PAPER - 1 : F|NAN6|AL REP0RT|NC

/nsuer quesr|ons.
work|ng nores snou|o lorm parr ol rne ansuer.
wnerever necessar,, su|rao|e assumpr|on{sj snou|o oe maoe o, rne cano|oares.
0uest|on 1
{aj Tne lo||ou|ng oara app|, ro 'X lro. oel|neo oenel|r pens|on p|an lor rne ,ear enoeo J'.0J.09,
ca|cu|are rne acrua| rerurn on p|an assers .
- 3enel|rs pa|o 2,00,000
- Emp|o,er conrr|our|on 2,80,000
- Fa|r marker va|ue ol p|an assers on J'.0J.09 '',40,000
- Fa|r marker va|ue ol p|an assers as on J'.0J.08 8,00,000
{oj u.$./ lro. purcnaseo rau marer|a| Rs. 400 per kg. 0ompan, ooes nor se|| rau marer|a| our
uses |n prooucr|on ol l|n|sneo gooos. Tne l|n|sneo gooos |n un|cn rau marer|a| |s useo are
expecreo ro oe so|o ar oe|ou cosr. /r rne eno ol rne accounr|ng ,ear, compan, |s nav|ng
'0,000 kg ol rau marer|a| |n srock. /s rne compan, never se||s rne rau marer|a|, |r ooes nor
knou rne se|||ng pr|ce ol rau marer|a| ano nence can nor ca|cu|are rne rea||zao|e va|ue ol rne
rau marer|a| lor va|uar|on ol |nvenror|es ar rne eno ol rne ,ear. louever rep|acemenr cosr ol
rau marer|a| |s Rs. J00 per kg. lou u||| ,ou va|ue rne |nvenror, ol rau marer|a|?
{cj Voon lro. enrereo |nro agreemenr u|rn $un lro. lor sa|e ol gooos ol Rs.8 |akns ar a prol|r ol
20 / on cosr. Tne sa|e rransacr|on rook p|ace on '
sr
Feoruar,, 2009. Dn rne same oa, $un
lro. enrereo |nro anorner agreemenr u|rn Voon lro. ro rese|| rne same gooos ar Rs. '0.80
|akns on '
sr
/ugusr, 2009. $rare rne rrearmenr ol rn|s rransacr|on |n rne l|nanc|a| sraremenrs ol
Voon lro. as on J'.0J.09. Tne pre-oererm|neo re-se|||ng pr|ce covers rne no|o|ng cosr ol $un
lro. S|ve rne Journa| Enrr|es as on J'.0J.09 |n rne oooks ol Voon lro.
{oj XY lro. uas mak|ng prov|s|ons lor non-mov|ng srocks oaseo on no |ssues lor rne |asr '2
monrns upro J'.0J.08. 3aseo on recnn|ca| eva|uar|on rne compan, uanrs ro make prov|s|ons
our|ng rne ,ear J'.0J.09.
Tora| va|ue ol srock --- Rs. '50 |akns.
Prov|s|ons requ|reo oaseo on '2 monrns |ssue Rs. 4.0 |akns.
Prov|s|ons requ|reo oaseo on recnn|ca| eva|uar|on Rs. J.20 |akns.
0oes rn|s amounr ro cnange |n accounr|ng po||c, ? 0an rne compan, cnange rne mernoo ol
prov|s|on?
{5x4=20 Varksj
FINAL (NEW) EXAMINATION: NOVEMBER, 2009
2
Answer
(a} Rs.
Fa|r va|ue ol p|ar assels or 31.3.08 8,00,000
/oo. Erp|oyer corlr|oul|or 2,80,000
less.8erel|ls pa|d 2,00,000
(A) 8,80,000
Fa|r rar|el va|ue ol p|ar assels al 31.3.09 (8) 11,10,000
Aclua| relurr or p|ar assels (8-A) 2,0,000
(b} As per Para 21 ol A3 2 (Rev|sed) 'va|ual|or ol lrverlor|es, raler|a|s ard olrer supp||es
re|d lor use |r lre producl|or ol |rverlor|es are rol Wr|ller doWr oe|oW cosl |l lre
l|r|sred producls |r Wr|cr lrey W||| oe |rcorporaled are expecled lo oe so|d al or aoove
cosl. loWever, Wrer lrere ras oeer a dec||re |r lre pr|ce ol raler|a|s ard |l |s esl|raled
lral lre cosl ol lre l|r|sred producls W||| exceed rel rea||zao|e va|ue, lre raler|a|s are
Wr|ller doWr lo rel rea||zao|e va|ue. lr sucr c|rcurslarces, lre rep|acererl cosl ol lre
raler|a|s ray oe lre oesl ava||ao|e reasure ol lre|r rel rea||zao|e va|ue. Trerelore, |r
lr|s case, u3A Lld. W||| va|ue lre sloc| ol raW raler|a| al Rs. 30,00,000 (10,000 Kg. _
Rs.300 per |g.).
(c} lr lre g|ver case, Voor Lld. corcurrerl|y agreed lo repurcrase lre sare goods lror
3ur Lld. or 1sl Feo., 2009. A|so lre re-se|||rg pr|ce |s pre-delerr|red ard covers
purcras|rg ard ro|d|rg cosls ol 3ur Lld. lerce, lre lrarsacl|or oelWeer Voor Lld. ard
3ur Lld. or 1sl Feo., 2009 srou|d oe accourled lor as l|rarc|rg ralrer lrar sa|e. Tre
resu|l|rg casr l|oW ol Rs.9.0 |a|rs rece|ved oy Voor Lld., carrol oe cors|dered as
reverue as per A3 9 'Reverue Recogr|l|or.
Journa| Entr|es |n the books of Hoon Ltd.
Rs. |n |akns
1.02.09 8ar| Accourl 0r. 9.0
To Advarce lror 3ur Lld

