CA Inter Accounts Question Paper Nov 2020

CA Inter Accounts Question Paper Nov 2020 – CA Inter Accounts Study Material is designed strictly as per the latest syllabus and exam pattern.

CA Inter Nov 2020 Accounts Question Paper

Question 1.
(a) A Ltd. had following assets. Calculate depreciation for the year ending 31st March, 2020 for each asset as per AS 10 (Revised) (5 Marks)

  1. Machinery purchased for ₹ 10 lakhson 1st April, 2015 and residual value after useful life of 5 years, based on 2015 prices is ₹ 10 lakhs.
  2. Land for ₹ 50 lakhs.
  3. A Machinery is constructed for ₹ 5,00,000 for its own use (useful life is 10 years). Construction is completed on 1st April, 2019, but the company does not begin using the machine until 31st March, 2020.
  4. Machinery purchased on 1st April, 2017 for ₹ 50,000 with useful life of 5 years and residual value is NIL. On 1st April, 2019, management decided to use this asset for further 2 years only.

Answer:

Asset Workings Depreciation
Machinery Cost on 1st April, 2015 = 10 Lacs
Book Value on 31st March, 2020 is below the residual value.Thus, as per AS 10, there will be no depreciation for the year ending 31st March, 2020.
Nil
Land Not a depreciable asset Nil
Machinery Depreciation begins when asset is ready for use.
Thus, even if the company has not started using the asset, it does not make any difference.
50,000
Machinery Cost on 1st April, 2017 = 50,000
Book Value as on 1st April, 2019 = 40,000
20,000
Since there has been a change in the useful life, the unamortised deprecia­ble amount will be written off over the remaining useful life i.e. 2 years

CA Inter Accounts Question Paper Nov 2020

(b) On 1st April, 2016, Mac Ltd. received a Government Grant of ₹ 60 lakhs for acquisition of machinery costing ₹ 300 lakhs. The grant was credited to the cost of the asset. The estimated useful life of the machinery is 10 years. The machinery is depreciated @ 10% on WDV basis. The company had to refund the grant in June 2019 due to non-compliance of certain conditions.

How the refund of the grant is dealt with in the books of Mac Ltd. assuming that the company did not charge any depreciation for the year 2019-20.
Pass necessary Journal Entries for the year 2019-20. (5 Marks)
Answer:
What AS-12 states:
According to para 21 of AS 12, the amount refundable in respect of a grant related to a specific fixed asset should be recorded by increasing the book value of the asset or by reducing deferred income balance, as appropriate, by the amount refundable.

Where the book value is increased, depreciation on the revised book value should be provided prospectively over the residual useful life of the asset.

Analysis and conclusion:
Journal Entry:
(For refund of grant)
Given – The Grant was credited to Machinery Account:

Particulars
Machinery A/c Dr.

To Bank A/c (Being grant refunded)

60 lakhs 60 lakhs

Balance of Machinery after three years but before refund:
Machinery was initially recorded in the books = ₹ 300 lakhs – ₹ 60 lakhs = ₹ 240 lakhs
Value of machinery after three years but before refund of grant = ₹ 240 lakhs × 0.9 × 0.9 × 0.9
= ₹ 174.96 lakhs
Balance of machinery after refund of grant:
= (₹ 174.96 lakhs + ₹ 60 lakhs) = ₹ 234.96 lakhs

CA Inter Accounts Question Paper Nov 2020

(c) A Limited invested in the shares of XYZ Ltd. on 1st December, 2019 at a cost of ₹ 50,000. Out of these shares ₹ 25,000 shares were purchased with an intention to hold for 6 months and ₹ 25,000 shares were purchased with an intention to hold as long-term Investment.

A Limited also earlier purchased Gold of ₹ 1,00,000 and Silver of ₹ 30,00,000 on 1st April, 2019. Market value as on 31st March, 2020 of above investments are as follows :
Shares – ₹ 47,500 (Decline in the value of shares is temporary.)
Gold – ₹ 1,80,000
Silver – ₹ 30,55,000
How above investments will be shown in the books of account of M/s. A Limited for the year ending 31st March, 2020 as per the provision of AS 13 (Revised)? (5 Marks)
Answer:
What AS-13 states:
As per AS 13, for investment in shares – if the investment is purchased, with an-intention to hold for short-term period (less than one year), then it will be classified as current investment and to be carried at lower of cost and fair value.

