when should software development charges be recognised in the books of the vendor in the following case:

X pvt. ltd is a software co. into the business of software development. Y inc. is a company incorporated in U.S.A who gives a contract of 100000$ on 1-5-2008. Y inc. pays X pvt. ltd 10000$ every month based on no. of manhours * rate per hour as software development charges.

X pvt. ltd accounts for the software development charges on actual receipt of money on conversion into indian rupees without accounting for Currency flucutations of rate on conversion as required under AS-11. Is the stand taken by X pvt. ltd correct?

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Or they mutually agree or disagree?

Suppose when we are valuing inventory we take cost or NRV which ever is less.

But is it prudent to show like that as it is not showing the real values of stock.

Why do we call it as Profit and loss A/c ?Because it shows either profit or loss only. Can't we call it as Profit or loss Account?

How accounting should be done of options. What are the different types of options. What is ratio in relation to options.

Dear Experts,

I am working in real estate sector we have purchased computer, AC, UPS & batteries, furniture for site office and construction has been started already in site.
Now I want to know how we can treat these fixed assets.

1. These are part of fixed assets in early stage of project.
Or
2. We have to put all these in capital work in progress and at the end of financial year we
Should provide a provision and put all this assets into fixed assets and have to provide Depreciation also.
Or
3. We must treat as fixed assets simply




Regards
Ravinder

2. Samreen Ltd is considering an investment in one of the two mutually exclusive proposals – Projects p1 and p2 , which require cash outlays of Rs.3,40,000 and Rs. 3,30,000 respectively. The certainty equivalent (C.E.) approach is used in incorporating risk in capital budgeting decisions. The current yield on government bond is 8% and this be used as the risk less rate. The expected net cash flows and their certainty equivalents are as follows:





Project P1 Project P2
Year-end Cash Flow C.E. Cash Flow C.E.
1 180000 .6 180000 .8
2 200000 .8 180000 .7
3 200000 .7 200000 .8

Present Value factor os Rs. 1.00 discounted at 8% at ehe end of the year 1,2,3 are .926, .857 and .794 respectively. You are required to find out:-
I. Which project should be accepted?
II. If risk adjusted discount rate method is used, which project would be analysed with a higher rate?


please send your answers to psrinivas1@in.com

1. A company is considering the replacement of its existing machine which is obsolete and unable to meet the rising demand for its product. The company is faced with two alternatives: to buy Machine A which is similar to the existing machine or to go in for Machine B which is more expensive and has much greater capacity. The cash flows at the present level of operations under the two alternatives are as follows:-


Machine Immediate Cash outflows Cash inflows (in lakhs of Rs.) at the end of
(in lakhs of Rs.) 1st IInd IIIrd Ivth Vth
year year year year year
Machine A 25 - 5 20 14 14
Machine B 40 10 14 16 17 15

The company’s cost of capital is 10%

The finance manager tries to appraise the machines by calculating the following :
1. Net Present Value
2. Profitability Index
3. Payback period; and
4. Discounted payback period

At the end of his calculations, however, the finance manager is unable to make up his mind as to which machine to recommend.

You are required to make these calculations and in the light thereof to advise the finance manager about the proposed investment.

Note: Present values of Re.1 at 10% discount rate are as follows:

Year 0 1 2 3 4 5
P.V. 1.00 .91 .83 .75 .68 .62

What is the difference between PP expenses and Deffered revenue expenditure

suppose that 4 kgs of material A are required to make one unit of product TS, each kilogram costing Rs.10. It takes direct labour 5 hours to make one unit of product TS. The labour force is paid Rs.4.50 per hour.

During the period the following results were recorded.
Material A: 8,200 kgs purchased on credit* Rs.95000
Material A: kgs issued to production* 8200 kgs
Units of product TS produced* 1600
Direct labour hours worked* 10000
Cost of direct labour* Rs.32000

Required:
(a) Calculate the following variances for the period.
· Material price variance
· Material usage variance
· Labour rate variance
· Labour efficiency variance
(b) Prepare journal entries for the transactions marked * above, together with the variances calculated in (a).

You should make the following assumptions
· An integrated accounting system is maintained
· There are no opening or closing stocks of work in progress.
Please mail the solution to psrinivas1 @ in.com

Dear All
Please share any information related to Project Financing & Control. PLease share material or suggest best books for this. Is there any specific course for this.

Regards
Pawan Agrawal
agarwal.pawan@rediffmail.com