CMA Inter Accounts Important Question | Dec 25

Table of Content

1. Accounting Fundamentals 
2. Accounting for Special Transactions
3. Preparation of Final Accounts of Commercial Organisations
4. Preparation of Final Accounts of Not-for-Profit Organisations
5. Preparation of Final Accounts from Incomplete Records 
6. Partnership Accounting
7. Lease Accounting
8. Branch (including Foreign Branch) and Departmental Accounts
9. Insurance Claim for Loss of Stock and Loss of Profit
10. Hire Purchase and Installment Sale Transactions
11. Accounting Standards

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Accounting Fundamentals

1. The trial Balance of Mr. Sarvesh Kumar as on 31st March, 2024 did not tally and the difference was posted to Suspense Account. On a scrutiny of the books, the following errors were detected:

1. The total of Sales returns book for January 2024 has been casted short by ₹ 1,000.
2. Freight paid for installation of a Machine ₹ 6,500 was posted to the freight account as  ₹ 5,600.
3. Goods of the value of ₹ 2,500 returned by a customer were entered in the Sales day Book and posted there from to the credit of his account.
4. ₹ 18,000 paid for purchase of old Motorcycle for personal use of Mr. Sarvesh Kumar was debited to conveyance account.
5. A Purchase of ₹ 6,700 had been posted to creditor’s account as ₹ 6,000. 
6. Receipt of cash ₹ 5,000 from Mr. Avinash was posted to the debit of his account.
7. A cheque for ₹ 2,500 received from Mr. Alok had been dishonored and was posted to the debit of Mr. Ashok.
8. Sale of ₹ 8,500 to Mr. Deepak was recorded in the sales book correctly but while posting in ledger credited to his account.
9. The total of “Discount Allowed” column in the cash book for the month of December 2023 amounting to ₹ 3,800 was not posted.
10. Sale of old office table for ₹ 2,200 treated as sale of goods.

You are required to pass necessary journal entries with narrations to rectify the above errors.

2. Mr. P issued Cheques worth ₹15,000 in March, 2024, out of which ₹10,000 only were presented for payment by 31st March, 2024. While reconciling bank and cash book balance as on 31st March, 2024, how much would be added to balance as per Cash Book to arrive at balance as per Pass Book?

1. ₹ 15,000 
2. ₹ 10,000
3. ₹ 5,000
4. ₹ 7,500

3. (i) State briefly the difference between' Purchase Day Book and Purchase Account.

(ii) Rectify the following errors:

1. Credit sales to Barun ₹ 7,000 were recorded as ₹ 7,200.
2. Credit purchase from Raman ₹ 9,000 was recorded as ₹ 9,900.
3. Goods returned to Chaya ₹ 4,000 were recorded as? ₹ 4,040.
4. Goods returned from Paresh ₹ 1,000 were recorded as ₹ 1,400.

4. The Trial Balance of Rajesh Brothers on 31st March, 2023 did not agree. In order to close the books, the accountant placed the difference for ₹ 26,700 (Dr) to Suspense Account for necessary adjustment in the next period. On 25th April, 2023 the following errors, arising in 2022-23 were detected.

(i) ₹ 4,500 allowed as cash discount to a trade debtor was not debited to the Discount Account. 

(ii) Credit Sale of ₹ 6,550 was posted to the credit of the customer's account as ₹ 5,650. 

(iii) Machine purchased on 1st October, 2022 for ₹ 50,000 in cash was posted to the Purchase Account in the ledger. Rate of Depreciation was applicable on machine 15% per annum.

(iv) Sales book was overcast by ₹ 10,000 in February 2023. 

Give Journal entries to rectify the errors and prepare Suspense Account. 

