Roll No……………

Total No. of Questions — 6] [Total No. of Printed Pages — 5

Time Allowed : 3 Hours Maximum Marks : 100
Answers to questions are to be given only in English except in the cases of candidates who have opted for Hindi medium. If a candidate
who has not opted for Hindi medium, answers in Hindi, his answers in Hindi will not be valued.
Answer all Questions
Wherever appropriate suitable assumptions should be made by the candidate.
Working notes should form part of the answer.
Marks

1. The Balance Sheets of three companies Angle Ltd., Bolt Ltd., and Canopy Ltd., as at 31st December, 2007 are given 20 (0)
below:
Liabilities Angle Ltd. Bolt Ltd. Canopy Ltd.
Rs. Rs. Rs.
Share capital
(Equity shares of Rs.100 each) 15,00,000 10,00,000 6,00,000
Reserves 2,00,000 1,25,000 75,000
Profit and Loss A/c 5,00,000 2,75,000 2,50,000
Sundry creditors 2,00,000 2,50,000 1,00,000
Bills payable – – 50,000
Angle Ltd. – 1,00,000 80,000
24,00,000 17,50,000 11,55,000
Goodwill 2,50,000 5,80,000 4,50,000
Plant and Machinery 4,00,000 2,50,000 3,25,000
Furniture and Fittings 2,00,000 1,50,000 1,40,000
Shares in–
Bolt Ltd. (7,500 shares) 9,00,000 – –
Canopy Ltd. (1,000 shares) 1,50,000
Canopy Ltd. (3,500 shares) – 5,20,000 –
Stock in trade 1,00,000 1,50,000 1,60,000
Sundry debtors 1,40,000 70,000 70,000
Bills receivable 50,000 20,000 –
Due from–
Bolt Ltd. 1,20,000 – –
Canopy Ltd. 80,000 – –
Cash in hand 10,000 10,000 10,000
Total 24,00,000 17,50,000 11,55,000
(a) All shares were acquired on 1st July, 2006.
(b) On 1st January, 2006, the balances were:
Angle Bolt Ltd. Canopy
Ltd. Rs. Ltd.
Rs. Rs.
Reserves 1,00,000 1,00,000 50,000
Profit and Loss account 50,000 50,000)Dr. 30,000
Profit during 2006 were earned 3,00,000 2,50,000 1,00,000
evenly over the year
(c) Each company declared a dividend of 10% in the year 2007 on its shares
out of Profits for the year 2006; Angle Ltd. and Bolt Ltd. have credited their
Profit and Loss account with the dividends received.
 The increase in reserves in case of Angle Ltd., Bolt Ltd., and Canopy Ltd.,
(d)
was effected in the year 2006.
(e) All the bills payable appearing in Canopy Ltd.’s Balance Sheet were
accepted in favour of Bolt Ltd., out of which bills amounting Rs.30,000 were
endorsed by Bolt Ltd., in favour of Angle Ltd.
(f) Stock with Bolt Ltd. includes goods purchased from Angle Ltd., for
Rs.18,000. Angle Ltd., invoiced the goods at cost plus 20%.

Prepare consolidated Balance Sheet of the group as at 31st December,

2007. Working should be part of the answer. Ignore taxation including
dividend distribution tax, disclose minority interest as per AS 21.
2. The following are the Balance Sheets of Andrew Ltd. and Barry Ltd., as at 31.12.2007: 16 (0)

Andrew Ltd.
(in Rs.’000s)
Liabilities Assets
Share capital Fixed assets 3,400
3,00,000 Equity shares 3,000 Stock (pledged
of Rs.10 each 1,000 with secured 18,400
10,000 Preference shares 400 loan creditors) 3,600
of Rs.100 each Other Current 16,600
General reserve 16,000 assets
Secured loans (secured 8,600 Profit and Loss
against 13,000 account
pledge of stocks)
Unsecured loans
Current liabilities
42,000 42,000
Barry Ltd.
(in Rs.’000s)
Liabilities Assets
Share capital Fixed assets 6,800
1,00,000 Equity shares 1,000 Current assets 9,600
of Rs.10 each 2,800
General reserve 8,000
Secured loans 4,600
Current liabilities
16,400 16,400
Both the companies go into liquidation and Charlie Ltd., is formed to take over their businesses. The following
information is given:

