July 21

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2 FINAL (NEW) EXAMINATION: JULY 2021
PAPER – 6F: MULTI-DISCIPLINARY CASE STUDY

The question paper comprises five case study questions. The candidates are required to
answer any four case study questions out of five.
All your workings should form part of your answer.
CASE STUDY -1
About You
You are a knowledgeable Chartered Accountant and appointed as a partner in an established
firm of Chartered Accountants based out of Mumbai. You are very much excited on your
becoming a partner and cannot afford to wait to sign your first set of audited accounts.
A New Client
Your audit firm added a new client, "Sunshine Cot Spin Ltd" (SCSL), a family owned, closely
held, Public Limited Company, located at Pune to act as the Statutory Auditors of the Company
and audit the books of accounts of the Company for the financial year 2020-2021. The Company
is engaged in spinning and weaving of cotton yarn. The Audit firm's Senior Partner, CA. Sriman
Narayan, (fondly referred to as 'SN') has allocated the client to you to conduct the audit. The
senior partner is very close to the family which owns the Company and you strongly believe that
this is atleast part of the reason why the Company decided to appoint your audit firm.
About SCSL
SCSL has evolved to be a significant player in cotton yarn spinning in Pune, commanding a
premium market for their products and also exports its products to several countries. SCSL has
two manufacturing plants at Pune housing around 1.5 lakh sq ft each. The spinning division in
factory 'A' has an installed capacity of 2.25 lakh spindles, producing around 20 tonnes of cotton
yarn per day. The weaving division at factory 'B' has an installation of 50 Suzler projectile
machines. The export sales constituted around 30% of the total revenues as at 31st March,
2021. In Nov 2019, the Company was awarded a certificate of recognition as an export house
by the Joint Director of Foreign Trade. One of the Company's division is also continuously
engaged in leasing of properties - Mobile Towers as its principal or ancillary generating
activities. Going forward, the company's strategy is to expand their existing capacity in spinning
and weaving as well as enter in the textile chain including processing, garments and home
textiles. Their vision is to scale new heights in the textile industry from fibre to finished products
and to be at the forefront of the industry.
Commencement of the Audit Process
The CFO of the Company made available to you the audited accounts of the last five years and
the draft summary of management prepared financial statements for the FY 2020 -2021 subject
to audit of certain items that need clarifications and resolutions from the statutory auditors.

PAPER – 6F: MULTIDISCIPLINARY CASE STUDY 3
Before the commencement of the audit, you reviewed the Company's audited accounts of the
previous year. You noticed that the Auditors Report was qualified due to non -compliance with a
mandatory accounting standard with respect to valuation of a high valued property that the
Company owns. The audit opinion adds that the auditor is unable to quantify the impact of this
non-compliance with the accounting standard. At this point, you made a telephonic conversation
with the previous auditor informing them about your firm's appointment as auditor and also
discussed the qualification in the previous audit report.
You were wondering whether the audit qualification issued was appropriate in the circumstances
and you feel that a 'limitation of scope' opinion may have been more appropriate rather than
"except for dis-agreement with accounting treatment due to non-compliance with an accounting
standard”…. You are considering the impact of this issue when CA.SN comes into your office.
He provides you certain important inputs of SCSL and then asks whether you have any
clarifications to be sought. At this juncture, you inform CA.SN what you have found. He
immediately replies: "I don't see any issues. If the Company does not believe that it is worth
paying for this information, then who are we to tell them otherwise. It is a family business after
all. If we have to, then, we can also adopt the same approach as the previous auditors and
qualify the audit report on the same grounds." CA.SN further stated that you should go ahead
with the audit work and reassess the position once the audit fieldwork has been completed by
your team.
Precarious situation and the way forward
Now you are in a very precarious situation. You need to build a strategy. On the one hand, as
an individual, you don't feel like to compromise anything in the audit process as well as your
Independence and on the other hand, the relationship of CA.SN with the Company matters you
a lot. Finally, after a good thought, you have proposed to balance the situation with an
appropriate presentation of a matter that needs proper reporting and / or by pointing out the
legal position before hand with a view to avoid / rectify any lapse or shortcomings to the
satisfaction of both the Company's management and CA.SN. You always believe in Professional
Scepticism / Professional Judgement and is of the opinion that it is your legitimate right to advise
your clients to comply with the rule of law, promote transparency in financial and business
transactions, make your clients much more tax complaint vis-a-vis intelligent tax planning rather
than tax dogging and tax evasion.
Accordingly, you made a detailed audit program and deputed your audit team to look
meticulously into every material aspects and conduct the audit from the propriety angle. You
also instructed that all observations made by the audit team would be reviewed by you with
proper assessments to ensure that the financial statements reflects a true and fair view.

Review of accounts and records

On a review of the books of accounts, draft financial statements / minutes of the Board meetings
and other secretarial and regulatory records, the following observations were m ade by your
audit team:
1. During the FY 2020-2021, the company had entered into certain related party transactions.
A payment of ` 4 lakhs per month was made to a partnership firm which is a 'related party'
within the meaning of the Companies Act, 2013 for marketing services rendered by them.
Based on an independent assessment, the consideration paid was higher than the arms
length by ` 0.50 lakhs per month. Whilst the transactions was accounted in the financial
statements based on the amounts paid, no separate disclosure of this related party
transaction has been made in the notes to accounts forming part of the financial statements
highlighting the same as related party transaction. Further, regarding related party
transactions, the Management of the Company has insisted the statutory auditors to rely
on the management representation letter regarding the proper accounting, presentation
and disclosure of such related party transactions.
2. The long term borrowings from a subsidiary Company has no written terms and neither the
interest nor the principal has been repaid so far.
3. Certain computers and peripherals were received from the subsidiary company free of
cost, the value of which is ` 0.75 lakhs and no accounting or disclosure of the same has
been made in the notes to accounts.
4. The Company also sells its products to local dealers in Maharashtra. One of the conditions
of sale is that interest will be charged at the rate of 2% p.m., for delayed payments. On
scrutiny of the accounts, the audit team found that the percentage of interest recovery is
only 10% on such overdue outstanding due to various reasons. During the year 2020-21,
the Management has recognized the entire interest receivable as income in the Statement
of Profit and Loss.
5. One of their division also deals in Leasing of properties - Mobile Towers. The accountant
showed the rent arising from the leasing of such properties as 'other income' in the
Statement of Profit and Loss.
6. During the course of the audit, you were provided with various oral representations during
meetings and discussions. Whereas, while finalizing the audit, you requested the
Management to provide all such oral representations into writing. The Management has
informed you that since it has provided you full access to whatever records, documents
and evidences were available with them without any exception, providing any
representations in writing to external auditors is not possible. They have requested you to
co-relate the same with the oral representations.

7. You as the engagement partner has requested the Management to provide email
addresses of trade receivables of the company for the purpose of obtaining balance
confirmation from the trade receivables. The Management asked its Sales Manager to
send confirmation requests to the trade receivables and collect all the responses and
provide the same to the Auditors. The Management informed that confirmation with respect
to two of its trade receivables namely X Limited and Y Limited will not be available as a
dispute is going on with them. With respect to other trade receivables, the Sales Manager
provided you all the balance confirmations.
8. While verifying the inventories as on 31 st March, 2021, you observed that significant
amount of inventories belonging to the Company are held by third parties. However, the
Company has kept all the records of the inventories maintained by the third parties.
9. SCSL purchased new computers for ` 10 lakhs on October 5, 2020, installed the same in
its office and put the said computers to use on the same date.
10. The Company has incurred an expenditure of ` 10 lakhs on advertisement in a souvenir of
a registered political party.
11 While preparing the Ind AS financial statements for the previous year ended 31.03.2020,
SCSL has observed that it had presented certain material liabilities as non -current in its
financial statements for the year ended 31.03.2019. While preparing annual financial
statements for the year ended 31.03.2021, management discovers that these liabilities
should have been classified as current. The Management intends to restate the
comparative amounts for the prior period presented (i.e as at 31.03.2020).
12 Other Issues of Management for your professional advice SCSL is considering a new sales
strategy for one of its small subsidiary company that will be valid for the next 4 years. They
want to know the value of new strategy. Following information relating to the year which
has just ended is available:
Income Statement
Amount (in ` ‘000)
Sales 20,000
Gross Margin (20%) 4,000
Administration, Selling and Distribution Expenses (10%) 2,000
PBT 2,000
Tax (30%) 600
PAT 1,400
Balance Sheet Information
Fixed Assets 8,000
Current Assets 4,000

Equity 12,000
If it adopts the new strategy, sales will grow at the rate of 20% per year for three years.
The gross margin ratio, assets turnover ratio, the capital structure and the income tax rate
will remain unchanged. Depreciation would be 10% of net fixed assets at th e beginning of
the year. The company's target rate of return is 15%.
At this juncture, before proceeding further, Mr. SN has desired to have an interim meeting
with you to get an hands on summary of the audit observations and also with proper
solutions to address them. So get ready to comprehend, analyse and apply to arrive at a
correct solution to the issues given here under:
You are requested to provide the correct option to the following questions. Please indicate
your option in capital letters. No reasoning is required. Note that the financial statements
of the Company for the year under review are prepared using IND AS and your answers
on Direct Tax Laws should relate to Assessment Year 2021-22.
1.1 In respect of the inputs given in para (1) above, is there any further responsibility of the
statutory auditor with regard to the other formalities to be performed for related party
transactions (RTP)?
(A) There is no further responsibility as the best audit evidence for the RTP is the
Management representation letter.
(B) There is no further responsibility, as the statutory auditor is responsible for verifying
the balances and disclosure of RTPs. The identification of RTPs is the responsibility
of the Management.
(C) Yes, the statutory auditor has the responsibility to perform the audit procedures to
identity, assess and respond to the material misstatements arising from the entity's
failure to account for/ disclose related party relationships, transactions and balances.
(D) Yes, the statutory auditor has the ultimate responsibility to detect fraud and error with
respect to RTPs.
1.2 With respect to the inputs given in para (7) above, which of the following is warranted as
per the requirement of the relevant SA?
(A) As the Statutory Auditor, you should not have relied on the explanation provided by
the Management with respect to the trade receivables namely X Limited and Y Limited
and you should have performed alternative procedures with respect to such trade
receivables.
(B) As the Statutory Auditor, based on the risk assessment and materiality, you should
have obtained direct responses atleast from some significant, if not all, trade
receivables instead of the sales manager receiving direct responses and forwarding
the same to you.
(C) Both (A) and (B)

(D) You should give a qualified opinion as balance confirmations with respect to two trade
receivables were not available.
1.3. With respect to the inputs given in para (9) above, the allowable depreciation under the
Income Tax Act would be:
(A) ` 1.5 Lakhs
(B) ` 2 Lakhs
(C) ` 3 Lakhs
(D) ` 4 Lakhs
1.4 With respect to the inputs given in para (10) above, which of the following statement is
correct as per the Income Tax Act?
(A) Such expenditure is an allowable deduction while computing its business income.
(B) Such expenditure is not an allowable deduction while computing its business income.
(C) Such expenditure is not an allowable deduction while computing its business income
but is allowable as a deduction from gross total income.
(D) Such expenditure is neither allowable as a deduction from business income nor
allowable as a deduction from gross total income.
1.5 With respect to the inputs given in para (11) above, which of the following statement is
valid as per the Companies Act, 2013?
(A) Change in Estimate - Restatement of previous year comparative is not required.
(B) Change in Estimate - Restatement of previous year comparative is required.
(C) Prior period error - Restatement of previous year comparative is not required.
(D) Prior period error - Restatement of previous year comparative is required.
(2 x 5 = 10 Marks)
1.6 With reference to the case study, comment on whether communication made with the
previous auditor is in line with relevant clause of Schedule to the Chartered Accountants
Act, 1949 and Code of Ethics. (3 Marks)
1.7 Comment whether the classification referred in para (5) above is correct or not in the light
of Schedule III to the Companies Act, 2013. (4 Marks)
1.8 In respect of the inputs given in para (12) above, determine the incremental value due to
adoption of the new strategy in line with the strategic financial management principles
adopted by the company. (8 Marks)

ANSWER TO CASE STUDY 1

PART – A
1.1 (C)
1.2 (C)
1.3 (B)
1.4 (C)
1.5 (D)
PART – B
1.6 As per Clause (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949,
a Chartered Accountant is deemed to be guilty of professional misconduct if he accepts a
position as auditor previously held by another chartered accountant or a certified auditor
who has been issued certificate under the Restricted Certificate Rules, 1932 without first
communicating with him in writing.
It must be pointed out that professional courtesy alone is not the major reason for requiring
a member to communicate with the existing accountant who is a member of the Ins titute
or a certified auditor. The underlying objective is that the member may have an opportunity
to know the reasons for the change in order to be able to safeguard his own interest, the
legitimate interest of the public and the independence of the existing accountant. It is not
intended, in any way, to prevent or obstruct the change. When making the inquiry from the
retiring auditor, the one proposed to be appointed or already appointed should primarily
find out whether there are any professional or other reasons why he should not accept the
appointment.
In the given situation, the incoming auditor has informed the previous auditor about their
appointment and discussed about the qualifications given in audit report over telephone.
Mere informing about appointment over telephone instead of writing is not correct in
accordance with Clause 8. Therefore, the incoming auditor would be held guilty of
professional misconduct under Clause (8) of Part I of First Schedule to the Chartered
Accountants Act, 1949 for not communicating with previous auditor in writing.
1.7 General Instructions for the Preparation of Statement of Profit and Loss of Division II
under Schedule III to the Companies Act, 2013, requires revenue from operations to be
separately disclosed in the notes, showing revenue from:
(a) Sale of products;
(b) Sale of services; and
(c) Other operating revenues

The term “other operating revenue” is not defined. This would include Revenue arising
from a company’s operating activities, i.e., either its principal or ancillary revenue-
generating activities, but which is not revenue arising from sale of products or rendering
of services. Whether a particular income constitutes “other operating revenue” or “other
income” is to be decided based on the facts of each case and detail understanding of
the company’s activities.
The classification of income would also depend on the purpose for which the particular
asset is acquired or held.
In the given case, it is mentioned that one of their divisions also deals in Leasing of
properties – Mobile Towers. The company is primarily engaged in spinning and weaving
of cotton yarn. The revenue arising out of mobile towers division may be considered as
either its principal or ancillary revenue-generating activities. Accordingly, the rent arising
from leasing of Mobile towers properties would be classified under the head “Revenue
from Operations” in the Statement of Profit and Loss. Hence, it cannot be shown under
the head “Other Income”.
1.8 Projected Balance Sheet
Year 1 Year 2 Year 3 Year 4

Fixed Assets (40% of Sales) 9,600 11,520 13,824 13,824
Current Assets (20% of Sales) 4,800 5,760 6,912 6,912
Total Assets 14,400 17,280 20,736 20,736
Equity 14,400 17,280 20,736 20,736
Projected Cash Flows
Year 1 Year 2 Year 3 Year 4

Sales 24,000 28,800 34,560 34,560
PBT (10% of sale) 2,400 2,880 3,456 3,456
PAT (70%) 1,680 2,016 2,419.20 2,419.20
Depreciation 800 960 1,152 1,382
Addition to Fixed Assets 2,400 2,880 3,456 1,382
Increase in Current Assets 800 960 1,152 -
Operating cash flow (FCFF) (720) (864) (1,036.80) 2,419.20

Projected Cash Flows:-

Present value of Projected Cash Flows:-
Cash Flows PVF at 15% PV
-720 0.870 -626.40
-864 0.756 -653.18
-1,036.80 0.658 -682.21
-1,961.79
Residual Value = 2419.20/0.15 = 16,128
Present value of Residual value = 16128/(1.15) 3
= 16128/1.521 = 10603.55
Total shareholders’ value = 10,603.55 – 1,961.79 = 8,641.76
Pre strategy value = 1,400 / 0.15 = 9,333.33
 Incremental Value of strategy = 8,641.76 – 9,333.33 = – 691.57
CASE STUDY - 2
You are a young dynamic Management Consultant of 30 years of age, having graduated from a
top notch business school in India and later on obtained a Doctorate degree in Finance from
USA. At the age of 27 years, you started a consultancy firm in Bengaluru, India for providing
scratch to end business advisory solutions to start-up companies, especially on innovative ways
to finance a start-up, direct taxes, financial reporting, legal advisory under FEMA, 1999 and
Insolvency and Bankruptcy Code, 2016. Your clients are spread across the country and you
have a sizeable team of professionals working under your entire advisory practice.
Your client, Soft Tech Automobile Solutions Private Limited (STAS) is one of the India’s start-
up companies incorporated at Delhi in the year 2017. The main objective of the Company is to
develop a niche, never invented before, customized software packages for two and three
wheeler automobile manufacturers in India and abroad. The Company is the first ever start-up
company wholly owned, managed by women technocrats with only women employees. It was
promoted by Ms. Sunandha and Ms. Pracheeti, IITians from Delhi.
Ever since the promoters started their venture, they have, within a span of one year, garnered
about 15 reputed automobile companies in India and twelve foreign companies in USA as their
customers with long term contracts and significant business in terms of volume and money
value. The promoters have also formed a wholly owned subsidiary at Singapore which has a
liaison office in Mumbai and currently has very limited operations in India. The Indian liaison
office, at present, employs about 30 people primarily to represent the foreign subsidiary in
dealing with the customers in India.

Because of their innovative and user friendly software package, that provides high value
addition, and going by the success they reaped within a year, it is for sure, that, they would
flourish and branch out in their business within the next five years of their establishment. In
other words, the Company is also looking at rapid expansion over the next three years.
Nevertheless, what disturbs them, is the infusion of initial funds and continued working capital
in the start-up to meet their commitments.
STAS is well recognized for its governance standards and is very keen to implement its zero
tolerance for non-compliances policy. Under the circumstances, they have reached out to you
seeking your advice on strategic financial management vis-a-vis innovative ways to finance a
start up, matters on financial reporting and direct taxation. Besides the above, they also wanted
you to advise them on the regulatory provisions of FEMA, 1999, IBC Code, 2016 that may impact
their business. Accordingly, they have requested you to join their internal brainstorming session
organized to discuss and decide on the way forward. This meeting will be attended by Ms.
Sunandha, Managing Director, Ms. Pracheeti, Joint Managing Director, Ms. Anjana, Chief
Financial Officer, Ms. Samanvitha, Manager, Taxation and Ms. Jaishvitha, Company Secretary.
Prior to the meeting, the promoters have informed you and given the following inputs:
(a) A few export invoices raised by the Company towards supply of goods or services were
remaining outstanding from the foreign party (in excess of the stipulated thresholds for suo
moto write oft) and despite the Company's best efforts, the amounts have become doubtful
of recovery.
(b) During the financial year 2020-21, the Company had changed its method of accounting
compared to the previous financial year (2019-20) and had reported a closing stock of
computer peripherals amounting to ` 2 lakhs only as on 31.03.2021. Also, the Company
had borrowed a sum of ` 10 crores equally from two public sector banks and two NBFCs.
The Company had promptly repaid few deposits amounting to ` 80 lakhs to the deposit
holders.
(c) The Company acquired 5 state of the art, hitech computers, peripherals and servers (herein
after referred to as 'Plant') at a cost of ` 2 Crores (with no break down of the component
parts). The estimated useful life is 10 years. At the end of the 2nd year, one of the majo r
component (Server) has become obsolete and requires replacement as further
maintenance is uneconomical. The balance of the plant is perfect and expected to last for
next 10 years. The cost of the replacement of new component is ` 60,00,000. The discount
rate assumed is 5%
(d) The statutory Auditors of the Company, M/s. DEF & Associates, where CA. Mr. F, who is
one of the partners of the audit firm who does not sign the audited financials of the
Company had borrowed a sum of ` 4 lakhs from the subsidiary company for a short term
repayable within 2 months. He had also purchased accounting software worth ` 1.10 lakhs
from the said company. Both the sum borrowed and the cost of the. accounting software
are not yet paid by Mr. F.

(e) Ms. Suman, sister of Ms. Sunandha, (the Managing Director of the Company) is a resident
of Singapore and she owns an immovable property in Varanasi, which she inherited from
her father, who was a resident in India. Currently, Ms. Sunandha uses the property.
(f) Ms. Pracheeti, the Joint Managing Director wants to know the legal remedies available in
India for recovering amounts rightfully due to the Company in case of a wilful default by
the customer. In this regard, she is curious to understand the legal provisions of Insolvency
and Bankruptcy Code, 2016 which would come handy for enforcing timely actions by the
defaulting customers, where required. She also wanted to understand how the settlement
of the dues would be prioritized as compared to various secured creditors of the defaulting
company at the time of insolvency.
(g) The income tax assessment of the Company was completed under Section 143(3) of the
Income Tax Act, 1961 with an addition of income of ` 24 lakhs to the returned income.
The Company had preferred an appeal before the Commissioner of Appeals which is
pending disposal.
Asks from You
You are requested to advise STAS based on your understanding of their requirements, issues
and clarifications sought. You can make relevant assumptions, if any, as may be required to
explain your views so as to provide a holistic and relevant feedback. Your timely advices may
go a long way to the dynamic women entrepreneurs in scaling new heights in their business
operations. Good Luck........!
Provide the correct options to the following questions:
2.1 Under the provisions of the Foreign Exchange Management Act, 1999, amounts receivable
referred in para (a) above:
(A) Will remain in the books for ever and nothing needs to be done.
(B) To be continued to be treated as good till such time the approval from the RBI/
Authorized Dealer is obtained for write-off.
(C) Can be written off in the accounts and claimed as an allowable expense for taxation
purposes and the procedural aspects of approvals from the RBI /AD may be obtained
later.
(D) To be provided for in the accounts towards doubtful receivables, disallowed for
income tax computation purposes and the write-off to be effected in compliance with
the FEMA/RBI directions and income tax requirements.
2.2 In the light of the information provided in para (b) above, state which among the below
transactions which were undertaken by the Company needs to be reported by the Statutory
Auditors under fiscal laws?
(i) ` 10 crore loan taken, which is exceeding the limit specified under Section 269 SS of
the Income tax Act, 1961.

(ii) Changed its method of accounting from the previous financial year.
(iii) Repayment of deposits of ` 80 lakhs which is exceeding the limit specified under
Section 269 T of the Income Tax Act, 1961.
(iv) Reporting of closing stock of computer peripherals worth ` 2 Lakhs only.
OPTIONS
(A) (i), (iii) & (iv)
(B) (ii) & (iii)
(C) (i) & (iii)
(D) (i), (ii), (iii) & (iv)
2.3 With respect to the acts carried out by CA. Mr. F, what can you infer about the appointment
of M/s. DEF & Associates as Statutory Auditors of the Company?
(A) It is valid since the indebtedness is not with STAS.
(B) It is valid since CA. Mr. F is not signing the financials of STAS.
(C) It is valid since the indebtedness is within the prescribed limits.
(D) It is not valid since the indebtedness exceeds prescribed limit of ` 1 lakh.
2.4 Can Ms. Suman continue to hold the property?
(A) No, she cannot hold, transfer or invest in India, since she is resident outside India.
(B) Yes, she can continue to hold in India, since she is a person of Indian ori gin and the
property is located in India.
(C) Yes, she can continue to hold in India, since this was inherited from a person who
was resident in India.
(D) Yes, she can continue to hold in India, since her sister uses the property whenever
she travels to Varanasi.
2.5 Under the Insolvency and Bankruptcy Code, 2016, with reference to information in para
(f), the foreign subsidiary can initiate action against the defaulting companies in India for
non-payment of its enforceable dues:
(A) For any amount in excess of US $ 100 in its capacity as financial creditor.
(B) For any amounts in excess of ` 10 million with the approval of NCLT.
(C) For any amount in excess of US $ 100 in its capacity as corporate debtor.
(D) For any amounts in excess of ` 10 million without the approval of NCLT.
(2 x 5 = 10 Marks)

2.6 Being the referred Management Consultant, what are some of the ways you would suggest
STAS management to finance their start-up? (5 Marks)
2.7 In respect of the information provided in para (c) above, examine whether the cost of new
component (server) be recognized as an asset and if so, what should be the carrying value
of the plant at the end of the second year? (5 Marks)
2.8 In respect of the information provided in para (g) above, please answer the following
questions:
(i) Can the Commissioner make a revision under Section 263 of the Income Tax Act,
1961 both in respect of matters covered in appeal and other matters?
(ii) Can STAS seek revision under Section 264 of the Income Tax Act, 1961 in respect
of the matters other than those preferred in appeal? (5 Marks)
PART – A
2.1 (B)
2.2 None of the options given is correct.
2.3 None of the options given is correct.
2.4 (C)
2.5 (B)
PART – B
2.6 Every startup needs access to capital, whether for funding product development, acquiring
machinery and inventory or paying salaries to its employee. Though we can think first of
bank loans as the primary source of money, only to find out that banks are re ally the least
likely benefactors for startups. So, we suggest innovative measures include maximizing
non-bank financing.
Here are some of the sources for funding a startup:
(i) Personal financing: It may not seem to be innovative but you may be surprised to
note that most budding entrepreneurs never thought of saving any money to start a
business. This is important because most of the investors will not put money into a
deal if they see that you have not contributed any money from your personal sources.
(ii) Personal credit lines: One qualifies for personal credit line based on one’s personal
credit efforts. Credit cards are a good example of this. However, banks are very
cautious while granting personal credit lines. They provide this facility only when the
business has enough cash flow to repay the line of credit.

(iii) Family and friends: These are the people who generally believe in you, without even
thinking that your idea works or not. However, the loan obligations to friends and
relatives should always be in writing as a promissory note or otherwise.
(iv) Peer-to-peer lending: In this process group of people come together and lend money
to each other. Peer to peer lending has been there for many years. Many small and
ethnic business groups having similar faith or interest generally support each other in
their start up endeavors.
(v) Crowd funding: Crowd funding is the use of small amounts of capital from a large
number of individuals to finance a new business initiative. Crowdfunding makes use
of the easy accessibility of vast networks of people through social media and
crowdfunding websites to bring investors and entrepreneurs together.
(vi) Micro loans: Microloans are small loans that are given by individuals at a lower
interest to a new business ventures. These loans can be issued by a single individual
or aggregated across a number of individuals who each contribute a portion of the
total amount.
(vii) Vendor financing: Vendor financing is the form of financing in which a company
lends money to one of its customers so that he can buy products from the company
itself. Vendor financing also takes place when many manufacturers and distributors
are convinced to defer payment until the goods are sold. This means extending t he
payment terms to a longer period for e.g. 30 days payment period can be extended
to 45 days or 60 days. However, this depends on one’s credit worthiness and payment
of more money.
(viii) Purchase order financing: The most common scaling problem faced by startups is
the inability to find a large new order. The reason is that they don’t have the necessary
cash to produce and deliver the product. Purchase order financing companies often
advance the required funds directly to the supplier. This allows the completion of
transaction and profit flows up to the new business.
(ix) Factoring accounts receivables: In this method, a facility is given to the seller who
has sold the good on credit to fund his receivables till the amount is fully received.
So, when the goods are sold on credit, and the credit period (i.e. the date upto which
payment shall be made) is for example 6 months, factor will pay most of the sold
amount up front and rest of the amount later. Therefore, in this way, a startup can
meet his day to day expenses. (Any 5 points)
2.7 The new component will produce economic benefits to company, and the cost is
measurable. Hence, the item should be recognised as an asset.
The original invoice for the plant did not specify the cost of the component; however, the
cost of the replacement ` 60,00,000 can be used as an indication (usually by
discounting) of the likely cost, two years previously.

If an appropriate discount rate is 5% per annum, ` 60,00,000 discounted back two years
amounts to ` 54,42,177 [` 60,00,000/(1.05) 2], i.e., the approximate cost of component
before 2 years.
The current carrying amount of the component which is required to be replaced of
` 43,53,742 would be derecognised from the books of account, (i.e., Original Cost
` 54,42,177 as reduced by accumulated depreciation for past 2 years ` 10,88,435,
assuming depreciation is charged on straight-line basis.)
The cost of the new component, ` 60,00,000 would be added to the cost of plant,
resulting in a revision of carrying amount of plant to ` 1,76,46,258 (i.e., ` 1,60,00,000*
– ` 43,53,742 + ` 60,00,000).
*Original cost of plant ` 2,00,00,000 reduced by accumulated depreciation (till the end
of 2 years) ` 40,00,000.
2.8
(i) As per section 263, the Commissioner has the power to revise an order
prejudicial to revenue, even if the order is the subject matter of appeal before
Commissioner (Appeals). However, the power of the Commissioner under
section 263 shall extend to only such matters as had not been considered and
decided in such appeal. The doctrine of partial merger would apply in this case.
Even in a case where the appeal is pending but not yet decided, the
Commissioner cannot exercise his revisionary jurisdiction in respect of those
issues which are the subject matter of appeal . CWT Vs Sampathmal Chordis
(2002) 256 ITR 440 (Mad).
(ii) As per section 264(4), the Commissioner shall not revise any order under
section 264, where such order has been made the subject of an appeal to the
Commissioner (Appeals), even if the revision pertains to a matter, other than
the matter(s) covered in the appeal. Thus, the concept of total merger would
apply in the case of section 264.
Therefore, STAS cannot seek revision under section 264 even in respect of
matters other than those preferred in appeal. As held by Hon’ble Supreme
Court in the case of Hindustan Aeronautics Ltd Vs CIT (2000) 243 ITR 898.
CASE STUDY - 3
Your Position in the Professional Arena
You are an open minded, sensible, competent and innovative Management Consultant providing
solutions in financial reporting, budgetary control, cost analysis, capital budgeting and other
areas of costing and management reporting. You are also advising corporates on the
implications of mergers and amalgamations covering various aspects inter-alia on the legal,
business and corporate tax related matters.

You are specifically approached by various corporates to implement governance and ethics into
the very fabric of the client's organization, revising and re-framing the compliance framework,
policies, processes in line with the corporate & allied laws and other local regulations.
Professional Work
During the month of January 2021, six different Companies approached you seeking your advice
with respect to their proposals as outlined below:
Proposals
(1) KG LIMITED (KGL)
KOL is a manufacturing company that produces a wide range of consumer products for
home consumption. Among its popular brand are its energy efficient and environment
friendly LED lamps. The Company has a quality control department that monitors the
quality of production. As per the recent ‘poor quality report', the current rejection rate of
LED lamps is 5% of units input. 5,000 units input goes through the process each day. Each
unit that is rejected costs ` 200 to the Company. The quality control department has
proposed few changes to the inspection process that would enable early detection of
defects. This would reduce the overall rejection rate from 5% to 3 % of units input. The
improved inspection costs would cost the company ` 15,000 per day.
(2) GANGOTRI LIMITED (GL)
GL is intending to acquire Madhruk Limited (ML) (by merger) (a company not within the
definition of a "small company" under the Companies Act, 2013) and the following
information are available in respect of both the companies:
(In ` )
Particulars Gangotri Limited Madhruk Limited
Total Current Earnings 2,50,000 90,000
Number of outstanding shares 50,000 30,000
Market price per share 21 14
Besides the above, GL has lent an amount of ` 10 lakhs to ML as an inter-corporate deposit
(ICD) for meeting various working capital requirements in the year 2018 which is being
rolled over every 6 months since ML is not in a position to repay the loan as per agreed
tenure. It is also not servicing any interest and the amount of interest payable as per the
terms is not recognized in the books of ML in view of uncertainties attached to revenue
recognition.
The CFO of GL believes that this proposal of merger is completely workable and in fact
the same needs to be mandatorily pursued through the fast track mechanism available
under the regulatory framework. He further added that the ICD which remains as

outstanding from ML will also be eliminated on merger and hence the issue of repayment
also does not arise.
(3) EL GEE INDUSTRIES LIMITED (EGIL)
EGIL manufactures standard heavy duty steel storage racks for industrial use. Each
storage rack is sold for ` 750 each. The Company produces 10,000 racks per annum.
Relevant cost data per annum are as follows:
Cost Component Budget Actual Actual Cost p.a. (`)
Direct Material 5,00,000 sq. ft. 5,20,000 sq. ft. 20,00,000
Direct Labour 90,000 hrs. 1,00,000 hrs. 10,00,000
Machine Setup 15,000 hrs. 15,000 hrs. 1,50,000
Mechanical Assembly 2,00,000 hrs. 2,00,000 hrs. 30,00,000
The actual and budgeted operating levels are the same. Actual and standard rates of
material procurement and hourly labour rate are also the same. Any variance in cost is
solely on account of difference in the material usage and hours required to complete
production. Aggressive pricing from competitors has driven down sales. A comparable rack
is available in the market for ` 675 each. Shankar, the marketing manager has determined
that in order to maintain the company's existing market share of 10,000 racks, EGIL must
reduce the price of each rack to ` 675.
(4) JM BAKES & CONFECTIONERS LTD (JMBCL)
JMBCL started a Bakery and Confectionery store. The MD of JMBCL, Mr. X contacted Mr.
Y, representing Iyer & Co., Confectioners & Bakers (ICCB) for supply of cakes and biscuits.
The communication between the parties were over email. On e-mail, there was a term of
service between the parties containing that "any disputes regarding quality or delivery shall
be submitted to arbitration conducted under the guidance of Indian Confectionery
Manufacturers Association. Please place your order if the above terms and conditions are
agreeable to you." X placed an order.
(5) SHANTHI BIOTECH LIMITED (SBTL)
SBTL had a paid up equity share capital of ` 20 crores divided into 20,00,000 equity shares
of ` 10 each. The Company had 2,000 equity shareholders. A petition was submitted
before the Tribunal signed by 320 members holding 40,000 equity shares of the Company
for the purpose of claiming relief against oppression and mismanagement by the majority
of the shareholders. Subsequently, 160 members, who had signed the petition withdrew
their consent.
(6) SUPER SPINNING LTD (SSL)
While computing the statement of total income prepared in accordance with ICDS for the
A.Y.2019-20, the following information was noted:

The amount of employee benefits include a sum of ` 4,50,000 in respect of bonus payable
to employees. In the previous year 2018-2019, the Company and its employees union had
a dispute over payment of bonus. In order to avoid late payment of bonus, the Company
formed a trust and transferred the amount of bonus payable to employees to the said trust.
The dispute was settled in the month of November, 2019 and the trust paid the amount of
bonus to the employees on 30 th December, 2020.
You are requested to provide the correct option to the following questions. Please indicate your
option in capital letters. No reasoning is required.
3.1 Whether the proposal of Gangotri Limited for the merger of Madhruk Limited needs to be
mandatorily pursued under "fast track mode"?
(A) Yes
(B) No
(C) Yes, as it involves capital reduction
(D) Would vary on a case to case basis depending on the contents of the scheme.
3.2 On giving effect to the scheme of merger, the ICD provided by Gangotri Limited (GL) to
Madhruk Limited (ML):
(A) Will remain in the books of ML.
(B) Will be squared off.
(C) Will remain as a memorandum entry.
(D) Will remain only in the books of GL.
3.3 State which statement is correct with respect to the arbitration agreement made between
JMBCL and ICCB under the provisions of the Arbitration and Conciliation Act,
(A) It is not valid agreement, as the terms of service is not contained in same document
of agreement.
(B) It is not valid, as the agreement is not laid down in particular format formally.
(C) It is not valid, as communication over email of the term of services is not proper.
(D) It is valid arbitration agreement in writing contained in correspondence between the
parties over email.
3.4 In respect of SBTL, as per the given facts:
(A) The petition becomes automatically void.
(B) The petition is nevertheless maintainable subject to the condition that approval of 80
members is obtained within a period of 30 days.
(C) The petition is nevertheless maintainable subject to the condition that approval of at
least 40 members is obtained within a period of 30 days.

(D) It will not affect the maintainability of the petition.

3.5 While computing the total income of Super Spinning Limited (SSL), for the A.Y. 2019-20,
the amount of bonus payable:
(A) Would be allowed as a deduction
(B) Would not be allowed as a deduction
(C) Would be partially allowed as a deduction
(D) No treatment is required. (2 x 5 = 10 Marks)
3.6 With reference to the inputs given for KG Limited above, analyze the proposal and suggest
if it would be beneficial for the Company to implement it. (3 Marks)
3.7 With reference to the inputs given for Gangotri Limited as above:
(i) What is the present EPS of both the companies?
(ii) If the proposed merger takes place, what would be the new earnings per share for
Gangotri Ltd. (assuming the merger takes place by exchange of Equity Shares and
the Exchange Ratio is based on the Current Market Price)? Assume no synergy
impact. (6 Marks)
3.8 With reference to the inputs given for El Gee Industries Limited,
(i) Calculate the current cost and profit per unit and identify the non-value added
activities in the production process.
(ii) Calculate the new target cost per unit for a sales price of ` 675 if the profit per unit is
maintained. (6 Marks)
PART – A
3.1 (B)
3.2 (B)
3.3 (D)
3.4 (D)
3.5 (B)
PART – B
3.6 Analysis of the proposal to make changes to the inspection process:
The company wants to reduce the cost of poor quality on account of rejected items from
the process. The current rejection rate is 5% that is proposed to be improved to 3% of
units input.

The expected benefit to the company can be worked out as follows:

The units of input each day = 5,000. At the current rate of 5%, 250 units of input are
rejected each day. It is proposed to reduce rejection rate to 3%, that is 150 units of input
rejected each day. Therefore, improvements to the inspection process would reduce the
number of units rejected by 100 units each day. The resultant cost of poor quality would
reduce by ` 20,000 each day (100 units of input × ` 200 cost of one rejected unit).
The cost of implementing these additional controls to the inspection process would be `
15,000 each day.
The net benefit to the company on implementing the proposal would be ` 5,000 each day.
Therefore, the company should implement the proposal.
3.7 (i) Present EPS of Gangotri Ltd. (GL) and Madhruk Ltd. (ML)
GL ML
Total Current Earnings (a) ` 2,50,000 ` 90,000
No. of outstanding shares (b) 50,000 30,000
EPS (a)/ (b) ` 5.00 ` 3.00
(ii) Calculation of new EPS of GL

No. of equity shares to be issued by GL to ML
= 30,000 shares × ` 14/` 21 = 20,000 shares
Total no. of shares in GL after acquisition of ML
= 50,000 + 20,000 = 70,000
Total earnings after tax [after acquisition]
= ` 2,50,000 + ` 90,000 = ` 3,40,000
EPS = ` 3,40,000/ ` 70,000 = ` 4.86
3.8 (i) The current cost and profit per unit are calculated as below:
Cost Component Units Actual Cost p.a. Actual Cost
for 10,000 racks per rack (`)
(`)
Revenue 10,000 racks 75,00,000 750
Direct Material 5,20,000 sq. ft. 20,00,000 200
Direct Labour 1,00,000 hrs. 10,00,000 100

Machine Setup 15,000 hrs. 1,50,000 15

Mechanical Assembly 200,000 hrs. 30,00,000 300
Total Cost 61,50,000 615
Profit 13,50,000 135
Therefore, the current cost is ` 615 p.u. while the profit is ` 135 p.u. Machine setup
is the time required to get the machines and the assembly line ready for production.
In this case, 15,000 hours spent on setting up does not add value to the storage
racks directly. Hence, it is a non-value add activity.
(ii) New sale price per rack is `675 per unit. The profit per unit needs to be maintained
at ` 135 per unit. Hence, the new target cost per unit = new selling price per unit –
required profit per unit = ` 675 - ` 135 = ` 540 per unit.
CASE STUDY - 4
You are advising companies in mergers and acquisitions. One of your clients, T Limited reached
out to you with their interest in acquiring companies for their inorganic growth. They have
provided you with an analysis of their initial target list along with some business insights
obtained through various channels. You are required to consider the details below and answer
the questions.
PB Private Limited
The promoters of this company are Z & Y who hold about 90% in the company. The remaining
10% is held by a group of minority shareholders of which 9% is held by J in his individual
capacity. Whilst the promoters of the company are willing to offload their shares completely at
a fair price, J, being a significant minority shareholder, may be creating problems arid he may
also demand higher price to capitalise on the opportunity.
J is also in the board of the Company and has issues with the Board Chairman on various
matters. He has also written to the Registrar of Companies (RoC) that the matters discus sed by
him in the board meetings are filtered by the Chairman and the minutes do not reflect the facts
and the key discussion matters appropriately. Z is the Chairman of the Board and he believes
that his decision is final with respect to board minutes and even the RoC has no role to play.
Further, the promoters wants to know about the powers to acquire shares of Shareholders
dissenting from scheme or contract approved by the majority or how they can directly purchase
Minority Shareholding, under Companies Act, 2013.
IP Limited
IP Limited is the market leader in introducing innovation in the paper industry. The advanced
3D printing capable new generation machineries are imported by the Company which has

helped the company in cutting its cost considerably and improving its profitability. Post
introduction of Goods and Service Tax (GST), the Company has resorted to certain practices
which were challenged by the Department. Several GST refunds received by the Company from
the Goods and Service Tax department were alleged to be failing the principle of unjust
enrichment under the Act. The exposure arising out of the same needs careful evaluation.
Further, the company is also having several issues with respect to supply and reversals/returns
and the process of invoicing/raising of credit and debit notes requires complete overhaul. It has
paid GST on several supplies without considering the subsequent reversals resulting in over
payment of taxes since it was not clear on the provisions, clarity was also sought on all owable
refunds. Further, the time limits for claiming refunds of excess tax paid/unutilised Input credit
also requires evaluation since this could have a significant impact on the net worth of the
company.
DP (Regd.)
DP (Regd.) is a partnership firm where G and K are the current partners. Earlier M was also a
partner, who retired on 31.03.2019. The firm primarily focuses on exports and has got good
recoveries over the past 2 years.
Majority of the exports of the firm were routed through a third party under the deemed exports
category which was challenged by the GST authorities recently. The firm has also been slapped
with a tax notice on their supplies made in financial year 2018-19 which if confirmed would
virtually result in wiping out all the net worth and the partners may have to pay from their
personal assets in view of their joint and several liability.
G and K believe that if there is a requirement to pay the tax, then M would also be required to
pay the same as per the applicable provisions, though M challenges this position. In view of the
tax uncertainty, the firm is willing to consider a total buy out by any large company.
Part-A
4.1 Presume that T Limited proposes to pursue amalgamation of PB Pvt. Ltd. and pursuant to
the same, agrees to pay higher price (higher than the price decided under the scheme) to
J based on his negotiation, the extra amount/compensation received by J shall be:
(A) Fully payable to him in his individual capacity.
(B) Full payable to the remaining minority shareholders.
(C) Allocated to all minority shareholders on pro rata basis.
(D) Allocated to all majority shareholders on pro rata basis.
4.2 Z has an absolute discretion to exclude the matters raised by J in the board minutes, if it -
(A) is relevant or material to the proceedings.
(B) is detrimental to the interests of the Chairman.

(C) is or could reasonably be regarded as defamatory of any person.

(D) is a dissent in a majority decision.
4.3 The GST liability of IP Ltd. as a supplier will reduce when the:
(A) Credit note is issued by the supplier.
(B) Credit note is issued by the customer.
(C) Debit note is issued by the supplier.
(D) Debit note is issued by the customer.
4.4 M is liable to pay GST, interest and penalty of the firm due:
(A) Till the date of the retirement notwithstanding any intimation to Commissioner.
(B) Till the date of the intimation provided to the commissioner.
(C) Indefinitely notwithstanding the retirement/intimation.
(D) Not at all liable.
4.5 The time limit for making an application for claiming refund of GST taxes paid by I P Ltd. is:
(A) 3 years from the relevant date.
(B) 2 years from the relevant date.
(C) None since there is no time limit.
(D) None since such refund can never be claimed. (2 x 5 = 10 Marks)
Part-B
4.6. With the reference to the decision to acquire P B Private Limited by T limited, discuss the
powers to acquire shares of Shareholders dissenting from scheme or contract approved
by Majority and also discuss various provision of purchase of minority shareholding, as
required by Z & Y. (10 Marks)
4.7 Under what circumstances IP limited is legally entitled to the GST refunds and can also
retain such amounts without having the requirement to pass it on to anybody else? Also
brief about what are allowable refunds. (5 Marks)
PART – A
4.1 (C)
4.2 (C)
4.3 (A)

4.4 (A)
4.5 (B)
PART – B
4.6 POWER TO ACQUIRE SHARES OF SHAREHOLDERS DISSENTING FROM SCHEME
OR CONTRACT APPROVED BY MAJORITY [SECTION 235 OF THE COMPANIES ACT,
2013]
(1) Basic requirements as to acquisition of shares [Sub-section (1)]:
• The scheme or contract involving the transfer of shares or any class of sha res
in a company (the transferor company) to another company (the transferee
company) has been approved by the holders of not less than 9/10th in value of
the shares whose transfer is involved.
• The approval from 9/10th shareholders in value shall be received within four
months after making of an offer in that behalf by the transferee company.
• The shares already held at the date of the offer by Transferee Company, or by
a nominee of the transferee company or its subsidiary companies shall not be
counted for this purpose. The transferee company shall express his desire to
acquire the remaining shares of dissenting shareholders within two months after
the expiry of the said four months and shall give notice in the prescribed manner
to any dissenting shareholder that it desires to acquire his shares.
(2) Order of Tribunal to acquire shares of dissenting shareholders [Sub-section
(2)]: Where a notice under sub-section (1) is given, the transferee company shall,
unless on an application made by the dissenting shareholder to the Tribunal, within
one month from the date on which the notice was given and the Tribunal thinks fit to
order otherwise, be entitled to and bound to acquire those shares on the terms on
which, under the scheme or contract, the shares of the approving shareholders are
to be transferred to the transferee company.
(3) Application by dissenting shareholders [Sub-section (3)]:
(i) Where a notice has been given by the transferee company on an application
made by the dissenting shareholder and the Tribunal has not, made an order
to the contrary i.e. order made in favor of the company, the transferee company
shall, on the expiry of one month from the date on which the notice has been
given, or,
(ii) if an application to the Tribunal by the dissenting shareholder is then pending, -
Nothing is required to be done.
(iii) after that application has been disposed of-
shall send a copy of the notice to the transferor company together with an

instrument of transfer, to be executed on behalf of the shareholder by any person

appointed by the transferor company and on its own behalf by the transferee
company, and pay or transfer to the transferor company- the amount or other
consideration representing the price payable by the transferee com pany for the
shares which that company is entitled to acquire,
(iv) The transferor company shall—
(a) thereupon register the transferee company as the holder of those shares;
and
(b) within one month of the date of such registration, inform the dissenting
shareholders of the fact of such registration and of the receipt of the
amount or other consideration representing the price payable to them by
the transferee company.
(4) Separate Bank account for disbursement to entitled shareholders [Sub-section
(4)]: Any sum received by the transferor company under this section shall be paid
into a separate bank account, and any such sum and any other consideration so
received shall be held by that company in trust for the several persons entitled to the
shares in respect of which the said sum or other consideration were respectively
received and shall be disbursed to the entitled shareholders within sixty days.
(5) Scheme/contract made before the commencement of Act [Sub-section (5)]: In
relation to an offer made by a transferee company to shareholders of a transferor
company before the commencement of this Act, this section shall have effect with the
following modifications, namely:—
(a) in sub-section (1), for the words “the shares whose transfer is involved oth er
than shares already held at the date of the offer by, or by a nominee of, the
transferee company or its subsidiaries,”, the words “the shares affected” shall
be substituted; and
(b) in sub-section (3), the words “together with an instrument of transfer, to be
executed on behalf of the shareholder by any person appointed by the transferee
company and on its own behalf by the transferor company” shall be omitted.
Explanation — For the purposes of this section, “dissenting shareholder” includes
a shareholder who has not assented to the scheme or contract and any shareholder
who has failed or refused to transfer his shares to the transferee company in
accordance with the scheme or contract.
Purchase of Minority Shareholding [Section 236]
(1) Notify to company for purchase of minority shareholding [Sub-section (1)]:
• In the event of an acquirer, or a person acting in concert with such acquirer -
becoming registered holder of ninety per cent. or more of the issued equity share

capital of a company, or
• in the event of any person or group of persons- becoming ninety per cent.
majority or holding ninety per cent. of the issued equity share capital of a
company,
by virtue of an amalgamation, share exchange, conversion of securities or for any
other reason, such acquirer, person or group of persons, as the case may be, shal l
notify the company of their intention to buy the remaining equity shares.
(2) Offer of equity shares to minority shareholders by acquirer, person or group of
persons [Sub-section (2)]: The acquirer, person or group of persons shall offer to
the minority shareholders of the company for buying the equity shares held by such
shareholders at a price determined on the basis of valuation by a registered valuer in
accordance with Rule 27.
(3) Offer to majority shareholder to purchase the minority equity shareholding
[Sub-section (3)]: The minority shareholders of the company may offer to the
majority shareholders to purchase the minority equity shareholding of the company
at the price determined in accordance with Rule 27.
(4) Deposit of amount in separate bank account [Sub-section (4)]: The majority
shareholders shall deposit an amount equal to the value of shares to be acquired by
them under sub-section (2) or sub-section (3), as the case may be, in a separate bank
account to be operated by the company whose shares are being transferred for at
least one year for payment to the minority shareholders and such amount shall be
disbursed to the entitled shareholders within sixty days:
Provided that such disbursement shall continue to be made to the entitled
shareholders for a period of one year, who for any reason had not been made
disbursement within the said period of sixty days or if the disbursement have been
made within the aforesaid period of sixty days, fail to receive or claim payment arising
out of such disbursement.
(5) Role of company whose shares are being transferred to act as a transfer agent
in the event of purchase [Sub-section (5)]: In the event of a purchase under this
section, the company whose shares are being transferred shall act as a transfer agent
for receiving and paying the price to the minority shareholders and for taking delivery
of the shares and delivering such shares to the majority, as the case may be.
(6) Company whose shares are being transferred to issue shares [Sub-section (6)]:
In the absence of a physical delivery of shares by the shareholders within the time
specified by the company,
• the share certificates shall be deemed to be cancelled, and

• the company whose shares are being transferred shall be authorised to issue
shares in lieu of the cancelled shares and complete the transfer in accordance
with law, and
• make payment of the price out of deposit made under sub-section (4) by the
majority in advance to the minority by despatch of such payment.
(7) Right of shareholders to make an offer for sale of minority equity shareholding
[Sub-section (7)]: In the event of a majority shareholder or shareholders requiring
a full purchase and making payment of price by deposit with the company for-
• any shareholder or shareholders who have died or ceased to exist, or
• whose heirs, successors, administrators or assignees have not been brought on
record by transmission,
the right of such shareholders to make an offer for sale of minority equity shareholding
shall continue and be available for a period of three years from the date of majority
acquisition or majority shareholding.
(8) Sharing of additional compensation [Sub-section (8)]: Where the shares of
minority shareholders have been acquired in pursuance of this section, and as on or
prior to the date of transfer following such acquisition, the shareholders holding
seventy-five per cent. or more minority equity shareholding negotiate or reach an
understanding on a higher price for any transfer, proposed or agreed upon, of the
shares held by them without disclosing the fact or likelihood of transfer taking place
on the basis of such negotiation, understanding or agreement,-
the majority shareholders shall share the additional compensation so received by
them with such minority shareholders on a pro rata basis.
Explanation—For the purposes of this section, the expressions “acquirer” and “person
acting in concert” shall have the meanings respectively assigned to them in clause
(b) and clause (e) of sub-regulation (1) of regulation 2 of the Securities and Exchange
Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.
(9) Determination of price for purchase of minority shareholders: Rule 27 prescribes
that the registered valuer shall determine the price to be paid by the acquirer, person
or group of persons referred to in sub-section (1) of section 236 of the Act for
purchase of equity shares of the minority shareholders of the company in accordance
with the prescribed rules.
(10) On failure of acquisition of shares [Sub-section (9)]: When a shareholder or the
majority equity shareholder fails to acquire full purchase of the shares of the minority
equity shareholders, then, the provisions of this section shall continue to apply to the
residual minority equity shareholders, even though,—

(a) the shares of the company of the residual minority equity shareholder had been
delisted; and
(b) the period of one year or the period specified in the regulations made by the
Securities and Exchange Board under the Securities and Exchange Board of
India Act, 1992, had elapsed.
4.7
Particulars
The refundable amount under GST shall, instead of being credited to the Consumer
Welfare Fund, be paid to IP Limited, if such amount is relatable to —
(a) refund of tax paid on export of goods or services or both or on inputs or input
services used in making such exports;
(b) refund of unutilized ITC in case of zero rated supplies made without payment
of tax or accumulated ITC on account of inverted duty structure;
(c) refund of tax paid on a supply which is not provided, either wholly or partially,
and for which invoice has not been issued, or where a refund voucher has
been issued;
(d) refund of tax in pursuance of section 77 of the CGST Act, 2017, i.e. tax paid
on a transaction treated to be an intra-State supply, but which is subsequently
held to be an inter-State supply or vice-versa.;
(e) the tax and interest, if any, or any other amount paid by Innovative Papers
Limited, if it had not passed on the incidence of such tax and interest to any
other person; or
(f) the tax or interest borne by such other class of applicants as the Government
may, on the recommendations of the Council, by notification, specify [Section
54(8) of the CGST Act, 2017]. [Any 3 points]
The allowable refunds are as under:-
(i) Export/supply to SEZ developer/unit on payment of IGST
(ii) Refund of unutilized ITC
(iii) Refund of tax paid on the supply of goods regarded as deemed exports may
be claimed.
(iv) Refund of any balance in the electronic cash ledger after payment of tax,
interest, penalty, fee or any other amount payable under this Act or the rules
made there under may be claimed.
(v) Refund on account of tax paid on a supply which is not provided, either
wholly or partially, and for which invoice has not been issued (tax paid on
advance payment).
(vi) Refund of tax wrongly collected and paid to the Government (i.e. CGST &
SGST paid by treating the supply as intra-State supply which is subsequently
held as inter-State supply and vice versa).

(vii) Refund of the IGST paid by tourist leaving India on any supply of goods taken
out of India by him.
(viii) Tax becomes refundable as a consequence of judgment, decree, order or
direction of the Appellate Authority, Appellate Tribunal or any Court.
(ix) On finalization of provisional assessment, if any tax becomes refundable to
taxpayer (on account of assessed tax on final assessment being less than
the tax deposited by the taxpayer).
(x) Refund of taxes on purchases made by UN bodies or embassies etc.
(xi) Refund of taxes to the retail outlets established in departure area of an
international airport beyond immigration counters making tax free supply to
an outgoing international tourist.
(xii) Refund of advance tax deposited by a casual taxable person/ Non-resident
taxable person.
(xiii) Refund of excess payment of tax.
[Any 2 points]
CASE STUDY - 5
S Limited is company having its registered and corporate office at New Delhi. It is specialised
in manufacturing machinery products and is looking to expand its operations across the nation.
60% of the S Limited's shares are held by the Government of India and rest by other investors.
The company is also in the process of negotiations with other companies to take over their
business for strategic advantage.
Since the company has been in existence for more than 10 years, the board resolution was
passed to make political contributions amounting to ` 10,00,000 for the year ending March 31 st,
2021. However, the average net profit of company for immediately preceding 3 years is
` 8,00,000 only. The management of company is concerned regarding the maximum amount of
political contributions to be made considering the relevant provisions of laws being in force.
Since the timeline to continue the audit for existing auditors has come to an end. So, at the
meeting held of its Board of Directors, it was decided to unanimously appoint M/s ABC Chartered
Accountants. This is the first time that S Limited would be applying Ind AS for the preparation
of its financials for the current financial year 2020-2021. Ind AS mandates that an entity shall
present three Balance Sheets as at: (a) the end of the current period; (b) the end of the
preceding period; and (c) the beginning of the preceding period, in its first -time adoption of Ind
AS. During this process, the company is also required to present the opening Ind AS Balance
Sheet as at the date of transition. Accordingly, following is the Balance Sheet prepared as per
earlier GAAP as at the beginning of the preceding period along with the additional information:

Balance Sheet as at 31st March, 20201

(All figures are in '000, unless otherwise specified)
Particulars Amount (`)
EQUITY AND LIABILITIES
(1) Shareholder's Funds
(a) Share Capital 10,00,000
(b) Reserves & Surplus 25,00,000
(2) Non-Current Liabilities
(a) Long Term Borrowings 4,50,000
(b) Long Term Provisions 3,50,000
(c) Deferred Tax Liabilities 3,50,000
(3) Current Liabilities
(a) Trade Payables 22,00,000
(b) Other Current Liabilities 4,50,000
(c) Short Term Provisions 12,00,000
TOTAL 85,00,000
ASSETS:
(1) Non-Current Assets
(a) Property, Plant & Equipment (net) 20,00,000
(b) Intangible Assets 2,00,000
(c) Goodwill 1,00,000
(d) Non-Current Investments 5,00,000
(e) Long Term Loans & Advances 1,50,000
(f) Other Non-Current Assets 2,00,000
(2) Current Assets
(a) Current Investments 18,00,000
(b) Inventories 12,50,000
(c) Trade Receivables 9,00,000
(d) Cash and Bank Balances 10,00,000
(e) Other Current Assets 4,00,000
TOTAL 85,00,000
1 to be read as 2019

Additional Information:
• Other current liabilities include ` 3,90,000 liabilities to be paid in cash such as expense
payable, salary payable etc. and ` 60,000 are statutory government dues.
• Long term loans and advances include ` 40,000 loan and the remaining amount consists
advance to staff of ` 1,10,000.
• Other non-current assets of ` 2,00,000 consists Capital advances to suppliers.
• Other current assets include ` 3,50,000 current assets receivable in cash and Prepaid
expenses of ` 50,000.
• Short term provisions include Dividend payable including DDT of ` 2,00,000. The dividend
payable had been as a result of board meeting wherein the declaration of dividend for
financial year 2018-2019 was made. However, it is subject to approval of shareholders in
the annual general meeting.
Chief Financial Officer of S Limited has also presented the following information against
corresponding relevant items in the Balance Sheet:
• Property, Plant & Equipment consists a class of assets as office buildings whose carrying
amount is ` 10,00,000. However, the fair value of said office building as on the date of
transition is estimated to be ` 5,00,000. Company wants to follow revaluation model as its
accounting policy in respect of its property, plant and equipment for the first annual Ind AS
financial statements.
• The fair value of Intangible Assets as on the date of transition is estimated to be
` 2,50,000. However, the management is reluctant to incorporate the fair value changes
in books of account although auditor does not agree to the same.
• S Ltd. had acquired 80% shares in Excel Private Limited few years ago thereby acquiring
the control in it at that time. S Ltd. recognised goodwill as per erstwhile accounting
standards by accounting the excess of consideration paid over the net assets acquired at
the date of acquisition. Fair value exercise was not done at the time of acquisition. Now
auditors insist the company that fair value exercise must be done with retrospective effect
as on the date of transition.
• Trade receivables include an amount of ` 20,000 as provision for doubtful debts measured
in accordance with previous GAAP. Now as per latest estimates, the provision needs to be
revised to ` 25,000.
• Six years ago, company had given a loan of ` 1,00,000 to an entity for the term of 10 years.
Transaction costs were incurred separately for this loan. The loan carries an interest rate
of 7% p.a. and it was carried at cost in its initial recognition. The principal amount is to be

repaid in equal instalments over the period of ten years at the year end. Interest is also
payable at each year end. The fair value of loan as on the date of transition is ` 50,000 as
against the carrying amount of loan which at present amounts ` 40,000. However, Ind AS
109 mandates to charge the interest expense as per effective interest method after the
adjustment of transaction costs. Management says it is tedious task in the given case to
apply the effective interest rate changes with retrospective effect and hence is reluctant to
apply the same retrospectively in its first-time adoption.
• In the long-term borrowings, ` 4,50,000 of component is due towards the State
Government. Interest is payable on the government loan at 4% p.a., however the prevailing
rate in the market at present is 8% p.a. The fair market value of loan stands at ` 4,20,000
as on the relevant date.
• Under Previous GAAP, the mutual funds were measured at cost or market value, whichever
is lower. Under Ind AS, the Company has designated these investments at fair value
through profit or loss. The value of mutual funds as per previous GAAP is ` 2,00,000 as
included in 'current investments'. However, the fair value of mutual funds as on the date of
transition is ` 2,30,000.
• Ignore separate calculation of deferred tax on above adjustments. Assume the net deferred
tax income to be ` 50,000 on account of Ind AS transition adjustments.
During the briefing with internal audit head of S Limited, internal auditor has put an observation
that a contractor, M/s DG Brothers Private Limited, has been providing the services to S Limited
since the beginning of the year. M/s DG Brothers Private Limited does billing to S Limited's
corporate office each month at ` 50,000 (exc. GST). From the invoice particulars, it is found
that M/s DG Brothers Private Limited is situated at Ghaziabad, Uttar Pradesh and having PAN
no. XXXXXXXXXX. The total invoice amount comes to ` 59,000 incorporating GST @ 18%.
Meanwhile, company deducts Tax Deduction at Source (TDS) of M/s DG Brothers Private
Limited each month amounting to ` 500 on the amount of ` 50,000 and not on ` 59,000.
Accountant is worried that he should have been deducting TDS on ` 59,000 as its non-
compliance would require the company to pay interest on late payment of TDS / Short deduction.
There is another service provider, Amit Shukla who as a professional had assisted the company
for Ind AS adjustments. Amit Shukla billed ` 10,00,000 to the company on 16th January, 2021.
Company booked the said invoice in its books with the date as mentioned in invoice and
deducted the TDS accordingly. However, company has deposited the due TDS amount on
30th April, 2021.

Part-A
(Multiple Choice Questions)
5.1 Appointment of S Limited's statutory auditors at annual general meeting is not valid since:
(A) Prior approval of Central Government has not been taken.
(B) Prior approval of Comptroller and Auditor General of India has not been taken.
(C) Appointment should be valid for 1 year only.
(D) Comptroller and Auditor General of India auditors can only appoint the auditors.
5.2 Calculate the amount of political contribution S Limited can make to political party for the
year ending 31st March, 2020.
(A) ` 10,00,000
(B) ` 8,00,000
(C) Nil
(D) No Limit
5.3 Calculate the amount of TDS to be deducted by S Limited against the monthly invoice of
M/s DG Brothers Private Limited.
(A) ` 1,180
(B) ` 1,000
(C) ` 885
(D) ` 750
5.4 Calculate the interest on late payment of TDS, S Limited is required to pay a nd deposit to
the account of Central Government in the case of Amit shukla.
(A) ` 5,000
(B) ` 7,500
(C) ` 4,500
(D) ` 4,000
5.5 The place of supply and tax leviable in case of services provided by M/s DG Brothers
Private Limited to S Limited is-
(A) Delhi, CGST & SGST
(B) Delhi, IGST

(C) Uttar Pradesh, CGST & SGST

(D) Uttar Pradesh, IGST (2 x 5 = 10 Marks)
Part-B
(Descriptive Questions)
5.6 Discuss in brief about the provisions/ requirements of the relevant Ind AS, which is required
for preparation of S Limited's opening Balance Sheet as on the date of transition. (3 Marks)
5.7 Prepare transition date Balance Sheet of S Limited as per Indian Accounting Standards,
according to the format prescribed in Division II - Ind AS Schedule III to the Companies
Act, 2013. (4 Marks)
5.8 Show necessary explanation for each of the items presented by chief financial officer in
the form of notes, which may or may not require the adjustment as on the date of transition.
(8 Marks)
PART – A
5.1 (D)
5.2 (C)
5.3 (B) or (D)
(Note: For the period between 14.5.2020 and 31.03.2021, tax is to be deducted at source
at the rate reduced by 25% on the payment made to residents. Accordingly, rate of TDS
u/s 194C where payee is a company is 2% for the period between 1.4.2020 to 13.5.2020
and 1.5% for the period between 14.5.2020 and 31.03.2021.
The question requires the candidates to calculate the amount of TDS to be deducted by S
Limited against the monthly invoice of M/s. DG Brothers Private Ltd. It, however, does not
state for which month the computation of TDS is to be made. Therefore, it is possible to
compute tax deducted at source by applying rate of tax @2% or @ 1.5%. Accordingly, the
answer given in option (B) ` 1,000 (` 50,000 x 2%) would be correct for the month of April
and May (upto 13 th May), 2020. The answer given in option (D) ` 750 (` 50,000 x 1.5%)
would be correct, for the months of May, 2020 (after 13 th May) to March, 2021.)
5.4 (C)
5.5 (B)
(Note: It has been assumed that M/s DG Brothers Private Limited is not a works contractor.
Thus, answer has been given by applying section 12(2)(a) of the IGST Act, 2017, i.e. the
place of supply of services made to a registered person shall be the location of s uch
person.)

PART – B
5.6 Ind AS 101 prescribes the accounting principles for first-time adoption of Ind AS. It lays
down various ‘transition’ requirements when a company adopts Ind AS for the first time.
Conceptually, the accounting under Ind AS should be applied retrospectively at the time
of transition to Ind AS. However, to ease the process of transition, Ind AS 101 has given
certain exemptions from retrospective application of Ind AS.
An entity shall prepare and present an opening Ind AS Balance Sheet at the date of
transition to Ind AS. This is the starting point for its accounting in accordance with Ind
AS.
An entity shall, in its opening Ind AS Balance Sheet:
- recognise all assets and liabilities whose recognition is required by Ind AS;
- not recognise items as assets or liabilities if Ind AS do not permit such recognition;
- reclassify items that it recognised in accordance with previous GAAP as one type of
asset, liability or component of equity, but are a different type of asset, liability or
component of equity in accordance with Ind AS; and
- apply Ind AS in measuring all recognised assets and liabilities.
The accounting policies in opening Ind AS Balance Sheet may differ from those that it
used for the same date using previous GAAP. The resulting adjustments arise from
events and transactions before the date of transition to Ind AS, shall be recognised
directly in retained earnings (or, if appropriate, another category of equity) at the date of
transition to Ind AS.
5.7 Transition Date (Opening) Ind-As Balance Sheet of S Limited
As at 1 st April 2019
(`)
Particulars Previous Transitional Opening Ind
GAAP Ind AS AS Balance
adjustments Sheet
ASSETS
Non-current assets
Property, plant and equipment (Note 1 20,00,000 (5,00,000) 15,00,000
of Ans 5.8)
Goodwill (Note 2 of Ans 5.8) 1,00,000 - 1,00,000
Other Intangible assets (Note 3 of Ans 2,00,000 - 2,00,000
5.8)

Financial assets:
Investment 5,00,000 - 5,00,000
Loans (Note 4 of Ans 5.8) 40,000 10,000 50,000
Other financial assets 1,10,000 - 1,10,000
Other non-current assets 2,00,000 - 2,00,000
Current assets
Inventories 12,50,000 - 12,50,000
Financial assets
Investments (Note 5 of Ans 5.8) 18,00,000 30,000 18,30,000
Trade receivables (Note 6 of Ans 9,00,000 - 9,00,000
5.8)
Cash and bank balances 10,00,000 - 10,00,000
Other financial assets 3,50,000 - 3,50,000
Other current assets 50,000 - 50,000
TOTAL ASSETS 85,00,000 (4,60,000) 80,40,000
EQUITY AND LIABILITIES
Equity
Equity share capital 10,00,000 - 10,00,000
Other equity 25,00,000 (2,10,000) 22,90,000
Non-current liabilities
Financial liabilities
Borrowings (Note 7 of Ans 5.8) 4,50,000 - 4,50,000
Provisions 3,50,000 - 3,50,000
Deferred tax liabilities (Net) 3,50,000 (50,000) 3,00,000
Current liabilities
Financial liabilities
Trade payables 22,00,000 - 22,00,000
Other financial liabilities 3,90,000 - 3,90,000
Other current liabilities 60,000 - 60,000
Provisions (Note 8 of Ans 5.8) 12,00,000 (2,00,000) 10,00,000
TOTAL EQUITY AND LIABILITIES 85,00,000 (4,60,000) 80,40,000

OTHER EQUITY
Retained Earnings (`) Total

As on the date of transition 22,90,000 (W.N.1) 22,90,000
Working Note 1:
Retained earnings balance:
Balance as per Earlier GAAP 25,00,000
Transitional adjustment due to revaluation of PPE (5,00,000)
Transitional adjustment due to loan’s fair value 10,000
Transitional adjustment due to increase in mutual fund’s fair value 30,000
Transitional adjustment due to decrease in deferred tax liability 50,000
Transitional adjustment due to decrease in provisions (dividend) 2,00,000
Total 22,90,000
Disclosure forming part of financial statements:
Proposed dividend on equity shares is subject to the approval of the shareholders of the
company at the annual general meeting and should not recognized as liability as at the
Balance Sheet date.
5.8 Explanation for the items as presented by chief financial officer against the
corresponding relevant items which may or may not require adjustment on the date of
transition as per Ind AS 101 in S Limited’s opening Ind AS balance sheet:
Note 1: Property, plant & Equipment:
As per para D5 of Ind AS 101, an entity may elect to measure an item of property, plant
and equipment at the date of transition to Ind AS at its fair value and use that fair value as
its deemed cost at that date.
Para D7AA has to be applied for all items of property, plant and equipment. So, if D5
exemption is taken for buildings, Ind AS will have to be applied retrospectively for other
assets as well. Since, an entity elects to measure an item of property, plant and equipment
at the date of transition to Ind AS at its fair value and use that fair value as its deemed cost
at that date, it is assumed that the carrying amount of other assets based on retrospective
application of Ind AS is equal to their fair value of ` 10 lakhs.
Note 2: Goodwill:
Ind AS 103 mandatorily requires measuring the assets and liabilities of the acquiree at its
fair value as on the date of acquisition. However, a first time adopter may elect to not
apply the provisions of Ind AS 103 with retrospective effect that occurred prior to the date
of transition to Ind AS.

Hence company can continue to carry the goodwill in its books of account as per the
previous GAAP.
Note 3: Intangible assets:
Para D7 read with D6 of Ind AS 101 states that a first-time adopter may elect to use a
previous GAAP revaluation at, or before, the date of transition to Ind AS as deemed cost
at the date of the revaluation, if the revaluation was, at the date of the reval uation, broadly
comparable to:
(a) Fair value; or
(b) Cost or depreciated cost in accordance with Ind AS, adjusted to reflect, for example,
changes in a general or specific price index.
However, there is a requirement that Intangible assets must meet the definition and
recognition criteria as per Ind AS 38.
Hence, company can avail the exemption given in Ind AS 101 as on the date of transition
to use the carrying value as per previous GAAP.
Note 4: Loan:
Para B8C of Ind AS 101 states that if it is impracticable (as defined in Ind AS 8) for an
entity to apply retrospectively the effective interest method in Ind AS 109, the fair value of
the financial asset or the financial liability at the date of transition to Ind AS shall be the
new gross carrying amount of that financial asset or the new amortised cost of that financial
liability at the date of transition to Ind AS.
Accordingly, ` 50,000 would be the gross carrying amount of loan and difference of
` 10,000 (` 50,000 – ` 40,000) would be adjusted to retained earnings.
Note 5: Mutual Funds:
Para 29 of Ind AS 101 states that an entity is permitted to designate a previously
recognised financial asset as a financial asset measured at fair value through profit or loss
in accordance with paragraph D19A. The entity shall disclose the fair value of financial
assets so designated at the date of designation and their classification and carrying amount
in the previous financial statements.
D19A states that an entity may designate a financial asset as measured at fair value
through profit or loss in accordance with Ind AS 109 on the basis of the facts and
circumstances that exist at the date of transition to Ind AS.
Note 6: Trade receivables:
Para 14 of Ind AS 101 states that an entity’s estimates in accordance with Ind AS at the
date of transition to Ind AS shall be consistent with estimates made for the same date in
accordance with previous GAAP (after adjustments to reflect any difference in accounting
policies), unless there is objective evidence that those estimates were in error.

Para 15 of Ind AS 101 further states that an entity may receive information after the date
of transition to Ind AS about estimates that it had made under previous GAAP. In
accordance with paragraph 14, an entity shall treat the receipt of that information in the
same way as non-adjusting events after the reporting period in accordance with Ind AS 10,
Events after the Reporting Period.
The entity shall not reflect that new information in its opening Ind AS Balance Sheet (unless
the estimates need adjustment for any differences in accounting policies or there is
objective evidence that the estimates were in error). Instead, the entity shall reflect that
new information in profit or loss (or, if appropriate, other comprehensive income).
Note 7: Government Grant:
Para 10A of Ind AS 20 states that the benefit of a government loan at a below-market rate
of interest is treated as a government grant. The loan shall be recognised and measured
in accordance with Ind AS 109, Financial Instruments. The benefit of the below-market
rate of interest shall be measured as the difference between the initial carrying value of
the loan determined in accordance with Ind AS 109, and the proceeds received. The
benefit is accounted for in accordance with this Standard.
However, Para B10 of Ind AS 101 states, a first-time adopter shall classify all government
loans received as a financial liability or an equity instrument in accordance with Ind AS 32,
Financial Instruments: Presentation. Except as permitted by paragraph B11, a first-time
adopter shall apply the requirements in Ind AS 109, Financial Instruments, and Ind AS 20,
Accounting for Government Grants and Disclosure of Government Assistance,
prospectively to government loans existing at the date of transition to Ind AS and shall not
recognise the corresponding benefit of the government loan at a below-market rate of
interest as a government grant. Consequently, if a first-time adopter did not, under its
previous GAAP, recognise and measure a government loan at a below-market rate of
interest on a basis consistent with Ind AS requirements, it shall use its previous GAAP
carrying amount of the loan at the date of transition to Ind AS since the carrying amount of
the loan in the opening Ind AS Balance Sheet. An entity shall apply Ind AS 109 to the
measurement of such loans after the date of transition to Ind AS.
Note 8: Dividend
Dividend should be deducted from retained earnings during the year when it has been
declared and approved. Accordingly, the provision declared for preceding year should be
reversed (to rectify the wrong entry). Retained earnings would increase proportionately
due to such adjustment.

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DISCLAIMER

students in their education. Alternate Answers have been incorporated,

wherever necessary. While due care is taken in preparation of the answers,

attention of the Director of Studies. The Council of the Institute is not in

anyway responsible for the correctness or otherwise of the answers

have been worked out on the basis of certain assumptions/views derived

based on the assumption made or view taken.

© The Institute of Chartered Accountants of India

PAPER – 6F: MULTI-DISCIPLINARY CASE STUDY

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Review of accounts and records

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ANSWER TO CASE STUDY 1

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Year 1 Year 2 Year 3 Year 4

Projected Cash Flows

Year 1 Year 2 Year 3 Year 4

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Projected Cash Flows:-

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© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

(D) It will not affect the maintainability of the petition.

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The expected benefit to the company can be worked out as follows:

(ii) Calculation of new EPS of GL

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Machine Setup 15,000 hrs. 1,50,000 15

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(C) is or could reasonably be regarded as defamatory of any person.

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instrument of transfer, to be executed on behalf of the shareholder by any person

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© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

Balance Sheet as at 31st March, 20201

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© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

(C) Uttar Pradesh, CGST & SGST

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© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India