5. On comparing the Cash Book of Shivam with the Bank Pass Book for the year ended 31st March, 2024, following discrepancies were noticed:

1. Cheques of ₹85,000 deposited into the bank on 25th March, cheques amounting to ₹25,000 were collected on 5th April.
2. Cheques amounting to ₹38,000 drawn on 28th March, of which a cheque for ₹8,000 was presented on 3rd April.
3. A cheque for ₹4,000 entered in Cash Book but omitted to be banked on 31st March.
4. A bill receivable for ₹18,000 previously discounted (discount ₹90) with the bank had been dishonoured but advice was received on 3rd April.
5. A cheque of ₹20,000 wrongly credited in the Pass Book on 29th March was reversed on 2nd April.
6. Bank had wrongly debited ₹15,000 in the account on 31st March and reversed it on 10th April, 2024.

Prepare a Bank Reconciliation Statement as on 31st March, 2024, if the Balance as per Cash Book on 31st March, 2024 was ₹1,82,500.

6. Original cost of a machine is ₹1,50,000, residual value ₹10,000, if depreciation is charged @ 10% per annum under WDV method then depreciation for 3rd year will be ______________

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Accounting for Special Transactions

7.  Write a Short Note on: Retirement of bills of exchange.

8. Suresh draws a bill for ₹ 30,000 on Anup on 15th April,2024 for 3 months, which Anup returns to Suresh after accepting the same. Suresh gets it discounted with Bank ₹ 29,400 on 18th April,2024 and remit one-third amount to Anup. On the due date Suresh fails to remit the amount due to Anup, but he accepts a bill of ₹ 35,000 for 3 months, which Anup discounts for ₹ 34,200 and remits ₹ 5,650 to Suresh. Before the maturity of the renewed bill Suresh becomes insolvent and only 50% was realized from his estate on 31st October,2024.

Pass necessary Journal entries for the above transactions in the books of Suresh.

9. Ram of Kolkata sent goods costing ₹ 1,50,000 to Shyam of Mumbai on consignment basis. Ram paid ₹ 6,000 on various accounts for sending the goods. Shyam paid ₹ 3,600 as railway charges and ₹ 1,500 as godown rent. The consignee sent a bank draft for ₹ 90,000 as advance against the consignment. 4/5th of the goods were sold at ₹ 1,74,000. A customer who purchased goods for  ₹ 1000 failed to pay for which the debt proved bad. The Account sales sent by the consignee showed that he charged 10% as ordinary commission and 2.5% as del Credere commission.

You are required to give in the books of Ram: (i) Consignment A/c (ii) Shyam Personal Account (iii) Advance against consignment Account.

10. M/s Singha Traders of Surat consigned 5,000 litres of edible oil costing ₹ 32 each to M Ltd. of Mumbai on 1.2.2022. S Ltd. paid ₹ 5,000 as freight and insurance charges. During transit 200 litres were destroyed for which the insurance company agreed to pay ₹ 5,000 in full settlement.

M Ltd. paid clearing charges ₹ 6,100; godown rent ₹ 300 and Salesman’s salary ₹ 900. It was entitled to 6% ordinary commission and 4% del credere commission on sales.

On 30.6.2022, M Ltd. reported that 4,000 litres were sold at ₹ 1,65,000 and 100 litres were lost due to evaporation. A customer who bought liquor for ₹ 1,500 could pay only 40% of his amount. M Ltd. paid its balance due by a cheque. 

Show the Consignment Account in the books of M/s Singha Traders.

11. Hari and Om agreed for purchasing and selling furniture in a joint venture, their profit sharing ratio being 3:2 respectively. Hari purchased 10 sofas at ₹ 10,000 per sofa. He sent those sofas to Om for sale after spending ₹ 1,000 per sofa on insurance and transportation. He drew a bill of ₹ 50,000 on Om and this bill was discounted at a discount of ₹ 5,000 after acceptance. Om incurred further expenses of ₹ 2,000 on these sofas before sale. He sold all the sofas @ ₹ 15,000 per sofa, giving 5% commission to the dealer. Prepare Joint Venture with Om Account in the books of Hari. Also show the Memorandum Joint Venture Account.

