Amount paid to partners 89,300 41,689 32,767 14,844
Loss 10,311 7,733 5,156
Working Note:
i) Highest Relative Capital Basis
P (Rs.) Q (Rs.) R (Rs.)
Scheme of payment for January 2017
Balance of Capital Accounts 65,000 50,500 32,000
Less: Loans (13,000) (7,000) -
(A) 52,000 43,500 32,000
Profit Sharing Ratio 4 3 2
Capital / Profit sharing Ratio 13,000 14,500 16,000
Capital in profit sharing ratio, taking P’s 52,000 39,000 26,000
capital as base (B)
Excess of R’s capital and Q’s Capital (A – B) (i) 4,500 6,000
Profit Sharing Ratio 3 2
Capital / Profit sharing Ratio 1,500 3,000
Capital in profit sharing ratio, taking Q’s 4,500 3,000
capital as base (ii)
Excess of R’s Capital over Q’s capital (i – ii) 3,000

ii) Scheme of distribution of available cash for March:

P (Rs.) Q (Rs.) R (Rs.)
Balance of Capital Accounts at end of February (A) 52,000 40,500 20,000
Profit Sharing Ratio 4 3 2
Capital / Profit sharing Ratio 13,000 13,500 10,000
Capital in profit sharing ratio, taking R’s capital 40,000 30,000 20,000

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as base (B) (i)
Excess of P’s Capital and Q’s Capital (A – B) (i) 12,000 10,500
Profit Sharing Ratio 4 3
Capital / Profit sharing Ratio 3,000 3,500
Capital in profit sharing ratio taking P’s capital as 12,000 9,000
base (ii)
Excess of Q’s Capital over P’s Capital (i – ii) - 1,500
Payment Rs. 1500 (C) (1,500)
Balance of Excess Capital 12,000 9,000
(i –C)
Payment Rs. 21000 (D) (12,000) (9,000)
Balance due (A – C – D) 40,000 30,000 20,000
Balance cash Payment (29,689) (22,267) (14,844)
(Rs. 89,300 – Rs. 22,500) = Rs. 66,800 (E)
Total Payment (Rs. 89,000) (C + D +E) (iii) 41,689 32,767 14,844
Loss (A – iii) 10,311 7,733 5,156

Answer 4(b)
Popular Bank
Profit and Loss Account
For the year ended 31st March, 2021
Particulars Schedule Year ended
31-3-2021 (Rs)
I Income
Interest earned 13 28,72,500
Other income 14 1,87,500
30,60,000
II Expenditure
Interest expended 15 20,40,000
Operating expenses 16 17,55,000
Provisions and Contingencies (W.N) 5,10,000
43,05,000
III Profit/Loss (12,45,000)
IV Appropriations Nil
Schedule 13 - Interest Earned
Year ended 31-3-2021 (Rs)
I Interest/discount on advances/bills
Interest on cash credit Rs (13,65,000-3,15,000) 10,50,000
Interest on overdraft Rs (5,62,500-2,62,500) 3,00,000
Interest on term loans Rs (11,55,000-3,75,000) 7,80,000 21,30,000
II Income on investments 6,30,000

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 III Interest on Balance with RBI 1,12,500
28,72,500
Schedule 14 - Other Income
Year ended 31-3-2021 (Rs)
I Commission, Exchange and Brokerage
Commission on remittances and transfer 56,250
Commission on letter of credit 88,500
Commission on Government business 61,500 2,06,250
II Profit on sale of Land and Building 20,250
III Loss on Exchange Transactions (39,000)
1,87,500

Schedule 15 - Interest Expended

Year ended 31-3-2021 (Rs)
I Interest on Deposits 20,40,000
Schedule 16 - Operating Expenses
Year ended 31-3-2021 (Rs)
I Payment and provision for employees
Salaries, allowances and bonus 9,30,000
Provident Fund Contribution 2,10,000 11,40,000
II Printing and Stationery 1,05,000
III Advertisement and publicity 1,35,000
IV Directors’ fees and allowances 1,87,500
V Auditors’ fees and expenses 90,000
VI Postage, telegrams, telephones etc. 60,000
VII Repairs and maintenance 37,500
17,55,000
Working Note:
Provisions and contingencies (Rs)
Provision for NPA:
Standard 22,50,000 × 0.40% 9,000
Sub-standard 8,40,000 × 15% 1,26,000
Doubtful not covered by 1,50,000 × 100% 1,50,000
security
Doubtful covered by security 37,500 × 25% 9,375
for one year
Loss Assets 1,50,000 × 100% 1,50,000
4,44,375
Depreciation on current
investments
Cost (75% of 20,62,500)
Less: Market value 65,625

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 5,10,000
Note: 25% of the total investments are held to maturity. In the case of Held to Maturity investments the
valuation is done at cost and these are not marked to market value generally. Hence, depreciation on
investments has been calculated only on other investments which can either be Held for Trading (HFT) or
Available for Sale (AFS).

Answer 5
Journal Entries in the books of Z Ltd.
Rs Rs
Business Purchase A/c Dr. 54,00,000
To Liquidator of A Ltd. A/c 54,00,000
Land & Building A/c Dr. 28,00,000
Plant & Machinery A/c Dr. 20,00,000
Long term advance to B Ltd. A/c Dr. 2,20,000
Inventories A/c Dr. 10,40,000
Trade Receivables A/c Dr. 8,20,000
Cash and Bank A/c Dr. 3,00,000
Goodwill A/c Dr. 12,20,000
To Retirement Gratuity Fund A/c 1,00,000
To 10% Debentures A/c 20,00,000
To Unsecured Loan A/c 6,00,000
To Trade Payables A/c 1,00,000
To Other liabilities A/c 2,00,000
To Business Purchase A/c 54,00,000
10% Debentures A/c Dr. 20,00,000
To 12% Debentures A/c 20,00,000
Liquidator of A Ltd. A/c Dr. 54,00,000
To Equity Share Capital A/c 27,00,000
To Securities Premium A/c 27,00,000
Business Purchase A/c Dr. 28,80,000
To Liquidator of B Ltd. A/c 28,80,000
Land and Building A/c Dr. 21,00,000
Plant & Machinery A/c Dr. 7,60,000
Inventories A/c Dr. 7,00,000
Trade Receivables A/c Dr. 5,20,000
Cash and Bank (less dividend) A/c Dr. 60,000
To Unsecured Loan A/c 8,20,000
To Trade Payables A/c 3,40,000
To Business Purchase A/c 28,80,000
To Capital Reserve A/c 1,00,000
Liquidators of B Ltd. A/c Dr. 28,80,000
To Equity Share Capital A/c 14,40,000

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 To Securities Premium A/c 14,40,000
Unsecured Loans A/c Dr. 2,20,000
To Long term Advance to B Ltd. A/c 2,20,000
*Capital Reserve A/c Dr. 1,00,000
To Cash and Bank A/c (Liquidation expenses) 80,000
To Goodwill A/c 20,000

Note:
1. The journal entries for A Ltd. and B Ltd. have been given separately in the above solution. Alternatively, the entries
may be given as combined for both companies.
2. *Alternatively, following set of entries may be given in place of the last entry given in the above solution:
Goodwill A/c Dr. 50,000
To Cash & Bank A/c (Liquidation expenses of A Ltd.) 50,000
Capital Reserve A/c Dr. 30,000
To Cash and Bank A/c (Liquidation expenses of B Ltd.) 30,000
Capital Reserve A/c Dr. 70,000
To Goodwill A/c 70,000

Balance Sheet of Z Ltd. as at 31st March, 2022

Particulars Note No. (Rs)
I. Equity and Liabilities
(1) Shareholder's Funds
(a) Share Capital 1 41,40,000
(b) Reserves and Surplus 2 41,40,000
(2) Non-Current Liabilities
(a) Long-term borrowings 3 20,00,000
(b) Long term provisions 4 1,00,000
(3) Current Liabilities
(a) Short-term borrowings1 5 12,00,000
(b) Trade payables 6 4,40,000
(a) Other liability 2,00,000
Total 1,22,20,000
II. Assets
(1) Non-current assets
(a) i. Property, plant and equipment 7 76,60,000
ii. Intangible assets 12,00,000
(Goodwill 12,20,000-20,000)
(2) Current assets
(a) Inventories 8 17,40,000
(b) Trade receivables 9 13,40,000

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 (c) Cash and cash equivalents 10 2,80,000
Total 1,22,20,000