If equity shares are acquired with an intention to hold for long term period (more than one year), then should be considered as long-term investment to be shown at cost in the Balance Sheet of the company. However, provision for diminution should be made to recognize a decline, if other than temporary, in the value of the investments.

Analysis and conclusion:
In case of shares:
25,000 shares will be valued at lower of cost (₹ 25,000) and market value (₹ 23,750) as on 31 March 2020, i.e., ₹ 23,750.

Rest of the 25,000 shares will be valued at cost as it is a long-term investment.

Gold and Silver are generally purchased with an intention to hold it for long term period until and otherwise given. Hence the investment in gold and silver (purchases on 1st April 2019 shall continue to be shown at cost as on 31st March 2020 i.e. ₹ 1,00,000 and ₹ 30,00,000 respectively, though their realizable values have been increased. If held as short term then it should be valued at lower of cost or fair value (Market price).

CA Inter Accounts Question Paper Nov 2020

(d) On 15th April, 2019 RBM Ltd. obtained a Term Loan from the Bank for ₹ 320 lakhs to be utilized as under:

₹ (in lakhs)
Construction for factory shed 240
Purchase of Machinery 30
Working capital 24
Purchase of Vehicles 12
Advance for tools/cranes etc. 8
Purchase of technical know-how 6

In March, 2020 construction of shed was completed and machinery was installed. Total interest charged by the bank for the year ending 31 st March, 2020 was ₹ 40 lakhs.

In the context of provisions of AS 16 ‘Borrowing Costs’, show the treatment of interest and also explain the nature of Assets. (5 Marks)
Answer:
What AS-16 states:
According to AS 16, borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset should be capitalised as part of the cost of that asset. The amount of borrowing costs eligible for capitalisation should be determined in accordance with this Standard. Other borrowing costs should be recognised as an expense in the period in which they are incurred.

Analysis and conclusion:
Amount of borrowing costs capitalized and expensed off should be calculated as follows:
CA Inter Accounts Question Paper Nov 2020 1

Note:
It has been assumed that construction of factory shed will normally take more than a year (substantial period of time), hence considered as qualifying asset.

CA Inter Accounts Question Paper Nov 2020

Question 2.
(a) Vijay & Co. of Jaipur has a branch in Patna to which goods are sent @ 20% above cost. The branch makes both cash & credit sales. Branch expenses are paid direct from Head office and the branch has to remit all cash received into the bank account of Head office. Branch doesn’t maintain any books of account, but sends monthly returns to the head office.

Following further details are given for the year ended 31st March, 2020:

Amount (₹)
Goods received from Head office at Invoice Price 8,40,000
Goods returned to Head office at Invoice Price 60,000
Cash sales for the year 2019-20 1,85,000
Credit Sales for the year 2019-20 6,25,000
Stock at Branch as on 1-04-2019 at Invoice price 72,000
S. Debtors at Patna branch as on 1-04-2019 96,000
Cash received from Debtors 4,38,000
Discount allowed to Debtors 7,500
Goods returned by customers at Patna Branch 14,000
Bad debts written off 5,500
Amount recovered from Bad debts previously written off as Bad. 1,000
Rent, Rates & Taxes at Branch 24,000
Salaries & wages at Branch 72,000
Office Expenses (at Branch) 9,200
Stock at Branch as on 31-03-2020 at cost price 1,25,000

Prepare necessary ledger accounts in the books of Head office by following Stock and Debtors method and ascertain Branch profit. (10 Marks)

CA Inter Accounts Question Paper Nov 2020

(b) M/s Rohan & Sons runs a business of Electrical goods on wholesale basis. The books of account are closed on 31st March every year. The Balance Sheet as on 31st March, 2019 is as follows :

Liabilities ₹ Assets ₹
Capital 12,50,000 Fixed Assets 6,50,000
Trade Creditors 1,90,000 Closing stock 3,75,000
Profit & Loss A/c 1,45,000 Trade Debtors 3,65,000
Cash & Bank 1,95,000
15,85,000 15,85,000

The management estimates the purchase & sales for the year ended 31st March, 2020 as under:

Particulars Upto 31-1-2020 (₹) February 2020 (₹) March 2020 (₹)
Purchases 16,20,000 1,40,000 1,25,000
Sales 20,75,000 2,10,000 1,75,000

All Sales and Purchases are on credit basis. It was decided to invest ₹ 1,50,000 in purchase of Fixed assets, which are depreciated @ 10% on book value. A Fixed Asset of book value as on 01.04.2019, ₹ 60,000 was sold for ₹ 56,000 on 31st March, 2020.

