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Must Practice Questions
Every descriptive question ever set in an MTP, RTP or PYQ is mapped to its exact chapter, unit and topic. These are the ones worth your time first — ranked by how heavily the topic has been examined across the last ten sittings.
Basics — Introduction to Accounting Standards: 6 must-practice questions
Introduction to Accounting Standards, Module 1. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- PYQ May 2026, Q6(a) [OR-alt 1] · Marks: 4 · Topic: Need for Convergence towards Global Standards. Why practise it: Rank 49 topic (Need for Convergence towards Global Standards); PYQ May 2026.
Explain the key aspects which required the need for convergence towards global standards of financial reporting. (4 Marks) - MTP September 2024 Set 2, Q6(a) [OR-alt 1] · Marks: 4 · Topic: Introduction. Why practise it: Rank 48 topic (Introduction); MTP September 2024 Set 2.
“Accounting Standards standardize diverse accounting policies with a view to eliminate the non-comparability of financial statements and improve the reliability of financial statements.” Discuss and explain the benefits of Accounting Standards. - PYQ May 2025, Q6(a) [OR-alt 1] · Marks: 4 · Topic: Introduction. Why practise it: Rank 48 topic (Introduction); PYQ May 2025.
What are Accounting Standards? Explain the objectives of "Accounting Standards" in brief, also state the advantages of setting Accounting Standards. (4 Marks) - MTP May 2024 Set 1, Q6(a) [OR-alt 2] · Marks: 4 · Topic: Introduction. Why practise it: Rank 48 topic (Introduction); MTP May 2024 Set 1.
What are the issues, with which Accounting Standards deal? - RTP May 2026, Q5 · Marks:Not stated in source · Topic: International Accounting Standard Board. Why practise it: Rank 113 topic (International Accounting Standard Board); RTP May 2026.
Write a short note on International Accounting Standard Board (IASB). - MTP January 2025 Set 2, Q6(a) [OR-alt 2] · Marks: 4 · Topic: What are Carve Outs/Ins in Ind AS?. Why practise it: Rank 116 topic (What are Carve Outs/Ins in Ind AS?); MTP January 2025 Set 2.
What do you mean by Carve outs/ins in Ind AS? Explain.
Framework — Framework for Preparation & Presentation of Financial Statements: 10 must-practice questions
Framework for Preparation and Presentation of Financial Statements, Module 1. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- MTP May 2026 Set 2, Q6(a) [OR-alt 1] · Marks: 4 · Topic: Capital Maintenance; Qualitative Characteristics of Financial Statements; Elements of Financial Statements. Why practise it: Rank 37 topic (Capital Maintenance); MTP May 2026 Set 2; covers 3 mapped topics.
(i) With regard to financial statements, name any five qualitative characteristics and elements. (ii) Aman started a business on 1st April 2025 with ₹24,00,000 represented by 1,20,000 units of ₹20 each. During the financial year ending on 31st March, 2026, he sold the entire stock for ₹30 each. In order to maintain the capital intact, calculate the maximum amount, which can be withdrawn by Aman in the year 2025-26 if Financial Capital is maintained at historical cost. (4 Marks) - RTP May 2024, Q4 · Marks:Not stated in source · Topic: Capital Maintenance. Why practise it: Rank 37 topic (Capital Maintenance); RTP May 2024.
Shiva started a business on 1 st April 2022 with ₹15,00,000 represented by 80,000 units of ₹25 each. During the financial year ending on 31 st March, 2023, he sold the entire stock for ₹35 each. In order to maintain the capital intact, calculate the maximum amount, which can be withdrawn by Shiva in the year 2022-23 if Financial Capital is maintained at historical cost. - PYQ September 2025, Q6(a) [OR-alt 2] · Marks: 4 · Topic: Introduction. Why practise it: Rank 50 topic (Introduction); PYQ September 2025.
What are the key elements of financial statements? Explain. - RTP May 2026, Q6 · Marks:Not stated in source · Topic: Elements of Financial Statements. Why practise it: Rank 125 topic (Elements of Financial Statements); RTP May 2026.
Giant Ltd. has entered into a binding agreement with Tiny Ltd. to buy a custom-made machine of ₹1,00,000 at the end of 2024-25, before delivery of the machine, Giant Ltd. had to change its method of production. The new method will not require the machine ordered and it will be scrapped after delivery. The expected scrap value is nil. You are required to advise the accounting treatment and give necessary journal entry in the year 2024-25. - MTP September 2025 Set 1, Q6(a) [OR-alt 1] · Marks: 4 · Topic: Elements of Financial Statements. Why practise it: Rank 125 topic (Elements of Financial Statements); MTP September 2025 Set 1.
Briefly explain the elements of financial statements. - MTP January 2025 Set 2, Q6(a) [OR-alt 1] · Marks: 4 · Topic: Qualitative Characteristics of Financial Statements. Why practise it: Rank 123 topic (Qualitative Characteristics of Financial Statements); MTP January 2025 Set 2.
"One of the characteristics of financial statements is neutrality"— Do you agree with this statement? - MTP September 2024 Set 1, Q6(a) [OR-alt 2] · Marks: 4 · Topic: Fundamental Accounting Assumptions. Why practise it: Rank 122 topic (Fundamental Accounting Assumptions); MTP September 2024 Set 1.
Summarised Balance Sheet of Cloth Trader as on 31.03.2023: Liabilities – Proprietor's Capital 3,00,000; Profit & Loss Account 1,25,000; 10% Loan Account 2,10,000; Sundry Creditors 50,000; Total 6,85,000. Assets – Fixed Assets 3,60,000; Closing Stock 1,50,000; Sundry Debtors 1,00,000; Deferred Expenses 50,000; Cash & Bank 25,000; Total 6,85,000. Additional Information: (1) The remaining life of fixed assets is 8 years, pattern of use even; net realisable value of fixed assets on 31.03.2024 was ₹3,25,000. (2) Purchases and Sales in 2023-24 amounted to ₹22,50,000 and ₹27,50,000 respectively. (3) Cost and net realizable value of stock on… - MTP May 2024 Set 1, Q6(a) [OR-alt 1] · Marks: 4 · Topic: Qualitative Characteristics of Financial Statements. Why practise it: Rank 123 topic (Qualitative Characteristics of Financial Statements); MTP May 2024 Set 1.
What are the qualitative characteristics of the financial statements which improve the usefulness of the information furnished therein? - MTP May 2023 Set 1, Q6(d) · Marks: 5 · Topic: Objectives and Users of Financial Statements; Fundamental Accounting Assumptions; Qualitative Characteristics of Financial Statements. Why practise it: Rank 121 topic (Objectives and Users of Financial Statements); MTP May 2023 Set 1; covers 4 mapped topics.
(i) With regard to financial statements name any four: (1) Users; (2) Qualitative characteristics; (3) Elements. (ii) What are fundamental accounting assumptions? (5 Marks) - MTP November 2023 Set 2, Q6(d) · Marks: 4 · Topic: Measurement of Elements of Financial Statements. Why practise it: Rank 117 topic (Measurement of Elements of Financial Statements); MTP November 2023 Set 2.
Explain in brief, the alternative measurement bases, for determining the value at which an element can be recognized in the Balance Sheet or Statement of Profit and Loss.
Applicability — Applicability of Accounting Standards: 3 must-practice questions
Applicability of Accounting Standards, Module 1. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- RTP May 2026, Q7 · Marks:Not stated in source · Topic: Applicability of Accounting Standards. Why practise it: Rank 127 topic (Applicability of Accounting Standards); RTP May 2026.
Virat Traders, an unlisted partnership firm, had a turnover of ₹249.99 crore and borrowings of ₹25.01 crore during the financial year 2023-24. It is not a bank, financial institution, or insurance company, and also not a subsidiary of any other entity. The firm wishes to avail MSME exemptions for FY 2024-25. Is it eligible? - RTP September 2025, Q4 · Marks:Not stated in source · Topic: Status of Accounting Standards. Why practise it: Rank 126 topic (Status of Accounting Standards); RTP September 2025.
As per the revised scheme effective from accounting periods commencing on or after 1st April, 2024, classify non-company entities for the purpose of applicability of Accounting Standards. Briefly explain the criteria for each category. - RTP May 2024, Q5 · Marks:Not stated in source · Topic: Status of Accounting Standards. Why practise it: Rank 126 topic (Status of Accounting Standards); RTP May 2024.
Based upon criteria for rating of non-corporate entity, categorize the following as Level I, Level II, Level III and Level IV entities for the purpose of compliance of Accounting Standards in India. Rama Textiles whose turnover (excluding other income) exceeds ten crore but does not exceed rupees fifty crore in the immediately preceding accounting year. Star Industries is having borrowings (including public deposits) in excess of rupees two crore but not in excess of rupees ten crore at any time during the immediately preceding accounting year. Newman Industries is having borrowings (including public deposits) less than rupees fifty lakh at…
AS 1 — Disclosure of Accounting Policies: 9 must-practice questions
Presentation & Disclosures Based Accounting Standards, Module 1. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- MTP May 2026 Set 1, Q6(b) · Marks: 5 · Topic: Fundamental Accounting Assumptions; Disclosure of Changes in Accounting Policies; Disclosure of Deviations From Fundamental Accounting Assumptions. Why practise it: Rank 51 topic (Fundamental Accounting Assumptions); MTP May 2026 Set 1; covers 3 mapped topics.
Discuss Disclosure requirements in following cases as per AS 1. (i) Accountant of A Ltd. charges a probable loss of losing a suit in books of accounts and also disclosed the same fact in financial statements. The probability of losing the suit is 25%. (ii) Accountant of A Ltd. capitalized all the revenue expenses of repair and maintenance during the year to Plant & Machinery and is also disclosing the same as company policy in financial statements. (iii) A Ltd. has followed accrual basis of accounting since incorporation. The chief accountant also disclosed this fact in financial statements. (iv) A Ltd. was providing for after sales expenses… - RTP May 2025, Q4 · Marks:Not stated in source · Topic: Fundamental Accounting Assumptions. Why practise it: Rank 51 topic (Fundamental Accounting Assumptions); RTP May 2025.
What do you mean by 'Accrual' in reference to AS-1? Also, specify any three reasons for 'Accrual Basis of Accounting'. - PYQ January 2025, Q6(a) [OR-alt 2] · Marks: 4 · Topic: Fundamental Accounting Assumptions. Why practise it: Rank 51 topic (Fundamental Accounting Assumptions); PYQ January 2025.
Given below is the Balance Sheet of Sky and Associates as on 31st March, 2023: Liabilities ₹ Assets ₹ Capital 1,60,000 Machinery 1,80,000 Profit & Loss Account 93,000 Stock 1,15,000 8% Loan 40,000 Trade Receivables 75,000 Trade Payables 66,000 Deferred Expenditure 9,000 Bank Overdraft 20,000 Total 3,79,000 Total 3,79,000 Additional information: (1) The firm is planning to shut down its business with immediate effect from 1st April, 2024. (2) The sale and purchase of the firm for the year 2023-24 amounts to ₹8,20,000 and ₹6,50,000 respectively. (3) The value of Closing Stock as on 31-3-2024 was ₹65,000. The net realizable value is estimated… - RTP September 2025, Q5 · Marks:Not stated in source · Topic: Disclosure of Changes in Accounting Policies. Why practise it: Rank 131 topic (Disclosure of Changes in Accounting Policies); RTP September 2025.
Lion Ltd. (manufacturing/construction contracts), FY ended 31st March 2025, follows historical cost, FIFO, and percentage-of-completion. During the year, management changes: (i) inventory valuation FIFO→Weighted Average (citing raw-material price volatility); (ii) depreciation SLM→WDV (citing better usage reflection). The company discloses the inventory-method change in notes but not the depreciation-method change (calling it immaterial), and has not disclosed its accounting policy on government grants despite receiving a significant subsidy this year. (a) Identify AS 1 violations, if any. (b) Critically evaluate whether "materiality"… - MTP May 2023 Set 2, Q1(b) · Marks: 5 · Topic: . Why practise it: no syllabus topic is mapped to this question yet; MTP May 2023 Set 2.
HIL Ltd. was making provision for non-moving stocks based on no issues having occurred for the last 12 months upto 31.03.2021. The company now wants to change it and make provision based on technical evaluation during the year ending 31.03.2022. Total value of stock on 31.3.2022 is ₹120 lakhs. Provision required based on technical evaluation amounts ₹3.00 lakhs. However, provision required based on 12 months (no issues) is ₹4.00 lakhs. You are required to discuss the following points in the light of Accounting Standard (AS)-1: (i) Does this amount to change in accounting policy? (ii) Can the company change the method of accounting? (iii)… - MTP November 2023 Set 2, Q1(d) · Marks: 5 · Topic: . Why practise it: no syllabus topic is mapped to this question yet; MTP November 2023 Set 2.
State whether the following statements are 'True' or 'False' in line with the provisions of AS 1. Also give reason for your answer. Certain fundamental accounting assumptions underline the preparation and presentation of financial statements. They are usually specifically stated because their acceptance and use are not assumed. If fundamental accounting assumptions are not followed in presentation and preparation of financial statements, a specific disclosure is not required. All significant accounting policies adopted in the preparation and presentation of financial statements should form part of the financial statements. Any change in an… - MTP September 2025 Set 2, Q6(c) · Marks: 4 · Topic: . Why practise it: no syllabus topic is mapped to this question yet; MTP September 2025 Set 2.
An entity presents the following items in its trial balance. Classify the items as current or non-current assets in accordance with Accounting Standard 1 (AS 1) and, where AS 1 is silent, refer to Schedule III of the Companies Act, 2013: Security deposits paid to electricity company; Raw materials inventory; Prepaid rent (for 14 months); Fixed deposits with 18-month maturity. - PYQ May 2023, Q6(a) · Marks: 5 · Topic: . Why practise it: no syllabus topic is mapped to this question yet; PYQ May 2023.
You are required to comment on the following cases as per the provisions of Accounting Standard-1 ‘Disclosure of Accounting Policies’: (1) Bee Limited has not complied with AS-2 "Valuation of inventories" and the same is disclosed in the Notes on Accounts. Management is of the view that the financial statements give a true and fair view as non-compliance with AS-2 is disclosed. (2) Cee Limited sold its Office Building for ₹10,00,000 on 1 st March, 2023. The buyer has paid the full amount and taken possession of the building. The book value of the Office Building is ₹4,00,000. On 31 st March 2023, documentation and legal formalities are… - RTP January 2025, Q3 · Marks:Not stated in source · Topic: . Why practise it: no syllabus topic is mapped to this question yet; RTP January 2025.
ABC Ltd. was making provision for non-moving inventories based on no issues for the last 12 months up to 31.3.2023. The company wants to provide during the year ending 31.3.2024 based on technical evaluation: Total value of inventory ₹100 lakhs Provision required based on 12 months issue ₹3.5 lakhs Provision required based on technical evaluation ₹2.5 lakhs Does this amount to change in Accounting Policy? Can the company change the method of provision?
AS 3 — Cash Flow Statement
Questions on AS 3 are asked and listed under Module 3, Financial Statements of Companies, in the Cash Flow Statement unit. (Module 3 · Financial Statements of Companies · Cash Flow Statement)
AS 17 — Segment Reporting: 5 must-practice questions
Presentation & Disclosures Based Accounting Standards, Module 1. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- RTP January 2025, Q12 · Marks:Not stated in source · Topic: Allocation. Why practise it: Rank 153 topic (Allocation); Category A — 92% identical to an ICAI Study Material question; RTP January 2025.
A Company has an inter-segment transfer pricing policy of charging at cost less 5%. The market prices are generally 20% above cost. You are required to examine whether the policy adopted by the company is correct or not? - RTP September 2025, Q17 · Marks:Not stated in source · Topic: Scope. Why practise it: Rank 150 topic (Scope); 53% match to an ICAI Study Material question; RTP September 2025.
Cotton Garments Limited, 5 segments (₹ Crore): Segment Assets A/B/C/D/E 40/15/10/10/5 (Total 80); Segment Results (95)/5/5/(5)/15 (Total −75); Segment Revenue 310/40/30/40/30 (Total 450). The Chief Accountant believes only segment "A" should be reported. Examine this opinion per AS 17. - RTP May 2026, Q13 · Marks:Not stated in source · Topic: Treatment of Interest for determining Segment Expense. Why practise it: Rank 152 topic (Treatment of Interest for determining Segment Expense); RTP May 2026.
Whether interest expense relating to overdrafts and other operating liabilities identified to a particular segment should be included in the segment expense or not? - RTP January 2026, Q13 · Marks:Not stated in source · Topic: Scope. Why practise it: Rank 150 topic (Scope); RTP January 2026.
Garnet Limited has 4 operating segments (₹ in appropriate units): Fan — Inter-segment sales 3,200, External sales 10,900, Total assets 23,700; Light — 200, 1,400, 13,200; Lamp — 0, 1,500, 4,200; Printer — 1,100, 200, 3,400; Total — 4,500, 14,000, 44,500. How many reportable segments does Garnet Limited have per the Revenue and Assets criteria in AS 17? State reasons. - MTP May 2025 Set 2, Q6(b) · Marks: 5 · Topic: Treatment of Interest for determining Segment Expense. Why practise it: Rank 152 topic (Treatment of Interest for determining Segment Expense); MTP May 2025 Set 2.
Whether interest expense relating to overdrafts and other operating liabilities identified to a particular segment should be included in the segment expense or not? In case interest is included as a part of the cost of inventories where it is so required as per AS 16, read with AS 2, and those inventories are part of segment assets of a particular segment, state whether such interest would be considered as a segment expense.
AS 18 — Related Party Disclosures: 8 must-practice questions
Presentation & Disclosures Based Accounting Standards, Module 1. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- MTP September 2025 Set 2, Q1(b) · Marks: 7 · Topic: Related Party Relationships, as contemplated under AS-18; Who are NOT deemed to be Related Parties under AS-18?. Why practise it: Rank 31 topic (Related Party Relationships, as contemplated under AS-18); MTP September 2025 Set 2; covers 2 mapped topics.
Answer the following with respect to AS 18: (i) ABC Ltd. sold goods of ₹2,00,000 to its associate company for the 1st quarter ending 30.06.2025. After that the related party relationship ceased to exist. However, goods were supplied to any other ordinary customer. Decide whether transactions of the entire year have to be disclosed as related party transaction. (ii) If the majority of directors of Arjun Ltd. constitute the majority of the Board of another Company Bheem Ltd. in their individual capacity as professionals (and not by virtue of their being Directors in Arjun Ltd.). Are both the companies related? (iii) Asha Ltd. sells all the… - RTP May 2025, Q17 · Marks:Not stated in source · Topic: Related Party Relationships, as contemplated under AS-18. Why practise it: Rank 31 topic (Related Party Relationships, as contemplated under AS-18); RTP May 2025.
SP Hotels Limited enters into an agreement with Mr. A for running its hotel for a fixed return payable to the latter every year. The contract involves the day-to-day management of the hotel, while all financial and operating policy decisions are taken by the Board of Directors of the company. Mr. A does not own any voting power in SP Hotels Limited. Would he be considered as a related party of SP Hotels Limited? - PYQ January 2025, Q6(a) [OR-alt 1] · Marks: 4 · Topic: Related Party Relationships, as contemplated under AS-18. Why practise it: Rank 31 topic (Related Party Relationships, as contemplated under AS-18); 55% match to an ICAI Study Material question; PYQ January 2025.
The following information is provided for the year ended 31st March, 2024: (i) AX Limited holds 70% shares of BX Limited. (ii) BX Limited holds 30% shares of CX Limited. (iii) DX Limited holds 40% shares of in CX Limited. (iv) DX Limited holds 49% shares in EX Limited. You are required to: (i) Identify the related parties for the reporting entities – AX Limited, CX Limited and EX Limited. (ii) If DX Limited would have sold its investment in EX Limited on 1st October, 2023, but goods were continued to be supplied by DX Limited to EX Limited throughout the year, will this scenario change your answer with respect to any of the reporting entity… - RTP May 2024, Q7(i) · Marks:Not stated in source · Topic: Related Party Relationships, as contemplated under AS-18. Why practise it: Rank 31 topic (Related Party Relationships, as contemplated under AS-18); RTP May 2024.
A Ltd. enters into an agreement with Mr. Bhola for running a business for a fixed amount payable to the later every year. The contract states that the day-to-day management of the business will be handled by Mr. Bhola, while all financial and operating policy decisions are taken by the Board of Directors of the Company. Mr. Bhola does not have any voting power in A Limited. You are required to suggest how this transaction will be treated as at the closing date i.e. on 31 st March, 2023 for the purposes of AS 18 'Related Party Disclosures'. - RTP May 2024, Q7(ii) · Marks:Not stated in source · Topic: Related Party Relationships, as contemplated under AS-18. Why practise it: Rank 31 topic (Related Party Relationships, as contemplated under AS-18); RTP May 2024.
Shri Manoj a relative of key management personnel received remuneration of ₹3,50,000 for his services in the company for the period from 1 st April, 2022 to 30th June, 2022. On 1 st July, 2022, he left the service. You are required to suggest how this transaction will be treated as at the closing date i.e. on 31 st March, 2023 for the purposes of AS 18 'Related Party Disclosures'. - RTP September 2025, Q18 · Marks:Not stated in source · Topic: Who are NOT deemed to be Related Parties under AS-18?. Why practise it: Rank 159 topic (Who are NOT deemed to be Related Parties under AS-18?); 56% match to an ICAI Study Material question; RTP September 2025.
X Ltd. sold goods to its associate company for the 1st quarter ending 30.6.2024, priced as it would for any ordinary customer. After that quarter, the related party relationship ceased to exist. Decide whether transactions for the entire year have to be disclosed as related party transactions. - RTP January 2026, Q14 · Marks:Not stated in source · Topic: Definitions of other Terms used in AS 18. Why practise it: Rank 161 topic (Definitions of other Terms used in AS 18); RTP January 2026.
Mr. Rajiv, a KMP of Raijada Limited, received a cheque of ₹70,000 towards reimbursement of expenses incurred on hotel stay, conference expenses, etc. while attending a meeting on behalf of the company. Is this transaction covered under AS-18? - RTP January 2025, Q13 · Marks:Not stated in source · Topic: Definitions of other Terms used in AS 18. Why practise it: Rank 161 topic (Definitions of other Terms used in AS 18); RTP January 2025.
Will transactions with related parties, for services provided/received free of cost, be required to be disclosed? A Limited has a corporate communications department, which centralises the public relations function for the whole group of A Limited and its subsidiaries. No charges are, however, levied by A Limited on its subsidiaries and accordingly, these transactions are not given accounting recognition. Would these constitute related party transactions requiring disclosure under AS 18 in the standalone financial statements of A Limited?
AS 20 — Earnings Per Share: 8 must-practice questions
Presentation & Disclosures Based Accounting Standards, Module 1. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- PYQ January 2026, Q1(c) · Marks: 5 · Topic: Shares issued in a scheme of Amalgamation. Why practise it: Rank 38 topic (Shares issued in a scheme of Amalgamation); Category A — 100% identical to an ICAI Study Material question; PYQ January 2026.
From the financial records of P Limited: Profit before tax FY2023-24 ₹25,00,000; FY2024-25 ₹32,50,000. Number of Equity Shares (Face Value ₹5) outstanding as on 31st March, 2024: 12,00,000. Applicable Tax Rate for both years: 20%. On 1st June, 2024, Directors announced a rights issue: 1 share for every 6 held @ ₹20/share, exercisable to 30th June, 2024, fully subscribed. Fair value of one equity share immediately prior to exercise of right (30th June, 2024) was ₹25. You are required to calculate the Basic Earnings per Share to be reported in the financial statements of P Limited for the year ended 31st March, 2025, including the comparative… - RTP September 2024, Q14 · Marks:Not stated in source · Topic: Shares issued in a scheme of Amalgamation. Why practise it: Rank 38 topic (Shares issued in a scheme of Amalgamation); 84% match to an ICAI Study Material question; RTP September 2024.
The following information is available in respect of High-end Ltd. for the accounting year 2022-2023 and 2023-2024: Net profit for ₹ Year 2022-2023 22,00,000 Year 2023-2024 30,00,000 Number of shares outstanding prior to right issue 10,00,000 shares. Right issue: One new share for each five shares outstanding i.e. 2,00,000 shares. : Right issue price ₹25 : Last date to exercise right 31 st July, 2023. Fair value of one equity share immediately prior to exercise of rights on 31.07.2023 is ₹32. You are required to compute, as per AS 20: Basic earnings per share for the year 2022-2023. Restated basic earnings per share for the year 2022-20223… - MTP January 2025 Set 1, Q3(a) · Marks: 4 · Topic: Shares issued in a scheme of Amalgamation. Why practise it: Rank 38 topic (Shares issued in a scheme of Amalgamation); 73% match to an ICAI Study Material question; MTP January 2025 Set 1.
Following information is supplied by K Ltd.: Number of shares outstanding prior to right issue - 2,50,000 shares. Right issue - two new share for each 5 outstanding shares (i.e. 1,00,000 new shares). Right issue price - ₹98. Last date of exercising rights - 30-06-2023. Fair value of one equity share immediately prior to exercise of right on 30-06-2023 is ₹102. Net Profit to equity shareholders: 2022-2023 - ₹50,00,000; 2023-2024 - ₹75,00,000. You are required to calculate the basic earnings per share as per AS-20 Earnings per Share. - RTP May 2025, Q19 · Marks:Not stated in source · Topic: Diluted Earnings Per Share; Earnings-Diluted; Per share- Diluted. Why practise it: Rank 71 topic (Diluted Earnings Per Share); 50% match to an ICAI Study Material question; RTP May 2025; covers 3 mapped topics.
