hitechpathshala

Q. 1

To encourage industrial promotion, IDCI offers subsidy worth Rs. 50 lakhs to all new industries set up in the specified industrial areas. This grant is in the nature of promoter’s contribution. How such subsidy should be accounted in the books?

Credit it to capital reserve

Credit it as ‘other income’ in the profit and loss account in the year of commencement of commercial operations c

.Both (a) and (b) are permitted

Income from house property

Q. 2

Which of the following is an acceptable method of accounting presentation for a government grant relating to an asset?

Show the grant as part of Capital Reserve

Reduce the grant from the cost of the asset or show it separately as a deferred income on the Liability side of the Balance Sheet.

Show the grant as part of general Reserve

31st July, 2023

Q. 3

X Ltd. has received a grant of ₹ 20 crore for purchase of a qualified machine costing ₹ 80 crore. X Ltd has a policy to recognise the grant as a deduction from the cost of the asset. The expected remaining useful life of the machine is 10 years. Assume that there is no salvage value and the depreciation method is straight- line. The amount of annual depreciation to be charged as an expense in Profit and Loss Statement will be:

₹ 10 crore

₹ 6 crore

₹ 2 crore

₹ 8 crore

Q. 4

X Ltd has received a grant of ₹ 20 crore for purchase of a qualified machine costing ₹ 80 crore. X Ltd. has a policy to recognise the grant as deferred income. The expected remaining useful life of the machine is 10 years. Assume that there is no salvage value and the depreciation method is straight-line. The amount of other income to be to be recognised in Profit and Loss Statement will be:

₹ 10 crore

₹ 6 crore

₹ 2 crore

₹ 8 crore

Q. 5

Which of the following statement is correct:

In case of merger – ESH can be issued only equity shares as a part of Purchase consideration.

In case of purchase – ESH can be issued Preference shares also as a part of Purchase consideration.

Both (a) and (b) are correct.

Both (a) and (b) are incorrect.

Q. 6

State which statement is correct:

In case of merger – assets and liabilities can only be taken over at book values.

In case of purchase – assets and liabilities can be taken over at book values or agreed values.

Both (a) and (b) are correct.

Both (a) and (b) are incorrect.

Q. 7

State which statement is correct:

In case of merger – All Reserves and surplus of vendor company are taken over by Purchasing company.

In case of Purchase – None of the Reserves and surplus of vendor company are taken over by Purchasing company.

Both (a) and (b) are correct.

Only (a) is correct.

Q. 8

State which statement is incorrect:

In case of merger – We can issue either preference shares or equity shares to PSH.

In case of Purchase – We can issue either preference shares or equity shares to PSH.

In case of merger – We can issue only preference shares to PSH.

none of the above

Q. 9

What is accounting treatment of government grant refundable which was in the nature of promoters' contribution?

Debited to profit & loss account

Added in the Cost of Fixed asset

Reduced from Deferred Government Grant account

Reduced from Capital Reserve

Q. 10

A government grant that becomes refundable is treated as:

Ordinary item

Prior Period Item

Change in Accounting Policy

Extra Ordinary item

Q. 11

Which of the following statement is correct:

In case of merger – ESH can be issued only equity shares as a part of Purchase consideration.

In case of purchase – ESH can be issued Preference shares also as a part of Purchase consideration.

Both (a) and (b) are correct.

Both (a) and (b) are incorrect.

Q. 12

State which statement is correct:

In case of merger – assets and liabilities can only be taken over at book values.

In case of purchase – assets and liabilities can be taken over at book values or agreed values.

Both (a) and (b) are correct.

Both (a) and (b) are incorrect.

Q. 13

State which statement is correct:

In case of merger – All Reserves and surplus of vendor company are taken over by Purchasing company.

In case of Purchase – None of the Reserves and surplus of vendor company are taken over by Purchasing company.

Both (a) and (b) are correct.

Only (a) is correct.

Other Accounting Standards

Marks: 12

Which of the following statement is correct:

State which statement is correct:

State which statement is correct: