Advanced accounting

IPCC 780 views 2 replies

Vinay 2013

Student CA IPC / IPCC

37 Points Joined March 2013

Dear friends,

Please refer page No. 1.4 in the attachment. There is a problem given in the study material as an example. I could not understand:

1. How the depreciation amount became 13,000 in case 1 (in P & L account for 31/03/2011)

2. How the Fixed asset has become 52,000 in Balance sheet in case 1 (if the above doubt is clarified it will be automatically clarified)

3. How the trade payables is 12,000 in case 1 (is it assumed that if the company is not going concern the discount of 5% is not available) Kindly clarify. I am not good at accounts. Request you to explain in detail.

Thanks in advance

Vinay

Attached File : 1030196 1158362 ipcc advanced accounts 1.pdf downloaded: 165 times

Replies (2)

Sathish M

Management Accountant

40581 Points Joined June 2010

For Fixed Assets:

Value of Fixed Assests as on 31/03/2010 is Rs.65,000

Less: Depreciation (Rs.65000/5years) {the usage pattern of the Asset is even} is Rs.13,000

Balance as on 31/03/2011 is Rs. 52,000

For Trade Payable:

As per the adjustment (g), closing trade payable for a going concern is Rs.12,000 (actual).

In case, the business is not of a going concern then the final settlement to be made to the supplier will be after discount of 5%, which is 12,000*5%=600. Thus final settlement will be Rs.12,000-Rs.600= Rs.11,400.

CA D.C. Bansal

Accounts Head

283 Points Joined November 2007

1. Value of Assets is 65000 and it has to be depreciated within 5 Years hence yearly depreciation will be calculated as under:

Rs.65,000/5 Years = Rs.13000/-

2. Value of Assets 60,000/- less Depreciation for the year 13,000/- = WDV Rs.53,000/-

3. Case I is based on going concern basis hence full value of Trade Payables for Rs.12,000/- will be taken in case I and in case II, Trade Payables of Rs. 11,400/- (Rs.12,000 less 5%) will be taken.