The following information relates to XYZ Limited for the year ended 31st March, 2024: Net Profit for the year after tax: ₹37,50,000. Number of Equity Shares of ₹10 each outstanding: 5,00,000. Convertible Debentures issued by the Company (at the beginning of the year): Particulars Nos. 8% Convertible Debentures of ₹100 each 50,000 Equity Shares to be issued on conversion 55,000 The Rate of Income Tax: 30%. You are required to calculate Basic and Diluted Earnings Per Share (EPS). - PYQ May 2024, Q6(a) [OR-alt 2] · Marks: 4 · Topic: Diluted Earnings Per Share; Per share- Basic; Earnings-Diluted. Why practise it: Rank 71 topic (Diluted Earnings Per Share); 75% match to an ICAI Study Material question; PYQ May 2024; covers 5 mapped topics.
OR On 1 April 2023, ABC Limited has given the following information: Particulars ₹ 50,000 equity shares of ₹100 each (₹80 paid up by all shareholders) 40,00,000 2,00,000 8% Preference shares of ₹10 each 20,00,000 10,000, 12% Debentures of ₹100 each (Each debenture is convertible into 3 equity shares of ₹100 each) 10,00,000 On 1st July 2023, the remaining ₹20 was called up and paid by all the shareholders except one shareholder holding 10,000 equity shares. During the year 2023-24 the company had a profit after tax of ₹3,44,000. Tax rate is 30%. You are required to compute Basic and Diluted EPS. - MTP May 2026 Set 2, Q6(b) · Marks: 5 · Topic: Per share- Basic. Why practise it: Rank 86 topic (Per share- Basic); MTP May 2026 Set 2.
In the following list of shares issued, for the purpose of calculation of weighted average number of shares, from which date, weight is to be considered: (i) Equity Shares issued in exchange of cash, (ii) Equity Shares issued as a result of conversion of a debt instrument, (iii) Equity Shares issued in exchange for the settlement of a liability of the enterprise, (iv) Equity Shares issued for rendering of services to the enterprise, (v) Equity Shares issued in lieu of interest and/or principal of an other financial instrument, (vi) Equity Shares issued as consideration for the acquisition of an asset other than in cash. (5 Marks) - RTP January 2025, Q15 · Marks:Not stated in source · Topic: Dilutive Potential Equity Shares. Why practise it: Rank 99 topic (Dilutive Potential Equity Shares); RTP January 2025.
XYZ Limited has a wholly owned subsidiary BC Limited. The Group prepares consolidated Financial Statements for the year ended 31st March, 2024. XYZ Limited (in its separate financial statements) has incurred a loss of ₹2 crore during the year, while the consolidated profit for the group during the year is ₹40 lakh. XYZ Limited has 5,00,000 shares outstanding as at 31st March, 2024. Further, it has granted options to issue equity shares as at that date. In respect of such options, 1,00,000 shares are considered to be the shares issued for no consideration. There are no changes in income or expenses that are expected from the issue of equity… - RTP January 2026, Q16 · Marks:Not stated in source · Topic: Definition of the terms used in AS 20. Why practise it: Rank 166 topic (Definition of the terms used in AS 20); RTP January 2026.
Should appropriation to mandatory reserves be excluded from net profit attributable to equity shareholders? AB Limited must, per an agreement with debenture holders, appropriate profits each year to a specific reserve such that, at redemption, the reserve equals at least half the debenture value. Since these appropriations aren't available for distribution to equity shareholders, AB Limited excluded them from the Basic EPS numerator. Is this correct?
AS 24 — Discontinuing Operations: 7 must-practice questions
Presentation & Disclosures Based Accounting Standards, Module 1. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- MTP May 2025 Set 2, Q1(a) · Marks: 7 · Topic: Discontinuing Operation; Initial Disclosure Event. Why practise it: Rank 52 topic (Discontinuing Operation); MTP May 2025 Set 2; covers 2 mapped topics.
Arzoo Ltd. is in the business of manufacture of Passenger cars and commercial vehicles. The company is working on a strategic plan to shift from the Passenger car segment over the coming 5 years. However, no specific plans have been drawn up for sale of neither the division nor its assets. As part of its plan it will reduce the production of passenger cars by 20% annually. It also plans to commence another new factory for the manufacture of commercial vehicles plus transfer of employees in a phased manner. You are required to comment if mere gradual phasing out in itself can be considered as a ‘Discontinuing Operation' within the meaning of… - MTP May 2026 Set 1, Q6(a) [OR-alt 1] · Marks: 5 · Topic: Presentation and Disclosure. Why practise it: Rank 53 topic (Presentation and Disclosure); MTP May 2026 Set 1.
Analyse the disclosure and presentation requirements of AS 24 for Discontinuing Operations (any five). (5 Marks) - MTP January 2026 Set 2, Q1(c) · Marks: 4 · Topic: Discontinuing Operation. Why practise it: Rank 52 topic (Discontinuing Operation); MTP January 2026 Set 2.
Kumar Ltd. manufactures both passenger cars and commercial vehicles. Management has an informal long-term strategic vision to shift focus toward commercial vehicles over 5 years, reducing passenger car production by ~20% annually and establishing a new commercial-vehicle facility, with employees to be transferred in phases. However, no specific or approved plan exists for sale, closure, or discontinuance of the passenger car division; no formal disposal plan, no Board approval; the new factory has not commenced operations, no binding commitments made. Comment on whether this gradual scaling down, without a formal approved plan, can be… - RTP January 2025, Q18 · Marks:Not stated in source · Topic: Presentation and Disclosure. Why practise it: Rank 53 topic (Presentation and Disclosure); RTP January 2025.
What are the disclosure and presentation requirements of AS 24 for discontinuing operations? Give four examples of activities that do not necessarily satisfy criterion (a) of paragraph 3 of AS 24, but that might do so in combination with other circumstances. - PYQ May 2026, Q5(b) · Marks: 10 · Topic: Discontinuing Operation. Why practise it: Rank 52 topic (Discontinuing Operation); PYQ May 2026.
Oasis Limited runs a famous chain of super markets and restaurants. Restaurant division constitutes 35% of total group revenue. The management of the company decides to close the business of restaurants as the company has been experiencing declining profitability due to increased competition. On 1st April, 2025, the management announced its intention to discontinue the restaurant business and concentrate on Super market segment only. The decision was made through strategic review and the management started actively seeking buyers for the restaurant division. During the year 2025-26, the company has sold 5 restaurants out of 12 restaurants so… - PYQ January 2026, Q6(a) [OR-alt 1] · Marks: 4 · Topic: Presentation and Disclosure. Why practise it: Rank 53 topic (Presentation and Disclosure); PYQ January 2026.
What is the initial disclosure information of AS-24 for discontinuing operations? (4 Marks) - RTP May 2024, Q8 · Marks:Not stated in source · Topic: Discontinuing Operation. Why practise it: Rank 52 topic (Discontinuing Operation); RTP May 2024.
Arzoo Ltd. is in the business of manufacture of passenger cars and commercial vehicles. The company is working on a strategic plan to shift from the passenger car segment to the commercial vehicles segment over the coming 5 years. However, no specific plans have been drawn up for sale of neither the division nor its assets. As part of its plan, it has planned that it will reduce the production of passenger cars by 20% annually. It also plans to commence another new factory for the manufacture of commercial vehicles plus transfer of employees in a phased manner. These plans have not been approved from the Board of Directors and the new…
AS 25 — Interim Financial Reporting: 3 must-practice questions
Presentation & Disclosures Based Accounting Standards, Module 1. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- PYQ May 2025, Q3(b) · Marks: 7 · Topic: Revenue Received Seasonally or Occasionally. Why practise it: Rank 26 topic (Revenue Received Seasonally or Occasionally); PYQ May 2025.
XY Limited reported a Profit Before Tax (PBT) of ₹18 lakhs for the third quarter ending 31st December 2024. Following observations are noted: (i) Dividend income of ₹8 lakhs received during the quarter has been recognized to the extent of ₹2 lakh only. (ii) Sales promotion expenses ₹15 lakhs incurred in the third quarter, 70% has been deferred to the fourth quarter as the sales in the last quarter is high. (iii) In the third quarter, the company changed depreciation method from WDV to SLM, which resulted in excess depreciation of ₹4 lakhs. The entire amount has been debited in the third quarter, though the share of the third quarter is only… - PYQ May 2026, Q1(c) · Marks: 4 · Topic: Accounting Policies. Why practise it: Rank 54 topic (Accounting Policies); PYQ May 2026.
The following information is provided in respect of Vardhman Ltd. for the financial year 2025-26: Estimated total annual income ₹5,00,000 (inclusive of estimated capital gains earned in 2nd quarter ₹1,00,000). Tax rates for FY 2025-26: On capital gains 20%; On other incomes – first ₹2,00,000 at 35%, balance income at 40%. Assuming no difference between estimated taxable income and estimated accounting income, you are required: (i) To compute total tax expenses for the year 2025-26; (ii) To calculate tax expenses for each quarter, when the estimated income of each quarter is ₹1,25,000 and income for 2nd quarter includes capital gain of… - ICAI Study Material, Illustration 1 · marks not stated · Topic: Revenue Received Seasonally or Occasionally; Cost Incurred Unevenly During the Financial Year. Why practise it: Not asked in this form in any MTP, RTP or PYQ. Tests seasonal income and evenly incurred costs (Rank 26 topic); Illustration 4 in the same chapter is this problem again with other figures, so only this one is listed.
Sincere Corporation is dealing in seasonal product. Sales pattern of the product quarter-wise is as follows: 1st quarter 30th June 10% 2nd quarter 30th September 10% 3rd quarter 31st December 60% 4th quarter 31st March 20% Information regarding the 1st quarter ended on 30th June, 20X1 is as follows: Sales 80 crores Salary and other expenses 60 crores Advertisement expenses (routine) 4 crores Administrative and selling expenses 8 crores While preparing interim financial report for first quarter Sincere Corporation wants to defer ₹ 10 crores expenditure to third quarter on the argument that third quarter is having more sales, therefore, the…
AS 21 — Consolidated Financial Statements: 10 must-practice questions
Accounting Standards for Consolidated Financial Statements, Module 2. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- MTP September 2025 Set 1, Q5(a) · Marks: 7 · Topic: Calculation of Goodwill/Capital Reserve (Cost of Control). Why practise it: Rank 8 topic (Calculation of Goodwill/Capital Reserve (Cost of Control)); Category A — 99% identical to an ICAI Study Material question; MTP September 2025 Set 1.
Exe Ltd. acquires 70% of equity shares of Zed Ltd. as on 31st March, 2024 at a cost of ₹70 lakhs. The following information is available from the balance sheet of Zed Ltd. as on 31st March, 2024 (₹ in lakhs): Property, plant and equipment 120; Investments 55; Current Assets 70; Loans & Advances 15; 15% Debentures 90; Current Liabilities 50. The following revaluations have been agreed upon (not included in the above figures): Property, plant and equipment up by 20%; Investments down by 10%. Zed Ltd. declared and paid dividend @20% on its equity shares as on 31st March, 2024 (Face value – ₹10 per share). Exe Ltd. purchased the shares of Zed… - MTP January 2025 Set 2, Q2(a) · Marks: 7 · Topic: Calculation of Goodwill/Capital Reserve (Cost of Control). Why practise it: Rank 8 topic (Calculation of Goodwill/Capital Reserve (Cost of Control)); Category A — 98% identical to an ICAI Study Material question; MTP January 2025 Set 2.
Exe Ltd. acquires 70% of equity shares of Zed Ltd. as on 31st March, 2024 at a cost of ₹70 lakhs. The following information is available from the balance sheet of Zed Ltd. as on 31st March, 2024: Property, plant and equipment ₹120 lakhs, Investments ₹55 lakhs, Current Assets ₹70 lakhs, Loans & Advances ₹15 lakhs, 15% Debentures ₹90 lakhs, Current Liabilities ₹50 lakhs. The following revaluations have been agreed upon (not included in the above figures): Property, plant and equipment up by 20%, Investments down by 10%. Zed Ltd. declared and paid dividend @ 20% on its equity shares as on 31st March, 2024 (Face value – ₹10 per share). Exe Ltd.… - MTP September 2025 Set 2, Q3 · Marks: 14 · Topic: Consolidation Adjustments; Preparation of Consolidated Statement of Profit and Loss; Preparation of Consolidated Cash Flow Statement. Why practise it: Rank 9 topic (Consolidation Adjustments); 67% match to an ICAI Study Material question; MTP September 2025 Set 2; covers 3 mapped topics.
G Ltd. and its subsidiary K Ltd. give the following information for the year ended 31st March, 2025 (₹ in crores): Particulars G Ltd. K Ltd Sales and other Income 3000 750 Increase in Inventory 750 100 Raw material consumed 600 100 Wages and Salaries 600 75 Production expenses 100 50 Administrative expenses 75 50 Selling and Distribution expenses 100 25 Interest 75 30 Depreciation 75 30 The following information is also given: (i) G sold goods of ₹200 crores (sale value) to K Ltd. at cost plus 25%. (1/5th of such goods were still in inventory of K Ltd. at the end of the year) (ii) G Ltd. holds 75% of the Equity share capital of K Ltd. and… - MTP September 2025 Set 1, Q1(b) · Marks: 7 · Topic: Minority Interests. Why practise it: Rank 18 topic (Minority Interests); 66% match to an ICAI Study Material question; MTP September 2025 Set 1.
From the following data, determine Minority Interest on the date of acquisition and on the date of consolidation in each case: Case Subsidiary Company % of Share Owned Cost (₹) Share Capital 01-01-2024 (₹) Profit and Loss A/c 01-01-2024 (₹) Share Capital 31-12-2024 (₹) Profit and Loss A/c 31-12-2024 (₹) Case-i X 85% 1,85,000 1,35,000 60,000 1,35,000 70,000 Case-ii Y 70% 1,60,000 1,25,000 45,000 1,25,000 5,000 Case-iii Z 65% 83,000 25,000 5,000 25,000 5,000 Case-iv M 90% 60,000 45,000 20,000 45,000 40,000 Case-v N 100% 85,000 25,000 25,000 25,000 50,000 - PYQ May 2026, Q5(a) · Marks: 4 · Topic: Preparation of Consolidated Statement of Profit and Loss. Why practise it: Rank 13 topic (Preparation of Consolidated Statement of Profit and Loss); 54% match to an ICAI Study Material question; PYQ May 2026.
Glamour Ltd. and its subsidiary Fashion Ltd. has provided you the following information for the year ended 31st March, 2026: Particulars Glamour Ltd. ('000) Fashion Ltd. ('000) Equity share capital 1,000 750 Sales and other operating revenue 4,500 2,800 Inventory as on 1.04.2025 545 390 Inventory as on 31.03.2026 750 615 Dividend income 125 80 Raw materials consumed 1,550 940 Production expenses 710 680 Administrative expenses 314 129 Selling & Distribution expenses 285 230 Interest expenses 150 95 Depreciation 70 45 Wages & salaries 880 740 Loss on sale of investment — 35 Other non-operating income 74 22 Other information: (i) On 1st April,… - MTP May 2026 Set 1, Q5(a) · Marks: 10 · Topic: Preparation of Consolidated Statement of Profit and Loss. Why practise it: Rank 13 topic (Preparation of Consolidated Statement of Profit and Loss); MTP May 2026 Set 1.
Birds Ltd. and its subsidiary Rooster Ltd provided the following information for the year ended 31/03/2025. Particulars Birds Ltd. (₹) Rooster Ltd. (₹) Equity Share Capital 10,00,000 3,00,000 Sales 28,40,000 10,40,000 Purchases (Finished Goods) 9,15,000 1,75,000 Salaries 7,75,000 3,78,000 Rent received 5,40,000 General and Administration expenses 2,81,500 1,98,000 Selling and Distribution Expenses 2,21,000 90,000 Dividend Income 1,35,000 28,000 Finished Goods Inventory on 01/04/2024 3,35,000 1,20,000 Finished Goods Inventory on 31/03/2025 7,85,000 2,90,000 Other Non-operating Income 2,38,000 57,000 Other Information: On 1st April 2022 Birds… - MTP May 2024 Set 2, Q5(b) · Marks: 7 · Topic: Consolidation Adjustments. Why practise it: Rank 9 topic (Consolidation Adjustments); 53% match to an ICAI Study Material question; MTP May 2024 Set 2.
Gamma Ltd. acquired 24,000 equity shares of ₹10 each, in Beta Ltd. on October 1, 2023 for ₹4,60,200. The profit and loss account of Beta Ltd. showed a balance of ₹15,000 on April 1, 2023. The plant and machinery of Beta Ltd. which stood in the books at ₹2,25,000 on April 1, 2023 was considered worth ₹2,70,000 on the date of acquisition. The information of the two companies as at 31-3-2024 was as follows: Share capital (fully paid equity shares of ₹10 each): Gamma 7,50,000, Beta 3,00,000. General reserve: Gamma 3,60,000, Beta 1,50,000. Profit and loss account: Gamma 85,800, Beta 1,23,000. Current Liabilities: Gamma 2,54,700, Beta 49,500. Land… - PYQ May 2024, Q5 · Marks: 14 · Topic: Calculation of Goodwill/Capital Reserve (Cost of Control); Consolidation Adjustments; Minority Interests. Why practise it: Rank 8 topic (Calculation of Goodwill/Capital Reserve (Cost of Control)); 67% match to an ICAI Study Material question; PYQ May 2024; covers 5 mapped topics.
The Balance Sheets of Art Limited and Craft Limited as on 31 March 2024 are as below: Particulars Note No Art Limited (₹) Craft Limited (₹) I. Equity and Liabilities – a. Shareholder's Fund – i. Share Capital 1 6,50,000 4,00,000 ii. Reserve & Surplus 2 3,12,000 2,48,000 b. Current Liabilities – i. Trade Payables 1,45,000 92,000 ii. Short term borrowings 3 70,000 – Total 11,77,000 7,40,000 II. Assets – a. Non-current Assets – i. Property, Plant & Equipment 4 4,21,000 3,60,000 ii. Non-current investment 5 4,32,000 – b. Current Assets – i. Inventories 1,66,000 2,05,000 ii. Trade Receivables 6 1,33,500 1,68,300 iii. Cash & Cash equivalent 24,500… - PYQ September 2025, Q5 · Marks: 14 · Topic: Control. Why practise it: Rank 15 topic (Control); PYQ September 2025.
Seva Limited and subsidiary Meva Limited, Balance Sheets as at 31st March 2025 (₹ Lakh): Seva — Equity Shares of ₹10 6,000, General Reserve 1,500, P&L 2,000, 10% Debentures 1,180, Trade Payable 1,500; Land and Building 4,000, Plant & Machinery 1,460, Investments (Meva shares) 3,000, Inventories 1,400, Trade Receivable 1,420, Cash at Bank 550, Cash in Hand 350. Meva — Equity Shares of ₹10 4,000, General Reserve 1,200, P&L 1,500, 10% Debentures 820, Trade Payable 1,080; Land and Building 4,150, Plant & Machinery 1,650, Inventories 1,100, Trade Receivable 1,000, Cash at Bank 600, Cash in Hand 100. Seva acquired 80% of Meva on 1st April 2024… - MTP January 2025 Set 1, Q5 · Marks: 14 · Topic: Uniform Accounting Policies. Why practise it: Rank 73 topic (Uniform Accounting Policies); 67% match to an ICAI Study Material question; MTP January 2025 Set 1.
Consider the following summarized Balance Sheets of subsidiary MNT Ltd.: Liabilities 2022-23 (₹) 2023-24 (₹) Issued and subscribed 7500 Equity Shares of ₹100 each 7,50,000 7,50,000 Revenue Reserve 2,14,000 5,05,000 Securities Premium 72,000 2,07,000 Trade Payables 2,90,000 2,46,000 Bank Overdraft - 1,70,000 Provision for Taxation 2,62,000 4,30,000 Total 15,88,000 23,08,000 Assets 2022-23 (₹) 2023-24 (₹) Fixed Assets (Cost) 9,20,000 9,20,000 Less: Accumulated Depreciation (1,70,000) (2,82,500) Net Fixed Assets 7,50,000 6,37,500 Investment at Cost - 5,30,000 Inventory 4,12,300 6,90,000 Trade Receivable 2,95,000 3,43,000 Prepaid expenses 78,000…
AS 23 — Accounting for Investments in Associates in Consolidated Financial Statements: 3 must-practice questions
Accounting Standards for Consolidated Financial Statements, Module 2. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- PYQ September 2024, Q5 · Marks: 14 · Topic: Associates Accounted for using the Equity method. Why practise it: Rank 74 topic (Associates Accounted for using the Equity method); 61% match to an ICAI Study Material question; PYQ September 2024.
On 1st February, 2024, Best Ltd. acquired 80% Equity shares of Cool Ltd. for ₹14,80,000. On 31st March, 2024, Best Ltd. also acquired 25% Equity shares of Good Ltd. for ₹3,80,000. The following are the balances extracted from the books of Best Ltd., Cool Ltd., and Good Ltd. as on 31st March, 2024: Particulars Best Ltd. (₹) Cool Ltd. (₹) Good Ltd. (₹) Equity Shares of ₹100 each fully paid 30,00,000 20,00,000 10,00,000 Securities Premium - 2,20,000 - 9% Debentures 6,30,000 - 2,40,000 General Reserve 2,69,000 84,000 1,20,000 Profit & Loss Account (Credit Balance) 3,26,000 2,70,000 50,000 Investments 17,50,000 6,10,000 - Property, Plant, and… - MTP May 2025 Set 2, Q3(b) · Marks: 7 · Topic: Relevant Explanations to AS 23. Why practise it: Rank 198 topic (Relevant Explanations to AS 23); MTP May 2025 Set 2.
A Ltd. has a share capital of 50,000 shares @ ₹100 per share. H Ltd. acquired 15% shares in A Ltd. on 1.4.2024. It also acquired all the 5,000, 12% convertible debentures of ₹100 each of A Ltd. These debentures will be converted at par into equity shares of A Ltd. after 3 years. State whether, as per AS 23, A Ltd. is an Associate of H Ltd. or not with reasons? - RTP January 2025, Q17 · Marks:Not stated in source · Topic: Definitions of the terms used in the Accounting Standard. Why practise it: Rank 200 topic (Definitions of the terms used in the Accounting Standard); RTP January 2025.
A Ltd. invested ₹1,00,000 to acquire 10% stake (Investment I) in B Ltd. and later invested ₹3,00,000 to acquire additional 20% (Investment II). The net asset value of the B Ltd. at the respective investment dates was ₹7,50,000 and ₹12,50,000 respectively. Determine whether B Ltd. is an associate of A Ltd. Also, calculate goodwill arising on the acquisition of the associate.
AS 27 — Financial Reporting of Interests in Joint Ventures: 2 must-practice questions
Accounting Standards for Consolidated Financial Statements, Module 2. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- MTP January 2026 Set 2, Q3 · Marks: 14 · Topic: Jointly Controlled Assets (JCA). Why practise it: Rank 216 topic (Jointly Controlled Assets (JCA)); 61% match to an ICAI Study Material question; MTP January 2026 Set 2.
Hari Ltd., OM Ltd. and Bhakti Ltd. jointly constructed a pipeline to transport gas manufactured by them (a jointly controlled asset under AS 27). Expenditure incurred: Buildings ₹18,00,000 (depreciate @5% p.a.); Pipeline ₹90,00,000 (@15% p.a.); Computers & electronics ₹4,50,000 (@40% p.a.); Vehicles ₹13,50,000 (@20% p.a.). They equally bear pipeline maintenance expenditure of ₹9,00,000 each year. Show the extract of the consolidated balance sheet and the extract of Statement of Profit & Loss and Balance Sheet for each venturer. - RTP January 2026, Q18 · Marks:Not stated in source · Topic: Scope; Forms of Joint Ventures. Why practise it: Rank 211 topic (Scope); RTP January 2026; covers 2 mapped topics.
Briefly explain the scope and forms of Joint Venture as per AS 27.
AS 2 — Valuation of Inventories: 10 must-practice questions
Assets Based Accounting Standards, Module 2. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- MTP November 2023 Set 1, Q1(b) · Marks: 5 · Topic: NRV of materials held for use or disposal; Comparison of Cost and Net Realisable Value. Why practise it: Highest-ranked AS 2 topic (rank 40) and a 90% match to an ICAI Study Material question.
Mr. Jatin gives the following information relating to the items forming part of the inventory as on 31.03.2023. His enterprise produces product P using Raw Material X. 900 units of Raw Material X (purchased @ ₹100 per unit). Replacement cost of Raw Material X as on 31.03.2023 is ₹80 per unit. 400 units of partly finished goods in the process of producing P. Cost incurred till date is ₹245 per unit. These units can be finished next year by incurring additional cost of ₹50 per unit. 800 units of Finished goods P and total cost incurred is ₹295 per unit. Expected selling price of product P is ₹280 per unit, subject to a payment of 5% brokerage… - MTP January 2026 Set 2, Q6(a) [OR-alt 2] · Marks: 4 · Topic: Exclusions from the cost of inventories. Why practise it: Newest MTP in the corpus and a Category A question — 93% identical to a Study Material question.