. 9.0
(8e|rg advarce rece|ved lror 3ur Lld arourl|rg
[Rs.8 |a|rs 20 ol Rs. 8 |a|rs= 9.0 |a|rs|
urder sa|e ard re-purcrase agreererl)
31.03.09 F|rarc|rg Crarges Accourl 0r. 0.10
To 3ur Lld. 0.10
(F|rarc|rg crarges lor 2 rorlrs al Rs.1.20
|a|rs [10.80 - 9.0| |.e. 1.2 |a|rs x 2/ )
31.03.09 Prol|l ard Loss Accourl 0r. 0.10
To F|rarc|rg Crarges Accourl 0.10
(8e|rg arourl ol l|rarce crarges lrarslerred lo
P& L Accourl)

The balance oI Sun Ltd. account will be disclosed as an advance under the heading liabilities in the balance
sheet oI Moon Ltd. as on 31
st
March, 2009.
PAPER - 1 : FINANCIAL REPORTING
3
(d} Tre dec|s|or ol ra||rg prov|s|or lor ror-rov|rg sloc|s or lre oas|s ol lecrr|ca| eva|ual|or
does rol arourl lo crarge |r accourl|rg po||cy as per A3 5 'Nel Prol|l or Loss lor lre
Per|od, Pr|or Per|od llers ard Crarges |r Accourl|rg Po||c|es. Tre relrod ol esl|ral|rg
lre arourl ol prov|s|or ray oe crarged, |r case, a rore pruderl esl|rale car oe rade oy
adopl|rg lre crarged relrod.
lr lre g|ver case, cors|der|rg lre lola| va|ue ol sloc|s, lre crarge |r lre arourl ol requ|red
prov|s|or ol ror-rov|rg sloc|s lror Rs.1.0 |a|rs lo Rs.3.20 |a|rs |s a|so rol raler|a|. Tre
d|sc|osure car oe rade lor sucr crarge oy Way ol roles lo lre accourls |r lre l|rarc|a|
slalererls ol XY Lld. lor lre year erd|rg or 31.03.09, |r lre lo||oW|rg rarrer:
'Tre corpary ras prov|ded lor ror-rov|rg sloc|s or lre oas|s ol lecrr|ca| eva|ual|or ur|||e
preced|rg years. lad lre sare relrod oeer lo||oWed as |r lre prev|ous year, lre prol|l lor
lre year ard lre correspord|rg ellecl or lre year erd, lre rel assels Wou|d rave oeer r|grer
oy Rs.0.80 |a|rs.
0uest|on 2
Tne lo||ou|ng are rne 3a|ance $neers ol l lro. ano $ lro. as ar J'.0J.09.
Rs. |n |akns
l lro. $ lro. l lro. $ lro.
Rs. Rs. Rs. Rs.
$nare cap|ra| F|xeo assers 60 '8
$nare ol Rs.'0 eacn 50 '0 lnvesrmenr |n $ lro. {60,000 snaresj 6 -
Senera| reserve 50 20 0eorors J5 5
Prol|r ano loss 20 '5 lnvenror|es J0 25
$ecureo |oan 20 J 0asn ar 3ank J9 2
0urrenr ||ao|||r|es J0 2
'70 50 '70 50
l lro. no|os 60/ ol rne pa|o up cap|ra| ol $ lro. ano oa|ance |s ne|o o, a lore|gn compan,.
Tne lore|gn compan, agreeo u|rn l lro. as unoer.
{|j Tne snares ne|o o, rne lore|gn compan, u||| oe so|o ro l lro. ar Rs. 50 aoove rnan
nom|na| va|ue ol per snare.
{||j Tne acrua| cosr per snare ro rne Fore|gn 0ompan, uas Rs. '', ga|n accru|ng ro Fore|gn
0ompan, |s raxao|e 20 / . Tne rax pa,ao|e u||| oe oeoucreo lrom rne sa|e proceeos
ano pa|o ro Sovernmenr o, l lro. 50/ ol rne cons|oerar|on {alrer pa,menr ol raxj u||| oe
rem|rreo ro Fore|gn 0ompan, o, l lro. ano a|so an, casn lor lracr|ona| snares a||orreo.
{|||j For rne 3a|ance ol cons|oerar|on l lro. uou|o |ssue |rs snares ar rne|r |nrr|ns|c va|ue.
lr uas a|so oec|oeo rnar l lro. uou|o a|so aosoro $ lro. s|mu|raneous|, o, ur|r|ng ooun
rne l|xeo assers ol $ lro. o, '0 /. Tne 3a|ance $neer l|gure |nc|uoeo a sum ol Rs. '
|akn oue o, $ lro. ro l lro, |nc|uoeo srock ol Rs. '.5 |akns purcnaseo lrom $ lro. uno
so|o rnem ar cosr p|us 20 /.
FINAL (NEW) EXAMINATION: NOVEMBER, 2009
4
Pass Journa| enrr|es |n rne oooks ol l lro. ro recoro rne aoove arrangemenr on J'.0J.09
ano prepare rne 3a|ance $neer ol l lro. alrer aosorpr|on ol $ lro. work|ngs snou|o lorm
parr ol ,our ansuer. {'6 Varksj
Answer
Journa| Entr|es |n the books of h Ltd.
Rs. Rs.
1. 8us|ress Purcrase A/c 0r. 21,00,000
To Fore|gr Corpary 21,00,000
(8e|rg ous|ress purcrased)
2. F|xed Assels A/c 0r. 1,20,000
0eolors A/c 0r. 5,00,000
lrverlor|es A/c 0r. 25,00,000
Casr al 8ar| A/c 0r. 2,00,000
To Currerl L|ao|||l|es A/c 2,00,000
To 3ecured Loar A/c 3,00,000
To lrveslrerl |r 3 Lld. A/c ,00,000
To 8us|ress Purcrase A/c 21,00,000
To Cap|la| Reserve A/c (8.F.) 13,20,000
(8e|rg var|ous assels ard ||ao|||l|es la|er over)
3. Prol|l ard Loss A/c 25,000
To lrverlor|es A/c 25,000
(8e|rg e||r|ral|or ol urrea||sed prol|l)
1. Currerl L|ao|||l|es A/c 0r. 1,00,000
To 0eolors A/c 1,00,000
(8e|rg e||r|ral|or ol rulua| oW|rgs)
5. Fore|gr Corpary 0r. 21,00,000
To Tax Payao|e A/c 3,92,000
To 8ar| A/c(Rs.10,01,000 Rs.20) 10,01,020

