Account heads Retained Earnings Accumulated depreciation Plant & Machinery Capital Work-in-Progress Furniture & Equipment Patent

Brand Software Website Sales Opening stock Purchases Rent earned Interest on investment Advance Tax Loans to Employees Interest on loan to employees Investment Building on operating lease granted Repairs & maintenance Audit Fees Trade payables Trade Receivables Cash on hand Demand deposit Term deposits Security Deposits taken Working Capital Loan 10% Term Loans

In Rs. Cr. In Rs. Cr. 3400 3400 Equity 2000 2000 Equity 5000 5000 Asset 2000 2000 Asset 1000 1000 Asset 200 200 Asset 500 500 Asset 20 20 Asset 2 2 Asset 12000 12000 Income 500 500 Asset /expense 7000 7000 Expense 10 10 Income 100 100 Income 1000 1000 asset 200 200 asset 20 0 20 income 1500 1500 asset 100 100 asset 130 130 expense 5 5 expense 400 400 liability 500 500 asset 13 13 asset 200 200 asset 1000 1000 asset 240 240 liability 700 700 liability 2000 2000 liability 41740 20870 20870 0

Revised Trial Balance Account heads Retained Earnings Loss on sale of asset Accumulated depreciation Plant & Machinery Capital Work-in-Progress

In Rs. Cr. In Rs. Cr. 3400 3400 26.25 2000 2415 now it is chnaged 5000 4800 2000 2000

Furniture & Equipment Patent Brand Software Website Sales Opening stock Purchases Rent earned Interest on investment Depreciation Advance Tax Loans to Employees Interest on loan to employees Investment Building on operating lease Repairs & maintenance Audit Fees Trade payables Trade Receivables Cash on hand Demand deposit Term deposits Security Deposits Working Capital Loan 10% Term Loans

1000 200 500 20 2 12000 500 7000 10 100

1000 200 500 20 2 12000 500 7000 10 100 468.8 1000 200 0 1500 100 130 5

1000 200 20 20 1500 100 130 5 400 400 500 500 13 13 320 320 1000 1000 240 240 700 700 2000 2000 41860 21285 21285 0

Tangible asset Non-current asset Tangible assetaaset under construction Non-current asset Tangible asset Non-current asset Intangible asset Non-current asset Intangible asset Non-current asset Intangible asset Non-current asset Intangible asset Non-current asset Asset /expense Expense

Current asset: An Asset is classified as cu following four charcterist 1. It is expected to normal operating cycle
Inventories of raw material s work

current asset non-current asset non-current asset non-current asset expense expense monetary liability monetary assets monetary assets monetary assets monetary assets monetary liability monetary liability monetary liability

2. It is held for trading 3. it is expected reporting date 4. It is cash and cash equi

now it is chnaged to closing after computation of depreciation

rent asset: Asset is classified as current asset if any of the owing four charcteristics is met :

is expected to be realised or consumed or sold with mal operating cycle

Current liability: A liability is classified as curren of the following four charcterist

tories of raw material s work-in-progress finished goods trade receivables

is held for trading is expected to be realised within 12 months after the orting date is cash and cash equivalents

1. 2. 3. it is expected to be settled w after the reporting date 4.

lassified as current liability if any ng four charcteristics is met :

to be settled within 12 months rting date

Asset Schedule Plant & Machinery Furniture Building on Operating Lease Plant & Machinery Furniture Building on Operating Lease

Original cost 5000 1000 100 6100 7.50% 10% 5% Gross Less Acc depn Net Block

Aditions/ Sales -200

-200

5900 2415 3485

P&M In Use Sold

4800 200

Profit / Loss on sale of plant and machinery Cost 200 Less accumulated depr -50 Less current depn 1.4.2010-30.6.2010 -3.75 Written Down value 146.25 Sale proceeds 120 Loss -26.25

Closing balance of accumulated depn= opening b

Depreciation 2010-11

Acc depn Acc depn Net 1.4.2010 31.3.2011 31.3.2011 363.75 1785 2095 2705 100.00 5.00 468.75 200 15 2000 300.00 20.00 2415 700.00 80.00 3485