Notes to Accounts
(Rs) (Rs)
1. Share Capital
Authorized Share Capital
6,00,000 Equity shares of Rs 10 each 60,00,000
Issued: 4,14,000 Equity shares of Rs 10 each 41,40,000
(all these shares were Issued for consideration other
than cash)
2. Reserves and surplus
Securities Premium Account (4,14,000
shares × Rs 10) 41,40,000
3. Long-term borrowings
12% Debentures 20,00,000
4 Long term Provisions
Retirement gratuity fund 1,00,000
5. Short-term borrowings
Unsecured loans
A Ltd. 6,00,000
B Ltd. 8,20,000 14,20,000
Less: Mutual (2,20,000) 12,00,000
6. Trade payables
A Ltd. 1,00,000
B Ltd. 3,40,000 4,40,000
7. Property, plant & equipment
Land and Building
A Ltd. 28,00,000
B Ltd. 21,00,000 49,00,000
Plant and Machinery
A Ltd. 20,00,000
B Ltd. 7,60,000 27,60,000
76,60,000
8. Inventories
A Ltd. 10,40,000
B Ltd. 7,00,000 17,40,000
9 Trade receivables
A Ltd. 8,20,000
B Ltd. 5,20,000 13,40,000
10 Cash & cash equivalents

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 A Ltd. 3,00,000
B Ltd. [3,00,000-2,40,000(dividend)] 60,000
3,60,000
Less: Liquidation Expenses (80,000) 2,80,000

Working Note:
Calculation of amount of Purchase Consideration
A Ltd. B Ltd.
Existing shares 3,00,000 2,40,000
Agreed value per share Rs 18 Rs 12
Purchase consideration 54,00,000 28,80,000
No. of shares to be issued of Rs 20 each (including Rs 10 premium) 2,70,000 1,44,000
Face value of shares at Rs 10 27,00,000 14,40,000
Premium of shares at Rs 10 27,00,000 14,40,000

Answer
6(a)
i)
X Ltd., Y Ltd. & W Ltd. are related to each other. Z Ltd. & W Ltd. are related to each other by virtue of
associate relationship. However, neither X Ltd. nor Y Ltd. is related to Z Ltd. and vice versa since neither
control nor significant influence exists between them.
ii)
Himalaya Ltd. and Aravalli Ltd are related parties since key management personnel of Himalaya Ltd. ie. its
managing director holds 80% in Aravalli Ltd. and hence disclosure of transaction between them is required
irrespective of whether the transaction was done at normal selling price. Hence the contention of Chief
Accountant of Himalaya Ltd that these sales require no disclosure under related party Transactions, is
wrong.

b)
An LLP may be wound up by the Tribunal in the following circumstances:
• If the LLP decides that it should be wound up by the Tribunal;
• If for a period of more than six months, the number of partners of the LLP is reduced below two;
• If the LLP is unable to pay its debts;
• If the LLP has acted against the interests of the integrity and sovereignty of India, the security of the
state or public order;
• If the LLP has defaulted in the filing of the Statement of Account and Solvency with the Registrar for five
consecutive financial years;
• If the Tribunal is of the opinion that it is just and equitable that the LLP be wound up.

c) Section 326 of the Companies Act, 2013 is talks about the overriding preferential payments to be made
from the amount realized from the assets to be distributed to various kind of creditors. According to the
proviso given in the section 326 the security of every secured creditor should be deemed to be subject to a
pari passu change in favour of the workman to the extent of their portion.
Workman's Share to Secured Asset= Amount Realized X Workman's Dues

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 Workman's Dues +Secured Loan
Workman's Share to Secured Asset= 2,00,00,000 X 62,50,000
62,50,000 +2,50,00,000
= 2,00,00,000 X 1/5
Workmen’s share to Secured Assets = Rs 40,00,000
Amount available to secured creditor is Rs 200 Lakhs – 40 Lakhs = 160 Lakhs
Hence, no amount is available for payment of government dues and unsecured creditors.

d)
As per AS 26 ‘Intangible Assets’
i) Carrying value of intangible asset as on 31.03.2018
At the end of financial year, on 31st March 2018, the production process will be recognized (i.e. carryin g
amount) as an intangible asset at a cost of RS. 30 (98-68 1) lacs (expenditure incurred since the date the
recognition criteria were met, i.e., from 1st January, 2018)
ii) Expenditure to be charged to Profit and Loss account for the year ended 31.03.2019
(Rs. in lakhs)
Carrying Amount as on 31.03.2018 30
Expenditure during 2018 – 2019 72
Book Value 102
Recoverable Amount (52)
Impairment loss 50
RS. 50 lakhs to be charged to Profit and loss account for the year ending 31.03.2019.

iii) Carrying value of intangible asset as on 31.03.2019

(Rs. in lacs)
Book Value 102
Less: Impairment loss (50)
Carrying amount as on 31.03.2019 52

CA.RAHUL JAIN Page 16