Please explain me exemption from brach audit. In that explain me fully with the example of figures EXEMPTION BASED ON QUANTUM OF ACTIVITY and explain its terminologies. I dont want to know exemption in other cases and exemption through specific application. So only explain EXEMPTION BASED ON QUANTUM OF ACTIVITY. Please help me in understanding these.
Thank you everyone whosoever replies me.
Hie...Although u wont be asked any practical question on this in the exam .. but u should know this....see..u will find the theory in books i will take practial example..
Now see the quantum of activities...means what all activities done by branch ....
suppose...
goods produced by a branch in 2008-10 lakhs
2009-12 lakhs
2010-11 lakhs
so,average-10lakhs
goods sold and services rendered by branch- 2008-5 lakhs
2009-6 lakhs
2010-7 lakhs
average= 6 lakhs
expenditure of branch- capital as well as revenue(i hope u understand these terms,if u dont then please ask i will explain) 2008-20 lakhs
2009-6 lakhs
2010-10 lakhs
average- 12 lakhs
Step 2- now take the highest average of the above 3 points- that is 12 lakhs ...take it as "x"
Now, next 2 aspects to be seen- a) 2 lakhs
b)2% ofaverage turnover of the company including branch office- Suppose the average turnover of the company is 10 crores...so 2% will be 20 lakhs
Take the higher of a) and b)...that will be 20 lakhs...take it as "y"
Step 3- if x is less than y...branch audit is exempt...or else its not....
So here x 10 lakhs is less than y 20 lakhs..so branch audit is exempt........
Do ask if u have any further doubt..
Thanx.
CAclubindia