To Equ|ly 3rare Cap|la| A/c 3,31,0

To 3ecur|l|es Prer|ur A/c ,9,320
(8e|rg payrerl rade lo lore|gr corpary)

ll |s assured lral payrerl ol lracl|ora| srares ras a|so oeer rouled lrrougr 8ar| A/c a|org W|lr 50 payrerl
rer|lled lo Fore|gr Corpary.
PAPER - 1 : FINANCIAL REPORTING
5
. Tax Payao|e A/c 0r. 3,92,000
To 8ar| A/c 3,92,000
(8e|rg lax pa|d lo 0overrrerl)
a|ance 8heet of h Ltd. (After Absorpt|on}
l|ao|||r|es Rs. /ssers Rs.
5,31,1 3rares ol Rs.10 eacr 53,31,0 F|xed Assels Z,20,000
(oul ol aoove, 33,1 srares |ssued
lor cors|deral|or olrer lrar casr)
(0,00,0001,20,000)
0erera| Reserve
Prol|l & Loss (20,00,000- 25,000)
Cap|la| Reserve
3ecur|l|es Prer|ur
50,00,000
19,Z5,000
13,20,000
,9,320
3urdry 0eolors
(35,00,000 - 1,00,000
5,00,000)
39,00,000
3ecured Loar (20,00,0003,00,000)
Currerl L|ao|||l|es
23,00,000 lrverlor|es (30,00,000-
25,00025,00,000)
51,Z5,000
(30,00,0002,00,000-1,00,000) 31,00,000 Casr al 8ar| 2Z,03,980
________
(39,00,0002,00,000-
10,01,020-3,92,000)
________
19,98,980 19,98,980
work|ng Notes:
1. Amount payab|e to fore|gn company
Pr|ce per srare ol 3 Lld.= Rs.50 Rs.10 (Nor|ra| va|ue) = Rs.0
va|ue ol 10 srares re|d oy lore|gr corpary = 10,00,000x 10x
10
60
= Rs. 21,00,000
Cap|la| ga|r = Rs.21,00,000 - (1,00,000 x
10
11
) = Rs.19,0,000
Tax or cap|la| ga|r = Rs.19,0,000 20 = Rs.3,92,000
Arourl payao|e lo Fore|gr Corpary aller lax = Rs.21,00,000-Rs.3,92,000= Rs.20,08,000
50 ol Rs.20,08,000 = Rs.10,01,000 lo oe rer|lled lo lore|gr corpary.
2. |ntr|ns|c va|ue of shares of h Ltd. and ba|ance payment to fore|gn company
Rs. Rs.
Tola| assels (Exc|ud|rg lrveslrerl |r 3 Lld.) 1,1,00,000
/oo. lrveslrerl |r 3 Lld. (0,000 srares Rs.0) 3,00,000
2,00,00,000
less:L|ao|||l|es:
FINAL (NEW) EXAMINATION: NOVEMBER, 2009
6
3ecured Loar 20,00,000
Currerl L|ao|||ly 30,00,000 50,00,000
1,50,00,000
No. ol equ|ly srares 5,00,000
lrlr|rs|c va|ue per srare Rs.30
Nuroer ol srares lo oe |ssued lor payrerl ol 50 oa|arce arourl
srares 1 , 33
30
000 , 01 , 10 . Rs