360 3.75 363.75 Loss On sale of asset Bank Acc depn P&M Depreciation Dr To Accumulated Depn

1735 50 1785 26.25 120 53.75 200 468.75 468.75 Equity Asset Equity Asset Dr Dr Dr Cr

2705 146.25

decreased increased decreased decreased

mulated depn= opening balance+depreciation for year-acc depn on asset sold

decreased increased decreased decreased

set sold

Tangible Fixed Assets Depreciation Original cost

Refer to Points (i) &(ii) Addition Sale

Plant & Machinery Furniture & Equipment Building on Operating Lease Depreciation Accumulated depreciation Plant & Machinery In Use Asset sold Expense Equity

5000 1000 100

200

468.75 Include a new line depre 468.75 add this amount to accu

4800 200 5000

Accounting Entry for sale of asset on credit Receivables for sale of asset Asset Increased Accumulated Depreciation Equity decreased Loss on sale of Plant & Machinery Equity decreased Plant & machinery Asset decreased Point (iii) Amortisation Cost Patent 200 Brand 500 Software 20 Website 2

Dr Dr Dr Cr

120.00 53.75 26.25

Amortisation Amrotisation Acc 10 10 50 50 4 4 0.4 0.4 64.4 64.4

Accounting entry Amortisation Accumulation Amortisation

Expense Equity

Dr Cr

64.4

Depreciation during the year Accumulated Net Accumulated Depreciation Depreciation Balance on 1.4.2010 on 31.3.2011 363.75 1785 2095.00 100.00 200 300.00 5.00 15 20.00 468.75 2000 2415.00 de a new line depreciation his amount to accumulated depn

360.00 3.75 363.75

1735 50 1785

2095.00 53.75

200 Amortisation rate 5% 10% 20% 20%

Amrotisation

64.4

Revised Trial Balance Dr Cr Account heads In Rs. Cr. In Rs. Cr. Retained Earnings 3400 Accumulated depreciation Depreciation 468.75 Loss on sale of Machinery 26.25 Interest on Term Loan 150.00 Interest on Working Capital Loan 31.50 Outstanding Interest Receivables for sale asset 120 Plant & Machinery 4800 Amortisation 64.4 Accumulated amortisation Capital Work-in-Progress 2000 2000 Furniture & Equipment 1000 1000 Patent 200 200 Brand 500 500 Software 20 20 Website 2 2 Sales 12000 Opening stock 500 500 Purchases 7000 7000 Rent earned 10 Interest on investment 100 Advance Tax 1000 1000 Loans to Employees 200 200 Interest on loan to employees 20 0 Investment 1500 1500 Building on operating lease granted 100 100 Repairs & maintenance 130 130 Audit Fees 5 5 Trade payables 400 Trade Receivables 500 500 Cash on hand 13 13 Demand deposit 200 200 Term deposits 1000 1000 Security Deposits taken 240 Working Capital Loan 700 10% Term Loans 2000

3400 2415

181.50

64.4

12000

10 100

20

400

240 700 2000

21530.90 Profit and loss Statement for the year ended on 31.03.2011 Note Sales Other Income Expenses Purchases Changes in Stock in trade Other expenses Depreciation and Amortisation Interest Provisions PBT Current Tax 30 PAT

21530.90

Rs.in million 12000 230 7000 -480 161.25 533.15 181.5 17 7412.9 4817.1 144513% 337197%

Balance Sheet(IFRS Presentation) Assets Non Current Assets

Equity Equity Expense Equity ( decreased) Expense Expense Liability Asset Asset Expense Equity Asset Asset Asset Asset Asset Asset Income Asset /expense Expense Income Income asset asset income asset asset expense expense liability asset asset asset asset liability liability liability

