PROTEACH CA INTERMEDIATE JTC

Test – Branch, AS - 22, 17, 24

Total Marks – 50 Time Allowed – 1 Hour 30 Mins
Ques 1 M & S Co. of Lucknow has a branch (integral foreign operation) in Canberra, Australia. As on
31st March 2022, the following ledger balances have been extracted from the books of the Lucknow
office and the Canberra
Lucknow Office Canberra Branch
(₹ in thousand) (Aust. Dollars in thousand)
Dr. Cr. Dr. Cr.
Capital 2,000
Reserves & Surplus 1,000
Land 500
Buildings (Cost) 1,000
Buildings Depreciation Provision 200
Plant and Machinery (Cost) 2,500 200
Plant and Machinery Dep.
Provision 600 130
Debtors/Creditors 280 200 60 30
Stock as on 1-4-2021 100 20
Branch Stock Reserve 4
Cash & Bank Balances 10 10
Purchases/Sales 240 520 20 123
Goods sent to Branch 100 5
Managing Partner’s Salary 30
Wages and Salary 75 45
Rent 12
Office Expenses 25 18
Commission Receipts 256 100
Branch/HO Current Account 120 7
4,880 4,880 390 390
The following information is also available:
(i) Stock as at 31st March, 2022
Lucknow ₹ 1,50,000
Canberra A$ 3125 (all stock are out of purchases made at Abroad)
(ii) Head Office always sent goods to the Branch at cost plus 25%
(iii) Provision is to be made for doubtful debts at 5%
(iv) Depreciation is to be provided on Buildings at 10% and on Plant and Machinery at 20% on
written down value.
You are required to:
(1) Convert the Branch Trial Balance into rupees by using the following exchange rates:
Opening rate 1 A$ = ₹ 50
Closing rate 1 A$ = ₹ 53
Average rate 1 A$ = ₹ 51.00
For Fixed Assets 1 A$ = ₹ 46.00
(2) Prepare Trading and Profit and Loss Account for the year ended 31st March 2022 showing to the
extent possible H.O. results and Branch results separately.
[15]
Ques 2 The following transactions were reported by PQR Ltd during the year 2020-2021:
i. Tax Rate 30%

CA JITIN TYAGI (CA CS BCOM) M. NO. - 7011008509

PROTEACH CA INTERMEDIATE JTC
(₹ in lakh)
ii. Items disallowed in 2019-2020 and allowed for tax purposes in
2020-2021. 20.00
iii. Interest to Financial Institutions accounted in the books on
accrual basis, but actual payment was made before the due date
of filing return and allowed for tax purpose also. 20.00
iv. Donations to Private Trust made in 2020-2021 (not allowed under
Income Tax Laws). 10.00
You are required to show impact of the above items in terms of Deferred Tax Assets/Deferred Tax
Liability for the year ended 31.03.2021.
[5]
Ques 3 The accountant of Parag Ltd has furnished you with the following data related to its Business
Divisions:
Divisions A B C D Total
Segment Revenue 100 300 200 400 1,000
Segment Results 45 -70 80 -10 45
Segment Assets 39 51 48 12 150
You are requested to identify the reportable segments in accordance with criteria laid down in AS 17.
[5]
Ques 4 A consumer goods producer has changed the product line as follows:
Dish washing Bar Clothes washing Bar
(Per month) (Per month)
January 2021 – September 2021 2,00,000 2,00,000
October 2021 – December 2021 1,00,000 3,00,000
January 2022 – March 2022 Nil 4,00,000
The company has enforced a gradual enforcement of change in product line on the basis of an overall
plan. The Board of directors has passed a resolution in March 2021 to this effect. The company
follows calendar year as its accounting year.
You are required to advise the company whether it should be treated as discounting operation or not
as per AS 24?
[6]
Ques 5 Treadmill invoices goods to its branch at cost plus 20%. The branch sells goods for cash as
well as on credit. The branch meets its expenses out of cash collected from its debtors and cash sales
and remits the balance of cash to head office after withholding ₹ 20,000 necessary for meeting
immediate requirements of cash. On 31st March, 2022 the assets at the branch were as follows:

₹ (‘000)
Cash in Hand 20
Trade Debtors 768
Stock, at Invoice Price 2,160
Furniture and Fittings 1,000

During the accounting year ended 31st March, 2023 the invoice price of goods dispatched by the head
office to the branch amounted to ₹ 2 crore 64 lakhs. Out of the goods received by it, the branch sent
back to head office goods invoiced at ₹ 1,44,000. Other transactions at the branch during the year
were as follows:

CA JITIN TYAGI (CA CS BCOM) M. NO. - 7011008509

PROTEACH CA INTERMEDIATE JTC
₹ (‘000)
Cash Sales 19,400
Credit Sales 6,280
Cash collected by Branch from Credit Customers 5,684
Cash Discount allowed to Debtors 116
Returns by Customers direct to Head office (at invoice price) 204
Bad Debts written off 74
Expenses paid by Branch 1,684

On 1st January, 2023 the branch purchased new furniture for ₹ 2 lakh for which payment was made
by head office through a cheque.
On 31st March, 2023 branch expenses amounting to ₹ 12,000 were outstanding and cash in hand was
again ₹ 20,000. Furniture is subject to depreciation @ 16% per annum on diminishing balance method.
Prepare Branch Account in the books of head office for the year ended 31st March, 2023.
[15]
Ques 6 M.C.Q [4]
1. The account prepared to adjust the loading included in the value of opening and closing stock at
branch is termed as
(a) Branch adjustment account
(b) Stock reserve account
(c) Goods sent to branch account
(d) Branch debtor account
2. Which of the following is a quantitative threshold under AS 17?
(a) Absolute Amount of its Reported Profit ≥ 10% of the Combined Reported Profit of all Segments
(b) Absolute Amount of its Reported Loss ≥ 10% of the Combined Reported Loss of all Segments
(c) Either of the above
(d) None of the above
3. An Entity has acquired an Asset costing ₹ 1,00,000 for production of certain items to be sold by it. It
is deductible equally over 2 years in the books of accounts. In Tax Law, ₹ 75,000 is deductible in year
1 and balance is deductible in year 2. Tax rate 10%. In Year 1, the Entity should -
(a) Create DTL 2,500
(b) Reverse DTL 2,500
(c) Create DTA 2,500
(d) Reverse DTA 2,500
4. The Entity is disposing of piecemeal, as part of a single co-ordinated plan, of a separate major line
of business or geographical area of operations is called as -
(a) Component of an Entity
(b) Disposal Group
(c) Cash Generating Unit
(d) Discontinuing Operation

CA JITIN TYAGI (CA CS BCOM) M. NO. - 7011008509