Casr lor lracl|ora| srares = Rs.10,01,000 - (33,1 x Rs.30) = Rs.20
0uest|on 3
P lro. ouns 80/ ol $ ano 40/ ol J ano 40/ ol /. J |s o|nr|, conrro||eo enr|r, ano / |s an
assoc|are. 3a|ance $neer ol lour compan|es as on J'.0J.09 are.
P lro. $ J /
{Rs. |n |aknsj
lnvesrmenr |n $ 800 - - -
lnvesrmenr |n J 600 - - -
lnvesrmenr |n / 600 - - -
F|xeo assers '000 800 '400 '000
0urrenr assers 2200 JJ00 J250 J650
Tora| 5200 4'00 4650 4650
l|ao|||r|es.
$nare cap|ra| Re. '
Equ|r, snare '000 400 800 800
Rera|neo earn|ngs 4000 J400 J600 J600
0reo|rors 200 J00 250 250
Tora| 5200 4'00 4650 4650
P lro. acqu|reo snares |n '$ man, ,ears ago unen '$ rera|neo earn|ngs uere Rs. 520 |akns. P lro.
acqu|reo |rs snares |n 'J ar rne oeg|nn|ng ol rne ,ear unen 'J rera|neo earn|ngs uere Rs. 400
|akns. P lro. acqu|reo |rs snares |n '/ on 0'.04.08 unen '/ rera|neo earn|ngs uere Rs. 400 |akns.
Tne oa|ance ol gooou||| re|ar|ng ro $ nao oeen ur|rren oll rnree ,ears ago. Tne va|ue ol gooou||| |n
'J rema|ns uncnangeo.
Prepare rne 0onso||oareo 3a|ance $neer ol P lro. as on J'.0J.09 as per /$ 2', 2J, ano 27.
{'6 Varksj
PAPER - 1 : FINANCIAL REPORTING
7
Answer
6onso||dated a|ance 8heet of P Ltd.
l|ao|||r|es Rs. |n |akns /ssers Rs. |n |akns
3rare Cap|la| 1,000 0oodW||| (w.N.1) 120
Rela|red Earr|rgs(w.N.2) 8,800 F|xed Assels
[1,000 800 50 (1100 x 10)|
2,30
Cred|lors (200 300 10 ol 250) 00 Currerl Assels
[2,2003,3001,300(3,250x 10)|
,800
V|ror|ly lrleresl (w.N.3) Z0 lrveslrerl |r Assoc|ales (w.N.1) 1,880
11,10 11,10
work|ng Notes:
1. 6omputat|on of Coodw|||
8 (subs|d|ary}
Rs. |n |akns
Cosl ol |rveslrerl 800
less:Pa|d up va|ue ol srares acqu|red 320
3rare |r pre- acqu|s|l|or prol|ls ol 3 Lld. (520 80) 11 Z3
0oodW||| 1
J (Jo|nt|y 6ontro||ed Ent|ty}
Rs. |n |akns
Cosl ol lrveslrerl 00
less:Pa|d up va|ue ol srares acqu|red (10 ol 800) 320
3rare |r pre-acqu|s|l|or prol|ls (10 ol 100) 10 180
0oodW||| 120
Nole:Jo|rl|y corlro||ed erl|ly 'J' lo oe corso||daled or proporl|orale oas|s |.e. 10 as per A3 2Z
Assoc|ate A (A8 23}
Rs. |n |akns
Cosl ol |rveslrerl 00
less.Pa|d up va|ue ol srares acqu|red (800 x 10) 320
3rare |r pre-acqu|s|l|or prol|ls (100 x 10) 10 180
0oodW||| 120
FINAL (NEW) EXAMINATION: NOVEMBER, 2009
8
Coodw||| shown |n the 6onso||dated a|ance 8heet
Rs. |n |akns
0oodW||| ol 'J' 120
0oodW||| ol '3' 1
less.0oodW||| Wr|ller oll ol '3' 1
0oodW||| 120
2. 6onso||dated Reta|ned Earn|ngs
Rs. |n |akns
P Lld. 1,000
3rare |r posl acqu|s|l|or prol|ls ol 3 - 80 (3,100 - 520) 2,301
3rare |r posl acqu|s|l|or prol|ls ol J - 10 (3,00 - 100) 1,280
3rare |r posl acqu|s|l|or prol|ls ol A - 10 (3,00 - 100) 1,280
less.0oodW||| Wr|ller oll (1)
8,800
3. H|nor|ty |nterest '8'
Rs. |n |akns
80 3rare Cap|la| (20 ol 100)
3rare |r Rela|red Earr|rgs (20 ol 3,100)
80
Z0
4. |nvestment |n Assoc|ates
Rs. |n |akns
Cosl ol lrveslrerls (|rc|ud|rg goodW||| Rs. 120 |a|rs) 00
3rare ol posl acqu|s|l|or prol|ls 1,280