"In determining the cost of inventories, it is appropriate to exclude certain costs and recognise them as expenses in the period in which they are incurred." Provide examples of such costs as per AS 2 (Revised) 'Valuation of Inventories'. - RTP May 2025, Q5 · Marks:Not stated in source · Topic: NRV of materials held for use or disposal; Costs of Conversion; Measurement of Inventories. Why practise it: An RTP that carries three mapped topics at once, including the rank-40 NRV topic.
From the following information provided by LMN Ltd. for the year 2024, you are required to compute the closing inventory: Raw Material A – Closing balance: 700 units ₹ per unit Cost price including GST 280 ITC available 25 Freight inward 35 Handling charges 20 Replacement cost 200 Finished Goods B – Closing balance: 1,800 units ₹ per unit Material consumed 280 Direct labour 80 Direct overhead 40 Total fixed overhead for the year was ₹3,60,000 on a normal capacity of 36,000 units, while actual production has been 30,000 units. Calculate the value of closing stock when: (i) Net Realisable Value of Finished Goods B is ₹500 per unit; (ii) Net… - MTP May 2025 Set 2, Q6(c) · Marks: 5 · Topic: Exclusions from the cost of inventories. Why practise it: Normal versus abnormal loss, the most repeated AS 2 idea, at an 80% Study Material match.
Wooden Plywood Limited has a normal wastage of 5% in the production process. During the year 2024-25, the Company used 16,000 MT of Raw material costing ₹190 per MT. At the end of the year, 950 MT of wastage was in stock. The accountant wants to know how this wastage is to be treated in the books. You are required to: (1) Calculate the amount of abnormal loss. (2) Explain the treatment of normal loss and abnormal loss [In the context of AS-2]. - MTP November 2023 Set 2, Q1(a) · Marks: 5 · Topic: Exclusions from the cost of inventories; Measurement of Inventories. Why practise it: Costs excluded from inventory cost, at an 80% match to an ICAI Study Material question.
(i) “In determining the cost of inventories, it is appropriate to exclude certain costs and recognize them as expenses in the period in which they are incurred”. Provide examples of such costs as per AS 2 ‘Valuation of Inventories’. (ii) X Limited purchased goods at the cost of ₹40 lakhs in October, 2022. Till March, 2023, 75% of the stocks were sold. The company wants to disclose closing stock at ₹10 lakhs. The expected sale value is ₹11 lakhs and a commission at 10% on sale is payable to the agent. Advise, what is the correct value of closing stock to be disclosed as at 31.3.2023. - RTP September 2024, Q3 · Marks:Not stated in source · Topic: Costs of Conversion. Why practise it: Rank 66 topic (Costs of Conversion); RTP September 2024.
Kirti Ltd. is in the business of manufacturing computers. During the year ended 31 st March, 2024, the company manufactured 550 computers. It has the policy of valuing finished stock of goods at a standard cost of ₹1.8 lakh per computer. The details of the costs are as under: (₹ in lakh) Raw material consumed 400 Direct Labour 250 Variable production overheads 150 Fixed production overheads (including interest of ₹100 lakh) 290 Compute the value cost per computer for the purpose of closing stock. - PYQ May 2024, Q1(b) · Marks: 7 · Topic: Costs of Conversion; Joint or By-Products. Why practise it: The only question covering Joint and By-Products, and the largest at 7 marks.
Well Wear Limited is a Textile Manufacturing Company and engaged in the production of Polyester (P) and Nylon (N). While manufacturing the main products, a by-product Fiber (F) is also produced. Details of the cost of production are as under: Purchase of Raw Material for manufacturing process of 30,000 units 30,000 units ₹3,50,000 Wages paid ₹1,60,000 Fixed overheads ₹1,20,000 Variable overheads ₹60,000 Output: Polyester (P) 12,500 Units Nylon (N) 10,000 Units Fiber (F) 3,200 Units Closing Inventory: Polyester (P) 1,600 Units Nylon(N) 400 Units Average market price of Polyester and Nylon is ₹100 and ₹60 per unit respectively, by-product… - MTP May 2023 Set 1, Q1(c) · Marks: 5 · Topic: Costs of Conversion; Comparison of Cost and Net Realisable Value. Why practise it: Hand-picked by Pranav: a closing-inventory computation where the selling price falls and the raw material's replacement cost is below its cost.
Particulars Kg. ₹ Opening Inventory: Finished Goods 1,000 25,000 Raw Materials 1,100 11,000 Purchases 10,000 1,00,000 Labour 76,500 Overheads (Fixed) 75,000 Sales 10,000 2,80,000 Closing Inventory: Raw Materials 900 Finished Goods 1,200 The expected production for the year was 15,000 kg of the finished product. Due to fall in market demand the sales price for the finished goods was ₹20 per kg and the replacement cost for the raw material was ₹9.50 per kg on the closing day. You are required to calculate the closing inventory as on that date. (5 Marks) - MTP May 2026 Set 1, Q1(c) · Marks: 4 · Topic: Other techniques of cost measurement; Estimates of Net Realisable Value. Why practise it: Latest MTP, and the only recent hit on the retail method and NRV estimation.
In the following cases, find the value of closing stock as per AS 2: (i) Sonu is a retailer dealing in toys. During the year, he purchased items worth for ₹1,47,000 and made a total sale ₹1,54,000. The average percentage of gross margin is 10% on cost. Opening stock of toys at cost was ₹20,000. (ii) On 21st March, 2026, Mohan purchased 250 chairs at ₹300 each. The selling price of the chair is ₹400 each. Owing to a manufacturing defect, net realisable value of the whole lot of chair was determined at 70% of their normal selling price. No chairs were sold during the year. (4 Marks) - RTP January 2026, Q3 · Marks:Not stated in source · Topic: Measurement of Inventories. Why practise it: Rank 224 topic (Measurement of Inventories); RTP January 2026.
A private limited company manufacturing fancy terry towels had valued its closing inventory of finished goods at realisable value, inclusive of profit and export cash incentives. Firm contracts had been received and goods were packed for export, but ownership had not been transferred to the foreign buyers. Comment on the valuation of the inventories by the company.
AS 10 — Property, Plant and Equipment: 10 must-practice questions
Assets Based Accounting Standards, Module 2. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- MTP November 2023 Set 1, Q1(d) · Marks: 5 · Topic: PPE acquired in Exchange for a Non-monetary Asset or Assets or A combination of Monetary and Non-monetary Assets; Measurement of PPE; Recognition Criteria for PPE. Why practise it: Rank 41 topic (PPE acquired in Exchange for a Non-monetary Asset or Assets or A combination of Monetary and Non-monetary Assets); 60% match to an ICAI Study Material question; MTP November 2023 Set 1; covers 3 mapped topics.
A Ltd. had following assets. Calculate depreciation for the year ended 31st March, 2023 for each asset as per AS 10 (Revised): Machinery purchased for ₹10 lakhs on 1st April, 2018 and residual value after useful life of 5 years, based on 2018 prices is ₹10 lakhs. Land for ₹50 lakhs. A Machinery is constructed for ₹5,00,000 for its own use (useful life is 10 years). Construction is completed on 1st April, 2022, but the company does not begin using the machine until 31st March, 2023. Machinery purchased on 1st April, 2020 for ₹50,000 with useful life of 5 years and residual value is NIL. On 1st April, 2022, management decided to use this asset… - RTP May 2025, Q11 · Marks:Not stated in source · Topic: Measurement of PPE; Initial Recognition. Why practise it: Rank 68 topic (Measurement of PPE); 84% match to an ICAI Study Material question; RTP May 2025; covers 2 mapped topics.
Shrishti Ltd. contracted with a supplier to purchase machinery which is to be installed in its Department A in three months' time. Special foundations were required for the machinery which were to be prepared within this supply lead time. The cost of the site preparation and laying foundations were ₹1,41,870. These activities were supervised by a technician during the entire period, who is employed for this purpose at ₹45,000 per month. The technician's services were given by Department B to Department A, which billed the services at ₹49,500 per month after adding 10% profit margin. The machine was purchased at ₹1,58,34,000 inclusive of IGST… - MTP May 2023 Set 1, Q6(a) · Marks: 5 · Topic: Measurement of PPE; Initial Recognition. Why practise it: Rank 68 topic (Measurement of PPE); 85% match to an ICAI Study Material question; MTP May 2023 Set 1; covers 2 mapped topics.
Preet Ltd. is installing a new plant at its production facility. It has incurred these costs: Particulars ₹ Cost of the plant (cost per supplier's invoice plus taxes) 10,00,000 Initial delivery and handling costs 80,000 Cost of site preparation 2,40,000 Consultants used for advice on the acquisition of the plant 2,80,000 Estimated dismantling costs to be incurred after 7 years 1,20,000 Operating losses before commercial production 1,60,000 Please advise Preet Ltd. on the costs that can be capitalised in accordance with AS 10 (Revised). (5 Marks) - PYQ May 2025, Q1(a) · Marks: 7 · Topic: Measurement of PPE; Initial Recognition. Why practise it: Rank 68 topic (Measurement of PPE); 55% match to an ICAI Study Material question; PYQ May 2025; covers 2 mapped topics.
Hardy Ltd. intends to extend the factory set up on the adjacent plot with disintegrated old premises. It acquired the land having an area of 250 hectares at a cost of ₹25,000 per hectare. Hardy Ltd. incurred Stamp duty and registration charges of 5% of land value. Legal fees were paid ₹4,75,000 for land acquisition. Hardy Ltd. incurred ₹37,85,000 for demolishing old premises thereon. A sum of ₹12,60,000 (including 5% GST thereon) was realized from the sale of material salvaged from the site. Till the new site with extended factory premises is ready, the company needs to move the present production facilities to another (temporary) site. The… - PYQ May 2026, Q1(b) · Marks: 5 · Topic: Cost of a self-constructed Asset. Why practise it: Rank 93 topic (Cost of a self-constructed Asset); Category A — 100% identical to an ICAI Study Material question; PYQ May 2026.
On 1 April, 2022, Sky Limited purchased a machinery for ₹7,35,000 (inclusive of GST @5%, input credit available for entire amount). Other installation expenses: Cost of preparation of site ₹16,500; Total Labour charges ₹75,000 (200 of 500 total men hours spent on installation); Total salary of supervisor ₹34,000 (25% of time spent on installation); Interest charges paid to supplier for deferred credit ₹8,000; Test run and experimental production expenses ₹28,200; Consultancy charges to architect for plant set up ₹18,800; Depreciation on assets used for installation ₹8,000. The machine was ready for use on October 1, 2022 but was put to use… - PYQ May 2023, Q1(a) · Marks: 5 · Topic: PPE acquired in Exchange for a Non-monetary Asset or Assets or A combination of Monetary and Non-monetary Assets. Why practise it: Rank 41 topic (PPE acquired in Exchange for a Non-monetary Asset or Assets or A combination of Monetary and Non-monetary Assets); PYQ May 2023.
In the books of Topmaker Limited, carrying amount of Plant and Machinery as on 1 st April, 2022 is ₹56,30,000. On scrutiny, it was found that a purchase of Machinery worth ₹21,12,000 was included in the purchase of goods on 1 st June, 2022. On 30 th June, 2022 the company disposed a Machine having book value of ₹9,60,000 (as on 1 st April, 2022) for ₹8,25,000 in part exchange of a new machine costing ₹15,65,000. The company charges depreciation @ 10% p.a. on written down value method on Plant and Machinery. You are required to compute: (i) Depreciation to be charged to Profit & Loss Account; (ii) Book value of Plant & Machinery as on 31 st… - RTP May 2026, Q10 · Marks:Not stated in source · Topic: Cost of a self-constructed Asset. Why practise it: Rank 93 topic (Cost of a self-constructed Asset); RTP May 2026.
On 1st April, 2024, Y Limited purchased an industrial plot of land for ₹50,00,000 for the purpose of constructing a new factory. This cost of ₹50,00,000 included legal cost of ₹2,50,000 incurred for the purpose of acquisition of this plot. The construction of the factory commenced on 1st May, 2024. Y Limited provides you with the following details of the costs incurred in relation to the above construction: Particulars Amount (₹) Preparation and levelling of the land 1,60,000 Employment costs of construction workers (per month) 58,000 Purchase of Raw materials for the construction 42,48,000 Cost of relocating the workers to new factory for… - RTP January 2025, Q8 · Marks:Not stated in source · Topic: Treatment of Subsequent Costs. Why practise it: Rank 229 topic (Treatment of Subsequent Costs); 57% match to an ICAI Study Material question; RTP January 2025.
MS Ltd. has acquired a heavy machinery at a cost of ₹1,00,00,000 (with no breakdown of the component parts). The estimated useful life is 10 years. At the end of the sixth year, one of the major components, the turbine requires replacement, as further maintenance is uneconomical. The remainder of the machine is perfect and is expected to last for the next four years. The cost of a new turbine is ₹45,00,000. The discount rate assumed is 5%. Can the cost of the new turbine be recognised as an asset, and, if so, what treatment should be used? - RTP September 2025, Q12(i) · Marks:Not stated in source · Topic: Other Definitions. Why practise it: Rank 232 topic (Other Definitions); RTP September 2025.
Precision Tools Ltd. purchased a machine for ₹12,00,000 on 1st October 2024. Additional expenses: Freight and insurance ₹60,000; Erection charges ₹40,000; Testing cost — raw materials used ₹25,000, wages ₹10,000, sale of finished goods from testing production ₹8,000. Calculate the amount to be capitalized for this machine per AS 10. - RTP September 2025, Q12(iii) · Marks:Not stated in source · Topic: Other Definitions. Why practise it: Rank 232 topic (Other Definitions); RTP September 2025.
On 15th March 2025, Precision Tools Ltd. shifted a machine from one factory to another, incurring: Dismantling cost ₹12,000; Transport and installation ₹18,000; Loss due to damage in transit ₹6,000. Calculate the amount to be capitalized.
AS 13 — Accounting for Investments: 10 must-practice questions
Assets Based Accounting Standards, Module 2. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- PYQ January 2026, Q3(b) · Marks: 7 · Topic: Cost of Investments. Why practise it: Rank 7 topic (Cost of Investments); Category A — 100% identical to an ICAI Study Material question; PYQ January 2026.
Mr. AB acquires 28,000 equity shares of ₹10 each in F Ltd. for ₹3,36,000 inclusive of brokerage and stamp duty on 1st April, 2024. F Ltd. announces: (i) 30th September, 2024, bonus declared 2:7. (ii) 30th November, 2024, rights issue 3:8 @₹15/share. Mr. AB took up 2/3 of right shares and sold the remaining rights for ₹6/share. On 18 January, 2025, Mr. AB sold 40% of his shareholdings at ₹17/share to a broker, who charged 2% brokerage. You are required to prepare Investment Account of Mr. AB for the year ended 31st March, 2025 assuming that the shares are being valued at average cost. (7 Marks) - MTP May 2026 Set 1, Q2(a) · Marks: 7 · Topic: Cost of Investments. Why practise it: Rank 7 topic (Cost of Investments); 63% match to an ICAI Study Material question; MTP May 2026 Set 1.
Following information is given by Mr. Happy (stock broker) relating to his holding in 10% Government Bonds: Opening Balance as on 1st April, 25 was 5,000 units (Nominal value ₹100 each), Cost ₹4,85,000. On 1st June, 25, Purchased 600 units, cum-interest @ ₹99. On 1st August, 25, Purchased 2400 units, ex-interest @ ₹97.50. On 1st October, 25, Sold 2,500 units @ ₹98.50, ex-interest. On 1st January, 26, Sold 3,000 units @ ₹99 cum interest. Interest is received on 30th June and 31st December each year. Mr. Happy closes his books on 31st March each year. Prepare Investment Account in the books of Mr. Happy assuming that FIFO method of valuation… - MTP September 2025 Set 2, Q5 · Marks: 14 · Topic: Disposal of Investments; Carrying Amount of Investments. Why practise it: Rank 24 topic (Disposal of Investments); MTP September 2025 Set 2; covers 2 mapped topics.
The following information is given for Mr. Atwood for the year ended 31.03.2025: 01.04.2024 Mr. Atwood has 3,000 equity shares in Sun Limited at a book value of ₹3,30,000 (nominal value ₹100 each). 01.07.2024 Purchased 1,500 equity shares in Sun Limited for ₹1,38,600. 01.08.2024 Purchased 5,000, 9% Bonds at ₹97 cum-interest (face value ₹100). The due dates of interest are 1st September and 1st March. 02.10.2024 Dividend declared on equity shares and paid by Sun Limited for the year 2023-2024 @ 10%. 15.10.2024 Sun Limited made a bonus issue of two equity shares for every five shares held. 01.01.2025 1,000 equity shares in Sun Limited sold @… - MTP May 2024 Set 1, Q1(a) · Marks: 5 · Topic: Carrying Amount of Investments; Classification of Investments. Why practise it: Rank 70 topic (Carrying Amount of Investments); Category A — 99% identical to an ICAI Study Material question; MTP May 2024 Set 1; covers 2 mapped topics.
Innovative Garments Manufacturing Company Limited invested in the shares of another company on 1st October, 2022 at a cost of ₹2,50,000. It also earlier purchased Gold of ₹4,00,000 and Silver of ₹2,00,000 on 1st March, 2020. Market value as on 31st March, 2023 of above investments are as follows: Particulars ₹ Shares 2,25,000 Gold 6,00,000 Silver 3,50,000 How above investments will be shown in the books of accounts of Innovative Garments Manufacturing Company Limited for the year ending 31st March, 2023 as per the provisions of Accounting Standard 13 "Accounting for Investments"? - RTP May 2024, Q9 · Marks:Not stated in source · Topic: Disposal of Investments. Why practise it: Rank 24 topic (Disposal of Investments); RTP May 2024.
ABC Ltd. holds 2,000, 15% Debentures of ₹100 each in XYZ Ltd. as on April 1, 2022 at a cost of ₹2,50,000. Interest is payable on June, 30 and December, 31 each year. Following are the details of 15% Debentures purchased and sold during the year 2022-23. Particulars On May 1, 2022, 1,000 debentures are purchased cum-interest at ₹1,05,000. On November 1, 2022, 1200 debentures are sold ex-interest at ₹1,28,200. On November 30, 2022, 500 debentures are purchased ex-interest at ₹54,500. On December 31, 2022, 900 debentures are sold cum-interest for ₹1,18,000 You are required to prepare the investment Account showing value of holdings on March 31,… - RTP September 2024, Q11 · Marks:Not stated in source · Topic: Carrying Amount of Investments. Why practise it: Rank 70 topic (Carrying Amount of Investments); 53% match to an ICAI Study Material question; RTP September 2024.
A company is engaged in the business of refining, transportation and marketing of petroleum products. During the financial year ended 31 st March, 2024, the company acquired controlling interest from Government of India in another public sector undertaking @ ₹1,551 per share as against the book value of ₹192.58 per share and market value of ₹876 per share as on 18 th February, 2024. Thus, the strategic premium of ₹675 per share has been paid considering various tangible and intangible factors. The above investment in the shares of the acquired company has been considered as long term strategic investment and, therefore, has been accounted… - MTP September 2024 Set 1, Q1(a) · Marks: 7 · Topic: Reclassification of Investments. Why practise it: Rank 239 topic (Reclassification of Investments); 63% match to an ICAI Study Material question; MTP September 2024 Set 1.
On 15th June, 2024, Y limited wants to re-classify its investments in accordance with AS 13 (revised). Decide and state the amount of transfer, based on the following information: A portion of long term investments purchased on 1st March, 2023 are to be re-classified as current investments. The original cost of these investments was ₹14 lakhs but had been written down by ₹2 lakhs (to recognise 'other than temporary' decline in value). The market value of these investments on 15th June, 2024 was ₹11 lakhs. Another portion of long term investments purchased on 15th January, 2023 are to be re-classified as current investments. The original cost… - RTP September 2025, Q14 · Marks:Not stated in source · Topic: Investment Properties. Why practise it: Rank 238 topic (Investment Properties); 58% match to an ICAI Study Material question; RTP September 2025.
On 1st April 2024, Kesar held 75,000 equity shares of Beta Ltd. at book value ₹15/share (nominal ₹10 each). Transactions: 20th June 2024, purchased 15,000 additional shares at ₹16/share. 1st August 2024, Beta Ltd. declared a 1:6 bonus issue. 31st October 2024, rights issue of 3-for-7 held at ₹15/share; Kesar sold one-third of his rights entitlement to Megha at ₹2/share and subscribed to the remainder on 5th November 2024. Prepare the Investment Account in Kesar's books for the year ending 31st March 2025. - MTP January 2026 Set 2, Q2(a) · Marks: 7 · Topic: Investment Properties. Why practise it: Rank 238 topic (Investment Properties); MTP January 2026 Set 2.
Prem Ltd. holds 2,000, 15% Debentures of ₹100 each in Mehar Ltd. as on 1st April, 2024 at a cost of ₹2,50,000. Interest payable 30th June and 31st December each year. Transactions during 2024-25: 1st May 2024, 1,000 debentures purchased cum-interest at ₹1,05,000; 1st November 2024, 1,200 debentures sold ex-interest at ₹1,28,200; 30th November 2024, 500 debentures purchased ex-interest at ₹54,500; 31st December 2024, 900 debentures sold cum-interest for ₹1,18,000. Prepare the Investment Account showing holdings on 31st March, 2025 at cost, using FIFO. - MTP November 2023 Set 1, Q1(a) · Marks: 5 · Topic: Reclassification of Investments. Why practise it: Rank 239 topic (Reclassification of Investments); 68% match to an ICAI Study Material question; MTP November 2023 Set 1.
Kunal Securities Ltd. wants to reclassify its investments in accordance with AS-13 (Revised). State the values, at which the investments have to be reclassified in the following cases: Long term investment in Company A, costing ₹10.5 lakhs is to be re-classified as current investment. The company had reduced the value of these investments to ₹9 lakhs to recognize a permanent decline in value. The fair value on the date of reclassification is ₹9.3 lakhs. Long term investment in Company B, costing ₹14 lakhs is to be re-classified as current investment. The fair value on the date of reclassification is ₹16 lakhs and book value is ₹14 lakhs.…
AS 16 — Borrowing Costs: 10 must-practice questions
Assets Based Accounting Standards, Module 2. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- MTP May 2023 Set 1, Q6(c) · Marks: 5 · Topic: Specific borrowings; Borrowing Costs Eligible for Capitalisation. Why practise it: Rank 22 topic (Specific borrowings); Category A — 95% identical to an ICAI Study Material question; MTP May 2023 Set 1; covers 2 mapped topics.
Vital Limited borrowed an amount of ₹150 crores on 1.4.2021 for construction of boiler plant @ 10% p.a. The plant is expected to be completed in 4 years. Since the weighted average cost of capital is 13% p.a., the accountant of Vital Ltd. capitalized ₹19.50 crores for the accounting period ending on 31.3.2022. Due to surplus fund out of ₹150 crores, an income of ₹1.50 crores was earned and credited to profit and loss account. Comment on the above treatment of accountant with reference to relevant accounting standard. (5 Marks) - MTP May 2026 Set 1, Q1(a) · Marks: 5 · Topic: General borrowings; Specific borrowings; Borrowing Costs Eligible for Capitalisation. Why practise it: Rank 19 topic (General borrowings); MTP May 2026 Set 1; covers 3 mapped topics.
Glen Ltd. began construction of a new building on 1st January, 2025. On 1st April, 2025, following two loans were obtained to fund the construction cost: (i) Loan of ₹60,00,000 from Data Bank Ltd. was taken at interest rate of 8% per annum. This loan was fully utilized for construction of the new building. (ii) Loan of ₹20,00,000 from Satya Bank Ltd. Out of this, loan amount of ₹6,00,000 was utilized for working capital purpose. Total interest of ₹1,92,000 were paid to Satya Bank Ltd. for the financial year 2025-26. Construction of the new building was completed on 31st January, 2026 and was ready for its intended use on the same date. None… - RTP May 2024, Q10 · Marks:Not stated in source · Topic: General borrowings; Specific borrowings. Why practise it: Rank 19 topic (General borrowings); 61% match to an ICAI Study Material question; RTP May 2024; covers 2 mapped topics.
H Ltd. began the construction of a new building on 1 st April 2022. It obtained a special loan of ₹6,00,000 on 1 st April 2022 at an interest of 12% to finance the construction of the building. The company's other outstanding two non-specific loans on 1 st April, 2022 were as follows: Amount in ₹ Rate of Interest 30,00,000 14% 54,00,000 16% The expenditure incurred on the building project was as per detail given below: Amount in ₹ 1st May, 2022 12,00,000 1st July, 2022 15,00,000 1st October, 2022 27,00,000 1st March, 2023 7,20,000 The building was completed by 31 st March 2023. Following the provisions of Accounting Standard 16, you are… - MTP May 2026 Set 2, Q6(a) [OR-alt 2] · Marks: 4 · Topic: Cessation of Capitalisation. Why practise it: Rank 242 topic (Cessation of Capitalisation); 88% match to an ICAI Study Material question; MTP May 2026 Set 2.
When capitalisation of borrowing cost should cease as per Accounting Standard 16? Explain in brief. (4 Marks) - RTP September 2025, Q16 · Marks:Not stated in source · Topic: Exchange Differences on Foreign Currency Borrowings. Why practise it: Rank 94 topic (Exchange Differences on Foreign Currency Borrowings); RTP September 2025.
