Dear Member,

We have receiving sample assets (Fixed) at free of cost from Head quarters.

Kindly let me know-at Ind As transition, what is the accounting treatment.

Can MAT credit be recognised in Balance sheet? If yes then what about DTA, shall it also be recognised along with MAT credit?

Please give reference also.... Thank you

Klein, Thompson Company’s CFO, has determined that the Motor Division has purchased switches for its motors from an outside supplier during the current year rather than buying them from the Switch Division. The Switch Division is operating at full capacity and demanded that the Motor division pay the price charged to outside customers rather than the actual full manufacturing costs as it has done in the past. The Motor Division refused to meet the price demanded by the Switch Division. The Switch Division contracted with an outside customer to sell its remaining switches and the Motor division was forced to purchase the switches from an outside supplier at an even higher price.

Klein is reviewing Thompson’s transfer pricing policy because she believes that sub-optimization has occurred. While Klein believes the Switch Division made the correct decision to maximize its divisional profit by not transferring the switches at actual full manufacturing cost, this decision was not necessarily in the best interest of Thompson.

Klein has requested that the corporate Accounting Department study alternative transfer pricing methods that would promote overall goal congruence, motivate divisional management performance, and optimize overall company performance. The three transfer pricing methods being considered are listed below. One of these methods will be selected, and will be applied uniformly across all divisions.

• Standard full manufacturing costs plus mark-up.

• Market selling price of the products being transferred.

• Costs incurred to the point of transfer plus opportunity cost per unit.

Another issue for Thompson Company is regarding its Division Z, Y, A and B, which is as follows:



Division Z of Thompson produces a component that it currently sells to outside customers for OMR 20 per unit. At its current level of production, which is 60% of capacity, Division Z’s fixed cost of producing this component is OMR 5 per unit and its variable cost is OMR 12 per unit. Division Y of Thompson Company would like to purchase this component from Division Z for OMR 10. Division Z has enough excess capacity to fill Division Y’s requirements. The managers of both divisions are compensated based upon reported profits. Recommend a price that will maximize total company profits and be most equitable to the managers of Division Y and Division Z?



Thompson Company has two sub divisions – A and B. Division B currently operates at 100% of its capacity and produces two products: Dango and Tango. Division B sells both products to outside customers for OMR 15 and OMR 30 per unit, respectively. At current production level the variable costs of Dangos are OMR 10 per unit, and fixed costs are OMR 3 per unit and for Tangos, the variable costs are OMR 16 per unit, and fixed costs are OMR 8 per unit.



Division A, which currently purchases Dangos from an outside supplier for OMR 16 per unit, would like to purchase 150 Dangos from Division B annually. However, if Division B increases the production of Dangos to meet the demand of Division A, it must stop producing Tangos entirely. Also, to meet stricter quality requirements of Division A, Division B must increase material cost by OMR 0.80 per Dango, but the marketing and transportation cost per Dango will be reduced by OMR 0.50 per unit. The total units of Tango produced and sold by Division B is 50 units per year.



Suggest the price range within which the transfer price for Dangos would satisfy both divisions i.e. Division A and Division B.



You are required to write a report to the Board of Directors of Thompson Company giving your suggestions and covering the following points:





· Introduction of Transfer Pricing, the discussion needs to be supported by relevant academic literature. (300)



· Transfer Pricing and Performance Evaluation Measures. (300)



· Detailed discussion on the different types of Transfer Pricing Methods used by Organizations. (700)

Our society given purchase Order for Rs.55000/- for purchase of electrical items such as copper wire, MCB's, aluminium cable etc. only 3 items singly have more than value of Rs.5000/- 3.5x35sq mm aluminium cable-Rs.8883/- 8 way VTPN DB- Rs7311/- 4 way VTPN DB-Rs.5747/- My query is how to account the same as expense or to capitalize any item ?

Sir,
Please tell me
For what all purposes we shall utilize the following reserves?
1.Capital Reserve
2.Capital Redemption Reserve
3.Debenture Equalisation reserve
4.Dividend Redemption Reserve
5.Statutory Reserves
6.Revenue Reserve

Thanks in Advance

Company take a agricultural land on lease and then give it to another company on lease for agriculture purpose. now, what is the treatment of difference of lease rent paid and sublease rent received from another company??? Plz give treatment of difference income(sub lease rent received-lease rent paid) as per companies act and income tax act also.

Sir, There are two charitable trusts, totally independent working in a city, are sharing a common office space, the lease agreement is with one of the trusts, the other one was occupying little space with out paying anything. Now from this year the 2nd one has pay partial rent. Keeping the same lease agreement with one trust, can the other one pay his share, without paying TDS, service tax etc. All these charges will be paid by the lessee for the full value, i.e TDS for the invoice value, and service tax etc etc. Can any one tell me in detail, the documentation including the booking steps.

What if fixed asset is received free of cost by say, a partnership firm and accounting standards are applicable to it. How would be this transaction accounted..?

Hi,
Actually i was doing an audit of bank,
They have done some expense on installing server system, and also some wiring, tape, & other tools used
So is tape used will be capitalised or not?

My secnd querry is that they had a door without hings which they have used earlier , they purchases hings of ₹100, and they install that door, and claiming hings as assets.
Is it really assets???

Reply me soon....

Sir,
I have 50000 receivable from a customer against different bills (100bills). I got 2725 against some invoices (reference not available). Can I find out the possible combinations of invoices amounting 2725 by using excel or any other mathematical formula.