Carry|rg arourl ol lrveslrerl (|rc|ud|rg goodW||| Rs. 120 |a|rs) 1,880
0uest|on 4
{aj Dn ' /pr||, 2008 0e|ra lro. |ssueo Rs.J0,00,000, 6 / converr|o|e oeoenrures ol lace va|ue ol
Rs. '00 per oeoenrure ar par. Tne oeoenrures are reoeemao|e ar a prem|um ol '0/ on
J'.0J.'2 or rnese ma, oe converreo |nro oro|nar, snares ar rne opr|on ol rne no|oer, rne
|nreresr rare lor equ|va|enr oeoenrures u|rnour convers|on r|gnrs uou|o nave oeen '0/.
3e|ng compouno l|nanc|a| |nsrrumenr, ,ou are requ|reo ro separare equ|r, ano oeor porr|on as
on 0'.04.08.
Tne presenr va|ue ol Re. ' rece|vao|e ar rne eno ol rne eno ol eacn ,ear oaseo on o|scounr
rares ol 6/ ano '0/ can oe raken as.
PAPER - 1 : FINANCIAL REPORTING
9
6/ '0/
Eno ol ,ear ' 0.94 0.9'
2 0.89 0.8J
J 0.84 0.75
4 0.79 0.68
{oj wnen genera| pr|ce |noex uas '00, $ranoaro lro. purcnaseo l|xeo assers ol Rs. 2 crore ano |r
nao a|so permanenr uork|ng cap|ra| ol Rs.80 |akns. Tne enr|re amounr requ|reo lor purcnase
ol l|xeo assers ano permanenr uork|ng cap|ra| uas l|nanceo o, ua, ol '2 / reoeemao|e
snare cap|ra|. $ranoaro lro. uanrs ro ma|nra|n |rs pn,s|ca| cap|ra|.
Dn J'.0J.09, rne compan, nao reserves ol Rs. J.50 crores. Tne genera| pr|ce |noex on rnar
uas 200. Tne ur|rren ooun va|ue ol l|xeo assers uas Rs. 20 |akns ano rne, uere so|o lor J
crores. Tne proceeos uere ur|||zeo lor reoempr|on ol snares. Dn rne same oa, {J'.0J.09j, rne
compan, purcnaseo neu lacror, lor Rs. 20 crores. Tne rar|o ol permanenr uork|ng cap|ra| ro
cosr ol assers ro oe ma|nra|neo ar 0.4 . '.
Tne compan, ra|seo rne aoo|r|ona| lunos requ|reo lor rne purpose o, |ssue ol equ|r, snares.
{/j 0a|cu|are rne amounr ol equ|r, cap|ra| ra|seo.
{3j $nou rne 3a|ance $neer as on 0'.04.09. {88 = '6 Varksj
Answer
(a} 6omputat|on of Equ|ty and 0ebt 6omponent of 6onvert|b|e 0ebentures as on 1.4.08
Rs.
Preserl va|ue ol lre pr|rc|pa| repayao|e aller lour years
[30,00,000 1.10 0.8 (10 0|scourl laclor)| 22,11,000
Preserl va|ue ol lrleresl [1,80,000 x 3.1Z (1 years curu|al|ve 10 d|scourl laclor)| 5,Z0,00
va|ue ol deol corporerl 28,11,00
va|ue ol equ|ly corporerl 1,85,100
Proceeds ol lre |ssue 30,00,000
(b}
Amount of equ|ty cap|ta| ra|sed Rs. |n crores
Arourl requ|red lor purcrase ol reW laclory 20.00
Perrarerl Wor||rg cap|la| requ|rererl al 10 8.00
28.00
less. Ex|sl|rg Wor||rg cap|la| (w.N. 3) .30
Fresr equ|ly cap|la| ra|sed 21.Z0
FINAL (NEW) EXAMINATION: NOVEMBER, 2009
10
a|ance 8heet of 8tandard Ltd. as on 1
st
Apr||, 2009
{Rs. |n croresj
l|ao|||r|es Rs. /ssers Rs.
3rare Cap|la| 21.Z0 F|xed Assels 20.00
Reserves ard 3urp|us (8a|. l|gure) .30 wor||rg Cap|la| 8.00
28.00 28.00
work|ng Notes:
{Rs. |n croresj
1. Preference share cap|ta| on 31
st
Harch, 2009
F|xed assels 2.00
wor||rg cap|la| 0.80
F|rarced oy 12 Redeerao|e prelererce srare cap|la| 2.80
To ra|rla|r prys|ca| cap|la|, lre corpary reeds lo eva|uale lre l|rarc|a| cap|la| or 31
sl
Varcr, 2009 Wr|cr |s requ|red lo ra|rla|r lre ex|sl|rg operal|rg capao|||ly ol lre