The time lag for payment to Trade Creditors for purchases is one month and receipt from Trade debtors for sales is two months. The business earns a gross profit of 25% on turnover. The expenses against gross profit amounts to 15% of the turnover. The amount of depreciation is not included in these expenses.

Prepare Trading & profit & Loss Account for the year ending 31st March, 2020 and draft a Balance Sheet as at 31st March, 2020 assuming that creditors are all Trade creditors for purchases and debtors are all Trade debtors for sales and there is no other current assets and liabilities apart from stock and cash and bank balances.

Also, prepare Cash & Bank account and Fixed Assets account for the year ending 31 st March, 2020. (10 Marks)
Answer:
Trading and Profit and Loss A/c
For the year ending 31st March, 2020
CA Inter Accounts Question Paper Nov 2020 2

Balance Sheet
As on 31st March, 2020
CA Inter Accounts Question Paper Nov 2020 3

Debtors A/c
CA Inter Accounts Question Paper Nov 2020 4

Creditors A/c
CA Inter Accounts Question Paper Nov 2020 5

Cash and Bank A/c
CA Inter Accounts Question Paper Nov 2020 6

Fixed Assets A/c
CA Inter Accounts Question Paper Nov 2020 7

Working Note – Profit on sale of Fixed Asset:
Book value as on 1st April, 2019 = 60,000
Thus,
Book value as on 31st March, 2020 = 60,000 – 10% = 54,000.
Sold at = 56,000
Therefore,
Profit on sale = 56,000 – 54,000 = 2,000.

CA Inter Accounts Question Paper Nov 2020

Question 3.
(a) On 1st April, 2019 Mr. H had 30,000 equity shares of ABC Ltd. at a book value of ₹ 18 per share (Nominal value ₹ 10 per share). On 10th June, 2019, H purchased another 10,000 equity shares of the ABC Ltd. at ₹ 16 per : share through a broker who charged 1.5% brokerage.

The directors of ABC Ltd. announced a bonus and a right issue. The terms of the issues were as follows :

  1. Bonus shares were declared at the rate of one equity share for every four shares held on 15th July, 2019.
  2. Right shares were to be issued to the existing equity shareholders on 31 st August, 2019. The company decides to issue one right share for every five equity share held at 20% premium and the due date for payment will be 30th September, 2019. Shareholders were entitled to transfer their rights in full or in part.
  3. No dividend was payable on these issues.

Mr. H subscribed 60% of the rights entitlements and sold the remaining rights for consideration of ₹ 5 per share.

Dividends for the year ending 31 st March, 2019 was declared by ABC Ltd. at the rate of 20% and received by Mr. H on 31st October, 2019.

On 15th January, 2020 Mr. H sold half of his shareholdings at ₹ 17.50 per share and brokerage was charged @1%.

You are required to prepare Investment account in the books of Mr. H for the year ending 31st March, 2020, assuming the shares are valued at average cost. (10 Marks)
Answer:
CA Inter Accounts Question Paper Nov 2020 8
Gross profit rate is = 1,72,000/8,60,000 × 100 = 20%

Step 2:
Memorandum Trading A/c:
We need to prepare a ‘Memorandum Trading A/c’ to ascertain the stock on date of fire.
It will be prepared for the period from 1.4.2019 to 30.09.2019 to compute the value of stock on 31.09.2019.

Memorandum Trading A/c
for the period 1st April, 2019 to 30th September, 2019
CA Inter Accounts Question Paper Nov 2020 9
# (6,02,000 – 52,000)

# # For financial statement purposes, this would form part of closing stock (since there is no actual sale). However, this has been shown separately for computation of claim for loss of stock since the goods were physically with the consignee and thus, there was no loss of such stock.