(a) All Current assets of two companies, except pledged stock are taken over
by Charlie Ltd. The realisable value of all Current assets are 80% of book
values in case of Andrew Ltd. and 70% for Barry Ltd. Fixed assets are
taken over at book value.
(b) The break up of Current liabilities is as follows:
Andrew Barry Ltd.
Ltd. Rs.
 Rs.
Statutory liabilities (including Rs.22 lakh in
case of
Andrew Ltd. in case of a claim not having been 72,00,000 10,00,000
admitted shown as contingent liability) 30,00,000 18,00,000
Liability to employees

The balance of Current liability is miscellaneous creditors.

(c) Secured loans include Rs.16,00,000 accrued interest in case of Barry Ltd.
(d) 2,00,000 equity shares of Rs.10 each are allotted by Charlie Ltd. at par
against cash payment of entire face value to the shareholders of Andrew
Ltd. and Barry Ltd. in the ratio of shares held by them in Andrew Ltd. and
Barry Ltd.
Preference shareholders are issued Equity shares worth Rs.2,00,000 in lieu
(e)
of present holdings.
(f) Secured loan creditors agree to continue the balance amount of their loans
to Charlie Ltd. after adjusting value of pledged security in case of Andrew
Ltd. and after waiving 50% of interest due in the case of Barry Ltd.
(g) Unsecured loans are taken over by Charlie Ltd. at 25% of Loan amounts.
Employees are issued fully paid Equity shares in Charlie Ltd. in full
(h)
settlement of their dues.
Statutory liabilities are taken over by Charlie Ltd. at full values and
(i)
miscellaneous creditors are taken over at 80% of the book value.
Show the opening Balance Sheet of Charlie Ltd. Workings should be part of the answer.
3. (a) From the following information of Beta Ltd. calculate Earning Per Share (EPS) in accordance with AS–20: 8 (0)

(Rs.)
Year Year
31.3.08 31.3.07
1. Net profit before tax 3,00,000 1,00,000
2. Current tax 40,000 30,000
Tax relating to earlier year 24,000 (13,000)
Deferred tax 30,000 10,000
3. Profit after tax 2,06,000 73,000
4. Other information:
(a) Profit includes compensation from Central
Government towards loss on account of 1,00,000
NIL earthquake in 2005 (non–taxable)
(b) Outstanding convertible 6% Preference shares 1,000
issued and paid on 30.9.2006. Face value Rs.100,
Conversion ratio 15 equity shares for every
preference share.
(c) 15% convertible debentures of Rs.1,000 each total
face value Rs.1,00,000 to be converted into 10
Equity shares per debenture issued and paid on
30.6.2006.
 (d) Total no. of Equity shares outstanding as on
31.3.2008, 20,000 including 10,000 bonus shares
issued on 1.1.08, face value Rs.100.
(b) From the following details in respect of loan funds of Excellent School of Management for 2007–08, prepare a 8 (0)
statement showing changes in fund balance during the year:
Rs.
Fund balance at the end of the year 30,30,000
Loan fund matching grant from revenues funds 30,000
Private and Government grants 11,00,000
Other transfers from unrestricted revenue funds 1,50,000
Interest on loans 60,000
Investment income 35,000
Loan cancellations and write offs 15,000
Refunded to grantors 60,000
Administrative and Collection costs 25,000
4. (a) From the following Profit and Loss account of New Mode Reporting Ltd., prepare a gross value added statement 10 (0)
for the year ended 31st December, 2007. Show also the reconciliation between GVA and Profit before taxation:
Profit and Loss Account
Rs.‘000s Rs.‘000s
Income
Sales 12,480
Other income 110 12,590
Expenditure
Production and Operational
8,640
expenditure
360
Administrative expenses
1,248
Interest and other charges
32 10,280
Depreciation
Profit before tax 2,310
Less: Provision for tax 110
Profit after tax 2,200
Add: balance as per last Balance Sheet 120
2,320
Less:Transfer to Fixed assets 800
replacement Reserve 320 1,120
Dividend paid 1,200
Surplus carried to Balance Sheet
Additional information:

(i) Production and Operational expenses consists of

Rs.
Consumption of Raw materials 64,20,000
Consumption of Stores 80,000
Local tax 16,000
Salaries to Administrative staff 12,40,000
Other Manufacturing expenses 8,84,000
Administrative expenses include salaries and commission to directors –
(ii)
Rs.10,000
 (iii) Interest and other charges include–
Rs.
(a) Interest on bank overdraft
(overdraft is of temporary nature) 2,18,000
(b) Fixed loan from SIDBI 1,02,000
(c) Working capital loan from IFCI 40,000
(d) Excise duties ?
Excise duties amount to one-tenth of total value added by
(iv)
manufacturing and trading activities.
(b) Anischit Finance Ltd. is a non–banking finance company. It makes available to you the costs and market price of 6 (0)
various investments held by it as on 31.3.2008:
(Figures in Rs. Lakhs)
Cost Market Price
Scripts:
A. Equity Shares-
A 60.00 61.20
B 31.50 24.00
C 60.00 36.00
D 60.00 120.00
E 90.00 105.00
F 75.00 90.00
G 30.00 6.00
B. Mutual funds–
MF–1 39.00 24.00
MF–2 30.00 21.00
MF–3 6.00 9.00
C. Government securities–
GV–1 60.00 66.00
GV–2 75.00 72.00
Can the company adjust depreciation of a particular item of investment
(i)
within a category?
(ii) What should be the value of investments as on 31.3.2008?
Is it possible to off–set depreciation in investment in mutual funds
(iii) against appreciation of the value of investment in equity shares and
government securities?

5. (a) Golden Eagle Ltd., has been successful jewellers for the past 100 years and sales are against cash only. The 4x4=16 (0)
company diversified into apparels. A young senior executive was put in charge of Apparels business and sales
increased 5 times. One of the conditions for sales that dealers can return the unsold stocks within one month of
the end of season. Sales return for the year was 25% of sales. Suggest a suitable Revenue Recognition Policy
with references to AS–9.
(b) Discuss the concept of Cost v/s Fair value with reference to Indian Accounting Standards. (0)

(c) Why Human Resources Asset is not recognised in the Balance sheet? (0)

(d) A company has a scheme for payment of settlement allowance to retiring employees. Under the scheme, retiring (0)
employees are entitled to reimbursement of certain travel expenses for class they are entitled to as per company
rule and to a lump-sum payment to cover expenses on food and stay during the travel. Alternatively employees
 can claim a lump sum amount equal to one month pay last drawn.
The company’s contentions in this matter are:
(i) Settlement allowance does not depend upon the length of service of
employee. It is restricted to employee’s eligibility under the Travel rule of
the company or where option for lump–sum payment is exercised, equal
to the last pay drawn.
Since it is not related to the length of service of the employees, it is
(ii)
accounted for on claim basis.
State whether the contentions of the company are correct as per relevant Accounting Standard. Give reasons in
support of your answer.
6. (a) XYZ Ltd., with a turnover of Rs.35 lakhs and borrowings of Rs.10 lakhs during any time in the previous year, 8 (0)
wants to avail the exemptions available in adoption of Accounting Standards applicable to companies for the year
ended 31.3.2008. Advise the management the exemptions that are available as per Companies (AS) Rules,
2006.
If XYZ is a partnership firm is there any other exemptions additionally available.
(b) Briefly explain any two of the following terms: 2x4=8
(i) IFRS (0)

(ii) NACAS (0)

(iii) Convergence of Accounting Standards with IFRS. (0)