prys|ca| assels. 0r lre oas|s ol pr|ce |rdex dala ava||ao|e, |l car oe Wor|ed oul as
lo||oWs:
Rs. 2.80 crore
100
200
= Rs. 5.0 crores
2. work|ng cap|ta| on 31
st
Harch, 2009
(before sa|e of f|xed assets and redempt|on of preference shares}
Prelererce srare cap|la| 2.80
Reserves 3.50
.30
less: wr|ller doWr va|ue ol l|xed assels 0.20
wor||rg cap|la| .10
As lre prys|ca| cap|la| or lre oas|s ol pr|ce |rdex |s Rs. 5. crores Wr|cr |s |ess lrar lre
aclua| Wor||rg cap|la| or 31
sl
Varcr, 09, lrerelore, prys|ca| cap|la| |s ra|rla|red.
3. work|ng cap|ta| as on 31
st
Harch, 2009
(after sa|e of f|xed assets and redempt|on of preference shares}
wor||rg cap|la| oelore sa|e ol l|xed assels ard rederpl|or .10
/oo. 3a|e proceeds ol l|xed assels 3.00
9.10
less: Rederpl|or ol prelererce srares 2.80
wor||rg cap|la| ava||ao|e aller sa|e ol l|xed assels ard rederpl|or ol prel. srares .30
PAPER - 1 : FINANCIAL REPORTING
11
0uest|on 5
{aj / Vurua| Funo ra|seo '00 |akn on /pr|| ', 2009 o, |ssue ol '0 |akn un|rs ol Rs. '0 per un|r.
Tne luno |nvesreo |n severa| cap|ra| marker |nsrrumenrs ro ou||o a porrlo||o ol Rs. 90 |akns.
Tne |n|r|a| expenses amounreo ro Rs. 7 |akn. 0ur|ng /pr||, 2009, rne luno so|o cerra|n
secur|r|es ol cosr Rs. J8 |akns lor Rs. 40 |akns ano purcnaseo cerra|n orner secur|r|es lor Rs.
28.20 |akns. Tne luno managemenr expenses lor rne monrn amounreo ro Rs. 4.50 |akns ol
un|cn Rs. 0.25 |akn uas |n arrears. Tne o|v|oeno earneo uas Rs. '.20 |akns. 75/ ol rne
rea||zeo earn|ngs uere o|srr|oureo. Tne marker va|ue ol rne porrlo||o on J0.04.2009 uas Rs.
'0'.90 |akn.
0ererm|ne h/v per un|r.
{oj From rne lo||ou|ng oera||s, compure accoro|ng ro lev ano $cnuarrz {'97'j mooe|, rne rora|
va|ue ol numan resources ol rne emp|o,ee groups sk|||eo ano unsk|||eo.
$k|||eo unsk|||eo
{|j /nnua| average earn|ng ol an emp|o,ee r||| rne
rer|remenr age Rs.50,000 Rs.J0,000
{||j /ge ol rer|remenr 65 ,ears 62 ,ears
{|||j 0|scounr rare '5/ '5/
{|vj ho. ol emp|o,ees |n rne group 20 25
{vj /verage age 62 ,ears 60 ,ears
{88 = '6 Varksj
Answer
(a}
Rs. |n |akns Rs. |n |akns
0per|rg oar| oa|arce [(100- 90-Z)Rs. |a|rs| 3.00
/oo. Proceeds lror sa|e ol secur|l|es 10.00
0|v|derd rece|ved 1.20 11.20
less.
Cosl ol secur|l|es 28.20
Furd raragererl experses
[(1.50-0.25) Rs. |a|rs| 1.25
Cap|la| ga|rs d|slr|ouled
[Z5 ol (10.00 - 38.00) Rs. |a|rs| 1.50
0|v|derds d|slr|ouled (Z5 ol Rs. 1.20 |a|rs) 0.90 (31.85)
C|os|rg oar| oa|arce 9.35
C|os|rg rar|el va|ue ol porllo||o 101.90
111.25
FINAL (NEW) EXAMINATION: NOVEMBER, 2009
12
less:Arrears ol experses 0.25
C|os|rg rel assels 111.00
Nuroer ol ur|ls 10,00,000
C|os|rg Nel Assels va|ue (NAv) Rs. 11.10
(b} Accord|rg lo Lev ard 3crWarlz, lre va|ue ol rurar cap|la| erood|ed |r a persor ol age
|s lre preserl va|ue ol r|s rera|r|rg lulure earr|rgs lror erp|oyrerl. Tre|r va|ual|or
rode| lor a d|screle |rcore slrear |s g|ver oy lre lo||oW|rg lorru|a:
v =

