Question:

1. Balance as of assets and liabilities as on 1 January 2022:

Assets Rs. In '000 Liabilities and Funds Rs. In '000

Cash and Bank 1,500 Funds 5,952
Prepaid Insurance 320 Trade Creditors 750
Property and equipment 5,500 Loans 1,800
Investment 2,000 Accumulated Depreciation 1,143
Recievables 450 Accured expenditure 675
Stock 550
10,320 10,320

Additional Information:

2. The details pertaining to property and equipment are as follows:

* The property was acquired at a cost of Rs 3,500,000 of which 40% pertains to the cost of the land.
* The equipment, purchased at a cost of Rs 2,000,000 on July 1, 2021, was exchanged on June 30, 2022, for another equipment. The fair value of the disposed asset is Rs 1,800,000,
and the fair value of the new equipment is Rs 1,900,000.

* The depreciation rate on property is 20% on a reducing balance basis, while equipment is depreciated at a rate of 15% on a reducing balance basis.

3. The details about the funds are: DEF LIAB

a. Some funds amounting to Rs. 1.75 million were recevied on 1 september 2021 for the acquisition of plant. The plant was acquired on 1 April 2022. Company depreciation the
plant at 15%.

3M - 1.75M = 1.25 M DEF LIAB

b. Some funds amounting to Rs. 3 million were recevied on 1 January 2021 for supporting medical clinics and hospitals. Till 31 Dec 2021 expenses amounting to Rs. 1.75 million
have been made, during the year a further expenditure of 0.35 million was made.

c. A specific fund has been set up for 10 years of Rs: 1 million from which the income earned will be used for the education of the students and upon term expiration the principal
be used to set up eductional Institution .

4. The investment is made in the debt securities of PRL company which carries a return of 14% per anuum. The investment amount is inclusive of the specific fund balance.

4. The summary of payments made during the year were:

Rs.in '000

Additional consideration paid on exchange transaction 50

Plant was acquired on 1 April 1,500
Annual Insurnace (valid till 31.08.2023) 650
Payments to creditors 500
Interest paid 130
Other Expenditure 630

* Payments made for other expenditures include a expenditure made for suppoting Rs 350,000 to the hospital expenses.

5. Sales are made on 25% markup on cost. 40% are cash sales and remaining are the credit sales.
6. Contribution Received during the year amounted to Rs. 7 Million . Breakup of the contribution is as follows:

Rs.in '000
Contribution for purchase of plant 500
Contribution for incurring future health expenses 2,500 ---> DEFERRED
Unresticed fund 4,000 ---> DIREECT INCOME

7. Balances of some assets and liabilities as on 31 December 2022:

Rs.in '000
Recivables 500
Stock 480
Trade Creditors 800

Required:
Prepare the following using the deferral method:
A. Statement of income and expenditure for the year ended 31 December 2022
B. Statement of financial position as at 31 December 2022

Working on opening accumulated fund:

Assets 10,320
Liabilities (4,368)
5,952
Less: Def liab (1,750) relating to plant
Less: Def liab (1,250) relating to future expenses
2,952
Less: endowment (1,000)
1,952 General Fund

FUNDS Rs. 5,952

DEF LIAB PPE Rs. DEF LIAB FUTURE ENDOWMENT Rs. 1,000 GENERAL FUNDS Rs. 1,952
1,750 EXP Rs. 1,250

PPE
Opening Disposal 2,000
- Land 1,400
- Building 2,100
Equipment 2,000
Addition 1,500
Addition by
way of
exchange 1,850 Closing 6,850

ACC DEP
Disposal 288.75 OP 1,143 150.00 EQUIP
Dep exp 138.75 FTY EQUIP OLD
- building 221
- On equip 278
- On Plant 169
closing 1,522
 new equipment 1,850
Acc Dep 288.75
Equipment - cost 2,000
Cash 50
Gain on disposal 88.75

BV OF ASSET SOLD 1,711.25

New equipment 1,850.00
138.75
Cash paid (50.00)
88.75

OP TOTAL LAND AND BULDING 3,500 Total Acc Dep 1,143

Less: LAND (1,400) Less: Equip dep (150)
2,100 Acc 993
Less: acc dep of building (993)
Book value eligible for Dep 1,107
Dep exp FTY 1,107 x 20% 221

Dep on equipment
Old equipment op BV 1,850 2,000 -150
Dep expense 15% x 6 /12 138.75

New equipment 1,850

Dep exp fty 6 months 138.75

Opening def related to PPE 1,750

Add: Contribution for the year 500
2,250
Less: Transfer to I&E (253.13) 2,250 x 15% x 9 / 12
1,996.88 ---> BALANCE SHEET

Cash 500
Def contribution - plant 500

Def contribution - plant 253

I&E 253

PREPAID
Opening
] 320 Expense 536.67 ---> I&E
Cash 650 Bal fig

Closing 433.33 650 / 12 x 8

Investment amount 1,000 1,000 2,000

Return 140 140 280
Cash 280
I&E - Interest income 140
endowment fund 140

TRADE CREDITORS
Payment 500 Opening 750
Purchase 550
Bal fig
Closing 800

Stock
Opening 550 Cogs - bal fig 620
Purchases 550
Closing 480

Cogs 620 x 125 775.00 Total Sales

100 40% cash sales (310.00)
Credit sales 465.00

Receivable
Opening 450 Cash - bal fig 415
credit sales 465
Closing 500

Cash and bank

Opening 1,500 Plant acqui 1,500
Equip acq 50
Contribution - plant 500 prepay insurance 650
Interest received 280 Creditors 500
Cash sales 310
Recovery from debtors 415
Furture exp contri 2,500
Unrestricted contr 4,000

Accrued expenditure
Payment 630 Opening 675

Closing 45.00

FOR UNDERSTANDING - LAST YEAR

Cash 3,000
Def liab 3,000

Expense 2,500
accrued exp 2,500
Def liab 1750
I&E transfer 1750