12. Manubhai of Rajkot and Raman of Madras enter into a joint venture deciding to share profits and losses in the ratio of 3:2. Manubhai purchases 3,000 kg. of material A for ₹ 1,50,000 and sends it to Nana of Pune for processing. Manubhai pays the transport cost amounting to ₹ 6,000. Raman purchases 2,000kgs. of material B for ₹ 2,00,000 and sends it to Nana of Pune for processing. The transport cost amounting ₹ 10,000 paid by Raman. Nana does the processing work and manufactures 4,800 units of finished product C. Nana prepare a “Conversion cost’ bill on the joint venture at ₹ 20 per unit. Manubhai pays this bill. The goods are sent to Banerjee of Calcutta, the transport cost amounting to ₹ 18,000 being paid by Manubhai. Banerjee sells 90% of the goods at ₹ 150 per unit. He takes over the balance goods at ₹ 120 per unit. After deducting his own commission @10% of sale proceeds, he remits the amount to Manubhai. The co-ventures agree to settle the account, after retaining 30% of the profits for taxation on the income of association of persons. You are required to show the ledger accounts in the books of Manubhai.

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Preparation of Final Accounts of Commercial Organisations

13. The following are the balances extracted from the books of Shri Raghuram as on 31.03.20X2, who carries on business under the name and style of M/s Raghuram and Associates at Chennai:

Particulars	Debit (₹)	Credit (₹)
Capital A/c		14,11,400
Purchases	12,00,000
Purchase Returns		18,000
Sales		15,00,000
Sales Returns	24,000
Freight Inwards	62,000
Carriage Outwards	8,500
Rent of Godown	55,000
Rates and Taxes	24,000
Salaries	72,000
Discount allowed	7,500
Discount received		12,000
Drawings	20,000
Printing and Stationery	6,000
Insurance premium	48,000
Electricity charges	14,000
General expenses	11,000
Bank charges	3,800
Bad debts	12,200
Repairs the Motor vehicle	13,000
Interest on loan	4,400
Provision for Bad-debts		10,000
Loan from Mr. Rajan		60,000
Sundry creditors		62,000
Motor vehicles	1,00,000
Land and Buildings	5,00,000
Office equipment	2,00,000
Furniture and Fixtures	50,000
Stock as on 31.03.20X1	3,20,000
Sundry debtors	2,80,000
Cash at Bank	22,000
Cash in Hand	16,000
	30,73,400	30,73,400

Prepare Trading and Profit and Loss Account for the year ended 31.03.20X2 and the Balance Sheet as at that date after making provision for the following:

(a) Depreciate Building by 5%, Furniture and Fixtures by 10%, Office Equipment by 15% and Motor Car by 20%.

(b) Value of stock at the close of the year was ₹ 4,10,000.

(c) One month rent for godown is outstanding.

(d) Interest on loan from Rajan is payable @ 10% per annum. This loan was taken on 01.07.20X1

(e) Reserve for bad debts is to be maintained at 5% of Sundry debtors.

(f) Insurance premium includes ₹ 42,000 paid towards proprietor's life insurance policy and the balance of the insurance charges cover the period from 01.04.20X1 to 30.06.20X2.

14. The following information relates to the business of ABC Enterprises. Prepare a Trading and Profit & Loss Account for the year ended 31st March, 2025 and a Balance Sheet as on that date.

(a) Assets and Liabilities as on

Particulars	1.04.24	31.03.25
Furniture	60,000	63,500
Stock	80,000	70,000
Sundry Debtors	1,60,000	?
Sundry Creditors	1,10,000	1,50,000
Prepaid Expenses	6,000	7,000
Outstanding Expenses	20,000	18,000
Cash in Hand and Bank Balance	12,000	26,250

 

(b) Cash transactions during the year:

(i) Collection from Debtors after allowing discount of ₹15,000 amounted to ₹5,85,000.

(i1) Collection on discounting Bills of Exchange, after deduction of discount ₹1,250 by bank totalled ₹61,250.