Point (iv) & (v) Interest 10% term Loan Working capital loan

2000 1.7.2010 700 1.10.2010

Interest on Term Loan Interest on Working Capital Loan Outstanding Interest

Dr Dr Cr

Expense Expense Liability

Point (vi) Provision for restructuring costs Provision for product warrant Provision for bad debt

10 5 2

Point ( viii) Interest Accrued but not due Interest Earned

100 100

Note Other Income Interest on loan to employees Rent Earned Interest on Investment Interest Earned Note 2(Closing Stock) Opening Stock Purchases Sales Qty

20 10 100 100 230 Amount 50 500 500 7000 480 6520

Closing Stock

70

980

Int 150.00 31.5

181.50 150.00 31.50 181.50

Asset Dr Income Cr

Rate 10 14 13.583

14

Equity Share capital P&M Accumulated depreciation

3000 4000 1000 4000 4000

Additional informatiopn : P&M Depreciation to date - 200 ACC Depreciation on asset sold - 50 Depreciation till date on asset sold -20 Cost of asset sold 200 Sale price 150 Accounting entry (1) Depreciation DR Accumulated Depreciation Cr Revised Trial Balance Equity Share capital P&M Depreciation Accumulated depreciation

Expense Equity

200 200 3000

4000 200 1200 4200 4200

Accounting Entry ( 2) Bank / Receivables Dr Acc Depn 50+20 Plant & machinery Profit on sale of asset Revised Trial Balance Equity Share capital P&M Bank/ Receivable Depreciation

150 70

Asset created reversal of acc de 200 Asset decreased 20 Equity

3000 3800 150 200

Profit on sale of asset Accumulated depreciation

20 1130 4150 4150

Asset created reversal of acc depn Asset decreased

Calculation of Gross Profit Qty Opening stock New purchases Sold Profit 1000 20000 21000 18000 Rate Amount 2 2000 2.5 50000 52000 5 90000 38000

No this not correct because closing stock not accounted for Qty Opening stock New purchases Sold Clsoing stcok Profit 1000 20000 21000 18000 3000 21000 Rate 2 2.5 5 2.5 Amount 2000 50000 52000 90000 7500 FIFO 97500 45500

Machinery Cost Scrap 5% SLM depreciation estimated useful life 20 years 5 years expired Asset is sold at ther beginning of the 6th year for Rs. 1500 million What is profit / loss on sale Cost 3000 Accumulated depreciation for 5 years 712.5 WDV 2287.5 Sale proceeds 1500 -787.5

Rs. Million 3000

Matching concept

Loss Loss Loss

812.50 Ashish 787.5 Chandan 787.5 Akansha

0 million

Annual depreciation

142.5

Cost of machinery 1600 million Resdiual value 10% Estimated useful life 10 years The company follows SLM depreciation It sold the asset on expiry of 7 years. Sale proceeds 400 million Cost of machinery 1600 Resdiual value 10% Estimated useful life 10 years The company follows reducing balance method of depreciation It sold the asset on expiry of 7 years. Sale proceeds 400 million Solution WDV depreciation rate Depreciation Schedule Original cost Less Depreciation 1 WDV 1 Less Depreciation 2 WDV 2 Less Depreciation 3 WDV 3 Less Depreciation 4 WDV 4 Less Depreciation 5 WDV5 Less Depreciation 6 WDV 6 Less Depreciation 7 WDV 7

20.57% Acc depn 1600.00 329.07 329.07 1270.93 261.39 590.47 1009.53 207.63 798.10 801.90 164.93 963.03 636.97 131.01 1094.04 505.96 104.06 1198.10 401.90 82.66 1280.76 319.24

Trial Balance ( before sale) Machinery Accumulated depn Equity & Others net

Dr 1600

Cr 1280.76 319.24 1600 1600

Trial Balance ( Revised) Bank Profit on sale of asset Equity & Others net

400 80.76 319.24 400

400

Acc depn Dr Bank Dr Loss Dr Machinery Cr

1008 400 192 1600

Accumulated Depreciation Dr Bank Dr machinery Cr Profit on sale of asset Cr

1280.76 400.00 1600.00 80.76