Is it permissible to capitalise borrowing costs incurred on assets necessary for the construction of qualifying assets? A company constructing a large manufacturing plant in a backward area also purchased a residential building (funded by a long-term loan) to house workers engaged in the plant's construction, intending to dispose of the building once construction completes. If the manufacturing plant is a qualifying asset, are the borrowing costs on the residential-building loan eligible for capitalisation? - RTP May 2025, Q16 · Marks:Not stated in source · Topic: Borrowing Costs Eligible for Capitalisation. Why practise it: Rank 245 topic (Borrowing Costs Eligible for Capitalisation); 66% match to an ICAI Study Material question; RTP May 2025.
U Limited has obtained a term loan of ₹620 lacs for a complete renovation and modernisation of its Factory on 1st April, 2023. Plant and Machinery was acquired under the modernisation scheme and installation was completed on 30th April, 2024. An expenditure of ₹510 lacs was incurred on installation of Plant and Machinery, ₹54 lacs has been advanced to suppliers for additional assets which were also received and installed before 30th April, 2024 (additional asset has taken substantial period of time in its installation), and the balance loan of ₹56 lacs has been used for working capital purposes. The company has paid total interest of ₹68.20… - MTP November 2023 Set 2, Q6(a) · Marks: 4 · Topic: Exchange Differences on Foreign Currency Borrowings. Why practise it: Rank 94 topic (Exchange Differences on Foreign Currency Borrowings); MTP November 2023 Set 2.
Omega Limited has borrowed a sum of US $10,00,000 at the beginning of Financial Year 2022-23 for its residential project at 4%. The interest is payable at the end of the Financial Year. At the time of availment of loan exchange rate was ₹56 per US $ and the rate as on 31st March, 2023 was ₹62 per US $. If Omega Limited had borrowed the loan in India in Indian Rupee equivalent, the pricing of loan would have been 10.50%. You are required to compute Borrowing Cost and exchange difference for the year ending 31st March, 2023 as per applicable Accounting Standards. - RTP May 2026, Q10 · Marks:Not stated in source · Topic: Borrowing Costs Eligible for Capitalisation; Commencement of Capitalisation. Why practise it: Rank 245 topic (Borrowing Costs Eligible for Capitalisation); RTP May 2026; covers 2 mapped topics.
On 1st April, 2024, Y Limited purchased an industrial plot of land for ₹50,00,000 for the purpose of constructing a new factory. This cost of ₹50,00,000 included legal cost of ₹2,50,000 incurred for the purpose of acquisition of this plot. The construction of the factory commenced on 1st May, 2024. Y Limited provides you with the following details of the costs incurred in relation to the above construction: Particulars Amount (₹) Preparation and levelling of the land 1,60,000 Employment costs of construction workers (per month) 58,000 Purchase of Raw materials for the construction 42,48,000 Cost of relocating the workers to new factory for… - RTP January 2026, Q12 · Marks:Not stated in source · Topic: Definitions. Why practise it: Rank 244 topic (Definitions); RTP January 2026.
Can interest be included in the cost of inventories? - MTP September 2024 Set 2, Q1(b) · Marks: 4 · Topic: Recognition criteria. Why practise it: Rank 246 topic (Recognition criteria); MTP September 2024 Set 2.
A company incorporated in June 2023, has setup a factory within a period of 8 months with borrowed funds. The construction period of the assets had reduced drastically due to usage of technical innovations by the company and the company is able to justify the reasons for the same. Whether interest on borrowings for the period prior to the date of setting up the factory should be capitalized although it has taken less than 12 months for the assets to get ready for use. You are required to comment on the necessary treatment with reference to AS 16.
AS 19 — Leases: 10 must-practice questions
Assets Based Accounting Standards, Module 2. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- PYQ January 2026, Q6(a) [OR-alt 2] · Marks: 4 · Topic: Accounting for Finance Leases (Books of lessee). Why practise it: Rank 30 topic (Accounting for Finance Leases (Books of lessee)); Category A — 100% identical to an ICAI Study Material question; PYQ January 2026.
S Limited took an equipment on lease from R Limited, fair value ₹9,50,000. Economic life and lease term both 3 years. At the end of each year, lessee pays ₹4,00,000 to lessor. S Limited has guaranteed a residual value of ₹35,000 on lease expiry to R Limited; R Limited estimates residual value will be only ₹25,000. Implicit rate of return 15% p.a.; PV factors at 15%: 0.869, 0.756, 0.657 (years 1-3). You are required to ascertain the value at which the equipment would be considered by S Limited and the finance charges in each year. (4 Marks) - MTP May 2026 Set 2, Q2(a) · Marks: 7 · Topic: Accounting for Finance Leases (Books of lessee). Why practise it: Rank 30 topic (Accounting for Finance Leases (Books of lessee)); MTP May 2026 Set 2.
You are required to give the necessary journal entry at the inception of lease to record the asset taken on finance lease in books of lessee from the following information: Lease period = 5 years; Annual lease rents = ₹50,000 at the end of each year; Guaranteed residual value = ₹25,000; Fair Value at the inception (beginning) of lease = ₹2,00,000; Interest rate implicit on lease is = 12.6% (Discounted rates for year 1 to 5 are .890, .790, .700, .622 and .552 respectively). (7 Marks) - RTP May 2026, Q14 · Marks:Not stated in source · Topic: Accounting for Operating Leases. Why practise it: Rank 42 topic (Accounting for Operating Leases); RTP May 2026.
Explain, in brief, the accounting treatment for an asset given under Operating Lease in the books of the Lessor. - RTP January 2026, Q15 · Marks:Not stated in source · Topic: Accounting for Operating Leases. Why practise it: Rank 42 topic (Accounting for Operating Leases); RTP January 2026.
On 1st April, 2024, Mansi Ltd. sold a plant for ₹8,52,800 (carrying amount ₹1,80,000) as part of a sale-and-leaseback package with Akash Ltd., leasing the asset back for an 8-year term. Economic life of the asset is 8 years. Minimum lease rents ₹1,60,000/year, payable annually from 31st March, 2025. Mansi Ltd.'s incremental borrowing rate is 10% p.a. Calculate the net effect on the Statement of Profit and Loss in Mansi Ltd.'s (the lessee's) books. - PYQ May 2024, Q6(a) [OR-alt 1] · Marks: 4 · Topic: Accounting for Finance Leases (Books of lessee); Indicators of Finance Lease; Deterministic Conditions. Why practise it: Rank 30 topic (Accounting for Finance Leases (Books of lessee)); 75% match to an ICAI Study Material question; PYQ May 2024; covers 4 mapped topics.
Colour Limited leased a Machine to Red Limited on 1 April, 2021 on the following: Particulars Cost of the machine ₹18,00,000 Lease term 3 Years Fair market value of the machine ₹18,00,000 Unguaranteed residual value as on 31.3.2024 ₹2,00,000 Internal rate of return 12% Other information: The expected useful life of the machine is 5 years. The machine will revert to Colour Limited on termination of the lease. The lease payment is to be made at the end of each year in 3 equal parts. The present value of ₹1 due at the end of 3rd year at 12% rate of interest is ₹0.7118. The present value of annuity of ₹1 due at the end of 3rd year at 12% IRR is… - MTP May 2024 Set 1, Q1(b) · Marks: 5 · Topic: Accounting for Finance Leases (Books of lessee). Why practise it: Rank 30 topic (Accounting for Finance Leases (Books of lessee)); MTP May 2024 Set 1.
Lessee Ltd. took a machine on lease from Lessor Ltd., the fair value being ₹7,00,000. The economic life of machine as well as the lease term is 3 years. At the end of each year Lessee Ltd. pays ₹3,00,000. The Lessee has guaranteed a residual value of ₹22,000 on expiry of the lease to the Lessor. However, Lessor Ltd., estimates that the residual value of the machinery will be only ₹15,000. The implicit rate of return is 15% p.a. and present value factors at 15% are 0.869, 0.756 and 0.657 at the end of first, second and third years respectively. Calculate the value of machinery to be considered by Lessee Ltd. and the finance charges in each… - PYQ January 2025, Q1(b) · Marks: 5 · Topic: Accounting for Finance Leases (Books of lessee); Indicators of Finance Lease; Deterministic Conditions. Why practise it: Rank 30 topic (Accounting for Finance Leases (Books of lessee)); PYQ January 2025; covers 4 mapped topics.
J Limited availed an equipment on lease from K Limited. The conditions of the lease terms are as under: (i) Lease starts from 1st April, 2020 for a period of 4 Years and useful life of the equipment is 6 years. Both the cost and fair value of equipment are ₹12,50,000. (ii) The equipment reverts back to the lessor on termination of the lease. (iii) The unguaranteed residual value is estimated at ₹1,20,000 at the end of the financial year 2023-2024. (iv) The amount will be paid in 4 equal instalments at the end of each year. (v) Consider IRR = 8%. (vi) The present value of ₹1 at the end of 4th year at 8% of interest is ₹0.735. (vii) The… - RTP May 2025, Q18 · Marks:Not stated in source · Topic: Indicators of Finance Lease; Deterministic Conditions; Suggestive Conditions. Why practise it: Rank 83 topic (Indicators of Finance Lease); RTP May 2025; covers 3 mapped topics.
Sun Limited wishes to obtain a machine costing ₹30 lakhs by way of lease. The effective life of the machine is 14 years, but the company requires it only for the first 3 years. It enters into an agreement with Star Ltd. for a lease rental of ₹3 lakhs p.a. payable in arrears, and the implicit rate of interest is 15%. The chief accountant of Sun Limited is not sure about the treatment of these lease rentals and seeks your advice. (Use annuity factor at 15% for 3 years as 3.36.) - RTP January 2025, Q14 · Marks:Not stated in source · Topic: Definitions. Why practise it: Rank 252 topic (Definitions); 85% match to an ICAI Study Material question; RTP January 2025.
Money Limited leased a machine to Hello Limited on the following terms (₹ in lakh): (i) Fair value of the machine 24.00 (ii) Lease term 5 years (iii) Lease rental per annum 4.00 (iv) Guaranteed residual value 0.8 (v) Expected residual value 1.5 (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. - MTP January 2025 Set 1, Q6(b) · Marks: 4 · Topic: Sale and Leaseback. Why practise it: Rank 250 topic (Sale and Leaseback); 74% match to an ICAI Study Material question; MTP January 2025 Set 1.
A Ltd. sold JCB having WDV of ₹20 lakhs to B Ltd. for ₹24 lakhs and the same JCB was leased back by B Ltd. to A Ltd. The lease is operating lease. In context of Accounting Standard 19 "Leases" explain the accounting treatment of profit or loss in the books of A Ltd. if: (i) Sale price of ₹24 lakhs is equal to fair value. (ii) Fair value is ₹20 lakhs and sale price is ₹24 lakhs. (iii) Fair value is ₹22 lakhs and sale price is ₹25 lakhs. (iv) Fair value is ₹25 lakhs and sale price is ₹18 lakhs. (v) Fair value is ₹18 lakhs and sale price is ₹19 lakhs.
AS 26 — Intangible Assets: 7 must-practice questions
Assets Based Accounting Standards, Module 2. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- MTP January 2025 Set 1, Q1(b) · Marks: 5 · Topic: Recognition of an Expense. Why practise it: Rank 262 topic (Recognition of an Expense); Category A — 99% identical to an ICAI Study Material question; MTP January 2025 Set 1.
As per provisions of AS-26, how would you deal to the following situations: (1) ₹23,00,000 paid by a manufacturing company to the legal advisor for defending the patent of a product is treated as a capital expenditure. (2) During the year 2023-24, a company spent ₹7,00,000 for publicity and research expenses on one of its new consumer products which was marketed in the same accounting year but proved to be a failure. (3) A company spent ₹25,00,000 in the past three years to develop a product, these expenses were charged to profit and loss account since they did not meet AS-26 criteria for capitalization. In the current year approval of the… - MTP May 2024 Set 2, Q1(a) · Marks: 5 · Topic: Recognition of an Expense. Why practise it: Rank 262 topic (Recognition of an Expense); Category A — 92% identical to an ICAI Study Material question; MTP May 2024 Set 2.
K Ltd. launched a project for producing product X in October, 2023. The Company incurred ₹40 lakhs towards Research and Development expenses upto 31st March, 2024. Due to prevailing market conditions, the Management came to conclusion that the product cannot be manufactured and sold in the market for the next 10 years. The Management hence wants to defer the expenditure write off to future years. Advise the Company as per the applicable Accounting Standard. - RTP January 2025, Q19 · Marks:Not stated in source · Topic: Development Phase. Why practise it: Rank 260 topic (Development Phase); 68% match to an ICAI Study Material question; RTP January 2025.
During 2023-2024, an enterprise incurred costs to develop and produce a routine, low risk computer software product, as follows: Completion of detailed programme and design (Phase 1) ₹25,000 Coding and Testing for establishing technical feasibility (Phase 2) ₹20,000 Other coding costs (Phase 3) ₹42,000 Testing costs (Phase 4) ₹12,000 Product masters for training materials (Phase 5) ₹13,000 Duplication of computer software and training materials, from product masters (2,000 units) (Phase 6) ₹40,000 Packing the product (1,000 units) (Phase 7) ₹11,000 After completion of phase 2, it was established that the computer software is technically… - PYQ September 2024, Q1(a) · Marks: 4 · Topic: Measurement subsequent to initial recognition; Amortisation Period; Amortisation Method. Why practise it: Rank 100 topic (Measurement subsequent to initial recognition); 56% match to an ICAI Study Material question; PYQ September 2024; covers 5 mapped topics.
In the following cases, record Journal Entries for amortization in the books of Huge Ltd. for the year ended 31st March, 2024 with reference to AS-26: (i) The company had acquired Patent Rights for ₹340 lakhs on 01.04.2022. The estimated product life is 4 years. Amortization was decided in the ratio of estimated future cash flows which are as under: 1st Year ₹140 Lakhs, 2nd Year ₹350 Lakhs, 3rd Year ₹280 Lakhs, 4th Year ₹420 Lakhs. (ii) The company had developed know-how by incurring expenditure of ₹80 lakhs. The know-how has been used by the company since 01.04.2018. Its useful life is 8 years from the year of commencement of its use. The… - MTP January 2025 Set 2, Q1(b) · Marks: 7 · Topic: Recoverability of the Carrying Amount-Impairment Losses; Retirements and Disposals. Why practise it: Rank 265 topic (Recoverability of the Carrying Amount-Impairment Losses); MTP January 2025 Set 2; covers 2 mapped topics.
Honey Ltd. is in the process of developing a new production method. During the financial year ended 31st March, 2023, total expenditure incurred on development of this production method was ₹98,00,000. On 1st Jan, 2023, the production method met the criteria as an intangible asset and expenditure incurred till this date was ₹68,00,000. Further expenditure incurred on the new method was ₹72,00,000 for the year ended 31st March, 2024 and recoverable amount of the know how embodied in the new method for this financial year is ₹52,00,000. You are required to calculate: (1) The carrying amount of the Intangible asset on 31st March, 2023. (2) The… - RTP January 2026, Q17 · Marks:Not stated in source · Topic: Recognition and Initial Measurement of an Intangible Asset. Why practise it: Rank 273 topic (Recognition and Initial Measurement of an Intangible Asset); RTP January 2026.
Swift Limited acquired patent rights to manufacture Solar Roof Top Panels for ₹600 lacs. Product life cycle estimated at 5 years; amortization decided in the ratio of future cash flows: Year 1–5: 300, 300, 300, 150, 150 (₹ lacs). After Year 3, estimated balance future life revised to 3 years, with expected cash flow after Year 5 of ₹75 lacs. Determine the amortization cost of the patent for each year per AS 26. - RTP May 2024, Q12 · Marks:Not stated in source · Topic: Acquisition by way of a Government Grant; Exchange of assets; Recognition and Initial Measurement of an Intangible Asset. Why practise it: Rank 255 topic (Acquisition by way of a Government Grant); RTP May 2024; covers 5 mapped topics.
Naresh Ltd. had the following transactions during the financial year 2022-2023: Naresh Ltd. acquired the running business of Sunil Ltd. for ₹10,80,000 on 15 th May, 2022. The fair value of Sunil Ltd.'s net assets was ₹5,16,000. Naresh Ltd. is of the view that due to popularity of Sunil Ltd.'s product in the market, its goodwill exists. Naresh Ltd. had taken a franchise on July 2022 to operate a restaurant from Sankalp Ltd. for ₹1,80,000 and at an annual fee of 10% of net revenues (after deducting expenditure). The franchise expires after 6 years. Net revenues were ₹60,000 during the financial year 2022-2023. On 20th August, 2022, Naresh Ltd,…
AS 28 — Impairment of Assets: 6 must-practice questions
Assets Based Accounting Standards, Module 2. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- PYQ May 2025, Q6(a) [OR-alt 2] · Marks: 4 · Topic: Recognition and Measurement of an Impairment Loss. Why practise it: Rank 25 topic (Recognition and Measurement of an Impairment Loss); Category A — 100% identical to an ICAI Study Material question; PYQ May 2025.
A machine was acquired by Zest Ltd. on 01/04/2019 for ₹60 lakhs. It had a useful life of 6 years. The machine is depreciated on straight line basis and does not carry any residual value. On 01/04/2022, the carrying value of the machine was reassessed at ₹36 lakhs. The surplus arising out of the revaluation being credited to revaluation reserve. For the year ended March 2024, conditions indicating an impairment of the existed machine and the amount recoverable ascertained to be ₹9 lakhs. You are required to calculate the loss on impairment of the machine and show how this loss is to be treated in the books of Zest Ltd. The company had… - MTP May 2024 Set 1, Q1(c) · Marks: 4 · Topic: Recognition and Measurement of an Impairment Loss. Why practise it: Rank 25 topic (Recognition and Measurement of an Impairment Loss); Category A — 93% identical to an ICAI Study Material question; MTP May 2024 Set 1.
X Ltd. purchased a Property, Plant and Equipment four years ago for ₹150 lakhs and depreciates it at 10% p.a. on straight line method. At the end of the fourth year, it has revalued the asset at ₹75 lakhs and has written off the loss on revaluation to the profit and loss account. However, on the date of revaluation, the market price is ₹67.50 lakhs and expected disposal costs are ₹3 lakhs. What will be the treatment in respect of impairment loss on the basis that fair value for revaluation purpose is determined by market value and the value in use is estimated at ₹60 lakhs? - PYQ September 2025, Q3(b) · Marks: 7 · Topic: Composition of Estimates of Future Cash Flows. Why practise it: Rank 27 topic (Composition of Estimates of Future Cash Flows); 52% match to an ICAI Study Material question; PYQ September 2025.
Grace Limited acquired the business (a cash-generating unit) of Venus Limited on 31st March 2023 for ₹8,000 lakhs: Fair value of identifiable assets ₹6,000 lakhs, Goodwill (amortised over 5 years) ₹2,000 lakhs. Anticipated useful life of acquired assets: 8 years, nil residual value, straight-line. On 31st March 2025, significant decline in production estimated due to government policy changes; net selling price of identifiable assets ₹3,000 lakhs. Cash flow forecast for next 6 years (₹ lakhs): 1,000/800/700/800/600/500. Discount rate 10% (PV factors: 0.909, 0.826, 0.751, 0.683, 0.621, 0.564). Calculate: (i) Value in use at 31 March 2025;… - PYQ May 2026, Q1(b) · Marks: 5 · Topic: Reversal of an Impairment Loss; Reversal of an Impairment Loss for Goodwill. Why practise it: Rank 95 topic (Reversal of an Impairment Loss); Category A — 100% identical to an ICAI Study Material question; PYQ May 2026; covers 2 mapped topics.
On 1 April, 2022, Sky Limited purchased a machinery for ₹7,35,000 (inclusive of GST @5%, input credit available for entire amount). Other installation expenses: Cost of preparation of site ₹16,500; Total Labour charges ₹75,000 (200 of 500 total men hours spent on installation); Total salary of supervisor ₹34,000 (25% of time spent on installation); Interest charges paid to supplier for deferred credit ₹8,000; Test run and experimental production expenses ₹28,200; Consultancy charges to architect for plant set up ₹18,800; Depreciation on assets used for installation ₹8,000. The machine was ready for use on October 1, 2022 but was put to use… - RTP May 2026, Q16 · Marks:Not stated in source · Topic: Identification of the Cash-Generating Unit to which an Asset Belongs. Why practise it: Rank 289 topic (Identification of the Cash-Generating Unit to which an Asset Belongs); Category A — 96% identical to an ICAI Study Material question; RTP May 2026.
A publisher owns 150 magazine titles of which 70 were purchased and 80 were self-created. The price paid for a purchased magazine title is recognised as an intangible asset. The costs of creating magazine titles and maintaining the existing titles are recognised as an expense when incurred. Cash inflows from direct sales and advertising are identifiable for each magazine title. Titles are managed by customer segments. The level of advertising income for a magazine title depends on the range of titles in the customer segment to which the magazine title relates. Management has a policy to abandon old titles before the end of their economic… - RTP January 2026, Q19 · Marks:Not stated in source · Topic: Measurement of Recoverable Amount. Why practise it: Rank 287 topic (Measurement of Recoverable Amount); 60% match to an ICAI Study Material question; RTP January 2026.
X Ltd. purchased a fixed asset four years ago for ₹150 lakhs, depreciating at 10% p.a. SLM. At the end of the fourth year, it revalued the asset to ₹75 lakhs, writing off the revaluation loss to P&L. On the revaluation date, market price is ₹67.50 lakhs, expected disposal costs ₹3 lakhs, and value in use is estimated at ₹60 lakhs. What is the treatment of impairment loss, given fair value for revaluation is market-value-based?
AS 15 — Employee Benefits: 7 must-practice questions
Liabilities Based Accounting Standards, Module 2. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- PYQ May 2026, Q1(a) · Marks: 5 · Topic: Actuarial Gains and Losses. Why practise it: Rank 14 topic (Actuarial Gains and Losses); Category A — 100% identical to an ICAI Study Material question; PYQ May 2026.
Mr. A has joined a company XYZ Ltd. on 1st April, 2025. The terms of his appointment: (i) Mr. A will get ₹18,62,764 as annual emoluments. (ii) The salary of Mr. A is expected to grow @10% per annum. The company also has a policy of giving lump sum payment of 30% of the last drawn annual salary of the employee for each completed year of service if the employee retires after completing minimum 5 years of service. Since the company has inducted Mr. A in the beginning of the year and it is expected that he will complete the minimum five-year term before retiring, he will get 5 yearly increments. You are required to: (1) Compute the amount that… - PYQ January 2026, Q1(b) · Marks: 4 · Topic: Actuarial Gains and Losses. Why practise it: Rank 14 topic (Actuarial Gains and Losses); Category A — 100% identical to an ICAI Study Material question; PYQ January 2026.
RMC Limited operates a defined retirement benefits plan. On 1st April, 2024, the fair value of plan assets stood at ₹25,00,000. On 30th September, 2024, the plan paid out benefits of ₹4,75,000 and received inward contributions of ₹12,25,000. On 31st March, 2025, the actuaries assessed the present value of the defined benefit obligation at ₹36,98,000, and fair value of plan assets was ₹37,50,000. Actuarial losses on the obligations for 2024-25 were ₹15,000. On 1st April, 2024 estimates (based on market studies): Interest and dividend income (after tax) payable by the fund 9.75%; Realized gains on plan assets (after tax) 2.50%; Fund… - PYQ September 2024, Q1(b) · Marks: 5 · Topic: Actuarial Gains and Losses. Why practise it: Rank 14 topic (Actuarial Gains and Losses); Category A — 100% identical to an ICAI Study Material question; PYQ September 2024.
Pendora Ltd. has given the following details in respect of employee benefit pension plan: The fair value of plan assets as on 01-04-2023 ₹5,00,000; The benefits paid out on 30-11-2023 ₹63,000; Inward contributions received on 30-09-2023 ₹1,42,000; The fair value of plan assets as on 31-03-2024 ₹7,50,000. On 01.04.2023, the company made following estimates, based on its market studies and prevailing prices: Interest and dividend income (after tax) payable by fund 10.50%; Realised gains on plan assets (after tax) 2.00%; Fund administrative costs (2.00)%; Expected rate of annual return (Interest is compounded annually) 10.50%. You are required… - RTP May 2024, Q13 · Marks:Not stated in source · Topic: Actuarial Gains and Losses. Why practise it: Rank 14 topic (Actuarial Gains and Losses); 79% match to an ICAI Study Material question; RTP May 2024.
Hello Limited belongs to the manufacturing industry. The company received an actuarial valuation for the first time for its pension scheme which revealed a surplus of ₹12 lakhs. It wants to spread the same over the next 2 years by reducing the annual contribution to ₹4 lakhs instead of ₹10 lakhs. The average remaining life of the employees is estimated to be 6 years. You are required to advise the company on the following items from the viewpoint of finalization of accounts, taking note of the mandatory accounting standards. - MTP September 2024 Set 1, Q6(b) · Marks: 4 · Topic: Actuarial Gains and Losses. Why practise it: Rank 14 topic (Actuarial Gains and Losses); 55% match to an ICAI Study Material question; MTP September 2024 Set 1.
Synergy Ltd., is in engineering industry. The company received an actuarial valuation for the first time for its pension scheme which revealed a surplus of ₹6 lakhs. It wants to spread the same over the next 2 years by reducing the annual contribution to ₹2 lakhs instead of ₹5 lakhs. The average remaining life of the employee is estimated to be 6 years. You are required to advise the company. - PYQ January 2025, Q1(c) · Marks: 4 · Topic: Accounting Treatment. Why practise it: Rank 56 topic (Accounting Treatment); PYQ January 2025.