(ii) Creditors of T ₹4,00,000 were paid ₹3,92,000 in full settlement.

(iv) Freight Inward paid: ₹30,000.

(v) Drawings: ₹70,000.

(vi) Payment for Office Furniture: ₹10,000.

(vii) Investment carrying annual interest of 6% were purchased at ₹95 (200 shares, face value ₹100 each) on lst October 2024 and payment made thereof.

(vii) Expenses including salaries paid: ₹95,000.

(ix) Miscellaneous Receipts: ₹5,000.

(c) Additional Information:

• Bills drawn ₹1,00,000, of these ₹20,000 endorsed to creditors and an endorsed bill of exchange of ₹4,000 was dishonoured.
• Goods worth ₹9,000 used as advertising material. 
• Gross Profit is always 20% on Sales. 
• Cash Book difference treated as Drawing/Capital introduced. 
• Provide 2% for Doubtful Debts on closing Debtors.

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Preparation of Final Accounts of Not-for-Profit Organisations

15. The Income and Expenditure account of an association for the year ended 31 March 2022 is as under: 

DR.		CR.
Particulars	(₹)	Particulars	(₹)
To, Salaries	1,20,000	By, Subscription	1,70,000
To, Printing and Stationery	6,000	By, Entrance fee	4,000
To, Telephone	1,500	By, Contribution for Dinner	36,000
To, Postage	500
To, General expenses	12,000
To, Interest and bank charges	5,500
To, Audit fees	2,500
To, Annual Dinner Expenses	25,000
To, Depreciation	7,000
To, Surplus	30,000
	2,10,000		2,10,000

The aforesaid Income and Expenditure account has been prepared after the following adjustments: 

	(₹)
Subscription outstanding as on 31st March 2021	16,000
Subscription outstanding as on 31st March 2022	18,000
Subscription received in advance as on 31st March 2021	13,000
Subscription ‘received in advance as on 31st March 2022	8,400
Salaries outstanding as on 31st March 2021	6,000
Salaries outstanding as on 31st March 2022.	8,000
Audit fees for 2020-21 paid during 2021-22	2,000
Audit fee for 2021-22 not paid	2,500
The building owned by the association since 2004 costs	1,90,000
Equipment as on 31st March, 2021 valued at	52,000
At the end of the year after depreciation of ₹ 7,000, equipment amounted to	63,000
In 2020-21, the association raised a bank loan of which is still not paid	30,000
Cash in hand as on 31st March 2022	28,500
Cash in hand as on 31st March 2021	13,600
Capital Fund as on 31st March 2021	2,20,600

You are required to prepare Receipts and Payment Account of the association for the year ended 31st March 2022 and the Balance Sheet as at that date. 

16. From the following receipts and payments account of Pune Club, prepare income and expenditure account for the year ended 31.03.20X2 and its balance sheet as on that date:

Receipts	₹	Payments	₹
Cash in hand	4,000	Salary	2,000
Cash at bank	10,000	Repair expenses	500
Donations	5,000	Purchase of furniture	6,000
Subscriptions	12,000	Misc. expenses	500
Entrance fees	1,000	Purchase of investments	6,000
Interest received from bank	500	Insurance premium	200
Sale of old newspaper	150	Snooker table	8,000
Sale of drama tickets	1,050	Stationary	150
		Drama expenses	500
		Cash in hand (closing)	2,650
		Cash at bank (closing)	7,200
	33,700		33,700

The following adjustments are to be made while drawing up the accounts:

1. Subscriptions in arrear for year 20X1-X2 ₹900 and subscriptions in advance for 20X2-X3 ₹ 350.

2. Insurance premium outstanding ₹ 40 and Misc. expenses prepaid ₹90.

3. 50% of donation is to be capitalized.

4. Entrance fees are to be treated as revenue income.

5. 8% interest has accrued on investment for five months.

6. Snooker table costing ₹ 30,000 was purchased on 31st March,20X1 and ₹22,000 were paid for it.

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Preparation of Final Accounts from Incomplete Records

17. On 1st April, 20X2 the stock of Shri Ramesh was destroyed by fire, but sufficient records were saved from which following particulars were ascertained:

	₹
Stock at cost - 1st January, 20X1	73,500
Stock at cost - 31st December, 20X1	79,600
Purchases - year ended 31st December, 20X1	3,98,000
Sales - year ended 31st December, 20X1	4,87,000
Purchases - 1-1-20X2 to 31-3-20X2	1,62,000
Sales - 1-1-20X2 to 31-3-20X2	2,31,200

In valuing the stock for the Balance Sheet at 31st December, 20X1 ₹ 2,300 had been written off on certain stock which was a poor selling line having the cost ₹ 6,900. A portion of these goods were sold in March, 20X2 at loss of ₹ 250 on original cost of ₹ 3450. The remainder of this stock was now estimated to be worth its original cost. Subject to the above exception, gross profit had remained at a uniform rate throughout the year.

The value of stock salvaged was ₹ 5,800. The policy was for ₹ 50,000 and was subject to the average clause. Work out the amount of the claim of loss by fire.

18. On 1.4.2023, godown of Y Ltd. was destroyed by fire. The records of the company revealed the following particulars:

	₹
Stock on 1.1.2023	75,000
Stock on 31.12.2023	80,000
Purchases during 2023	3,10,000
Sales during 2023	4,00,000
Purchase from 1.1.2024 to the date of fire	75,000
Sales from 1.1.2024 to the date of fire	1,00,000

In valuing Closing Stock of 2023, ₹ 5,000 was written off whose cost was ₹ 4,800. Part of this stock was sold in 2024 at a loss of ₹ 400, at ₹ 2,400. Stock salvaged was ₹ 5,000. The godown and the cost of which was fully insured.

Indicate from above amount of claim to be made against the insurance company.

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Partnership Accounting

19. The Balance Sheet of a Partnership Firm M/s AB & Co consisted of two partners A and B who were sharing Profits and Losses in the ratio of 5 : 3 respectively. The position as on 31-03-20X2 was as follows:

Liabilities	(₹)	Assets	(₹)
A's Capital	4,10,000	Land & Building	3,80,000
B's Capital	3,30,000	Plant & Machinery	1,70,000
Profit & Loss A/c	1,12,000	Furniture	1,09,480
Trade Creditors	54,800	Stock	1,45,260
		Sundry debtors	60,000
		Cash at Bank.	42,060
	9,06,800		9,06,800

On the above date, C was admitted as a partner on the following terms:

(a) C should get 1/5th of share of profits.

(b) C brought ₹ 2,40,000 as his capital and ₹ 32,000 for his share of Goodwill.

(c) Plant and Machinery would be depreciated by 15% and Land & Buildings would be appreciated by 40%.

A provision for doubtful debts to be created at 5% on sundry debtors.

An unrecorded liability of ₹ 6,000 for repairs to Buildings would be recorded in the books of accounts.

(d) Immediately after C’s admission, Goodwill brought by him would be adjusted among old partners. Thereafter, the capital accounts of old partners would be adjusted through the current accounts of partners in such a manner that the capital accounts of all the partners would be in their profit sharing ratio.

Prepare Revaluation A/c, Capital Accounts of the partners, New profit sharing ratio and Balance Sheet of the Firm after the admission of C.

