A(6th Sm.)-Financial Reporting etc.-HIDSE-6.

1AHICBCS

2024
FINANCIAL REPORTING AND
FINANCIAL STATEMENT ANALYSIS HONOURS
Paper : DSE-6.1AH
Full Marks : 80

The figures in the margin indicate full marks.

Candidates are required togive their answers in their own words
as far as practicable.
Group - A
1. Explain the fundamental assumptions for preparation of Financial Statements as per Ind-AS 1. 5

Or,
Mention the objectives of Financial Statements. 5

2. From the following information, calculate the net cash flows from the Investing Activities of Tanbir Ltd.
31.03.2023 31.03.2024
() ()
Plant and Machinery (at Cost) 6,00,000 8,00,000
Accumulated Depreciation 3,20,000 4,80,000
Investmnent 1,00,000 2,20,000
Additional information :
(i) During the year, machinery costing 2,20,000 was sold for 1,00,000(Accumulated depreciation
of such machine 80,000).
(ii) During the year, machinery costing ? 1,80,000 was purchased by issuing equity shares at par, and
the balance of machinery was purchased by cash payment.
(ii) Income from investment received during the year 2S,000.
Show necessary workings.
3. From the following financial ratios of XYZ Ltd., compute (i) Return on Equity and (ii)Return on Assets.

Net profit Margin 12%

Asset Turnover 10 times

Equity Turnover 6.5 times.

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Or.

Compute "Operating Ratio" and "Operating Expense Ratio" from the following and comment on them.
5

3
Cost of goods sold = of net sales

Income Tax = 20% of net profit before tax

Administrative expenses = 1,00,000
Net income after tax = 2,40,000
Selling expenses = S0,000
Other Income = 50,000.
Group - B
4. From the following particulars, identify the missing information of IN Ltd. : 10

Year EBIT () Capital ROCE (%) Trend % of EBIT

ended on Employed () (Base year 2020)
31st March
2020 4,00,000 10% ?

2021 ? 5,00,000 150

2022 ? 6,00,000 225

2023 8,00,000 20%

2024 2,00,000 25%

5. (a) Ayan Ltd. purchased equipment for 40,00,000. Its useful life and the cost of its components are
estimated as follows :

Components Estimated cost Useful life

Motor of the Equipment 7 30,00,000 50,000 hours

Body 10,00,000 5years

Ayan Ltd. charges component-wise depreciation as per Ind-AS 16, for the year 2023-24.
Calculate the amount of Depreciation to be charged. During the year the motor was used for
4200 hours. (Assuming the estimated scrap value of components is nil)
 (3) A(6th Sm.)-Financial Reporting etc.-HIDSE-6.1AHICBCS
(b) Pilu Lid. purchased a Machine during the year 2023-24 the details of which are as below :
Purchase price of Plant and Machinery (before discount) { 1S,00,000
Trade discount 20% of purchase price
Cash discount Z L,00,000
GST paid (Input tax credit is availed) 1,44,000
Installation and delivery charges ?50,000
Site Preparation cost for the Machinery 7 30,000
Testing cost Z 10,000
Present value of initial estimated dismantling cost of the machine 15,000
Calculate the amount to be capitalised for Plant and Machinery as per Ind-AS 16. 4+6

Or,
Compute Basic earning per share from the following information for the year ended on 31.03.2024.
10

() Profit from continuing operation before tax 7 13,00,000

) Tax Rate 30%

(iii) 1,000 6% Cumulative Preference Shares of 100 each ?1,00,000

(iv) No. of equity shares outstanding on 01.04.2023 1,00,000
(v) No. of equity shares issued for cash fully paid up on 01.08.2023. 20,000
(vi) Bonus shares issued in October 2023 in the ratio of 1 share for
every 10 shares held on 01.04.2023
(vii) Buy-back of ordinary shares on 01.01.2024 10,000

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|A(6th Sm.)- FinancialReporting etc.-HIDSE-.IAHICBCS (4)
Group - C

6. The Balance Sheets of PM Ltd. and SB LId. as at 31.03.2024 are as follows :

Particulars PM Ltd. () SB Ltd. (<)

Equity and Liabilities

Shareholders' Fund:
Equity Share Capital (? 10 each) 5,00,000 1.00,000
General Reserve 1,20,000 60,000
Profit & Loss Account 2,00,000 40,000
Non-Current Liabilities :
12% Debentures 1,00,000
Current Liabilities :
Creditors 40,000 50,000
Bills Payable to PM Ltd. 20,000
Provision for tax 60,000 30,000

Total 9,20,000 4,00,000

Assets
Non-current Assets :
Property, Plant and Equipment :
Land 2,60,000 1,10,000
Plant and Machinery 2,00,000 1,80,000
Non-current Investments :
Investment in shares of SB Ltd. 2,20,000
Investment in 1000 Debentures of SB Ltd. 98,000
Current Assets :
Inventories 32,000 50,000
Debtors 40,000 30,000
Bills Receivable from SB Ltd. 20,000
Cash and Bank 50,000 30,000
Total 9,20,000 4,00,000

