CHAPTER
FINAL STATEMENTS OF COMPANIES
SECTION I: QUESTIONS - PRESENTATION OF ITEMS IN SCHEDULE III (DIVISION I) + OPERATING CYCLE:
Q.1. State under which head the following accounts should be classified in Balance Sheet, as per Schedule III of the Companies Act, 2013:
(i) Share application money received in excess of issued share capital.
(ii) Share option outstanding account.
(iii) Unpaid matured debenture and interest accrued thereon.
(iv) Uncalled liability on shares and other partly paid investments.
(v) Calls unpaid.
(vi) Intangible Assets under development.
(vii) Money received against share warrant.
(viii) Cash equivalents.
4 4.1
(RTP May 2015)/(MTP March 2019)/ (RTP May 2019) Ans.:
4.2
Q.2. State under which head these accounts should be classified in Balance Sheet, as per Schedule III of the Companies Act:
(i) Share application money received in excess of issued share capital.
(ii) Share option outstanding account.
(iii) Unpaid matured debenture and interest accrued thereon.
(iv) Uncalled liability on shares and other partly paid investments.
(v) Calls unpaid.
(vi) Intangible Assets under development.
(vii) Money received against share warrant.
(viii) Long-term maturity of finance lease obligation.
(4 Marks) (May 2014)
Ans.: Classification for the presentation in Schedule III to the Companies Act, 2013
Accounts Head
Q.3.
(a) Futura Ltd. had the following items under the head “Reserves and Surplus” in the Balance Sheet as on 31st March, 2013:
(
4.3
The company had an accumulated loss of ` 250 lakhs on the same date, which it has disclosed under the head “Statement of Profit and Loss” as asset in its Balance Sheet.
Comment on accuracy of this treatment in line with Schedule III to the Companies Act, 2013.
b) Sumedha Ltd. took a loan from bank for ` 10,00,000 to be settled within 5 years in 10 equal half yearly instalments with interest. First instalment is due on 30.09.2013 of ` 1,00,000.
Determine how the loan will be classified in preparation of Financial Statements of Sumedha Ltd. for the year ended on 31st March, 2013 according to Schedule III.
(RTP November 2013)/(RTP November 2017)
Ans.:
Q.4.
(
i) Vasudha Ltd. provides following information:
Raw Material stock holding period: 3.5 months
Work-in-progress holding period: 1 month
Finished goods holding period: 4.5 months
Debtors collection period: 6 months
You are required to compute the operating cycle of Vasudha Ltd. What would happen if the trade payables of the company are paid in 14 months-whether these should be classified as current or non-current liability?
(
ii) The management of Kshitij Ltd. contends that the work in progress is not valued since it is difficult to ascertain the same in view of the multiple processes involved. They opine that the value of opening and closing work in progress would be more or less the same. Accordingly, the management had not separately disclosed the work in progress in its financial statements. Comment in line with Schedule III.
(5 Marks) (November 2013) Ans.:
SECTION II: PROBLEMS - MANAGERIAL REMUNERATION:
PART I: Theory Questions
Q.5. The Companies Act, 2013 limits the payment of managerial remuneration.
What is the maximum managerial remuneration, which can be paid in case of a company consistently earning profits and has more than one managerial person?
(2 Marks) (November 2009)
Ans.: -
PART II:
Q.6. The Managing Director of A Ltd. is entitled to 5% of the annual net profits, as his remuneration, subject to a minimum of ` 25,000 per month. The net profits, for this purpose, are to be taken without charging income-tax and his remuneration itself. During the year, A Ltd. made net profit of ` 43,00,000 before charging MD’s remuneration, but after charging provision for taxation of ` 17,20,000.
Compute remuneration payable to the Managing Director.
(2 Marks) (June 2009)
Ans.:
Computation of remuneration of the Managing Director:
Particulars ` in Lacs
4.6
Q.7. From the following information of Alpha Ltd., calculate the managerial remuneration payable to the managing director of the company at the rate of 5% of the profits assuming that there is only one managing director in the company.
after considering the following:
[for the Purpose of Managerial Remuneration]
Managerial Remuneration- M.D.:
Working Note: Computation of Capital Profit on Sale of Fixed Assets: Particulars
4.7
Q.8. The following is the Draft Profit & Loss A/c of M Ltd., the year ended on 31st March, 20X1:
Depreciation on fixed assets as per Schedule II of the Companies Act, 2013 was ` 5,75,345.
You are required to calculate the maximum limits of the managerial remuneration as per Companies Act, 2013.
(MTP August 2018)
Ans.: Computation of Net Profit: ` `
Add:
Less: -
Q.9. Following is the draft Profit & Loss Account of × Ltd. for the year ended on 31st March, 2020:
Depreciation on Fixed Assets as per Schedule II of the Companies Act, 2013 was ` 6,51,750.
You are required to calculate the maximum limits of the managerial remuneration as per Companies Act, 2013.
Ans.:
(5 Marks) (November 2020)
Computation of net profit of × Ltd. as per the Companies Act, 2013
Particulars
Q.10. The following is the Draft Profit & Loss A/c of Brown Ltd. the year ended on 31st March,2020:
on fixed assets as per Schedule II of the Companies Act, 2013 was ` 5,15,675.
You are required to calculate the maximum limit of managerial remuneration as per Companies Act, 2013.
(5 Marks) (January 2021)
Ans.: Computation of net profit u/s 198 of the Companies Act, 2013
PART III:
Q.11. The following extract of Balance Sheet of × Ltd. (a non-investment company) was obtained: Balance Sheet (Extract) as on 31st March, 2015
`
4.11
You are required to compute Effective Capital as per the provisions of Schedule V to Companies Act, 2013. (RTP May 2015)
Ans.:
Computation of effective capital:
Particulars `
Q.12. X Ltd. a non-investment company has been incurring losses for the past few years. The company provides the following information for the current year:
`
X Ltd. has only one whole time director, Mr. Y.
You are required to calculate the amount of maximum remuneration that can be paid to him if no special resolution is passed at the general meeting of the company in respect of payment of remuneration for a period not exceeding three years. (4 Marks) (December 2021)
4.12
Ans.: Computation of effective capital and maximum amount of managerial remuneration: Particulars ( ` In lakhs)
Less
Note:
Remarks:
Q.13. Calculate the maximum remuneration payable to the Managing Director based on effective capital of a non-investment company for the year, from the information given below:
as per the Companies Act, 2013)
Q.14. Kumar Ltd., a non-investment company has been incurring losses for the past few years. The company provides the following information for the current year:
Kumar Ltd. has only one whole-time director, Mr. X.
You are required to calculate the amount of maximum remuneration that can be paid to him as per provisions of Part II of Schedule XIII, if no special resolution is passed at the general meeting of the company in respect of payment of remuneration for a period not exceeding three years.
(RTP Nov 2013)/(RTP November 2017)/ (RTP November 2018) (Figures 1.5 Times)
4.14
Ans.:
Computation of effective capital:
( `in lakhs)
Managerial remuneration: -
Q.15. The following extract of Balance Sheet of × Ltd. (a non-investment company) was obtained:
Balance Sheet (Extract) as on 31st March, 2017
`
`
each fully paid
` 80 paid-up
You are required to compute Effective Capital as per the provisions of Schedule V to Companies Act, 2013. (MTP March 2018)/(MTP March 2019)
Q.16. The following extract of Balance Sheet of Gaurav Ltd. was obtained: Balance Sheet (Extract) as on 31st March, 2018