What is the difference between Defined Contribution Plan and Defined Benefit Plan? From the following information calculate the amount of defined benefit liability / asset: Particulars ₹ in lakhs Present Value of Defined Benefit Obligation as on 31-3-2024 36.0 Fair Value of Plan asset 38.5 Past service cost not yet recognized 7.5 Present value of available future refund from the plan 6.0 (4 Marks) - MTP January 2026 Set 1, Q4(a) · Marks: 6 · Topic: Short-term Employee Benefits. Why practise it: Rank 296 topic (Short-term Employee Benefits); MTP January 2026 Set 1.
Mr. Suresh works for Raina Ltd. Annual salary ₹30,00,000 in both 2023-24 and 2024-25; 300 working days each year; leave allowed 10 days each year; leave taken 7 days (2023-24) and 13 days (2024-25); leave carried forward to next year: 3 days (2023-24), Nil (2024-25). Raina Ltd. assumes Mr. Suresh will avail the unutilized 3 days of 2023-24 in 2024-25, and contends it will record ₹30,00,000 as employee benefit expense in each year. Comment on the accounting treatment and pass journal entries for both years.
AS 29 — Provisions, Contingent Liabilities and Contingent Assets: 10 must-practice questions
Liabilities Based Accounting Standards, Module 2. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- PYQ January 2025, Q3(a) · Marks: 7 · Topic: Recognition of provision. Why practise it: Rank 28 topic (Recognition of provision); Category A — 100% identical to an ICAI Study Material question; PYQ January 2025.
An Engineering goods company provides 'after sales warranty' for 2 years to its customers. Based on the past experience, the company has been following policy for making provision for warranties on the Invoice amount on the remaining balance warranty period: Invoice less than 1 year: 2.5% provision. Invoice more than 1 year: 4.5% provision. The Company has raised Invoices as under: Invoice Date ₹ 20th February, 2021 42,000 17th July, 2022 25,000 27th January, 2022 47,000 1st March, 2023 1,10,000 24th August, 2023 34,000 20th March, 2024 75,000 You are required to: (i) Calculate the provision to be made for warranty under AS 29 as at 31st… - MTP January 2025 Set 1, Q1(a) · Marks: 4 · Topic: Recognition of provision. Why practise it: Rank 28 topic (Recognition of provision); Category A — 100% identical to an ICAI Study Material question; MTP January 2025 Set 1.
A Ltd. provides after sales warranty for two years to its customers. Based on past experience, the company has the following policy for making provision for warranties on the invoice amount, on the remaining balance warranty period: Less than 1 year: 2% provision; More than 1 year: 3% provision. The company has raised invoices as under: Invoice Date Amount (₹) 11th Feb, 2022 60,000 25th Dec, 2022 40,000 04th Oct, 2023 1,35,000 Calculate the provision to be made for warranty under AS-29 as at 31st March, 2023 and 31st March, 2024. Also compute amount to be debited to P & L account for the year ended 31st March, 2024. - RTP May 2025, Q20 · Marks:Not stated in source · Topic: Recognition of provision. Why practise it: Rank 28 topic (Recognition of provision); RTP May 2025.
Saharsh Ltd. is engaged in manufacturing of electric home appliances. The company is in the process of finalizing its accounts for the year ended 31.3.2023 [as printed in source; see extraction-note] and needs your expert advice on the following issues: The company has its plants at 3 different locations. It has to shut down one of its plants due to internal reasons. The said plant site is under a rental agreement till 31.3.2024. The rent per month is ₹80,000. If the company cancels the agreement, it has to pay a penal amount equal to six months' rent. The company also has an option to sub-let the site at a rent of ₹45,000 per month. A case… - RTP January 2025, Q20 · Marks:Not stated in source · Topic: Recognition of provision; Contingent Assets; Contingent Liabilities. Why practise it: Rank 28 topic (Recognition of provision); RTP January 2025; covers 3 mapped topics.
During the year, QA Ltd. delivered manufactured products to customer K. The products were faulty and on 1st October, 2023 customer K commenced legal action against the Company claiming damages in respect of losses due to the supply of faulty product. Upon investigating the matter, QA Ltd. discovered that the products were faulty due to defective raw material procured from supplier F. Therefore, on 1st December, 2023, the Company commenced legal action against F claiming damages in respect of the supply of defective raw materials. QA Ltd. has estimated that its probability of success of both legal actions, the action of K against QA Ltd. and… - RTP September 2024, Q18 · Marks:Not stated in source · Topic: Recognition of provision. Why practise it: Rank 28 topic (Recognition of provision); RTP September 2024.
A company incorporated under Section 8 of the Companies Act, 2013, have main objective to promote the trade by organizing trade fairs / exhibitions. When company was organizing the trade fair and exhibitions it decided to charge 5% contingency charges for the participants/outside agencies on the income received from them by the company, while in the case of fairs organized by outside agencies, 5% contingency charges are levied separately in the invoice, the contingency charges in respect of fairs organized by the company itself are inbuilt in the space rent charged from the participants. Both are credited to Income and Expenditure Account of… - RTP January 2026, Q20 · Marks:Not stated in source · Topic: Present Obligation. Why practise it: Rank 315 topic (Present Obligation); 86% match to an ICAI Study Material question; RTP January 2026.
An oil company has been contaminating land for several years, not cleaning up since no legislation currently requires it. At 31st March, 2025, it is virtually certain that a law requiring clean-up of contaminated land will be enacted shortly after the year end. Is provisioning presently necessary? - RTP May 2026, Q17(i) · Marks:Not stated in source · Topic: Reimbursements. Why practise it: Rank 307 topic (Reimbursements); RTP May 2026.
Galaxy Limited is in the process of finalization of its accounts for the year ended 31st March, 2025 and needs your advice on the following issue in line with the provisions of AS 29: Galaxy Limited is selling cosmetic products under its brand name “Angel” but is getting these products manufactured from X Limited. It has an understanding (enforceable agreement) with X Limited that if the company becomes liable for any damage claims, due to any injury or harm to the customer of the cosmetic products, 40% shall be reimbursed to it by X Limited. During the year 2024-25, an estimate of the claim of ₹25 lakhs may be payable to the customers by… - RTP May 2026, Q17(ii) · Marks:Not stated in source · Topic: Reimbursements. Why practise it: Rank 307 topic (Reimbursements); RTP May 2026.
Galaxy Limited has been sued by one of its competitor for alleged infringement of trademark and a notice for levy of penalty of ₹50 lakhs has been received by it. The company has appointed a law firm to defend its case for a fee of ₹5 lakhs. 60% of the fees has been paid in advance and the rest 40% would be paid after finalization of the case. There are 70% chances that the penalty may not be imposed. - MTP January 2025 Set 2, Q6(b) · Marks: 6 · Topic: Reimbursements. Why practise it: Rank 307 topic (Reimbursements); MTP January 2025 Set 2.
"The company has not made provision for warrantee in respect of certain goods considering that the company can claim the warranty cost from the original supplier". You are required to comment in line with the provisions of AS 29. - MTP May 2024 Set 2, Q3(a) · Marks: 4 · Topic: Reimbursements. Why practise it: Rank 307 topic (Reimbursements); MTP May 2024 Set 2.
XYZ Ltd. has not made provision for warrantee in respect of certain goods due to the fact that the company can claim the warranty cost from the original supplier. Hence the accountant of the company says that the company is not having any liability for warrantees on a particular date as the amount gets reimbursed. You are required to comment on the accounting treatment done by the XYZ Ltd. in line with the provisions of AS 29.
AS 4 — Contingencies and Events occurring after the Balance Sheet Date: 10 must-practice questions
Accounting Standards based on items impacting Financial Statements, Module 2. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- RTP May 2026, Q9(i) · Marks:Not stated in source · Topic: Non-Adjusting Events. Why practise it: Rank 324 topic (Non-Adjusting Events); 68% match to an ICAI Study Material question; RTP May 2026.
While preparing its financial statements for the year ended 31st March, 2025, B Limited has come across the following events which took place after 31st March, 2025. The financial statements of the company were approved by the Board of Directors on 30th May, 2025: B Limited started negotiations with S Limited during 2024-25 to acquire their Consumer Durables Business for ₹400 lakhs. The deal was finalized on 20th April, 2025 and B Limited invested ₹275 lakhs before 30th May, 2025. You are required to state with reasons, whether the aforesaid event is an adjusting or non-adjusting event as per the provisions of the relevant AS. - RTP May 2026, Q9(ii) · Marks:Not stated in source · Topic: Non-Adjusting Events. Why practise it: Rank 324 topic (Non-Adjusting Events); 68% match to an ICAI Study Material question; RTP May 2026.
During the course of audit for the year ended 31st March, 2025, the auditor discovered a fraud of ₹1,25,000 done by the accountant of the company. The fraud was discovered on 20th April, 2025. The accountant of the company had left the job and absconded on 29th March, 2025. You are required to state with reasons, whether the aforesaid event is an adjusting or non-adjusting event as per the provisions of the relevant AS. - RTP May 2026, Q9(iii) · Marks:Not stated in source · Topic: Non-Adjusting Events. Why practise it: Rank 324 topic (Non-Adjusting Events); 68% match to an ICAI Study Material question; RTP May 2026.
A fire engulfed the warehouse of B Limited on 13th April, 2025 and destroyed inventory worth ₹15 lakhs lying there. You are required to state with reasons, whether the aforesaid event is an adjusting or non-adjusting event as per the provisions of the relevant AS. - MTP January 2025 Set 2, Q1(a) · Marks: 7 · Topic: Adjusting Events. Why practise it: Rank 323 topic (Adjusting Events); 52% match to an ICAI Study Material question; MTP January 2025 Set 2.
State with reasons, how the following events would be dealt with in the financial statements of Hari Ltd. for the year ended 31st March, 2024 (accounts were approved on 25th July, 2024): Negotiations with another company for acquisition of its business was started on 21st January, 2024. Hari Ltd. invested ₹40 lakh on 22nd April, 2024. The company made a provision for bad debts @ 4% of its total debtors (as per trend followed from the previous years). In the second week of March 2024, a debtor for ₹2,50,000 had suffered heavy loss due to an earthquake; the loss was not covered by any insurance policy. In May, 2024 the debtor became bankrupt.… - MTP September 2025 Set 1, Q1(a) · Marks: 7 · Topic: Adjusting Events; Non-Adjusting Events. Why practise it: Rank 323 topic (Adjusting Events); MTP September 2025 Set 1; covers 2 mapped topics.
The financial statements of Mehta Ltd. for the year 2024-25 approved by the Board of Directors on 15th July, 2025. The following information was provided: A suit against the company's advertisement was filed by a party on 20th April, 2025, claiming damages of ₹25 lakhs. The terms and conditions for acquisition of business of another company have been decided by March, 2024. But the financial resources were arranged in April, 2025 and amount invested was ₹50 lakhs. Theft of cash of ₹5 lakhs by the cashier on 31st March, 2025 but was detected on 16th July, 2025. Company sent a proposal to sell an immovable property for ₹40 lakhs in March,… - MTP May 2025 Set 2, Q1(b) · Marks: 7 · Topic: Adjusting Events; Non-Adjusting Events. Why practise it: Rank 323 topic (Adjusting Events); MTP May 2025 Set 2; covers 2 mapped topics.
The financial statements of PQ Ltd. for the year 2024-25 approved by the Board of Directors on 15th July, 2025. The following information was provided: A suit against the company's advertisement was filed by a party on 20th April, 2025, claiming damages of ₹25 lakhs. The terms and conditions for acquisition of business of another company have been decided by March, 2025. But the financial resources were arranged in April, 2025 and amount invested was ₹50 lakhs. Theft of cash of ₹5 lakhs by the cashier on 31st March, 2025 but was detected on 16th July, 2025. Company sent a proposal to sell an immovable property for ₹40 lakhs in March, 2025.… - RTP January 2026, Q4 · Marks:Not stated in source · Topic: Non-Adjusting Events. Why practise it: Rank 324 topic (Non-Adjusting Events); RTP January 2026.
Zenith Industries Ltd., preparing FY2024-25 financial statements. After year-end: (a) Fire on 10th April, 2025 destroyed uninsured stock worth ₹10,00,000, salvage recovered ₹2,00,000. (b) Legal claim filed 18th April, 2025 alleging misleading advertisement, damages claimed ₹20,00,000. (c) Cheques in Hand: company proposes recognising all cheques dated 31st March, 2025 or earlier received from stockists as "Cheques in Hand" under Cash and Cash Equivalents, reducing Trade Receivables — but two categories exist: (i) cheques physically collected by marketing personnel on/before 31st March, 2025; (ii) cheques sent by courier on/before 31st March… - RTP May 2025, Q7 · Marks:Not stated in source · Topic: Adjusting Events; Non-Adjusting Events. Why practise it: Rank 323 topic (Adjusting Events); RTP May 2025; covers 2 mapped topics.
Smart Ltd. closes its books of accounts every year on 31st March. The financial statements for the year ended 31st March, 2024 are to be approved by the approving authority on 30th June 2024. During the first quarter of 2024-2025, the following events/transactions have taken place. The accountant of the company seeks your guidance for the following: Smart Ltd. has an inventory of 50 stitching machines costing at ₹5,500 per machine as on 31st March, 2024. The company is expecting a heavy decline in the demand in next year. The inventories are valued at cost or net realisable value, whichever is lower. During the month of April 2024, due to… - RTP May 2024, Q14(i) · Marks:Not stated in source · Topic: Contingencies. Why practise it: Rank 321 topic (Contingencies); RTP May 2024.
Surya Limited follows the financial year from April to March. A suit against the Company's Advertisement was filed by a party on 5th April, 2023, claiming damages of ₹5 lakhs. Keeping in view the provisions of AS-4, you are required to state with reasons whether the above event is to be treated as a Contingency, an Adjusting Event or a Non-Adjusting Event occurring after the Balance Sheet date. - RTP May 2024, Q14(ii) · Marks:Not stated in source · Topic: Contingencies. Why practise it: Rank 321 topic (Contingencies); RTP May 2024.
Surya Limited follows the financial year from April to March. Company sends a proposal to sell an immovable property for ₹45 lakhs in March 2023. The book value of the property is ₹30 lakhs as on year end date. However, the Deed was registered on 15th April, 2023. Keeping in view the provisions of AS-4, you are required to state with reasons whether the above event is to be treated as a Contingency, an Adjusting Event or a Non-Adjusting Event occurring after the Balance Sheet date.
AS 5 — Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies: 10 must-practice questions
Accounting Standards based on items impacting Financial Statements, Module 2. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- RTP September 2024, Q6 · Marks:Not stated in source · Topic: Changes in Accounting Policies. Why practise it: Rank 58 topic (Changes in Accounting Policies); 82% match to an ICAI Study Material question; RTP September 2024.
Explain whether the following will constitute a change in accounting policy or not as per AS 5: Introduction of a formal retirement gratuity scheme by an employer in place of ad hoc ex-gratia payments to employees on retirement. Management decided to pay pension to those employees who have retired after completing 5 years of service in the organistaion. Such employees will get pension of ₹20,000 per month. Earlier there was no such scheme of pension in the organization. - RTP May 2025, Q8 · Marks:Not stated in source · Topic: Changes in Accounting Policies. Why practise it: Rank 58 topic (Changes in Accounting Policies); 57% match to an ICAI Study Material question; RTP May 2025.
The Accountant of Heera Ltd. has sought your opinion with relevant reasons, whether the following transactions will be treated as change in Accounting Policy or not for the year ended 31st March, 2024. Please advise him in the following situations in accordance with the provisions of relevant Accounting Standard: Till the previous year the furniture was depreciated on straight line basis over a period of 5 years. From current year, the useful life of furniture has been changed to 3 years. Management decided to pay pension to those employees who have retired after completing 5 years of service in the organization. Such employees will get… - PYQ May 2026, Q6(b) · Marks: 4 · Topic: Changes in Accounting Policies. Why practise it: Rank 58 topic (Changes in Accounting Policies); 63% match to an ICAI Study Material question; PYQ May 2026.
The accountant of Moon Limited provides you the following information: (i) Provision for doubtful debts was created @3% till 31st March, 2025; from FY 2025-26, the rate has been changed to 5%. (ii) During the year ended 31st March, 2026 the management has introduced a formal gratuity scheme in place of ad-hoc ex-gratia payments to employees on retirement. (iii) During 2025-26, there was change in cost formula in measuring the cost of inventories. (iv) Management decided to pay pension to employees who have retired after completing 5 years of service (₹25,000 per month); earlier there was no such pension scheme. You are required to advise the… - RTP January 2026, Q5 · Marks:Not stated in source · Topic: Prior Period Items. Why practise it: Rank 57 topic (Prior Period Items); RTP January 2026.
Identify each of the following as Change in Accounting Policy / Change in Accounting Estimate / Extraordinary Item / Prior Period Item / Ordinary Activity: (i) Non-provision for salary already due in an earlier year. (ii) Attachment of the property of the enterprise. (iii) Introduction of a new pension scheme for employees. (iv) Change in Reserve for obsolete inventory. (v) Settlement of a litigation case. (vi) Legislative changes with long-term retrospective application. (vii) Change from Cost Model to Revaluation Model for PPE measurement. (viii) Government-sanctioned grant received this year for expenses incurred in a previous year. - RTP September 2025, Q9(a) · Marks:Not stated in source · Topic: Prior Period Items. Why practise it: Rank 57 topic (Prior Period Items); RTP September 2025.
When can an item qualify to be a prior period item as per AS 5? - PYQ September 2025, Q6(a) [OR-alt 1] · Marks: 4 · Topic: Prior Period Items. Why practise it: Rank 57 topic (Prior Period Items); PYQ September 2025.
Sneha, an employee of Omre Limited, went on paid maternity leave for 9 months, 1st January 2024 to 30th September 2024, monthly pay ₹1,50,000. While preparing FY2023-24 financial statements, her salary for 3 months (Jan–Mar 2024) was omitted. When she joined 1st October 2024, the whole 9-month salary was paid. With reference to AS-5, determine if this is a prior period item and pass the FY2024-25 journal entry. Variant: Suppose Sneha was terminated 1st January 2024 and reinstated by court order on 30th September 2024, with the 9-month salary paid 1st October 2024 — what is the AS-5 treatment here, with journal entry? - RTP September 2025, Q9(b) · Marks:Not stated in source · Topic: Changes in Accounting Estimates. Why practise it: Rank 328 topic (Changes in Accounting Estimates); 86% match to an ICAI Study Material question; RTP September 2025.
A Ltd. finds that the stock sheets of 31.3.2024 did not include two pages containing details of inventory worth ₹20 lakhs. How should this be dealt with in the accounts for the year ended 31st March, 2025, per AS 5? - MTP January 2025 Set 2, Q1(a) · Marks: 7 · Topic: Net Profit or Loss for the Period. Why practise it: Rank 327 topic (Net Profit or Loss for the Period); 52% match to an ICAI Study Material question; MTP January 2025 Set 2.
State with reasons, how the following events would be dealt with in the financial statements of Hari Ltd. for the year ended 31st March, 2024 (accounts were approved on 25th July, 2024): Negotiations with another company for acquisition of its business was started on 21st January, 2024. Hari Ltd. invested ₹40 lakh on 22nd April, 2024. The company made a provision for bad debts @ 4% of its total debtors (as per trend followed from the previous years). In the second week of March 2024, a debtor for ₹2,50,000 had suffered heavy loss due to an earthquake; the loss was not covered by any insurance policy. In May, 2024 the debtor became bankrupt.… - RTP January 2026, Q6 · Marks:Not stated in source · Topic: Changes in Accounting Estimates. Why practise it: Rank 328 topic (Changes in Accounting Estimates); RTP January 2026.
Best Ltd., a consultancy services provider, received a GST department demand notice of ₹2,50,000 on consultancy services provided; the company paid the demand and recorded it as extraordinary expenditure. Can this payment of a tax demand be recognised as an extraordinary item? - RTP January 2025, Q5 · Marks:Not stated in source · Topic: Net Profit or Loss for the Period. Why practise it: Rank 327 topic (Net Profit or Loss for the Period); RTP January 2025.
During the course of the last three years, a company owning and operating Helicopters lost four Helicopters. The company's accountant felt that after the crash, the maintenance provision created in respect of the respective helicopters was no longer required, and proposed to write it back to the Profit and Loss account as a prior period item. Is the company's proposed accounting treatment correct? Discuss.
AS 11 — The Effects of Changes in Foreign Exchange Rates: 10 must-practice questions
Accounting Standards based on items impacting Financial Statements, Module 2. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- PYQ May 2026, Q6(a) [OR-alt 2] · Marks: 4 · Topic: Presentation of Foreign Currency Monetary Item Translation Difference Account (FCMITDA). Why practise it: Rank 59 topic (Presentation of Foreign Currency Monetary Item Translation Difference Account (FCMITDA)); Category A — 100% identical to an ICAI Study Material question; PYQ May 2026.
ABC Ltd, borrowed 10,000 US $ in foreign currency on 1st April, 2025 at 6% p.a. annual interest and acquired a depreciable asset. Exchange rates: 01-04-2025 ₹85.00/US$; 31-03-2026 ₹90.00/US$. (Assume interest accrued on 31st March, 2026 is paid on the same date.) You are required to: (i) Pass the journal entries in case the option under Para 46A of AS 11 is availed by the company. (ii) Explain the difference in treatment of exchange difference if Para 46A of AS 11 is not availed. (iii) Would your answer be different regarding treatment of exchange difference if the loan was taken to finance the operations of the entity, not to procure a… - MTP May 2026 Set 1, Q1(b) · Marks: 5 · Topic: Reporting at each balance sheet date; Recognition of Exchange Differences. Why practise it: Rank 47 topic (Reporting at each balance sheet date); MTP May 2026 Set 1; covers 2 mapped topics.
Karna Ltd., an Indian Company, has the following foreign currency transactions during the financial year 2025-26: (i) On 1st July, 2025, imported goods from Try Ltd., a German based company, amounting to ₹30,96,000. (ii) On 1st October, 2025, imported plant and machinery from Lucy Ltd., a German based company, for €18,500. The amount was paid on the date of import itself. (Ignore depreciation). (iii) On 1st December, 2025, exported good on credit to Cream Ltd., a German based company, amounting to ₹50,40,000. All the above transactions were recorded in the books of account at the prevailing exchange rate on the date of the transactions.… - RTP January 2025, Q9 · Marks:Not stated in source · Topic: Reporting at each balance sheet date. Why practise it: Rank 47 topic (Reporting at each balance sheet date); RTP January 2025.
Bansal Company Ltd. imported raw material worth US Dollars 12,000 on 15th January, 2024 when the exchange rate was ₹68 per US Dollar. The payment for the transaction was made on 5th May, 2024 when exchange rate was ₹64 per US Dollar. At the year end, 31st March, 2024, the rate of exchange was ₹65 per US Dollar. The accountant of the company passed entry on 31st March, 2024 adjusting the cost of raw material consumed for the difference between ₹64 and ₹68 per US Dollar. Discuss whether this treatment is justified as per the provisions of AS-11 (Revised). - MTP May 2023 Set 2, Q6(a) [OR-alt 2] · Marks: 5 · Topic: Reporting at each balance sheet date; Definitions of the terms used in the Standard. Why practise it: Rank 47 topic (Reporting at each balance sheet date); MTP May 2023 Set 2; covers 2 mapped topics.
"Explain "monetary item" as per Accounting Standard 11. How are foreign currency monetary items to be recognized at each Balance Sheet date? Classify the following as monetary or non-monetary item: (i) Share Capital (ii) Trade Receivables (iii) Investments (iv) Fixed Assets. - PYQ November 2023, Q1(b) · Marks: 5 · Topic: Initial Recognition; Reporting at each balance sheet date; Recognition of Exchange Differences. Why practise it: Rank 46 topic (Initial Recognition); PYQ November 2023; covers 3 mapped topics.
Karna Ltd., an Indian Company, has the following foreign currency transactions during the financial year 2022-23: (i) On 1 st July, 2022, imported goods from Try Ltd., a German based company, amounting to ₹30,96,000. (ii) On 1 st October, 2022, imported plant and machinery from Lucy Ltd., a German based company, for €18,500. The amount was paid on the date of import itself. (Ignore depreciation). (iii) On 1 st December, 2022, exported goods on credit to Cream Ltd., a German based company, amounting to ₹50,40,000. All the above transactions were recorded in the books of account at the prevailing exchange rate on the date of the transactions.… - PYQ May 2023, Q1(b) · Marks: 5 · Topic: Initial Recognition; Reporting at each balance sheet date. Why practise it: Rank 46 topic (Initial Recognition); PYQ May 2023; covers 2 mapped topics.
Trower Limited is an Indian importer. It imports goods from True View Limited situated at London. Trower Limited has a payable of £50,000 to True View Limited as on 31 st March, 2023. True View Limited has given Trower Limited the following two options: (i) Pay immediately with a cash discount of 1% on the payable. (ii) Pay after 6 months with interest @ 5% p.a. on the payable. The borrowing rate for Trower Limited in rupees is 15% p.a. The following are the exchange rates: Date ₹/£ 31 st March, 2023 97 30 th September, 2023 99 You are required to give your opinion to Trower Limited on which of the above two options to be chosen. (5 Marks) - MTP May 2025 Set 1, Q6(b) · Marks: 5 · Topic: Recognition of Exchange Differences; Definitions of the terms used in the Standard. Why practise it: Rank 97 topic (Recognition of Exchange Differences); MTP May 2025 Set 1; covers 2 mapped topics.
