# IPCC May 2014 accounts paper, question wrong??

bhargav (student) (91 Points)

28 May 2014

Let me any body confirm that question 2(a) is correct or not, In the problem they have given 75000 equity shares of Rs.100 each = 75,00,000. On this 20% means = 15,00,000. Total available profit = 10,00,000. How can we distribute... If that share value will Rs.10 we can do that, please clarify..

sakshi (student) (57 Points)
Replied 28 May 2014

Yaa you are right i also find the same problem as u have but i did it with 1500000 and shown the method of computing staff bonus . Rest in the hands of icai. Lets see what happened

bhargav (student) (91 Points)
Replied 28 May 2014

Thanks for reply.. lets wait to see what happens..

Sunny Bhatia (article assistant) (128 Points)
Replied 28 May 2014

will thy giv full marks? i hav too worked out tat question... hw do we confirm abt it?

Vishal goenka (student) (42 Points)
Replied 28 May 2014

Can u do question no. 2b,5a,7a,7b,7c

Vishal goenka (student) (42 Points)
Replied 28 May 2014

Can u do question no. 2b,5a,7a,7b,7c

N.Naveena Maheswara Rao (Assistant manager for accounts)   (1091 Points)
Replied 28 May 2014

Yes. Question was wrong. If we take 10/- as share price. Answer will be as follows

 Current year Profit 1,000,000 Less: Depreciation 37,500 Tax provision 120,000 Balance available for appropriations 842,500 Less: Transfer to reserve (842,500 * 25%) 210,625 Staff bonus provision (75,000 X 100 X 20% X 10%) 15,000 Balance available for distribution of dividend 616,875 Less: Preference dividend (12,000 X 100 X 15%) 180,000 Less: Equity dividend (75,000 X 100 X 20%) 150,000 Balance 286,875 Less: Carried forward profit (12,000 X 100 X 14%) 168,000 Balance for additional dividend 118,875

 Distribution of additional dividend Balance for additional dividend 118,875 To preference share holders (1/3) 39,625 To equity share holders (2/3) 79250

 Net balance of P&L Op. balance in P&L 150,000 Carried forward current year profit 168,000 Net balance in P&L 318,000

N.Naveena Maheswara Rao (Assistant manager for accounts)   (1091 Points)
Replied 28 May 2014

If we take 100/- as share value. answer is as below. We need not pay equity dividend in case of insuffitient profits

 Current year Profit 1,000,000 Less: Depreciation 37,500 Tax provision 120,000 Balance available for appropriations 842,500 Less: Transfer to reserve (842,500 * 25%) 210,625 Staff bonus provision (75,000 X 100 X 20% X 10%) 150,000 Balance available for distribution of dividend 481,875 Less: Preference dividend (12,000 X 100 X 15%) 180,000 Balance 301,875 Less: Carried forward profit (12,000 X 100 X 14%) 168,000 Balance for additional dividend 133,875

 Distribution of additional dividend Balance for additional dividend 133,875 To preference share holders (1/3) 44,625 To equity share holders (2/3) 89,250

 Net balance of P&L Op. balance in P&L 150,000 Carried forward current year profit 168,000 Net balance in P&L 318,000

bhargav (student) (91 Points)
Replied 28 May 2014

Don't know about that, have to pay or not for equity dividend.. In question given that "after making provision (1), (2), (3) mentioned above" So without paying to equity shares how can we calculate..

bhargav (student) (91 Points)
Replied 28 May 2014

2(b) is per and post incorporation profit.. and 5(b) from h.purchase and 7(a) from Non trading concern , 7(b) cash flow statement

Gourav Kapoor (CA Final Student) (2977 Points)
Replied 28 May 2014

hey gys .. u all dont wrry abt anything .. just stay focussed on ur next exam.. if there is any mistake reg question in exam.. then ICAI will deal it with in right manner.. normally if anything like that happen from ICAI.. then ICAI give proportionate marks to each student but only those who hav attempted that particular question... so dont wrry abt it. ICAI wil deal with it.. TRUST ICAI.. and all the best for ur next exam

Vishal goenka (student) (42 Points)
Replied 28 May 2014

I need solution of that

rajeev (nnnone) (222 Points)
Replied 28 May 2014

The question was right and we have to calculate bonus by taking it x and susquently decreasing x- eqd pref. Div. Because the bonus calculation method is not provided in question and equity dividend and pref. Dividend has to be calculated after deducting x that is bonus. Refer parveen sharma book , similar question is there.

shashank (partner) (22 Points)
Replied 28 May 2014

If I did not attempt the sbove qurstion any benefit could be given by ICAI

shashank (partner) (22 Points)
Replied 08 June 2014

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