) 1 (
) (
wrere,
v = lre rurar cap|la| va|ue ol a persor years o|d.
l(l) = lre persor's arrua| earr|rgs up lo rel|rererl.
r = a d|scourl rale spec|l|c lo lre persor.
l = rel|rererl age.
Va|ue of sk|||ed emp|oyees:
=



2 5
15 0 1
000 50
-

) 64 - 65 ( ) 63 - 65 (
) 15 . 0 1 (
000 , 50
) 15 . 0 1 (
000 , 50

Rs. 32,8Z5.81 Rs. 3Z,80Z.18 Rs.13,1Z8.2 = Rs.1, 11,11.25

Tola| va|ue ol s||||ed erp|oyees |s Rs.1, 11,11.25 20 = Rs.22,83,225.
Va|ue of unsk|||ed emp|oyees
) 61 62 ( ) 60 62 (
) 15 . 0 1 (
000 , 30
) 15 . 0 1 (
000 , 30

=
) 15 . 0 1 (
000 , 30
) 15 . 0 1 (
000 , 30
2

= 22,81.31 2,08.9 = 18,ZZ1.2Z

Tola| va|ue ol lre urs||||ed erp|oyees = Rs. 18,ZZ1.2Z 25 = Rs.12,19,282
Tola| va|ue ol rurar resources (s||||ed ard urs||||ed) = Rs.22,83,225 Rs.12,19,282
= Rs.35,02,50Z.
0uest|on
{aj 0ap|ra| aoequac, rar|o lor hon-3ank|ng F|nanc|a| 0ompan|es {h3F0j
{oj Trearmenr ol reluno ol Sovernmenr granrs.
{cj S|ve lour examp|es ol acr|v|r|es rnar oo nor necessar||, sar|sl, cr|rer|on {aj ol paragrapn J ol
PAPER - 1 : FINANCIAL REPORTING
13
/$ 24, our rnar m|gnr oo so |n como|nar|on u|rn orner c|rcumsrances.
{oj From rne lo||ou|ng |nlormar|on compure o||ureo earn|ngs per snare.
her prol|r lor rne ,ear 2008 Rs.'2,00,000
we|gnreo average numoer ol equ|r, snares oursrano|ng our|ng ,ear 2008 5,00,000 snares
/verage la|r va|ue ol one equ|r, snare our|ng rne ,ear 2008 Rs.20
we|gnreo average numoer ol snares unoer opr|on our|ng rne ,ear 2008 ',00,000 snares
Exerc|se pr|ce per snare unoer opr|on our|ng rne ,ear 2008 Rs.'5
{4x4= '6 Varksj
Answer
(a} Nor-8ar||rg F|rarc|a| Corpar|es (N8FC) are requ|red lo ra|rla|r adequale cap|la|. Every
N8FC sra|| ra|rla|r a r|r|rur cap|la| ral|o cors|sl|rg ol T|er l
1
ard T|er ll
2
cap|la| Wr|cr
sra|| rol oe |ess lrar 12 ol |ls aggregale r|s|-We|grled assels. Tre lola| ol T|er ll cap|la| , al
ary po|rl ol l|re , sra|| rol exceed 100 ol T|er l cap|la|. Cap|la| adequacy |s ca|cu|aled as
urder:
100
Assels Adjusled R|s|
Cap|la| ll T|er l T|er