CA Inter Accounts Question Paper Nov 2020

Working Note:
Computation of Adjusted Purchases:

Particulars ₹
Purchases

Less: Purchase of machinery

Less: Withdrawn by partners [52,000 – 20%]

4,48,000

(41,600)

(58,000)

Free samples Adjusted purchases (8,500)
3,39,900

Step 3:
Computation of loss of stock:

Particulars ₹
Book value of stock as on 30.09.2019

Less: Stock salvaged

Loss of stock

1,88,100

(35,000)

1,53,100

Step 4:
Computation of Amount of claim:
= Loss of stock × Policy value/Value of stock on the date of fire
= 1,53,100 × 1,88,100/1,20,000 = ₹ 97,671

CA Inter Accounts Question Paper Nov 2020

Question 4.
(a) The following figures have been extracted from the books of Manan Limited for the year ended on 31-3-2020. You are required to prepare the Cash Flow statement as per AS 3 using indirect method. (10 Marks)

  1. Net profit before taking into account income tax and income from law suits but after taking into account the following items was ₹ 30 lakhs :
    (a) Depreciation on Property, Plant & Equipment ₹ 7.50 lakhs.
    (b) Discount on issue of Debentures written off ₹ 45,000.
    (c) Interest on Debentures paid ₹ 5,25,000.
    (d) Book value of investments ₹ 4.50 lakhs (Sale of Investments for ₹ 4,80,000).
    (e) Interest received on investments ₹ 90,000.
  2. Compensation received ₹ 1,35,000 by the company in a suit filed.
  3. Income-tax paid during the year ₹ 15,75,000.
  4. 22,500,10% preference shares of ₹ 100 each were redeemed on 2-04-2019 at a premium of 5%.
  5. Further the company issued 75,000 equity shares of ₹ 10 each at a premium of 20% on 30-3-2020 (Out of 75,000 equity shares, 25,000 equity shares were issued to a supplier of machinery)
  6. Dividend for FY 2018-19 on preference shares were paid at the time of redemption.
  7. Dividend on Equity shares paid on 31-1-2020 for the year 2018-2019 ₹ 7.50 lakhs (including dividend distribution tax) and interim dividend paid ₹ 2.50 lakhs for the year 2019-20.
  8. Land was purchased on 2-4-2019 for ₹ 3,00,000 for which the company issued 22,000 equity shares of ₹ 10 each at a premium of 20% to the land owner and balance in cash as consideration.
  9. Current assets and current liabilities in the beginning and at the end of the years were as detailed below :
As on 1-4-2019 As on 31-3-2020
₹
Inventory 18,00,000 19,77,000
Trade receivables 3,87,000 3,79,650
Cash in hand 3,94,450 16,950
Trade payables 3,16,500 3,16,950
Outstanding expenses 1,12,500 1,22,700

Answer:
Cash Flow Statement
for the year ended 31st March, 2019
CA Inter Accounts Question Paper Nov 2020 10
Note:
Purchase of land in exchange of equity shares (issued at 20% premium) has not been considered in the cash flow statement as it does not involve any cash transaction.

CA Inter Accounts Question Paper Nov 2020

(b) Sumit Ltd. (an unlisted company other than AIFI, Banking company, NBFC and HFC) had 8,000, 9% debentures of ₹ 100 each outstanding as on 1st April, 2019, redeemable on 31st March, 2020.
On 1st April, 2019, the following balance appeared in the books of account:

  •  Investment in 1,000,1% secured Govt, bonds of ₹ 100 each, ₹ 1,00,000.
  • Debenture Redemption Reserve is ₹ 50,000.

Interest on investments is received yearly at the end of financial year.

1,000 own debentures were purchased on 30th March, 2020 at an average price of ₹ 96.50 and cancelled on the same date.

On 31st March, 2020, the investments were realized at par and the debentures were redeemed. You are required to write up the following accounts for the year ended 31st March, 2020: (10 Marks)

  1. 12% Debentures Account.
  2. Debenture Redemption Reserve Account.
  3. DRR Investment Account.
  4. Own Debentures Account.

Answer:
Debenture Redemption Reserve A/c
CA Inter Accounts Question Paper Nov 2020 11

Working Note:
Calculation of DRR before redemption = 10% of ₹ 80,00,000 = 8,00,000
Available balance = ₹ 50,000
DRR required = 8,00,000 – 50,000 = ₹ 7,50,000.

