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SOLUTION: TEST 1
Solution 3
Alpha Ltd.: Balance Sheet as on 31st March, 2021
Particulars Notes Rs.
Equity and Liabilities
(1) Shareholders’ funds
a) Share capital 1 49,95,000
b) Reserves and Surplus 2 14,83,500
(2) Non-current liabilities
a) Long-term borrowings 3 13,17,500
(3) Current liabilities
a) Trade Payables 8,00,000
b) Other current liabilities 4 37,500
c) Short-term provisions 5 6,40,000
d) Short-term borrowings 2,00,000
Total 94,73,500
Assets
(1) Non Current assets
a) PPE & Intangible
(i) PPE 6 56,25,000
(2) Current assets
a) Inventories 7 12,50,000
b) Trade receivables 8 10,00,000
c) Cash and cash equivalents 9 13,85,000
d) Short-term loans and advances 2,13,500
Total 94,73,500
Notes to accounts
Particulars Rs.
1. Share Capital
Equity share capital
Issued & subscribed & called up
50,000 Equity Shares of Rs.100 each
(of the above 10,000 shares have been issued for 50,00,000
consideration other than cash)
Less: Calls in arrears (5,000) 49,95,000
Total 49,95,000
2. Reserves and Surplus
General Reserve 10,50,000
Add: Current year transfer 20,000 10,70,000
Profit & Loss balance
Profit for the year 4,33,500
Less: Appropriations:
Transfer to General reserve (20,000) 4,13,500
Total 14,83,500
3. Long-term borrowings
Secured Term Loan
State Financial Corporation Loan (7,50,000-37,500) 7,12,500
(Secured by hypothecation of plant and machinery
Unsecured Loan 6,05,000
Total 13,17,500
The copyright of these notes is with C.A. Nitin Goel
No part of these notes may be reproduced in any manner without his prior permission in writing.
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4. Other current liabilities
Interest accrued but not due on loans (SFC) 37,500 37,500
5. Short-term provisions
Provision for taxation 6,40,000
6. PPE
Land and Building 30,00,000
Less: Depreciation (2,50,000) 27,50,000
Plant & Machinery 35,00,000
Less: Depreciation (8,75,000) 26,25,000
Furniture & Fittings 3,12,500
Less: Depreciation (62,500) 2,50,000
Total 56,25,000
7. Inventories
Raw Materials 2,50,000
Finished Goods 10,00,000
Total 12,50,000
8. Trade receivables
Trade Rec-: Due less than 6 months 7,40,000
Trade Rec-: Due more than 6 months 2,60,000
Total 10,00,000
9. Cash and cash equivalents
Cash at bank
With Scheduled Banks 12,25,000
With others (Omega Bank Ltd.) 10,000 12,35,000
Cash in hand 1,50,000
Total 13,85,000
Solution 4
(i) Current Liabilities/ Other Current Liabilities
(ii) Shareholders' Fund / Reserve & Surplus
(iii) Contingent Liabilities and Commitments
(iv) Non Current Liabilities/ Long Term Borrowings
Solution 5
As per AS 13 ‘Accounting for Investments’, where long-term investments are reclassified as current
investments, transfers are made at the lower of cost and carrying amount at the date of transfer.
And where investments are reclassified from current to long term, transfers are made at lower of cost and
fair value on the date of transfer.
Accordingly, the re-classification will be done on the following basis:
a) In this case, carrying amount of investment on the date of transfer is less than the cost; hence this re-
classified current investment should be carried at Rs. 6.5 lakhs in the books
b) The carrying / book value of the long term investment is same as cost i.e. Rs. 7 lakhs. Hence this long
term investment will be reclassified as current investment at book value of Rs. 7 lakhs only.
c) In this case, reclassification of current investment into long-term investments will be made at Rs. 11
lakhs as cost is less than its market value of Rs. 12 lakhs.
d) In this case, market value is Rs. 13 lakhs which is lower than cost of Rs. 15 lakhs. The reclassification
of current investment as long-term investments will be made at Rs. 13 lakhs

Solution 6
1. c
Explanation:
Cost of bonds = (1,10,000/ 2,000) x 200 = 11,000
Sale proceeds = 200 X ₹ 99 = 19,800
The copyright of these notes is with C.A. Nitin Goel
No part of these notes may be reproduced in any manner without his prior permission in writing.
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Profit element = ₹ 8,800

2. c
3. b
4. a

The copyright of these notes is with C.A. Nitin Goel