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38

INTERMEDIATE (IPC) EXAMINATION: MAY, 2016

Weighted Average Cost = ` 8640/80 units = `108

Total Value = ` 108 x 20 units = ` 2,160
Value of inventory to be considered while preparing Balance Sheet as on 31 st
March, 2015 is, Cost or Net Realisable value whichever is lower i.e. ` 2,155.
(b) (i)

Operating Activities: c, e, f, g, j, m, o, s, t, w, x, aa & gg.

(ii) Investing Activities: a, h, k, l, p, q, u, v, bb & ee.

(iii) Financing Activities: b, d, i, n, r, y, z, cc & dd.
(iv) Cash Equivalent: ff.
19. (a) Depreciation per year = ` 1,20,000 / 10 = ` 12,000
Depreciation on SLM charged for three years = ` 12,000 x 3 years = ` 36,000
Book value of the computer at the end of third year = ` 1,20,000 ` 36,000
= ` 84,000.
Remaining useful life as per previous estimate = 7 years
Remaining useful life as per revised estimate = 5 years
Depreciation from the fourth year onwards = ` 84,000 / 5 = ` 16,800 per annum
(b) Total expected loss to be provided for Contract Price Total Cost
= ` 50,00,000 (21,00,000 + 31,50,000) = ` 2,50,000
Calculation for 2014-15 on 40% work
Contract Revenue

= ` 21,00,000

Contract Cost

= ` 21,00,000

Loss on contract

= ` 1,00,000

Expected loss recognized as per AS 7

= ` 2,50,000

Further provision required in respect of

Expected Loss (`2,50,000 - `1,00,000) = ` 1,50,000
In the Books of Five Star construction Limited
Profit & Loss A/c (Extract) for the year ended 31 st March 2015
Amount (`)
To Construction Costs
(for 40% work)
To Provision for Loss

21,00,000

Amount (`)
By Contract
Revenue

1,50,000 By Net Loss

22,50,000

20,00,000
2,50,000
22,50,000

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