20. Which of the following account is mainly prepared at the time of dissolution of the firm

1.  Revaluation A/c
2. Goodwill A/c
3. Realization A/c
4. Memorandum Revaluation A/c

21. Raylink Ltd. agreed to purchase the business of a firm consisting of two brothers, A. Ray and S. Ray as on March 31, 2024. The Balance Sheet of the firm on that date was as follows:

Liabilities	₹	Assets	₹
Capital Accounts:
A. Ray	1,90,000	Leasehold Premises	1,17,500
S. Ray	1,45,000	Plant & Machinery	70,000
General Reserve	75,000	Furniture & Fixtures	17,500
Creditors	1,00,000	Stock-in-Trade	1,55,000
		Debtors	1,37,500
		Cash	12,500
Total	5,10,000	Total	5,10,000

The company agreed to take over the liabilities and all the assets, with the exception of cash, the agreed purchase price being ₹4,50,000 to be satisfied as to 1/4th in cash and 3/4th by issue of fully paid equity shares of ₹10 each at an agreed value of ₹12.50 per share.

The company made the following revaluations of the assets taken over when bringing them to books:

• Leasehold Premises: ₹1,55,000
• Plant & Machinery: ₹62,500
• Furniture & Fixtures: ₹12,500
• Stock-in-Trade: ₹1,45,000
• Debtors: ₹1,25,000

You are required to:

(a) Pass the necessary journal entries to record the acquisition of the business in the books of the company; and

(b) Prepare the post-acquisition Balance Sheet of Raylink Ltd.

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Lease Accounting

22. Prakash Limited leased a machine to Badal Limited on the following terms:

		(Rs. In lakhs)
(i)	Fair value of the machine	48.00
(ii)	Lease term	5 year
(iii)	Lease rental per annum	8.00
(iv)	Guaranteed residual value	1.60
(v)	Expected residual value	3.00
(vi)	Internal rate of return	15%

Discounted rates for 1st year to 5th year are 0.8696, 0.7561, 0.6575, 0.5718, and 0.4972 respectively.

Ascertain Unearned Finance Income.

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Branch (including Foreign Branch) and Departmental Accounts

23. Ayan Ltd. invoices goods to its branch at cost plus 33 (1/3) %.

From the following particulars prepare Branch stock Account, Branch stock Adjustment Account and Branch Profit and Loss Account as they would appear in the books of head office.

Particulars	₹
Stock at commencement at Invoice price	3,60,000
Stock at close at Branch ay Invoice price	2,88,000
Goods sent to Branch during the year at invoice price (including goods invoiced at ₹ 48,000 to Branch on 31/03/20X1 but not received by Branch before the close of the year)	24,00,000
Return of goods to head office (invoice price)	1,20,000
Credit Sales at Branch	1,20,000
Invoice value of goods pilfered	24,000
The normal loss at Branch due to wastage and deterioration of stock (at invoice price)	36,000
Cash Sales at Branch	21,60,000

Ayan closes its books on 31st March 20X1.

24. P. Bose & Co. has two departments P and Q. Department P sells goods to Department Q at normal selling Price. From the following particulars prepare the Departmental Trading and Profit and Loss Account for the year ended 31.3.2024 and also ascertain the net profit to be transferred to Balance Sheet.

	Dept. P	Dept. Q
Opening Stock	2,50,000	Nil
Purchases	14,00,000	1,50,000
Goods from P	-	4,00,000
Wages	1,75,000	1,00,000
Travelling Expenses	10,000	80,000
Closing Stock at cost to the Department	4,00,000	1,04,500
Sales	15,00,000	10,00,000
Printing and Stationery	15,000	12,500

The following expenses incurred for the both departments were not apportioned between the departments:

(a)  Salaries ₹ 1,65,000; 
(b)  Advertisement Expenses ₹ 60,000; 
(c)  General Expenses ₹ 2,50,000; 
(d)  Depreciation is to be charges @30% on the machinery value of ₹ 48,000.

The advertisement expenses of the departments are to be apportioned in the turnover ratio. Salaries and Depreciation in the ratio of 2:1 and 1:3 respectively. General Expenses are to be apportioned in the ratio of 3:1.

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Insurance Claim for Loss of Stock and Loss of Profit

25. A fire occurred on 15th September 20X2 in the premises of Sen & Co. from the following figures, calculate the amount of claim to be lodged with the insurance company for loss of stock.

Particulars	Amount (Rs.)
Stock at cost on 1.1.20X1	40,000
Stock at cost on 1.1.20X2	60,000
Purchases in 20X1	80,000
Purchase from 1.1.20X1 to 15.9.20X2	1,76,000
Sales in 20X1	1,20,000
Sales from 1.1.20X2 to 15.9.20X2	2,10,000

During the current year cost of purchase has risen by 10% above last years’ level. Selling prices have gone up by 5%. Salvage value of stock after fire was Rs. 4,000.

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Hire Purchase and Installment Sale Transactions

26. Y purchased a machine under the hire purchase system. As per the agreement,  ₹ 40,000 was to be paid on signing the contract. The balance was to be paid in four instalments of ₹25,000 each plus interest. The cash price was ₹1,40,000. Interest is chargeable on outstanding balance at 20% per annum. Find interest for each year and the instalment amount. 

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Accounting Standards

27. Which one is the correct one? Fundamental accounting assumptions as per AS 1 are

28. (i) As per AS-10, the amount of depreciation charged to the Statement of Profit and Loss depends on certain factors. List out those factors with brief explanation. 

(ii) ABC Ltd. purchased a motor vehicle costing ₹70 lakh on 1st April, 2024. The major components of the motor vehicle consist of Main Body costing ₹20 lakh, Seating Arrangement and Furnishing costing ₹30 lakh, and Engine costing ₹20 lakh. The expected useful life of these components is: Main Body – 5 years, Seating Unit – 6 years and Engine – 10 years. Compute the depreciation for the year ending 31st March, 2025.

29. A business having the Head Office in Kolkata has a branch in UK. The following is the trial balance of Branch as at 31.03.20X4:

Account Name	Amount in £
	Dr.	Cr.
Property, Plant and Equipment (Purchased on 01.04.20X1)	5,000
Debtors	1,600
Opening stock	400
Goods received from head office account (Recorded in HO books as ₹ 4,02,000)	6,100
Sales		20,000
Purchases	10,000
Wages	1,000
Salaries	1,200
Cash	3,200
Remittances to Head Office (Recorded in HO books as ₹ 1,91,000)	2,900
Head office Account (Recorded in HO books as ₹ 4,90,000)		7,400
Creditors		4,000

•   Closing stock at branch is £ 700 on 31.03.20X4.

•   Depreciation @ 10% p.a. is to be charged on Property, plant and equipment.

•   Prepare the trial balance after been converted in Indian Rupees.

•   Exchange rates of Pounds on different dates are as follow:

01.04.20X1 – ₹ 61; 01.04.20X3 – ₹ 63 & 31.03.20X4 – ₹ 67

30. Big Box Ltd., a start-up purchased on April 1, 2020, a machine worth ₹ 44,85,000 in relation to which it received ₹ 7,35,000 as grant from Government of India. The company decided to treat this grant as a capital receipt. It is estimated that the realizable value of the machine at the end of its useful life of 4 years will be ₹ 15,36,000. During the financial year 2022-23, the grant became refundable as the start-up company failed to comply with the necessary terms and conditions of the grant.

You are required to calculate the amount of depreciation that is to be charged to the statement of profit and loss for the years 2022-23 and 2023-24 given that the company follows straight line method of charging depreciation. 

31. X Ltd. began construction of a new building on 1st January, 20X1. It obtained ₹ 1 lakh special loan to finance the construction of the building on 1st January, 20X1 at an interest rate of 10%. The company’s other outstanding two non-specific loans were:

Amount	Rate of Interest
₹ 5,00,000	11%
₹ 9,00,000	13%

The expenditures that were made on the building project were as follows:

	₹
January 20X1	2,00,000
April 20X1	2,50,000
July 20X1	4,50,000
December 20X1	1,20,000

Building was completed by 31st December, 20X1. Following the principles prescribed in AS 16 ‘Borrowing Cost,’ calculate the amount of interest to be capitalised and pass one Journal Entry for capitalising the cost and borrowing cost in respect of the building.