(b} As per Para 11 ol A3 12 ' Accourl|rg lor 0overrrerl 0rarls, goverrrerl grarl lral
oecores relurdao|e srou|d oe lrealed as ar exlraord|rary |ler. Tre arourl relurdao|e
|r respecl ol a goverrrerl grarl re|aled lo reverue |s app||ed l|rsl aga|rsl ary
urarorl|zed delerred cred|l rera|r|rg |r respecl ol lre grarl. To lre exlerl lral lre
arourl relurdao|e exceeds ary sucr delerred cred|l, or Wrere ro delerred cred| l ex|sls,
lre arourl |s crarged |rred|ale|y lo prol|l ard |oss slalererl. Tre arourl relurdao|e
|r respecl ol a goverrrerl grarl re|aled lo a spec|l|c l|xed assel |s recorded oy
|rcreas|rg lre ooo| va|ue ol lre assel or oy reduc|rg lre cap|la| reserve or lre delerred
|rcore oa|arce, as appropr|ale, oy lre arourl relurdao|e. lr lre l|rsl a|lerral|ve, |.e.,
Wrere lre ooo| va|ue ol lre assel |s |rcreased, deprec|al|or or lre rev|sed ooo| va|ue |s
prov|ded prospecl|ve|y over lre res|dua| uselu| ||le ol lre assel. wrere a grarl Wr|cr |s
|r lre ralure ol prorolers' corlr|oul|or oecores relurdao|e, |r parl or |r lu||, lo lre
goverrrerl or ror-lu|l|||rerl ol sore spec|l|ed cord|l|ors, lre re|evarl arourl
recoverao|e oy lre goverrrerl |s reduced lror lre cap|la| reserve.
(c} Para 3 ol A3 21 '0|scorl|ru|rg 0peral|ors exp|a|rs lre cr|ler|a lor delerr|ral|or ol
d|scorl|ru|rg operal|ors. Accord|rg lo Paragrapr 9 ol A3 21, exarp|es ol acl|v|l|es lral
1
'T|er-l Cap|la| rears oWred lurd as reduced oy |rveslrerl |r srares ol olrer N8FCs ard |r srares, deoerlure,
oords, oulslard|rg |oars ard advarces |rc|ud|rg r|re purcrase ard |ease l|rarce rade lo ard depos|ls W|lr
suos|d|ar|es ard corpar|es |r lre sare group exceed|rg, |r aggregale, 10 ol lre oWred lurd.
2
'T|er-ll cap|la| |rc|udes (|) Prelererce srares, (||) Reva|ual|or reserves al d|scourled rale ol 55, (|||) 0erera|
prov|s|ors ard |oss reserves lo lre exlerl lrese are rol allr|oulao|e lo aclua| d|r|rul|or |r va|ue or |derl|l|ao|e
polerl|a| |oss |r ary spec|l|c assel ard are ava||ao|e lo reel urexpecled |osses, lo lre exlerl ol ore ard ore
lourlr percerl ol r|s| We|grled assels, (|v) ryor|d deol cap|la| |rslrurerls, (v) suoord|raled deol.
FINAL (NEW) EXAMINATION: NOVEMBER, 2009
14
do rol recessar||y sal|sly cr|ler|or (a) ol paragrapr 3, oul lral r| grl do so |r coro|ral|or
W|lr olrer c|rcurslarces, |rc|ude:
(|) 0radua| or evo|ul|orary pras|rg oul ol a producl ||re or c|ass ol serv|ce;
(||) 0|scorl|ru|rg, ever |l re|al|ve|y aorupl|y, severa| producls W|lr|r ar orgo|rg ||re ol
ous|ress;
(|||) 3r|ll|rg ol sore producl|or or rar|el|rg acl|v|l|es lor a parl|cu|ar ||re ol ous|ress
lror ore |ocal|or lo arolrer; ard
(|v) C|os|rg ol a lac|||ly lo acr|eve producl|v|ly |rprovererls or olrer cosl sav|rgs.
Ar exarp|e |r re|al|or lo corso||daled l|rarc|a| slalererls |s se|||rg a suos|d|ary Wrose
acl|v|l|es are s|r||ar lo lrose ol lre parerl or olrer suos|d|ar|es.
(d} 6omputat|on of d||uted earn|ngs per share
Earn|ngs $nares Earn|ng per
snare
{Rs.j {Rs.j
Nel prol|l lor lre year 2008 12,00,000
we|grled average ruroer ol equ|ly srares oulslard|rg
dur|rg lre year 2008 5,00,000
as|c earn|ngs per share (12,00,0000/5,00,000) 2.10
we|grled average ruroer ol srares urder opl|or 1,00,000
Nuroer ol srares lral Wou|d rave oeer |ssued al la|r
va|ue (1,00,000 15.00)/20.00) (Z5,000) ___
0||uted earn|ngs per share (12,00,0000/5,25,000) 12,00,000 5,25,000 2.29
Tre earr|rgs rave rol oeer |rcreased as lre lola| ruroer ol srares ras oeer |rcreased
or|y oy lre ruroer ol srares (25,000) deered lor lre purpose ol corpulal|or lo rave oeer
|ssued lor ro cors|deral|or (Para 3Z(o) ol A3 20).