7/31/2019 SSF 2012-13
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QUEST TUTORIALS 1 Prelims
QUEST TUTORIALS: B-305, 3rd
floor, Rajdarshan Society, Behind ICICI ATM, Near Platform
No.1,Thane (W). Contact: 67120221 / 25394777 Website:
www.questclasses.com
SPECIAL STUDIES IN FINANCE
N.B.: 1) Section I is compulsory. (60 marks)
2) In Section II solve any 3 out of 4 questions. 2hrs.
Section I
1. Concepts (5)
(a) Segment Reporting
(b) Sweat Equity
(c) Wealth Maximization
(d) Non-monitory items as per Accounting standard (AS) 11.
(e) Return on Investment.
2. (A) Case study.
Answer the following questions with the help of the following.
(15)
Greenland Ltd is an extending business set up having sales
turnover of Rs. 3 Crores. It
wants to double its turnover in the coming years and is very
confident of achieving the same.The company produces and sells a
basic drug component, being the raw material for OTC
(over the counter) medicines.
The firm was set up 5 years ago, as partnership firm, but
converted itself into a company
2 years ago. The current capital employed of the company is
totally debt free at Rs. 2 crores
and hopes to raise it to Rs. 4.5 crores, the term loan applied
for being Rs. 2 crores.
The term lending institution offers the loan for 5 years tenure
@ rate of 10% p.a. being
advance towards purchase of additional to the primary
security.
The company has its establishment at Silvasa which enjoys an 8
years tax holiday from
the date of inception. Depreciation on new machinery is
estimated at Rs. 40 lacs p.a. The
average Tax applicable to a company is 30%. Expected ROI @ 18%
p.a. for years 1 to 3
years after inception and 22% p.a. thereafter.
(a) Prepare a Flash Report of Greenland Ltd.
(b) Prepare Statement of Profitability and DSCR for the tenure
of the loan.
(c) Comment on the viability of the project in brief.
(B) Solve any 2 from the following: (10)
(i) Explain the term financial assets as per accounting
standards 31.
(ii) From the following information, compute EVA of TCS Ltd.
(Assume 35% tax rate)
Equity Share Capital`1,000 lakhs
12% Debentures`500 lakhsCost of equity is 20%
Financial leverage is 1.5 times.
(iii) Vijay Ltd. Is considering a project with an initial outlay
of` 1,00,000 comprising of
machinery worth ` 75,000 and balance towards, working capital
exclusively for this
project ` 25,000. The entire amount can be borrowed at a rate of
12% p.a. The
machinery can be used for 5 yrs at the end of which there is
salvage value of`10,000. It
can be assumed that the machinery is depreciated on SLM basis
@20% p.a. for tax
purpose. The tax rate assumes to be 35%. Evaluate whether the
project is viable under
NPV method. Also calculate the pay- back period and briefly
recommend for the projectgiven the following annual sales and
expenses. Annual Sales - `2,00,000. Expenses
excluding depreciation`20,000.
7/31/2019 SSF 2012-13
2/2
QUEST TUTORIALS 2 Prelims
QUEST TUTORIALS: B-305, 3rd
floor, Rajdarshan Society, Behind ICICI ATM, Near Platform
No.1,Thane (W). Contact: 67120221 / 25394777 Website:
www.questclasses.com
Section II
(Any 3, 10marks each)
3. What is Lease Financing? Write advantages and limitations of
Lease Financing?
4. PQR Ltd. has purchased a machine (cash price `1,09,737) on
hire purchase system
from HP Ltd. on 1-1-2010. The term are that PQR Ltd. would pay
`40,000 as down
payment on signing of the agreement and 4 annual equated
instalment of`22,000 each
including interest @10% commencing from the beginning of the
next year. PQR ltd.
charged depreciation @20% p.a. on WDV method in their Hire
purchase contract.
Prepare Journal Entries, Machinery account and HP Ltd. account
for first 2 years in the
book of PQR Ltd.
5. Manthan Ltd. Imported goods from Mayur company worth US$ 5
lakhs on 1 - 8 2009
when exchange rate was US$ 1 =`42.90. He agreed to pay in 5
instalments as below:
Date Instalments (US$) Rate of Exchange ( )
10-10-2009 75,000 42.75
10-12-2009 1,50,000 43.50
10-2-2010 60,000 44.80
10-4-2010 75,000 42.90
10-6-2010 Balance 43.00
The rate of exchange was`43.00 as on 31-3-2010. Pass journal
entries (including those
for cash) in the books of Mayur in accordance with AS-11.
6. (a) XYZ Ltd has provided depreciation as per accounting
records`20 lakhs but as per
tax records`40 lakhs. The unamortized preliminary expenses, as
per tax records are`
10, 000. There is adequate evidence of future profit
sufficiency. Tax rate 30%. How
much deferred tax asset /liability should be recognised as
transition adjustment as per
AS - 22? (5)
(b)ABC Ltd. IPO opened on 6th October & closed on 8th
October- Company issued 20
crore shares in the price band 1200-1300. Public applied for 200
crore shares. The
BRLM J.P. Morgan in consultation with company announced issue
price ` 1250.
Average Price of application receive is`1270. Pass necessary
journal entries in books
of coal India Ltd. Refund and Allotment of shares of face value
of`10 were done on
20th Oct. 2011. (5)