Further Information :
) PM Ltd. acquired 9,000 shares in SB Ltd. on 01.10.2023. The balances of reserves and surpluses
of SB Ltd, on 01.04.2023 were (i)General Reserve : 10,000, (ii)Profit &Loss A/c (Cr.) : 20,000
(i) On 01.10.2023 SB Ltd. revalued its Plant and Machinery by 40,000 more than book value but no
entry has been passed by SB Ltd. (ignore depreciation)
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(i) SB Lid. paid dividend @ 12% on 15.10.2023 for the year 2022-23 and also another dividend
(@ 10% on 01.12.2023 for the year 2023-24. Share of both the dividends were credited in the
Profit & Loss A/c by PM Ltd.
(iv) Debtors of PM Lid. includes 20,000 for goods supplied to SB Ltd. by PM Ltd. at cost and entire
goods are left unsold till 31.03.2024. However, creditors of SB Ltd. include 15,000 due to PM Ltd.
Prepare a Consolidated Balance Sheet of PM Lid. and its subsidiary SB Ltd. as on 31.03.2024.
7. The following is the summarised Balance Sheet of SJ Ltd. as on 31.03.2023 and 31.03.2024 :
Particulars 31.03.2023 31.03.2024

Equity and Liabilities :

Equity Share Capital of? 10each fully paid 12,00,000 14,80,000
10% Preference Share Capital 4,00,000 2,80,000
General Reserve 6,80,000 8,00,000
Capital Reserve 40,000
Profit & Loss Balance 3,60,000 5,44,000
9% Debentures 4,00,000 3,00,000
Creditors 4,80,000 5,20,000
Provision for tax 3,60,000 3,56,000
Total 38,80,000 43,20,000
Assets :

Property, Plant and equipment - Machinery 22,80,000 26,40,000

Non-current Investment 4,00,000 3,20,000
Cash 10,000 10,000
Inventories 2,16,000 3,00,000
Other current assets 8,94,000 10,10,000
Preliminary expenses 80,000 40,000
Total 38,80,000 43,20,000
Additional information :
(i) Thecompany sold one fixed asset for 90,000, the cost of which was 1,20,000 and the depreciation
of? 20,000 was provided on it. Depreciation on Fixed Assets provided 3,20,000 during 2023-24.
(ii) Company sold some investments at a profit of 40,000 which was credited to Capital Reserve.
(iii) Debentures are redeemed at par and Preference shares were redeemed at 5% premium, both on
01.04.2023.

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(1V) Company decided to value stock at cost, whereas previously, the practice was to valuc stock at
cost less 10%. The stock on 31.03.2024 was correctly valued at 3,00,000.
(v) Tax paid during the year 3,20,000.
(vi) During the year the company paid preference dividend and 10% equity dividend for 2022-23.
Prepare Cash Flow Statement as per AS-3. 15

Or,
(a) From the following particulars, calculate the closing balance of the working capital for the year
ended 31.03.2024 of US Ltd.

Operating Profit after depreciation and tax ? 1,20,000

Depreciation charged 730,000
Issue of equity shares 7 2,00,000
Bad debt written off 12,000
Redemption of Debentures 71,10,000
Loan repaid Z1,50,000
Dividend paid 20,000
Tax provided during the year 734,000
Tax paid during the year 732,000
Working capital as on 01.04.2024 ?50,000

(b) State, along with the values, whether the following transactions represent sources or applications
of fund or no change of fund, where fund indicates working capital :
(i) Earnings before depreciation and tax 2,25,000
(ii) Interest received on non-current investment 50,000
(iii) Buyback of shares 1,00,00
(iv) Purchase of inventory by issuing equity shares 50,000
(v) Creditors taken over debtors 25,000
(vi) Unclaimed dividend paid 5,500
(vii) Conversion of Debentures into equity shares 80,000
(vii) Received non-current investment of 40,000from debtors in full settlement of their dues
of 42,000. 7+8
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8. (a) From the following information of MN LId., prepare a Balance Sheet as on 31.03.2024.
Current Ratio 2.5
Liquid Ratio L.5

Net working capital

(25% of Shareholders fund) 3,00,000
Cost of Revenue from operation /Closing inventory =6times
Gross Profit Ratio 25%
Debt collection period Imonth

Reserve/shareholder fund 33-% 3

There is no bank overdraft.

(b) Mention the nature (or type) of ratio that would be used in each of the following situations and also
mention the name of one ratio with the formula for the type:
() For a bank approached by a company for a working capital loan of ? 5,00,000
(i) For a long-term lender interested in determining whether his / her claim is adequately secured.
(1) For a shareholder who is examining whether he /she should hold or sellthe investment.
(iv) For a finance manager interested to know the operating effectiveness with which a firm uses
its available resources. 7+8

Or,
From the following information, prepare the Projected Statement of Profit and Loss for the next financial
year ending 31.03.2024 and the Projected Balance Sheet as on that date of CD Ltd.
Rate of Gross Profit 25%

Net Profit to Equity Capital 10%

Stock Turnover Ratio (Based on COGS) 5 times

Debtors Collection period 3months

Creditors Velocity 3months
Current Ratio 2:1

Proprictary ratio (Fixed Assets to Capital Employed) 80%

Capital Gearing Ratio (10% Debentures to Shareholder's Fund) 1:5

General Reserves and Profit and Loss to issued Equity Capital 25%

Cost of Goods Sold consists of 40% for materials and balance for wages and overheads. Gross Profit is
6,00,000. Working notes should be shown clearly. Debentures were outstanding thoughout the year.
Schedule III is not mandatory. 15