SIRC PRACTICE TEST SERIES FOR SEP
2025 EXAMINATION -19-07-2025
INTERMEDIATE COURSE –Group 1: Advanced Accounting
Time: 01:30 hours Max: 50 Marks
Part A Multiple choice questions
Q No. Ans
1i) A
1ii) C
1iii) D
2 B
3 B
4 A
5 B
6 A
7 A
8 B
9 C
10 D
(15marks)
Part B Practical questions
1.
(i) Annual lease rent
Total lease rent = 130% of 1,50,000 output during period lease / Total output
= 130% of 1,50,000 x (40,000 +50,000+ 60,000)/(40,000 + 50,000 + 60,000 + 80,000
+ 70,000)
= 1,95,000 x 1,50,000 units/3,00,000 units
= 97,500
Annual lease rent = 97,500 / 3 = 32,500
(ii) Lease rent Income to be recognized in each operating year
Total lease rent should be recognised as income in proportion of output during lease
period, i.e. in the proportion of 40 : 50 : 60. Hence income recognised in years 1, 2
and 3 will be as: Year 1 26,000, Year 2 32,500 and Year 3 39,000.
(iii) Deprecation for three years of lease
Since depreciation in proportion of output is considered appropriate, the depreciable
amount 1,50,000 should be allocated over useful life 5 years in proportion of output,
i.e.in proportion of 40 : 50 : 60 : 80 : 70. Depreciation for year 1 is 20,000, year 2 =
25,000 andyear 3 = 30,000.
(5 marks)
2.
Annual taxable income (₹ in lakhs)
2023-24
Q1 700
Q2 Q3 300
Q4 (Bf) -100
900 800
1800 ------------------> CY profit
Less: B/f loss eligible for set off
----------------> Past year
(700 X 90%) 630 loss
Taxable income 1170
Tax on the income = 1170 X 33%=386.10
Avg annual IT rate = 386.10/1800 X 100=21.45%
Tax exp
Q1 (700 X 21.45%) 150.15
Q2 (300 X 21.45%) 64.35
Q3 (-100 x 21.45%) -21.45 tax saving
Q4 (900 X 21.45% 193.05
386.1
(5 marks)
3)Answer
Desire Limited amortised 20,00,000 per annum for the first two years i.e. 40,00,000. The
remaining carrying cost can be amortized during next 5 years on the basis of net cash flows
arising from the sale of the product. The amortisation may be found as follows:
Year Net cash flows Amortisation ratio Amortisation
123 - - 45,00,000 0.200 0.200 0.225 Amount
4 42,00,000 0.21 20,00,000
5 40,00,000 0.20 20,00,000
67 38,00,000 0.19 0.175 13,50,000
35,00,000 12,60,000
12,00,000
11,40,000
10,50,000
It may be seen from above that from third year onwards, the balance of carrying amount i.e.,
60,00,000 has been amortized in the ratio of net cash flows arising from the product of
Desire Ltd. (5 marks)
4)
Raw Material A `
Cost Price 150
Add: Freight Inward 10
Cost per unit 160
Replacement cost per unit of raw 152
material
As per AS 2 (Revised) “Valuation of Inventories”, the inventories are to be valued at lower of
cost or net realizable value. Materials and other supplies held for use in the production of
inventories are written down below cost if the selling price of finished product containing the
material does not exceed the cost of the finished product. In the given case, net realizable
value of the Product ‘B’ (Finished Goods) is ` 360 per unit which is less than its cost ` 365 per
unit. Raw Material is to be valued at replacement cost.
Value of the closing stock of raw material on 31/03/2022 would be ` 1,14,000 (750 units X
`152 per unit).
Finished Goods B `
Materials consumed 225
Direct Labour 75
Direct Variable overheads 60 5
Fixed overheads (` 365
1,00,000/20,000 units) 360
Cost per unit
Net realizable value per unit
As per AS 2 (Revised) “Valuation of Inventories”, the inventories are to be valued at lower of
cost or net realizable value. Hence, Finished Goods are to be valued at NRV since NRV is
less than the cost.
Value of the closing stock of Finished goods as on 31/03/2022 would be ` 5,76,000 (1,600
units X ` 360 per unit).
(5 marks)
5)
Cash Flow Statement for the year ended 31st March,2021
Particulars
I Cash Flow from Operating Activities
Net Profit made during the year (W.N.1)
Add: Depreciation on Machinery (W.N.2) 2, 60, 000
Add: Depreciation on land and building 55, 000
Operating profit before change in working capital 20, 000
Add: Decrease in stock (3,00,000-2,80,000) 3, 35, 000
Less: Increase in sundry debtors (4,20,000-4,00,000) 20,000
Less: Decrease in sundry creditors (5,00,000-4,00,000) (20, 000)
Cash flow from operating activities (1, 00, 000)
Less: Income tax paid (W.N.3) ________
Net cash generated from operating activities 2,35,000
(45,000)
1, 90, 000
II. Cash Flow from Investing Activities
Purchase of machinery (1, 25, 000)
Sale of Investment (50,000+10,000)
60,000
Net cash generated from investing activities
(65, 000)
III.
Cash Flow from Financing Activities
Issue of equity shares (11,50,000-10,00,000) 1, 50, 000
Repayment of long term loan from bank (5,00,000- (1, 00, 000)
4,00,000) (1, 00, 000)
Dividend Paid
Net cash used in Financing Activities (50, 000)
Net increase in cash and cash equivalent 75, 000
Add: cash and cash equivalent at the beginning of the
5, 00, 000
period(2,00,000+3,00,000)
Cash and cash equivalent at the end of the period
5, 75, 000
(1,65,000+ 4,10,000)
Working notes:
1. Net profit(before tax) made during the year
Increase in profit & loss balance (1,80,000-1,50,000) 30,000
Add: Transfer to General reserve (3,00,000-2,50,000) 50,000
Add: Provision for taxation made during the year 55,000
Add: Proposed dividend provided during the year(W.N.4) 1,25,000
2,60,000
2. Machinery Account
To Balance b/d 7,50,000 ByBank(machinery sold) 55,000
To Bank (machinery 1,25,000 By Balancec/d 8,20,000
purchased)
8, 75, 000 8,75,000
3. Provision for Taxation
To Cash (Bal. fig.) 45,000 ByBalanceb/d 50,000
To Balance c/d 60,000 ByProfitandLoss A/c 55,000
1, 05, 000 1,05,000
4. Proposed DividendA/c
To Bank 1,00,000 By Balanceb/d 1,00,000
To Balance c/d 1,25,000 By Profit &LossA/c (Bal. 1,25,000
2,25,000 Fig.)
2,25,000
(10 marks)
6)
in crores
Profit before V.R.S. payments but after depreciation 75
VRS payments 32.1
Profit before tax 42.9
Provision for tax 15
PAT 27.9
Number of Equity shares 93 /10 9.3
Basic EPS = NP attributable to Equity shareholders / Number of shares 3
(5 marks)