(i) Classify the following items into Monetary and Non-monetary: Share capital; Trade Payables; Cash balance; Property, plant and equipment. (ii) Trade payables of CAT Ltd. include amount payable to JBB Ltd., ₹10,00,000 recorded at the prevailing exchange rate on the date of transaction, transaction recorded at US $1 = ₹80.00. The exchange rate on balance sheet date (31.03.2024) was US $1 = ₹85.00. You are required to calculate the amount of exchange difference and also explain the accounting treatment needed for this as per AS 11 in the books of CAT Ltd. - RTP May 2025, Q12 · Marks:Not stated in source · Topic: Recognition of Exchange Differences. Why practise it: Rank 97 topic (Recognition of Exchange Differences); RTP May 2025.
Legal Ltd. is engaged in the manufacturing of rubber. For its plant, it required machineries of latest technology. It usually resorts to Long Term Foreign Currency Borrowings for its fund requirements. On 1st April, 2023, it borrowed US $1 million from International Funding Agency, USA when the exchange rate was 1$ = ₹63. The funds were used for acquiring machineries, on the same date, to be used in three different plants. The useful life of the machineries is 10 years and their residual value is ₹30,00,000. Earlier also the company used to purchase machineries out of foreign borrowings. The exchange differences arising on such borrowings… - MTP January 2026 Set 2, Q1(a) · Marks: 5 · Topic: Classification of Foreign Operations as Integral or Non-integral. Why practise it: Rank 334 topic (Classification of Foreign Operations as Integral or Non-integral); MTP January 2026 Set 2.
Jared Limited purchased a machine for US$20,000 on 31st December 2024, payment due after four months. The company entered a four-month forward contract at ₹78.85 per US$; the spot rate on 31st December 2024 was ₹77.50 per US$. (i) How should Jared recognise the profit or loss on the forward contract for the year ended 31st March, 2025? (ii) Trade payables include an amount due to Sterling Limited of ₹9,75,000, recorded at US$1=₹75.00 on the purchase date. Exchange rate on balance-sheet date (31st March 2025): US$1=₹79.00. Payment made 1st May 2025 at US$1=₹78.30. Calculate the exchange difference as at 31st March 2025 and on settlement (1st… - MTP November 2023 Set 2, Q3(a) · Marks: 8 · Topic: Classification of Foreign Operations as Integral or Non-integral; Translation of Foreign Integral Operations; Translation of Non-Integral Foreign Operations. Why practise it: Rank 334 topic (Classification of Foreign Operations as Integral or Non-integral); MTP November 2023 Set 2; covers 4 mapped topics.
Moon Star has a branch at Virginia (USA). The Branch is a non-integral foreign operation of the Moon Star. The trial balance of the Branch as at 31st March, 2023 is as follows: Particulars Dr. (US $) Cr. (US $) Office equipments 48,000 Furniture and Fixtures 3,200 Stock (April 1, 2022) 22,400 Purchases 96,000 Sales 1,66,400 Goods sent from H.O 32,000 Salaries 3,200 Carriage inward 400 Rent, Rates & Taxes 800 Insurance 400 Trade Expenses 400 Head Office Account 45,600 Sundry Debtors 9,600 Sundry Creditors 6,800 Cash at Bank 2,000 Cash in Hand 400 Total 2,18,800 2,18,800 The following further information is given: Salaries outstanding $400.…
AS 22 — Accounting for Taxes on Income: 4 must-practice questions
Accounting Standards based on items impacting Financial Statements, Module 2. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- PYQ September 2024, Q1(c) · Marks: 5 · Topic: Recognition. Why practise it: Rank 43 topic (Recognition); Category A — 100% identical to an ICAI Study Material question; PYQ September 2024.
Delta Ltd. is working on different projects those are likely to be completed within 3 years period. It recognizes revenue from these contracts on Percentage of Completion Method for Financial Statements for the years ending 2021, 2022 and 2023 for ₹34 Lakhs, ₹50 Lakhs and ₹65 Lakhs respectively. However, for Income Tax purpose, it has adopted the Completed Contract Method under which it has recognized revenue of ₹30 Lakhs, ₹52 Lakhs and ₹67 Lakhs for the years ending 2021, 2022 and 2023 respectively. Income Tax rate is 30%. Compute the amount of Deferred Tax Asset / Liability and Total Tax Expenses for the years ending 31st March 2021, 2022… - RTP January 2025, Q16 · Marks:Not stated in source · Topic: Measurement. Why practise it: Rank 44 topic (Measurement); RTP January 2025.
ABC Ltd. prepares its accounts annually on 31st March. On 1st April, 2022, it purchases a machine at a cost of ₹1,50,000. The machine has a useful life of three years and an expected scrap value of zero. Although it is eligible for a 100% first year depreciation allowance for tax purposes, the straight line method is considered appropriate for accounting purposes. ABC Ltd. has profits before depreciation and taxes of ₹2,00,000 each year and corporate tax rate is 40 percent each year. The purchase of machine at a cost of ₹1,50,000 in 2022 gives rise to a tax saving of ₹60,000. The corporate tax rate has been assumed to be same in each of the… - PYQ September 2025, Q1(a) · Marks: 5 · Topic: Measurement. Why practise it: Rank 44 topic (Measurement); PYQ September 2025.
Amber Limited purchases a building for ₹20,00,000 on 1st April 2021, useful life 4 years, nil scrap value. Tax depreciation: 50% in Year 1, remaining balance in Year 2. Accounting: straight-line method. Profit before depreciation and taxes: 2021-22 ₹18,00,000; 2022-23 ₹22,00,000; 2023-24 ₹25,00,000; 2024-25 ₹30,00,000. Corporate tax rate 30% all years. Calculate Current Tax, Deferred Tax Assets/Liability, and Tax Expense for each year. - MTP May 2025 Set 2, Q6(a) [OR-alt 2] · Marks: 4 · Topic: Definitions. Why practise it: Rank 341 topic (Definitions); MTP May 2025 Set 2.
Write short note on Timing difference and Permanent Difference as per AS 22.
AS 7 — Construction Contracts: 8 must-practice questions
Revenue Based Accounting Standards, Module 2. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- PYQ May 2024, Q3(a) · Marks: 7 · Topic: Changes in Estimates; Percentage Completion Method; Stage of Completion. Why practise it: Rank 80 topic (Changes in Estimates); Category A — 100% identical to an ICAI Study Material question; PYQ May 2024; covers 3 mapped topics.
Constructions Limited is engaged in the business of constructing Flyovers and Railway over bridges. It obtained a contract from Railway Authorities to construct a railway over bridge for ₹400 crores. The construction of the railway over bridge is expected to be completed in 4 years. At the outset of the contract, it was estimated that the total costs to be incurred will be ₹370 crores but by the end of year 1, this estimate stands revised to ₹375 crores. During year 3, the Construction Limited has requested for a variation in the contract which is approved by Railway Authorities and accordingly the total contract value will increase by ₹10… - RTP January 2026, Q7 · Marks:Not stated in source · Topic: Changes in Estimates; Contract Revenue and Costs. Why practise it: Rank 80 topic (Changes in Estimates); 63% match to an ICAI Study Material question; RTP January 2026; covers 2 mapped topics.
A construction contractor entered a fixed-price contract of ₹18,000 lacs to construct a bridge within 3 years, with provisions for variations. (₹ in lacs): Year 1/2/3 — Initial revenue agreed 18,000/18,000/18,000; Variation in revenue (+)400/400 (Years 2,3); Contract costs incurred to date 4,186/12,336*/16,200**; Estimated profit for whole contract 1,900/2,000/2,000. *includes ₹200 lacs standard materials stored at site for use in Year 3. **excludes ₹200 lacs standard material brought forward from Year 2. Year 2's variation was approved by the customer. Compute year-wise: revenue recognised, expenses recognised, contract costs to complete,… - RTP January 2025, Q6 · Marks:Not stated in source · Topic: Percentage Completion Method. Why practise it: Rank 81 topic (Percentage Completion Method); RTP January 2025.
Rose Constructions undertake to construct a bridge for the Government of Uttar Pradesh. The construction commenced during the financial year ending 31.03.2024 and is likely to be completed by the next financial year. The contract is for a fixed price of ₹12 crore with an escalation clause. You are given the following information for the year ended 31.03.2024: Cost incurred upto 31.03.2024 ₹4 crore Cost estimated to complete the contract ₹6 crore Escalation in cost was by 5%. Hence, the contract price is also increased by 5%. You are required to ascertain the stage of completion and compute the amount of revenue and profit to be recognized… - RTP September 2024, Q7 · Marks:Not stated in source · Topic: Percentage Completion Method. Why practise it: Rank 81 topic (Percentage Completion Method); RTP September 2024.
Mehta ltd. has undertaken bridge construction contract wherein, bridge will be constructed in 3 years. The details of the contracts are as follows: Initial contract revenue ₹900 crore Initial contract cost ₹800 crore Years I II III ₹ in crore ₹ in crore ₹ in crore Estimated contract cost 805 Increase in contract revenue - 20 Estimated additional increase cost - 15 Contract cost incurred upto 161 584 820 At the end of year II, cost incurred includes ₹10 crore, for material stored at the sites to be used in year III to complete the project. State the amount of revenue, expenses and profit to be recognized in the Statement of Profit and Loss in… - RTP May 2024, Q15 · Marks:Not stated in source · Topic: Percentage Completion Method. Why practise it: Rank 81 topic (Percentage Completion Method); RTP May 2024.
The following data is provided for M/s. Raj Construction Co. Contract Price - ₹85 lakhs Materials issued - ₹21 Lakhs out of which Materials costing ₹4 Lakhs is still lying unused at the end of the period. Labour Expenses for workers engaged at site - ₹16 Lakhs (out of which ₹1 Lakh is still unpaid) Specific Contract Costs = ₹5 Lakhs Sub-Contract Costs for work executed - ₹7 Lakhs, Advances paid to Sub-Contractors - ₹4 Lakhs Further Cost estimated to be incurred to complete the contract - ₹35 Lakhs You are required to compute the Percentage of Completion, the Contract Revenue and Cost to be recognized as per AS-7. - RTP September 2025, Q10 · Marks:Not stated in source · Topic: Contract Revenue and Costs. Why practise it: Rank 351 topic (Contract Revenue and Costs); RTP September 2025.
A company took a construction contract for ₹100 lakhs in January 2024; 80% completed at cost ₹92 lakhs by 31.3.2025; further ₹23 lakhs estimated to complete; expected loss ₹15 lakhs. Can the company recognise the loss in the FY2024-25 financial statements? - RTP May 2025, Q9(i) · Marks:Not stated in source · Topic: Combining and Segmenting Construction Contracts. Why practise it: Rank 349 topic (Combining and Segmenting Construction Contracts); RTP May 2025.
AP Ltd., a construction contractor, undertakes the construction of a commercial complex for Kay Ltd. AP Ltd. submitted separate proposals for each of 3 units of the commercial complex. A single agreement is entered into between the two parties. The agreement lays down the value of each of the 3 units, i.e. ₹50 Lakh, ₹60 Lakh and ₹75 Lakh respectively. The agreement also lays down the completion time for each unit. Comment, with reference to AS-7, whether AP Ltd. should treat it as a single contract or three separate contracts. - RTP May 2025, Q9(ii) · Marks:Not stated in source · Topic: Combining and Segmenting Construction Contracts. Why practise it: Rank 349 topic (Combining and Segmenting Construction Contracts); RTP May 2025.
On 1st December, 2023, GR Construction Co. Ltd. undertook a contract to construct a building for ₹45 lakhs. On 31st March, 2024, the company found that it had already spent ₹32.50 lakhs on the construction. Additional cost of completion is estimated at ₹15.10 lakhs. What amount should be charged to revenue in the final accounts for the year ended 31st March, 2024 as per provisions of AS-7?
AS 9 — Revenue Recognition: 10 must-practice questions
Revenue Based Accounting Standards, Module 2. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- RTP May 2025, Q10 · Marks:Not stated in source · Topic: Conditions for Sale of Goods. Why practise it: Rank 79 topic (Conditions for Sale of Goods); 76% match to an ICAI Study Material question; RTP May 2025.
Given below are the following information of B.S. Ltd.: Goods of ₹50,000 were sold on 18-03-2024 but at the request of the buyer these were delivered on 15-04-2024. On 13-01-2024 goods of ₹1,25,000 are sent on consignment basis, of which 20% of the goods unsold are lying with the consignee as on 31-03-2024. ₹1,00,000 worth of goods were sold on approval basis on 01-12-2023. The period of approval was 3 months after which they were considered sold. Buyer sent approval for 75% goods up to 31-01-2024 and no approval or disapproval received for the remaining goods till 31-03-2024. You are required to advise the accountant of B.S. Ltd., with… - MTP January 2025 Set 2, Q3(a) · Marks: 4 · Topic: Conditions for Sale of Goods. Why practise it: Rank 79 topic (Conditions for Sale of Goods); 58% match to an ICAI Study Material question; MTP January 2025 Set 2.
Given the following information of Rainbow Ltd., you are required to advise, with valid reasons, the amount to be recognized as revenue under the provisions of AS-9: (i) On 15th November, goods worth ₹5,00,000 were sold on approval basis. The period of approval was 4 months after which they were considered sold. Buyer sent approval for 75% goods sold upto 31st January and no approval or disapproval received for the remaining goods till 31st March. (ii) On 31st March, goods worth ₹2,40,000 were sold to Bright Ltd. but due to refurnishing of their show-room being underway, on their request, goods were delivered on 10th April. (iii) Rainbow… - RTP May 2024, Q16(i) · Marks:Not stated in source · Topic: Conditions for Sale of Goods. Why practise it: Rank 79 topic (Conditions for Sale of Goods); 60% match to an ICAI Study Material question; RTP May 2024.
Goods of ₹2,00,000 sold to Den Ltd. on 20-03-2023 but at the request of the buyer these were delivered on 10-04-2023. You are required to advise the accountant of BS Products Ltd., with valid reasons, the amount to be recognized as revenue in this case in the context of AS 9. - RTP May 2024, Q16(ii) · Marks:Not stated in source · Topic: Conditions for Sale of Goods. Why practise it: Rank 79 topic (Conditions for Sale of Goods); 60% match to an ICAI Study Material question; RTP May 2024.
On 15-01-2023 goods of ₹3,00,000 were sent on consignment basis, of which 20% of the goods unsold are lying with the consignee as on 31-03-2023. You are required to advise the accountant of BS Products Ltd., with valid reasons, the amount to be recognized as revenue in this case in the context of AS 9. - RTP May 2024, Q16(iii) · Marks:Not stated in source · Topic: Conditions for Sale of Goods. Why practise it: Rank 79 topic (Conditions for Sale of Goods); 60% match to an ICAI Study Material question; RTP May 2024.
₹4,00,000 worth of goods were sold on approval basis on 01-12-2022. The period of approval was 3 months after which they were considered as sold. Buyer sent approval for 75% goods upto 31-01-2023 and no approval or disapproval received for the remaining goods till 31-03-2023. You are required to advise the accountant of BS Products Ltd., with valid reasons, the amount to be recognized as revenue in this case in the context of AS 9. - RTP May 2024, Q16(iv) · Marks:Not stated in source · Topic: Conditions for Sale of Goods. Why practise it: Rank 79 topic (Conditions for Sale of Goods); 60% match to an ICAI Study Material question; RTP May 2024.
Apart from the above, BS Products Ltd. sells goods to dealers also. One of the conditions of sale is that interest is payable @ 2% p.m. for delayed payments by dealers. The percentage of interest recovery is only 10% i.e. ₹50,000 on such overdue outstanding due to various reasons. During the year 2022-23, the company wants to recognize the entire interest receivable of ₹60,000. You are required to advise the accountant of BS Products Ltd., with valid reasons, the amount to be recognized as revenue in this case in the context of AS 9, and also determine the total revenue to be recognized for the year ending 31-03-2023. - RTP January 2026, Q8 · Marks:Not stated in source · Topic: Sale of Goods; Timing of Recognition of Revenue from Sale of Goods; Conditions for Sale of Goods. Why practise it: Rank 77 topic (Sale of Goods); RTP January 2026; covers 3 mapped topics.
Class Ltd., a real-estate developer, purchased land for ₹225 crore in FY2025 intending a residential complex, then sold it a few months later for ₹360 crore due to a strategic reallocation and favourable market conditions. All legal formalities completed. Advise on revenue recognition for the year ended 31st March, 2025. - RTP September 2025, Q11(i) · Marks:Not stated in source · Topic: Sale of Goods; Timing of Recognition of Revenue from Sale of Goods; Conditions for Sale of Goods. Why practise it: Rank 77 topic (Sale of Goods); RTP September 2025; covers 3 mapped topics.
Tonk Tanners (leather shoes): On 31st December, 2024, shoes worth ₹3,20,000 were sent to Mohan Shoes for sale on consignment; 25% remained unsold with Mohan Shoes as on 31st March, 2025. Advise when revenue is recognised in 2024-25 per AS 9. - MTP May 2024 Set 1, Q3(a) · Marks: 4 · Topic: Income from other sources - Interest, Royalties and Dividends. Why practise it: Rank 359 topic (Income from other sources - Interest, Royalties and Dividends); 78% match to an ICAI Study Material question; MTP May 2024 Set 1.
Y Ltd. used certain resources of X Ltd. In return X Ltd. received ₹10 lakhs and ₹15 lakhs as interest and royalties respectively from Y Ltd. during the year 2022-23. You are required to state whether and on what basis these revenues can be recognized by X Ltd. - RTP September 2024, Q8 · Marks:Not stated in source · Topic: Definition of Revenue. Why practise it: Rank 356 topic (Definition of Revenue); RTP September 2024.
When will the revenue be recognized in the case of inter divisional transfers?
AS 12 — Accounting for Government Grants: 10 must-practice questions
Other Accounting Standards, Module 2. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- MTP September 2024 Set 2, Q3(b) · Marks: 7 · Topic: Refund of Government Grants. Why practise it: Rank 36 topic (Refund of Government Grants); 81% match to an ICAI Study Material question; MTP September 2024 Set 2.
Smile Ltd. purchased machinery for ₹80 lakhs (useful life 4 years and residual value ₹8 lakhs). Government grant received was ₹32 lakhs. The grant had to be refunded at the beginning of third year. Show the Journal Entry to be passed at the time of refund of grant and the value of the fixed assets in the third year and the amount of depreciation for remaining two years, if the grant had been credited to Deferred Grant A/c. - PYQ November 2023, Q1(d) · Marks: 5 · Topic: Presentation of Grants Related to Specific Fixed Assets; Refund of Government Grants. Why practise it: Rank 35 topic (Presentation of Grants Related to Specific Fixed Assets); Category A — 100% identical to an ICAI Study Material question; PYQ November 2023; covers 2 mapped topics.
A Ltd. purchased a Machinery for ₹75 Lakhs. Government Grant received towards this Machinery is ₹10 Lakhs. Residual Value of Machinery at the end of useful life of 6 Years is ₹5 Lakhs. Asset is shown in Balance Sheet at net of grant. At the beginning of the 3 rd year, an amount becomes refundable to the extent of ₹8 Lakhs due to non-compliance of certain conditions of grant. You are required to give necessary Journal entries for the 1 st year and the 3 rd year in the books of A Ltd. (5 Marks) - MTP September 2025 Set 2, Q1(a) · Marks: 7 · Topic: Presentation of Grants Related to Specific Fixed Assets. Why practise it: Rank 35 topic (Presentation of Grants Related to Specific Fixed Assets); MTP September 2025 Set 2.
On 1st April 2023, Eleanor Limited purchased a manufacturing Plant for ₹60 lakhs, which has an estimated useful life of 10 years with a salvage value of ₹10 lakhs. On purchase of the Plant, a grant of ₹20 lakhs was received from the government. You are required to calculate the amount of depreciation as per AS 12 for the financial year 2024-25 in the following cases: (i) If the grant amount is deducted from the value of Plant. (ii) If the grant is treated as deferred income. (iii) If the grant amount is deducted from the value of Plant, but at the end of the year 2024-2025 grant is refunded to the extent of ₹4 lakhs, due to non-compliance of… - RTP May 2026, Q11 · Marks:Not stated in source · Topic: Presentation of Grants Related to Specific Fixed Assets. Why practise it: Rank 35 topic (Presentation of Grants Related to Specific Fixed Assets); RTP May 2026.
Era Limited installed Plant and Machinery costing ₹100 lakhs on 1st April, 2023 and received a Government Grant of 40% towards its cost on the same day. The Grant was credited to Plant & Machinery Account. The life of the Plant & Machinery is 5 years and its residual value is ₹10 lakhs. The company charges depreciation on Straight Line Method. After one year, the Company had to refund the Grant to the extent of ₹25 lakhs on 1st April, 2024 due to non-compliance with certain conditions. You are required to pass the necessary Journal entries in the books of Era Limited for the first two years for the above transactions. - MTP May 2023 Set 2, Q1(c) · Marks: 5 · Topic: Refund of Government Grants. Why practise it: Rank 36 topic (Refund of Government Grants); MTP May 2023 Set 2.
Caseworker Limited received a specific grant of ₹6 crore for acquiring the plant of ₹30 crore on 1.4.2016 having useful life of 10 years. At the beginning of the financial year 2021-2022, due to non-compliance of conditions laid down for the grant of ₹6 crore, the company had to refund the grant to the Government. What should be the treatment of the refund if grant was deducted from the cost of the plant during financial year 2016-2017? Assume depreciation is charged on fixed assets as per Straight Line Method. - RTP May 2025, Q13 · Marks:Not stated in source · Topic: Presentation of Grants of the Nature of Promoters' Contribution. Why practise it: Rank 368 topic (Presentation of Grants of the Nature of Promoters' Contribution); 58% match to an ICAI Study Material question; RTP May 2025.
XYZ Limited has set-up its business in a designated backward area which entitles the company to receive from the Government of India a subsidy of 20% of the cost of investment. Having fulfilled all the conditions under the scheme, the company on its investment of ₹75 crore received ₹15 crore as subsidy from the Government in January 2024. The company wants to treat this receipt as an item of revenue and thereby reduce the losses for the year ended on 31st March, 2024. Keeping in view the relevant Accounting Standard, examine whether this action is justified or not. - RTP January 2026, Q10 · Marks:Not stated in source · Topic: Presentation of Grants Related to Revenue. Why practise it: Rank 367 topic (Presentation of Grants Related to Revenue); RTP January 2026.
Mediwell Hospitals Ltd. acquired 40 Doppler Scan Machines from Holiver Inc., USA, at US$1,65,100/unit at the start of FY2022-23, exchange rate ₹50/US$. Partly financed by a government grant of ₹5 crores (specific condition: refund on change in management/ownership control). In April 2025, 51% shareholding acquired by an overseas investor — management control changed, grant refund now due. Useful life 5 years, SLM at 20% p.a. Also: Bank charges US$4,000 (whole import), Sea freight ₹7,500/unit. No Capital Reserve or Deferred Income Account was maintained for the grant. Advise the accounting treatment for the grant refund per AS 12. - RTP September 2025, Q13(i) · Marks:Not stated in source · Topic: Accounting Treatment of Government Grants. Why practise it: Rank 364 topic (Accounting Treatment of Government Grants); RTP September 2025.
Zenith Industries Ltd. received ₹65 lakhs from a local authority to develop medical facilities for employees at its new township. Explain the accounting treatment per AS 12. - RTP September 2025, Q13(ii) · Marks:Not stated in source · Topic: Accounting Treatment of Government Grants. Why practise it: Rank 364 topic (Accounting Treatment of Government Grants); RTP September 2025.
Zenith Industries Ltd. also received ₹82 lakhs as a Central Government subsidy for establishing a new production unit in a notified backward area, classified as being in the nature of promoters' contribution, intended to support long-term development. Explain the treatment per AS 12. - RTP September 2024, Q10 · Marks:Not stated in source · Topic: Recognition of Government Grants. Why practise it: Rank 365 topic (Recognition of Government Grants); RTP September 2024.
Energy Ltd. has acquired a generator on 1.4.2023 for ₹100 lakh. On 2.4.2023, it applied to Indian Renewal Energy Development Authority (IREDA) for a subsidy. The subsidy was granted in June, 2024 after the accounts for 2023-2024 were finalized. The company has not accounted for the subsidy for the year ended 31.3.2024. State Is this a prior period item? How should the subsidy be accounted in the accounting year 2024-2025?
AS 14 — Accounting for Amalgamations
Questions on AS 14 are asked and listed under Module 3, in the Amalgamation of Companies unit. (Module 3 · Amalgamation of Companies · Amalgamation of Companies)
Financial Statements of Companies — Preparation of Financial Statements: 10 must-practice questions
Financial Statements of Companies, Module 3. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- MTP January 2025 Set 1, Q2 · Marks: 14 · Topic: Final Accounts. Why practise it: Rank 1 topic (Final Accounts); Category A — 97% identical to an ICAI Study Material question; MTP January 2025 Set 1.
The following is the Trial Balance of MN Limited as on 31.3.2024 (Figures in ₹'000): Debit ₹ Credit ₹ Land at cost 220 Equity Capital (Shares of ₹10 each) 300 Plant & Machinery at cost 770 10% Debentures 200 Trade Receivables 96 General Reserve 130 Inventories (31.3.24) 86 Profit & Loss A/c 72 Bank 20 Securities Premium 40 Adjusted Purchases 320 Sales 700 Factory Expenses 60 Trade Payables 52 Administration Expenses 30 Provision for Depreciation 172 Selling Expenses 30 Suspense Account 4 Debenture Interest 20 Interim Dividend Paid 18 Total 1670 Total 1670 Additional Information: (i) The authorised share capital of the company is 40,000… - MTP May 2024 Set 1, Q2 · Marks: 14 · Topic: Final Accounts. Why practise it: Rank 1 topic (Final Accounts); Category A — 98% identical to an ICAI Study Material question; MTP May 2024 Set 1.
Following is the trial balance of Delta limited as on 31.3.2023 (Figures in ₹'000): Particulars (Debit) ₹'000 Particulars (Credit) ₹'000 Land at cost 800 Equity share capital (shares of ₹10 each) 500 Calls in arrears 5 10% Debentures 300 Cash in hand 2 General reserve 150 Plant & Machinery at cost 824 Profit & Loss A/c (balance on 1.4.22) 75 Trade receivables 120 Securities premium 40 Inventories (31-3-23) 96 Sales 1200 Cash at Bank 28 Trade payables 30 Adjusted Purchases 400 Provision for depreciation 150 Factory expenses 80 Suspense Account 10 Administrative expenses 45 Selling expenses 25 Debenture Interest 30 Total 2455 Total 2455… - PYQ May 2026, Q2 · Marks: 14 · Topic: Final Accounts. Why practise it: Rank 1 topic (Final Accounts); 82% match to an ICAI Study Material question; PYQ May 2026.
Following is the trial balance of Vinayak Ltd. as on 31st March 2026: Particulars Dr. (₹'000) Cr. (₹'000) Equity share capital (shares of ₹100 each) 7,500 General Reserve 2,250 P&L A/c (on 1-04-2025) 1,125 Securities premium 600 10% Debentures 4,500 Calls in arrear 75 Plant and machinery at cost 12,360 Land at cost 12,000 Cash in hand 30 Cash in Bank 420 Sales 18,000 Trade payables 450 Trade receivables 1,800 Inventories (31-03-2026) 1,440 Purchases 6,000 Provision for Depreciation 2,250 Debenture interest 450 Factory expenses 1,200 Administrative expenses 675 Selling expenses 375 Suspense account 150 Total 36,825 36,825 Additional… - MTP May 2026 Set 1, Q3 · Marks: 14 · Topic: Final Accounts. Why practise it: Rank 1 topic (Final Accounts); 56% match to an ICAI Study Material question; MTP May 2026 Set 1.
3. The following is the Trial Balance of Falgun Ltd., as on 31st March, 2025: Particulars Debit Amt. (₹) Credit Amt. (₹) Equity Share Capital (Fully paid-up shares of ₹100 each) 10,00,000 10% Preference Share Capital of Face Value ₹100 each 4,00,000 General Reserve 2,85,000 2,000 10% Debentures of ₹100 each 2,00,000 Securities Premium Account 50,000 Land (at Cost) 7,00,000 Plant and Machinery 14,70,000 Furniture 4,00,000 Provision for Depreciation – Plant and Machinery 3,00,000 Provision for Depreciation – Furniture 1,90,000 Trade Receivables 3,10,000 Trade Payables 72,000 Cash-in-Hand 1,34,000 Cash-at-Bank 3,05,000 Bank Over Drafts from… - PYQ January 2026, Q6(b) · Marks: 4 · Topic: Distributable Profit. Why practise it: Rank 20 topic (Distributable Profit); Category A — 100% identical to an ICAI Study Material question; PYQ January 2026.
Figures from the financial statements of MC Limited for the year ended 31st March, 2025: Issued, Subscribed and Paid-up Share Capital – 8,00,000 Equity Shares of ₹5 each ₹40,00,000; 1,25,000, 8% Preference Shares of ₹10 each ₹12,50,000. Reserves and Surplus – Securities Premium Reserve ₹5,00,000; Capital Reserve ₹3,00,000; Capital Redemption Reserve ₹2,50,000; General Reserve ₹11,75,000. Net Profit for 2024-25 ₹2,25,000. Equity Dividend paid: 2019-20 10%, 2020-21 11%, 2021-22 12%, 2022-23 13%, 2023-24 14%. Constrained by inadequate profits in 2024-25, management proposes a dividend of 12.5% out of reserves. You are required to ascertain the… - MTP January 2025 Set 2, Q4 · Marks: 14 · Topic: Final Accounts. Why practise it: Rank 1 topic (Final Accounts); 73% match to an ICAI Study Material question; MTP January 2025 Set 2.
From the following particulars furnished by Hello Ltd., prepare the Balance Sheet as on 31st March 2024 as required by Part I, Schedule III of the Companies Act, 2013. Particulars Debit ₹ Credit ₹ Equity Share Capital (Face value of ₹100 each) 50,00,000 Building 27,50,000 Plant & Machinery 26,25,000 Furniture 2,50,000 General Reserve 10,50,000 Loan from State Financial Corporation 7,50,000 Inventory — Raw Materials 2,55,000 Inventory — Finished Goods 10,00,000 Provision for Taxation 6,40,000 Trade receivables 10,00,000 Short term Advances 2,13,500 Profit & Loss Account 4,33,500 Cash in Hand 1,50,000 Cash at Bank 12,35,000 Unsecured Loan… - MTP September 2024 Set 1, Q2 · Marks: 14 · Topic: Final Accounts. Why practise it: Rank 1 topic (Final Accounts); 77% match to an ICAI Study Material question; MTP September 2024 Set 1.
From the following particulars furnished by the Prashant Ltd., prepare the Balance Sheet as at 31st March, 2024 as required by Schedule III of the Companies Act, 2013: Particulars Debit (₹) Credit (₹) Equity share capital (face value of ₹10 each) 15,00,000 Calls-in-arrears 5,000 Land 5,50,000 Building 4,85,000 Plant & machinery 5,60,000 General reserve 2,70,000 Loan from State Financial Corporation 2,10,000 Inventories 3,15,000 Provision for taxation 72,000 Trade receivables 2,95,000 Short-term loans & advances 58,500 Profit & loss account 1,06,800 Cash in hand 37,300 Cash at bank 2,85,000 Unsecured loans 1,65,000 Trade payables 2,67,000… - PYQ May 2025, Q6(b) · Marks: 4 · Topic: Distributable Profit. Why practise it: Rank 20 topic (Distributable Profit); Category A — 100% identical to an ICAI Study Material question; PYQ May 2025.
Due to inadequacy of profits during the year ended 31st March, 2025, DAY Ltd proposes to declare 9% dividend out of General reserves. From the following particulars, ascertain the amount that can be utilized from the General reserves according to the Companies (Declaration of dividend) rules, 2014. 9,50,000 Equity Shares of ₹10 each fully paid up ₹95,00,000; General reserves as on 1st April, 2024 ₹18,50,000; Revaluation Reserve as on 1st April, 2024 ₹4,25,000; Net profit for the year ended 31st March, 2025 ₹3,75,000; Average rate of dividend during the last 3 years has been 12.5%. (4 Marks) - PYQ September 2025, Q2 · Marks: 14 · Topic: Statutory Books. Why practise it: Rank 16 topic (Statutory Books); PYQ September 2025.
Chia Limited, 31st March 2025 balances (₹ lakhs): 40,000 Equity Shares of ₹100 each 40.00; Money received against share warrants 2.70; General Reserves 6.90; Capital Reserves (₹0.20 lakh Revaluation Reserve) 12.50; P&L 3.50; Securities Premium 0.75; Deferred tax liabilities (Net) 0.56; 10% Debentures (secured) 5.00; Loan from SSA Finance Corp. 10.00; Other Long Term Loans (unsecured) 4.25; Short-term borrowings 6.95; Trade Payables 5.69; Other current liabilities 1.41; Short-term Provisions 1.36; Freehold Land 30.88; Plant & Machinery 26.80; Investment in Debentures of Glad Limited 6.00; Capital WIP 11.40; Trade receivables 11.57;… - PYQ November 2023, Q6(b) [OR-alt 2] · Marks: 5 · Topic: Meaning of Company. Why practise it: Rank 45 topic (Meaning of Company); PYQ November 2023.
List down the applicable criteria under the Companies (Accounting Standards) Rules, 2021, to classify a company as Small and Medium Sized Company (SMC).
Financial Statements of Companies — Cash Flow Statement: 10 must-practice questions
Financial Statements of Companies, Module 3. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- MTP September 2024 Set 1, Q3(a) · Marks: 10 · Topic: Calculation of Cash Flows from Operating Activities. Why practise it: Rank 4 topic (Calculation of Cash Flows from Operating Activities); 78% match to an ICAI Study Material question; MTP September 2024 Set 1.
The following information was provided by PQR Ltd. for the year ended 31st March, 2024: (1) Gross Profit Ratio was 25% for the year, which amounts to ₹3,75,000. (2) Company sold goods for cash only. (3) Opening inventory was lesser than closing inventory by ₹25,000. (4) Wages paid during the year ₹5,55,000. (5) Office expenses paid during the year ₹35,000. (6) Selling expenses paid during the year ₹15,000. (7) Dividend paid during the year ₹40,000. (8) Bank Loan repaid during the year ₹2,05,000 (included interest ₹5,000). (9) Trade Payables on 31st March, 2023 were ₹50,000 and on 31st March, 2024 were ₹35,000. (10) Amount paid to Trade… - MTP May 2024 Set 1, Q6(b) · Marks: 4 · Topic: Calculation of Cash Flows from Operating Activities. Why practise it: Rank 4 topic (Calculation of Cash Flows from Operating Activities); Category A — 96% identical to an ICAI Study Material question; MTP May 2024 Set 1.
From the following information, calculate cash flow from operating activities: Summary of Cash Account for the year ended March 31, 2023 Particulars ₹ Particulars ₹ To Balance b/d 1,00,000 By Cash Purchases 1,20,000 To Cash sales 1,40,000 By Trade payables 1,57,000 To Trade receivables 1,75,000 By Office & Selling Expenses 75,000 To Trade Commission 50,000 By Income Tax 30,000 To Sale of Investment 30,000 By Investment 25,000 To Loan from Bank 1,00,000 By Repayment of Loan 75,000 To Interest & Dividend 1,000 By Interest on loan 10,000 By Balance c/d 1,04,000 Total 5,96,000 Total 5,96,000 - MTP September 2025 Set 2, Q4 · Marks: 14 · Topic: Calculation of Cash Flows from Operating Activities. Why practise it: Rank 4 topic (Calculation of Cash Flows from Operating Activities); 54% match to an ICAI Study Material question; MTP September 2025 Set 2.
The summarized Balance Sheet of Swan Limited for the year ended 31st March, 2024 and 31st March, 2025 are as below: Assets 31.03.2025 (₹) 31.03.2024 (₹) Goodwill 37,500 70,000 Land 14,37,500 15,00,000 Furniture and Fixtures 1,20,000 1,10,000 Vehicles 55,000 70,000 Office Equipment 52,500 – Long-term Investments 1,50,000 2,75,000 Stock-in-hand 2,40,000 2,20,000 Bills Receivables 45,375 36,250 Trade Receivables 1,15,000 1,30,000 Cash and Bank Balances 3,24,625 86,250 Total 25,77,500 24,97,500 Liabilities 31.03.2025 (₹) 31.03.2024 (₹) Equity Share Capital 17,00,000 12,50,000 General Reserves 2,25,000 1,50,000 Profit and Loss Account 2,32,500… - MTP May 2025 Set 1, Q1(b) · Marks: 7 · Topic: Calculation of Cash Flows from Operating Activities. Why practise it: Rank 4 topic (Calculation of Cash Flows from Operating Activities); 53% match to an ICAI Study Material question; MTP May 2025 Set 1.
Following information was extracted from the books of A Ltd. for the year ended 31st March, 2025: Net profit before taking into account income tax and after taking into account the following items was ₹60 lakhs: (a) Depreciation on Property, Plant & Equipment ₹14,00,000. (b) Discount on issue of debentures written off ₹90,000. (c) Interest on debentures paid ₹8,70,000. (d) Investment of Book value ₹7,00,000 sold for ₹7,50,000. (e) Interest received on Investments ₹1,40,000. Income tax paid during the year ₹25,60,000. Company issued 1,20,000 Equity Shares of ₹10 each at a premium of 20% on 10th April, 2024. 40,000, 9% Preference Shares of… - RTP May 2026, Q8 · Marks:Not stated in source · Topic: Calculation of Cash Flows from Operating Activities. Why practise it: Rank 4 topic (Calculation of Cash Flows from Operating Activities); 54% match to an ICAI Study Material question; RTP May 2026.
The following are the summarised Balance Sheets of Dark Limited as at 31st March, 2025 and 31st March, 2024: Particulars 31st March, 2025 (₹ in Lakhs) 31st March, 2024 (₹ in Lakhs) Equity and Liabilities Equity Share Capital 250.00 195.00 Profit & Loss Account 15.00 10.00 8% Debentures 50.00 40.00 Trade Payables 75.00 82.00 Unpaid Interest on Debentures 2.00 — Provision for Taxation 8.00 5.00 Total 400.00 332.00 Assets Property, Plant & Equipment 255.00 205.00 Goodwill 6.00 8.00 Inventories 28.00 42.00 Trade Receivables 52.00 50.00 Cash & Cash Equivalents 59.00 27.00 Total 400.00 332.00 Other Information: Dividend paid during the year… - MTP May 2026 Set 2, Q4(b) · Marks: 7 · Topic: Calculation of Cash Flows from Operating Activities. Why practise it: Rank 4 topic (Calculation of Cash Flows from Operating Activities); MTP May 2026 Set 2.
Following is the cash flow abstract of Alpha Ltd. for the year ended 31st March, 2026: Inflows ₹ Outflows ₹ Opening cash and bank balance 80,000 Payment for Account Payables 90,000 Share capital – shares issued 5,00,000 Salaries and wages 25,000 Collection from Trade Receivables 3,50,000 Payment of overheads 15,000 Debentures redeemed 4,00,000 Machinery acquired 50,000 Sale of Machinery 70,000 Bank loan repaid 2,50,000 Tax paid 1,55,000 Closing cash and bank balance 15,000 Total 10,00,000 Total 10,00,000 Prepare Cash Flow Statement for the year ended 31st March, 2026 in accordance with AS 3. (7 Marks) - RTP September 2025, Q8 · Marks:Not stated in source · Topic: Calculation of Cash Flows from Financing Activities. Why practise it: Rank 12 topic (Calculation of Cash Flows from Financing Activities); RTP September 2025.
Garden Ltd. acquired plant and machinery for ₹20 lakhs and sold furniture and fixtures for ₹5 lakhs in the same year. Can the company disclose net cash outflow towards purchase of fixed assets in the cash flow statement per AS 3? - MTP November 2023 Set 2, Q6(c) · Marks: 4 · Topic: Calculation of Cash Flows from Investing Activities. Why practise it: Rank 34 topic (Calculation of Cash Flows from Investing Activities); MTP November 2023 Set 2.
Prepare cash flow from investing activities as per AS 3 of M/s Subham Creative Limited for year ended 31.3.2023. Particulars Amount (₹) Machinery acquired by issue of shares at face value 2,00,000 Claim received for loss of machinery in earthquake 55,000 Unsecured loans given to associates 5,00,000 Interest on loan received from associate company 70,000 Pre-acquisition dividend received on investment made 52,600 Debenture interest paid 1,45,200 Term loan repaid 4,50,000 Interest received on investment (TDS of ₹8,200 was deducted on the above interest) 73,800 Book value of plant & machinery sold (loss incurred ₹9,600) 90,000 - RTP September 2024, Q4 · Marks:Not stated in source · Topic: Classification of Cash Flow Activities. Why practise it: Rank 91 topic (Classification of Cash Flow Activities); 77% match to an ICAI Study Material question; RTP September 2024.
Purse Ltd., a non financial company has the following entries in its Bank Account. It has sought your advice on the treatment of the same for preparing Cash Flow Statement. Loans and Advances given to the following and interest earned on them: to suppliers to employees to its subsidiaries companies Investment made in subsidiary Wallet Ltd. and dividend received Dividend paid for the year Insurance claim received against loss of property, plant and equipment by fire. Discuss in the context of AS 3 ‘Cash Flow Statement’. - RTP January 2025, Q4 · Marks:Not stated in source · Topic: Classification of Cash Flow Activities. Why practise it: Rank 91 topic (Classification of Cash Flow Activities); RTP January 2025.
Classify the following activities as (1) Operating Activities, (2) Investing Activities, (3) Financing Activities (4) Cash Equivalents. Proceeds from long-term borrowings. Proceeds from Trade receivables. Trading Commission received. Redemption of Preference Shares. Proceeds from sale of investment Interim Dividend paid on equity shares. Interest received on debentures held as investment. Dividend received on shares held as investments. Rent received on property held as investment. Dividend paid on Preference shares. Marketable Securities
Buyback — Buyback of Securities: 8 must-practice questions
Buy Back of Securities, Module 3. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- MTP January 2026 Set 1, Q2(b) · Marks: 7 · Topic: Introduction. Why practise it: Rank 11 topic (Introduction); MTP January 2026 Set 1.
Aerodots Ltd. has the following capital structure as on 31.03.2025 (₹ in thousands): Equity Share Capital (shares of ₹10 each) 600; General Reserve 540; Securities Premium 200; Profit & Loss 100; Revaluation Reserve 30; Investment Allowance Reserve (Statutory Reserve) 75; Infrastructure Development Reserve 25; Loan Funds 2000. On 1st April, 2025 the company wants to buy back 14,000 equity shares of ₹10 each at ₹30 per share, duly authorized. You are required to calculate the maximum permissible number of equity shares that can be bought back. - PYQ January 2026, Q3(a) · Marks: 7 · Topic: Introduction. Why practise it: Rank 11 topic (Introduction); PYQ January 2026.
Balance Sheet of P Limited as at 31st March, 2025: Share Capital ₹1,500 lakh (150 lakh Equity Shares of ₹10 each); Reserves and Surplus ₹2,750 lakh (Capital Reserve 380, Securities Premium 300, Revaluation Reserve 120, General Reserve 1,800, Surplus 150); Long Term Borrowings ₹3,450 lakh (12% Debentures 2,250, Unsecured Loans 1,200); Short Term Borrowings (Current Maturities) ₹1,980 lakh; Trade Payables ₹1,500 lakh; Total ₹11,180 lakh. Assets: PPE ₹5,675 lakh; Inventories ₹1,005 lakh; Trade Receivables ₹1,500 lakh; Cash and Cash Equivalents ₹3,000 lakh; Total ₹11,180 lakh. Considering the large surplus funds, the company decides to buy back… - MTP May 2026 Set 1, Q5(b) · Marks: 4 · Topic: Introduction. Why practise it: Rank 11 topic (Introduction); MTP May 2026 Set 1.
The following is the extract of Balance Sheet of Yellow Limited as on 31.03.2025: 4,00,000 Equity shares of ₹10 each 40,00,000 General Reserve 48,00,000 Profit & Loss Account 10,00,000 Securities Premium 18,00,000 Secured Loans 60,00,000 Unsecured Loans 32,00,000 Current Liabilities 28,00,000 Total 2,36,00,000 Property, Plant and Equipment 90,00,000 Investments 18,00,000 Current Assets 1,28,00,000 Total 2,36,00,000 The company intends to buy-back 80,000 equity shares of ₹10 each at a premium of 150%. You are required to state whether the company can buy back equity shares. (4 Marks) - PYQ September 2024, Q3(b) · Marks: 7 · Topic: Introduction. Why practise it: Rank 11 topic (Introduction); PYQ September 2024.
Aerodots Ltd. has the following capital structure as on 31.03.2024: Equity Share Capital (shares of ₹10 each) ₹6,00,000 [thousands]; Reserves: General Reserve ₹5,40,000; Securities Premium ₹2,00,000; Profit & Loss ₹1,00,000; Revaluation Reserve ₹30,000; Investment Allowance Reserve (Statutory Reserve) ₹75,000; Infrastructure Development Reserve ₹25,000; Loan Funds ₹20,00,000 (all figures ₹ in thousands, as printed). On 1st April, 2024 the company wants to buy back 14,000 equity shares of ₹10 each at ₹30 per Equity share. You are required to calculate maximum permissible number of equity shares that can be bought back. Buy Back of shares is… - RTP September 2024, Q19 · Marks:Not stated in source · Topic: Introduction. Why practise it: Rank 11 topic (Introduction); RTP September 2024.
Purpose Ltd. resolves to buy back 4 lakhs of its fully paid equity shares of ₹10 each at ₹22 per share. This buyback is in compliance with the provisions of the Companies Act and does not exceed 25% of Company's paid up capital in the financial year. For the purpose, it issues 1 lakh 11% preference shares of ₹10 each at par, the entire amount being payable with applications. The company uses ₹16 lakhs of its balance in Securities Premium Account apart from its adequate balance in General Reserve to fulfill the legal requirements regarding buy-back. Give necessary journal entries to record the above transactions. - RTP May 2024, Q19 · Marks:Not stated in source · Topic: Introduction. Why practise it: Rank 11 topic (Introduction); RTP May 2024.
Mukti Ltd. (a non-listed company) provide the following information as on 31.3.2023: (₹) Land and Building 21,50,000 Plant & Machinery 15,00,000 Non-current Investment 2,00,000 Trade Receivables 5,50,000 Inventories 1,80,000 Cash and Cash Equivalents 40,000 Share capital:1,00,000 Equity Shares of ₹10 each fully paid up 10,00,000 Securities Premium 3,00,000 General Reserve 2,50,000 Profit & Loss Account (Surplus) 1,50,000 10% Debentures (Secured by floating charge on all assets) 20,00,000 Unsecured Loans 8,00,000 Trade Payables 1,20,000 On 21 st April, 2023 the Company announced the buy back of 15,000 of its equity shares @ ₹15 per share. For… - PYQ January 2025, Q6(b) · Marks: 4 · Topic: Introduction. Why practise it: Rank 11 topic (Introduction); PYQ January 2025.
Following information are available in respect of Z Limited as on 31st March, 2024: 4,00,000 Equity share capital of ₹10 each ₹40,00,000 Capital Reserve ₹20,000 Revenue Reserve ₹50,00,000 Securities Premium ₹6,00,000 Profit and Loss Account ₹19,00,000 Investments ₹40,00,000 The company decides to buy back 20% of its Equity capital @₹15 per share on 1st April, 2024. Buy back is as per provisions of the Companies Act and company passed the necessary resolutions for it. For this purpose, it sold its investments of ₹40 lakhs for ₹32 lakhs. You are required to pass the necessary journal entries. (4 Marks) - MTP May 2026 Set 2, Q6(c) · Marks: 5 · Topic: Provisions of Section 70 of the Companies Act, 2013. Why practise it: Rank 388 topic (Provisions of Section 70 of the Companies Act, 2013); MTP May 2026 Set 2.
Alpha Chemicals Ltd., a listed company, proposes a buy-back of 12% of its equity share capital from its free reserves under Section 68 of the Companies Act, 2013. On scrutiny of its records, the following details were observed: 1. The company intends to route the buy-back through its wholly-owned subsidiary. 2. The company had defaulted on repayment of a term loan to a public sector bank, which was fully repaid 27 months ago. 3. The company has not filed its Annual Return and Financial Statements for the preceding financial year. 4. The company had declared a dividend in the last year, but the amount remains unpaid for 35 days from the date…
Amalgamation — Amalgamation of Companies: 10 must-practice questions
Amalgamation of Companies, Module 3. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- MTP May 2026 Set 2, Q1(a) · Marks: 7 · Topic: Purchase Consideration. Why practise it: Rank 10 topic (Purchase Consideration); MTP May 2026 Set 2.
Antu Limited and Bantu Limited decided to amalgamate and form a new company Anban Limited as on 31st March, 2026 and provide you the following information: Particulars Antu Ltd. – As on 31.03.2026 (₹) Bantu Ltd. – As on 31.03.2026 (₹) Antu Ltd. – Revalued (₹) Bantu Ltd. – Revalued (₹) Equity shares of ₹10 each 26,88,000 10,08,000 — — 10% Preference Shares of ₹100 each 13,44,000 6,72,000 — — Reserve & Surplus 21,76,960 10,61,920 — — Trade Payable 3,36,000 7,04,000 3,22,560 6,75,840 Property, Plant & Equipment 30,76,000 17,45,600 42,32,400 20,80,400 Goodwill 6,48,000 — 6,48,000 — Inventories 7,56,000 4,70,400 11,14,480 8,27,120 Trade… - MTP September 2025 Set 2, Q2 · Marks: 14 · Topic: Entries in the books of Purchasing Company; Purchase Consideration. Why practise it: Rank 3 topic (Entries in the books of Purchasing Company); MTP September 2025 Set 2; covers 2 mapped topics.
X Ltd. and Y Ltd. had been carrying on business independently. They agreed to amalgamate and form a new company XY Ltd. with an authorized share capital of ₹40,00,000 divided into 8,00,000 equity shares of ₹5 each. On 31st March, 2025 the respective information of X Ltd. and Y Ltd. were as follows: Particulars X Ltd. (₹) Y Ltd. (₹) Share Capital 34,25,000 36,10,000 Trade Payable 59,70,000 18,02,500 Property, Plant and Equipment 58,25,000 37,40,000 Current Assets 31,45,000 15,99,500 Additional Information: the following revalued figures of non-current and current assets are: X Ltd. Y Ltd. Property, Plant and Equipment 71,00,000 39,00,000… - PYQ May 2026, Q4 · Marks: 14 · Topic: Entries in the books of Purchasing Company; Purchase Consideration; Methods of Accounting for Amalgamations. Why practise it: Rank 3 topic (Entries in the books of Purchasing Company); PYQ May 2026; covers 3 mapped topics.
Blue Limited and Green Limited had been carrying on business independently. They agreed to amalgamate and form a new company BG Ltd. with an authorized share capital of ₹12,00,000 divided into 2,40,000 equity shares of ₹5 each. On 31st March, 2026 the Balance sheets of both companies: Particulars Blue Ltd. Green Ltd. I. Equity and Liabilities: (a) Share Capital 10,95,000 10,57,500 (b) Trade Payables 3,50,000 2,25,000 Short term borrowings 14,41,000 3,15,750 Total 28,86,000 15,98,250 II. Assets: PPE 19,05,000 10,95,000 Inventories 8,56,000 3,53,250 Trade receivables 1,25,000 1,50,000 Total 28,86,000 15,98,250 Additional Information: (a) Trade… - MTP May 2025 Set 1, Q5 · Marks: 14 · Topic: Meaning of Amalgamation. Why practise it: Rank 17 topic (Meaning of Amalgamation); MTP May 2025 Set 1.
Meet Ltd. and Preet Ltd. were amalgamated on and from 1st April, 2024. A new company Heer Ltd. was formed to take over the business of the existing companies. The Balance Sheets of Meet Ltd. and Preet Ltd. as at 31st March, 2024 are given below (₹ in Lakhs): Particulars Notes Meet Ltd. Preet Ltd. I. Equity and Liabilities (1)(a) Share Capital 1 3,300 2,850 (1)(b) Reserves and Surplus 2 1,260 990 (2) Non-Current Liabilities: 10% Debentures of ₹100 each 180 90 (3) Current Liabilities: Trade Payables 1,260 570 Total 6,000 4,500 II. Assets (1)(a) Property, Plant and Equipment 2,700 1,950 (1)(b) Non-Current Investments 450 150 (2)(a) Inventories… - MTP May 2025 Set 2, Q5 · Marks: 14 · Topic: Purchase Consideration. Why practise it: Rank 10 topic (Purchase Consideration); MTP May 2025 Set 2.
The summarized Balance Sheet of A Ltd. and B Ltd. as at 31st March, 2025 are as under: Particulars A Ltd. (₹) B Ltd. (₹) Equity shares of ₹10 each, fully paid up 1,80,00,000 1,44,00,000 Share Premium Account 24,00,000 — General Reserve 37,20,000 30,00,000 Profit and Loss Account 21,60,000 19,20,000 Retirement Gratuity Fund Account 6,00,000 — 10% Debentures 1,20,00,000 — Unsecured Loan (including loan from A Ltd. of ₹13,20,000) 36,00,000 49,20,000 Trade Payables 6,00,000 20,40,000 Total 4,30,80,000 2,62,80,000 Land and Buildings 1,68,00,000 1,26,00,000 Plant and Machinery 1,20,00,000 45,60,000 Long term advance to B Ltd. 13,20,000 —… - MTP May 2026 Set 1, Q6(a) [OR-alt 2] · Marks: 5 · Topic: Purchase Consideration. Why practise it: Rank 10 topic (Purchase Consideration); MTP May 2026 Set 1.
Raman Limited and Naman Limited decided to amalgamate and form a new company Rana Limited as on 31st March, 2026 and provided you the following information: Particulars Raman Ltd. – As on 31st March, 2026 (₹) Naman Ltd. – As on 31st March, 2026 (₹) Raman Ltd. – Revalued Figures (₹) Naman Ltd. – Revalued Figures (₹) Equity shares of ₹10 each 6,72,000 2,52,000 — — 10% Preference Shares of ₹100 each 3,36,000 1,68,000 — — Reserves and Surplus 5,44,240 2,65,480 — — Trade Payables 84,000 1,76,000 80,640 1,68,960 Property, Plant and Equipment 7,69,000 4,36,400 10,58,100 5,20,100 Goodwill 1,62,000 — 1,62,000 — Inventories 1,89,000 1,17,600 2,78,620… - RTP May 2026, Q12 · Marks:Not stated in source · Topic: Entries in the books of Purchasing Company; Purchase Consideration; Methods of Accounting for Amalgamations. Why practise it: Rank 3 topic (Entries in the books of Purchasing Company); RTP May 2026; covers 3 mapped topics.
A Limited and B Limited were amalgamated on 31st March, 2025 to form a new company named AB Limited. Prior to the amalgamation, the Balance Sheets of the two companies stood as under: Particulars Note No. A Limited (₹ lakhs) B Limited (₹ lakhs) I. Equity and Liabilities (1) Shareholders' Funds (a) Share Capital 1 1,188.00 1,026.00 (b) Reserves and Surplus 2 453.60 356.40 (2) Non-Current Liabilities: Long Term Borrowings 3 90.00 48.00 (3) Current Liabilities: Trade Payables 428.40 189.60 Total 2,160.00 1,620.00 II. Assets (1) Non-Current Assets (a) Property, Plant and Equipment 972.00 702.00 (b) Non-Current Investments 162.00 54.00 (2)… - PYQ September 2025, Q4 · Marks: 14 · Topic: Meaning of Amalgamation. Why practise it: Rank 17 topic (Meaning of Amalgamation); PYQ September 2025.
Blue Limited and Yellow Limited Balance Sheets as at 31st March 2025 (₹ lakhs): Blue — Equity Shares of ₹100 40.000, 10% Debentures 15.000, General Reserves 1.500, Retirement Gratuity Fund 3.450, Trade Payables 7.400, Other current liabilities 1.240, Short-term provisions 0.710; Goodwill 8.750, PPE 35.650, Inventories 8.890, Trade Receivables 13.535, Cash in hand 0.485, Bank 1.990. Yellow — Equity Shares of ₹100 28.000, 8% Debentures 8.000, General Reserves 0.670, Retirement Gratuity Fund 1.300, Trade Payables 4.250, Other current liabilities 0.880, Short-term provisions 0.320; Goodwill 1.795, PPE 31.260, Inventories 4.800, Trade Receivables… - PYQ May 2025, Q4 · Marks: 14 · Topic: Journal Entries to close the books of Vendor Company. Why practise it: Rank 5 topic (Journal Entries to close the books of Vendor Company); PYQ May 2025.
The following is summarized Balance Sheet of Pickles Ltd. as on 31/03/2025. Equity and Liabilities: Share Capital 11,00,000 (6,000 Equity Shares of ₹100 each = 6,00,000; 5,000 6% Preference Shares of ₹100 each = 5,00,000); Reserves and Surplus 2,10,000 (General reserve 1,00,000; P&L account 1,10,000); Long term borrowings 1,00,000 (8% Debentures); Long term Provisions 60,000 (Retirement Gratuity Fund); Trade Payables 1,75,000; Other Current Liabilities 65,000; Total 17,10,000. Assets: PPE 7,50,000 (Land and Building 3,50,000, Plant and Machinery 3,00,000, Furniture and Fittings 1,00,000); Intangible assets 75,000 (Patents); Inventories… - RTP September 2025, Q15 · Marks:Not stated in source · Topic: Introduction. Why practise it: Rank 389 topic (Introduction); RTP September 2025.
X Co. Ltd. (share capital ₹50 lakhs, equity shares of ₹10 each) was taken over by Y Co. Ltd. X Co. Ltd. has General Reserve ₹10,00,000 and Profit and Loss account Cr. ₹5,00,000. Y Co. Ltd. issued 11 equity shares of ₹10 each for every 10 shares of X Co. Ltd. Pass the journal entries in Y Co. Ltd.'s books for the shares issued under the Pooling of Interests method.
Internal Reconstruction: 10 must-practice questions
Accounting for Reconstruction of Companies, Module 3. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- MTP May 2026 Set 1, Q4 · Marks: 14 · Topic: Alteration of Share Capital. Why practise it: Rank 2 topic (Alteration of Share Capital); MTP May 2026 Set 1.
4. Following is the Balance Sheet of Tourna Limited as at 31st March, 2025: Particulars Note ₹ Equity and Liabilities 1. Shareholders' funds A. Share Capital 1 24,00,000 B. Reserves and Surplus 2 (9,10,000) 2. Non-current liabilities A. Long-term borrowings 3 3,20,000 3. Current liabilities A. Trade Payables 1,15,000 B. Short Term Borrowings – Bank Overdraft 1,40,000 C. Other current liabilities 4 32,000 D. Short term provisions 5 42,000 Total 21,39,000 Assets 1. Non-current assets A. Property, Plant and Equipment 6 7,80,000 B. Intangible Assets 7 1,70,000 C. Non-Current Investments 8 1,80,000 2. Current Assets A. Inventory 5,12,000 B. Trade… - MTP January 2026 Set 1, Q4(b) · Marks: 8 · Topic: Methods of internal reconstruction. Why practise it: Rank 29 topic (Methods of internal reconstruction); MTP January 2026 Set 1.
Summarized Balance Sheet of Vijay Ltd. as on 31st March, 2025: Equity Shares of ₹10 each 3,50,000; 8% Cumulative Preference Shares of ₹100 each 1,75,000; 6% Debentures of ₹100 each 1,40,000; Sundry Creditors 1,75,000; Provision for taxation 3,500; Total 8,43,500. Assets: PPE 4,37,500; Investments (Market value ₹33,250) 35,000; Current Assets 3,50,000; P&L A/c (Dr.) 21,000; Total 8,43,500. Scheme of Internal Reconstruction approved and effective 31st March, 2025: (1) Investments brought to market value; (2) Taxation liability settled at ₹5,250 out of Current Assets; (3) balance of P&L written off; (4) equity shares reduced to ₹4 each; (5)… - MTP January 2026 Set 2, Q4 · Marks: 14 · Topic: Alteration of Share Capital. Why practise it: Rank 2 topic (Alteration of Share Capital); MTP January 2026 Set 2.
Summarized Balance Sheet of Star Ltd. as on 31st March, 2025: 15,000 8% Preference shares of ₹50 each 7,50,000; 18,750 Equity shares of ₹50 each 9,37,500; Profit and Loss A/c (Dr.) (5,63,750); Loan 7,16,250; Trade Payables 2,58,750; Other Liabilities 43,750; Total 21,42,500. Assets: Building at cost less depreciation 5,00,000; Plant at cost less depreciation 3,35,000; Trademarks and goodwill at cost 3,97,500; Inventory 5,00,000; Trade Receivables 4,10,000; Total 21,42,500. (Preference dividend in arrears 5 years.) Scheme of reconstruction: (i) equity shares reduced ₹50→₹5, shareholders subscribe 3 new equity shares of ₹5 for each held; (ii)… - MTP September 2025 Set 1, Q4 · Marks: 14 · Topic: Alteration of Share Capital; Methods of internal reconstruction. Why practise it: Rank 2 topic (Alteration of Share Capital); MTP September 2025 Set 1; covers 2 mapped topics.
Sky Limited has decided to reconstruct the Balance Sheet since it has accumulated huge losses. The following is the balance sheet of the company as on 31st March, 2025 before reconstruction (₹ in lakh): Share Capital 4,200; Reserves and Surplus (1,566); Long term Borrowings 2,100; Trade Payables 306; Other Liabilities 72; Total 5,112. Assets: PPE 2,250; Current Investments 600; Inventories 900; Trade Receivables 1,350; Cash and Cash Equivalents 12; Total 5,112. Notes to Accounts: Share Capital — Authorised: 600 lakh shares of ₹10 each 6,000; 24 lakh, 8% Preference Shares of ₹100 each 2,400; Total 8,400. Issued, Subscribed and Paid up: 300… - PYQ May 2026, Q3(b) · Marks: 8 · Topic: Alteration of Share Capital. Why practise it: Rank 2 topic (Alteration of Share Capital); PYQ May 2026.
Given below is the Balance Sheet of ABC Ltd. as at March 31, 2026: Share Capital ₹18,50,000; Reserve and Surplus (₹6,53,000); Long-term borrowings ₹6,78,000; Trade Payables ₹3,57,000; Other Current Liabilities ₹85,000; Total ₹23,17,000. Assets: PPE ₹9,78,000; Intangible assets ₹4,50,000; Inventories ₹5,39,000; Trade Receivables ₹3,50,000; Total ₹23,17,000. Notes to Accounts: Share Capital – 21,000 Equity Shares of ₹50 each ₹10,50,000; 16,000, 8% Cumulative Preference Shares of ₹50 each ₹8,00,000 (preference dividend in arrears for 3 years); Total ₹18,50,000. Reserve and Surplus – Debit balance of P&L Account (₹6,53,000). Long-term borrowings… - RTP May 2026, Q19 · Marks:Not stated in source · Topic: Alteration of Share Capital. Why practise it: Rank 2 topic (Alteration of Share Capital); RTP May 2026.
Following is the Balance Sheet of Ellora Limited as at 31st March, 2025: Particulars Note Amount (₹) Equity and Liabilities Shareholders' Funds: Share Capital 1 46,00,000 Reserves and Surplus 2 (21,40,000) Non-current Liabilities: Long Term borrowings 3 15,00,000 Current Liabilities: Trade Payables 12,00,000 Short Term Borrowings – Bank Overdraft 7,80,000 Other Current Liabilities 4 4,90,000 Short Term Provisions – Provision for Taxation 4,00,000 Total 68,30,000 Assets: Property, Plant and Equipment 5 23,00,000 Intangible Assets 6 6,70,000 Non-current Investments 7 2,20,000 Inventories 17,00,000 Trade Receivables 19,40,000 Total 68,30,000… - PYQ January 2026, Q2 · Marks: 14 · Topic: Alteration of Share Capital. Why practise it: Rank 2 topic (Alteration of Share Capital); PYQ January 2026.
The business of MA Limited was being carried on continuously at losses. Extracts from its Balance Sheet as at 31st March, 2025: PPE ₹6,50,000; Investments ₹2,55,000; Stock ₹5,10,000; Trade Receivables ₹3,40,000; Cash & Cash Equivalents ₹70,000; P&L A/c debit balance ₹3,25,000; Total ₹21,50,000. Equity and Liabilities: 10,000 Equity Shares @ ₹100 ₹10,00,000; 40,000, 8% Cumulative Preference Shares @ ₹10 ₹4,00,000 (dividends in arrears 3 years); 10% Debentures ₹2,00,000; Unsecured Loans (from directors) ₹80,000; Trade Payables ₹4,10,000; Outstanding interest on debentures ₹60,000; Total ₹21,50,000. Scheme of reconstruction (court-approved):… - MTP January 2025 Set 2, Q3(b) · Marks: 10 · Topic: Alteration of Share Capital. Why practise it: Rank 2 topic (Alteration of Share Capital); MTP January 2025 Set 2.
The following information of Rocky Ltd. as at March 31, 2024 (₹ in lacs): Fully paid equity shares of ₹10 each 500; Capital Reserve 6; 12% Debentures 400; Debenture Interest Outstanding 48; Trade payables 165; Directors' Remuneration Outstanding 10; Other Outstanding Expenses 11; Provisions 33. Assets: Goodwill 15; Land and Building 184; Plant and Machinery 286; Furniture and Fixtures 41; Inventory 142; Trade receivables 80; Cash at Bank 27; Discount on Issue of Debentures 8; Profit and Loss Account 390. The following scheme of internal reconstruction was framed, approved by the Tribunal and all the concerned parties, and implemented: (i)… - MTP September 2025 Set 2, Q6(b) · Marks: 5 · Topic: Methods of internal reconstruction. Why practise it: Rank 29 topic (Methods of internal reconstruction); MTP September 2025 Set 2.
X Ltd. had ₹1,00,000 equity share capital divided into 1,000 shares of ₹100 each out of which ₹80 per share was called up and paid up. It has 1,500 cumulative preference shares of ₹100 each fully paid up. Intangible assets include Goodwill of ₹80,000 and patents of ₹27,800. Preference dividends are in arrears of ₹33,000. You are required to show the entries (Ignore dates) under each of the following conditions: (i) If X Ltd. resolves to subdivide the equity shares into 10,000 equity shares of ₹10 each of which ₹8 per share is called up and paid up. (ii) If X Ltd. resolves to convert its 1,000 equity shares of ₹100 each (assume fully-paid)… - PYQ September 2025, Q6(b) · Marks: 4 · Topic: Variation of Shareholders Rights. Why practise it: Rank 60 topic (Variation of Shareholders Rights); PYQ September 2025.
Megha Limited scheme of reconstruction, effective 1st April 2025: (i) 9% Debenture holders (₹5,00,000) accept 25% in cash and take over Plant & Machinery of ₹2,85,000 in full settlement. (ii) Furniture & Fixtures (book ₹5,50,000) written down to ₹4,45,000. (iii) Freehold Premises (book ₹9,25,000) appreciated by ₹75,000. (iv) Capital commitments ₹4,50,000, to be cancelled on payment of 5% penalty. (v) Write off P&L debit balance ₹1,15,000. (vi) Shortfall, if any, can use General Reserve balance ₹90,000. Pass journal entries.
Branch Accounting — Accounting for Branches including Foreign Branches: 10 must-practice questions
Accounting for Branches including Foreign Branches, Module 3. Chosen from every MTP, RTP and PYQ, ranked by how heavily the topic has been examined. Answers are on the interactive page.
- MTP May 2026 Set 1, Q2(b) · Marks: 7 · Topic: Accounting for Dependent Branches. Why practise it: Rank 6 topic (Accounting for Dependent Branches); MTP May 2026 Set 1.
Jolly Industries of Delhi is a trader in spices. It has a branch at Jalandhar to which Head office invoice goods at 20% on sales. The Jalandhar branch sells spices both on cash and credit. Branch remit all the cash received to Head Office Bank account, thus all expenses of branch are also directly paid from head office. From the following information given, Prepare Branch Accounts in the Head office ledger using Stock and Debtors Method. Branch does not maintain any books of account, but send fortnightly returns to Head office. Stock at Jalandhar as on 1st April, 2025 (Cost Price) 1,00,000 Sundry Debtors at Jalandhar as on 1st April, 2025… - MTP May 2026 Set 2, Q2(b) · Marks: 7 · Topic: Accounting for Dependent Branches. Why practise it: Rank 6 topic (Accounting for Dependent Branches); MTP May 2026 Set 2.
On 31st March, 2026 Delhi Branch submits the following Trial Balance to its Head Office at Mumbai: Debit Balances ₹ in lacs Furniture and Equipment 36 Depreciation on furniture 4 Salaries 50 Rent 20 Advertising 12 Telephone, Postage and Stationery 6 Sundry Office Expenses 2 Stock on 1st April, 2025 120 Goods Received from Head Office 576 Debtors 40 Cash at bank and in hand 16 Carriage Inwards 14 Total 896 Credit Balances Outstanding Expenses 6 Goods Returned to Head Office 10 Sales 720 Head Office 160 Total 896 Additional Information: Stock on 31st March, 2026 was valued at ₹124 lacs. On 29th March, 2026 the Head Office dispatched goods… - MTP January 2026 Set 2, Q2(b) · Marks: 7 · Topic: Introduction. Why practise it: Rank 32 topic (Introduction); MTP January 2026 Set 2.
Care, a retail business, opened a branch Omega on 1st January, 2025; all branch sales on credit. Goods supplied from Head Office, invoiced at 10% above cost. Transactions (Jan/Feb/March 2025): Goods sent to Branch (purchase price) 60,000 / 75,000 / 90,000; Sales as per branch monthly report 57,000 / 63,000 / 82,500; Cash received from debtors and remitted to HO 30,000 / 76,500 / 52,500; Returns to HO (invoice price) 1,800 / 900 / 3,600. Branch closing stock at 31st March, 2025: ₹80,100 at invoice-to-branch price. Record in HO books, showing balances as on 31st March, 2025 and the branch gross profit for the three months. - MTP January 2026 Set 1, Q6(c) · Marks: 6 · Topic: Introduction. Why practise it: Rank 32 topic (Introduction); MTP January 2026 Set 1.
Smart Limited (Indian Company) has a Branch at New York. Balances (USD): Debit — Expenditure (excl. depreciation) 1,03,095; Cash & bank 2,175; Debtors 7,365; Fixed Assets (Gross) 34,200 (depreciation rate 20%); Inventory 'P' 5,520; Inventory 'Q' 1,035. Credit — Incomes 1,32,000; Creditors 15,570; HO Control A/c 5,820. Average exchange rate during the year: 1 USD = ₹56. Fixed assets purchased at 1 USD = ₹55. Closing rate: 1 USD = ₹58. Stock 'P': cost USD 5,520 (purchase rate ₹56.50), NRV ₹2,85,000. Stock 'Q': carried at NRV USD 1,035 (cost USD 1,065, purchase rate ₹53). Branch Control A/c per HO books ₹2,66,265. Show how this is reflected in… - MTP May 2025 Set 2, Q3(a) · Marks: 7 · Topic: Accounting for Dependent Branches. Why practise it: Rank 6 topic (Accounting for Dependent Branches); MTP May 2025 Set 2.
Alpha Ltd. has a retail shop under the supervision of a manager. The ratio of gross profit at selling price is constant at 25 per cent throughout the year to 31st March, 2025. Branch manager is entitled to a commission of 10 per cent of the profit earned by his branch, calculated before charging his commission but subject to a deduction from such commission equal in 25 per cent of any ascertained deficiency of branch stock. All goods were supplied to the branch from head office. The following details for the year ended 31st March, 2025 are given as follows: Particulars ₹ Particulars ₹ Opening Stock (at cost) 74,736 Chargeable expenses 49,120… - PYQ May 2026, Q6(c) · Marks: 6 · Topic: Adjustment and Reconciliation of Branch& Head Office Accounts. Why practise it: Rank 21 topic (Adjustment and Reconciliation of Branch& Head Office Accounts); PYQ May 2026.
(i) Why goods are marked on invoice price by the head office while sending goods to the branch? (ii) Rama Ltd. has a branch at Delhi, that closes its books of accounts every year on 31st March. This is an independent branch, which maintains comprehensive books of accounts for recording their transactions. You are required to show Journal Entries in the books of branch on 31st March, 2026 to rectify or adjust the following: (A) Head Office allocates ₹2,70,000 to the Branch as Head Office Expenses, not yet recorded by Branch. (B) Depreciation of Branch Fixed Assets, accounts kept by Head Office, not yet recorded in Branch Books ₹2,30,000. (C)… - MTP January 2025 Set 1, Q6(c) · Marks: 6 · Topic: Adjustment and Reconciliation of Branch& Head Office Accounts. Why practise it: Rank 21 topic (Adjustment and Reconciliation of Branch& Head Office Accounts); MTP January 2025 Set 1.
Give Journal Entries in the books of Branch A to rectify or adjust the following: (i) Head Office expenses ₹3,500 allocated to the Branch, but not recorded in the Branch Books. (ii) Depreciation of branch assets, whose accounts are kept by the Head Office not provided earlier for ₹1,500. (iii) Branch paid ₹2,000 as salary to a H.O. Inspector, but the amount paid has been debited by the Branch to Salaries account. (iv) H.O. collected ₹10,000 directly from a customer on behalf of the Branch, but no intimation to this effect has been received by the Branch. (v) A remittance of ₹15,000 sent by the Branch has not yet been received by the Head… - RTP May 2026, Q20 · Marks:Not stated in source · Topic: Foreign Branches; Accounting for Foreign Branches; Techniques for Foreign Currency Translation. Why practise it: Rank 62 topic (Foreign Branches); RTP May 2026; covers 3 mapped topics.
Following is the Trial Balance as on 31st December, 2025 of the Cambridge Branch of Harry Limited whose Head Office is situated at Pune, India. Particulars Dr € Cr € Furniture 80,000 Stock as on 1st January, 2024 36,000 Debtors 16,000 Cash at Bank 3,000 Head Office A/c 80,000 Creditors 12,000 Sales 2,80,000 Expenses Goods sent from Head Office 12,000 Total 3,72,000 3,72,000 In the books of Head Office, the Branch Account stood as under: Cambridge Branch Account To Balance b/d ₹ in Lakhs 27.00 To Goods sent to Branch 180.00 By Bank 146.00 By Balance c/d 61.00 Total 207.00 / 207.00 Additional Information: (1) Goods are sent to the branch at… - MTP September 2024 Set 1, Q6(c) · Marks: 6 · Topic: Foreign Branches; Accounting for Foreign Branches. Why practise it: Rank 62 topic (Foreign Branches); MTP September 2024 Set 1; covers 2 mapped topics.
Karan Enterprises having its Head Office in Mangalore, Karnataka has a branch in Greenville, USA. Following is the trial balance of Branch as at 31-3-2024 ($): Fixed assets 8,000 Dr.; Opening inventory 800 Dr.; Cash 700 Dr.; Goods received from Head Office 2,800 Dr.; Sales 24,050 Cr.; Purchases 11,800 Dr.; Expenses 1,800 Dr.; Remittance to head office 2,450 Dr.; Head office account 4,300 Cr. (Total 28,350 both sides). (i) Fixed assets were purchased on 1st April, 2020. (ii) Depreciation at 10% p.a. straight line method on fixed assets. (iii) Closing inventory at branch is $700 as on 31-3-2024. (iv) Goods received from Head Office (HO) were… - MTP January 2025 Set 2, Q6(c) · Marks: 4 · Topic: Methods of Charging Goods to Branches. Why practise it: Rank 72 topic (Methods of Charging Goods to Branches); MTP January 2025 Set 2.
Why goods are marked on invoice price by the head office while sending goods to the branch?
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