Debenture A/c
CA Inter Accounts Question Paper Nov 2020 12

7% Secured Bonds of Govt.
(DRR Investment) A/c
CA Inter Accounts Question Paper Nov 2020 13

CA Inter Accounts Question Paper Nov 2020

Question 5.
(a) On 1st April, 2017, Mr. Nilesh acquired a Tractor on Hire purchase from Raj Ltd. The terms of contract were as follows :

  1. The Cash price of the Tractor was ₹ 11,50,000.
  2. ₹ 2,50,000 were to be paid as down payment on the date of purchase.
  3. The Balance was to be paid in annual instalments ₹ 3,00,000 plus interest at the end of the year.
  4. Interest chargeable on the outstanding balance was 8% p.a
  5. Depreciation @ 10% p.a is to be written off using straight line method.

Mr. Nilesh adopted the Interest Suspense method for recording his Hire purchase transaction.
You are required to:
Prepare the Tractor account, Interest Suspense account and Raj Ltd.’ s account in the books of Mr. Nilesh. (8 Marks)

CA Inter Accounts Question Paper Nov 2020

(b) The Books of Arpit Ltd. shows the following Balances as on 31st December, 2019:

Amount (₹)
6,00,000 Equity shares of ₹ 10 each fully paid up 60,00,000
30,000,10% Preference shares of ₹ 100 each, ₹ 80 paid up 24,00,000
Securities Premium 6,00,000
Capital Redemption Reserve 18,00,000
General Reserve 35,00,000

Under the terms of issue, the Preference Shares are redeemable on 31 st March, 2020 at a premium of 10%. In order to finance the redemption, the Board of Directors decided to make a fresh issue of 1,50,000 Equity shares of ₹ 10 each at a premium of 20%, ₹ 2 being payable on application, ₹ 7 (including premium) on allotment and the balance on 1st January, 2021. The issue was fully subscribed and allotment made on 1st March, 2020. The money due on allotment was received by 20th March, 2020.

The preference shares were redeemed after fulfilling the necessary conditions of Section 55 of the Companies Act, 2013.

You are required to pass the necessary Journal Entries and also show how the relevant items will appeal in the Balance Sheet of the company after the redemption carried out on 31st March, 2020. (12 Marks)
Answer:
Step 1:
Equation to Identify the amount of CRR Transfer:
Preference Share Capital (Face Value of PSC)
= Capital Redemption Reserve (CRR) + Proceeds of Fresh Issue (Without premium)
30,00,000 = 19,50,000 (Balancing figure) + 10,50,000 (Working note)
30,00,000 = 19,50,000 + 10,50,000

Working Note:
Amount received (excluding premium) on fresh issue of shares till the date of redemption should be considered for calculation of proceeds of fresh issue of shares.

Thus, proceeds of fresh issue of shares are ₹ 10,50,000 (₹ 3,00,000 application money plus ₹ 7,50,000 received on allotment towards share capital).

CA Inter Accounts Question Paper Nov 2020

Step 2:
Journal Entries:
CA Inter Accounts Question Paper Nov 2020 14
CA Inter Accounts Question Paper Nov 2020 15

Balance Sheet (Extract)
CA Inter Accounts Question Paper Nov 2020 16

Notes to Accounts:
CA Inter Accounts Question Paper Nov 2020 17

CA Inter Accounts Question Paper Nov 2020

Question 6.
Answer any four of the following :

(a) Department A sells goods to Department B at a profit of 20% on cost and to Department C at 50% on cost. Department B sells goods to Department A and Department C at a profit of 15% and 10% on sales respectively. Department C sells goods to Department A and Department B at a profit of 10% and 5% on cost respectively.

Stock lying at different departments at the end of the year are as follows:

Department A Department B Department C
(₹) (₹) (₹)
Transfer from Department A 1,14,000 60,000
Transfer from Department B 55,000 15,200
Transfer from Department C 52,800 1,11,300

Calculate Department wise unrealised profit on Stock. (5 Marks)

CA Inter Accounts Question Paper Nov 2020

(b) What are the qualitative characteristics of the Financial Statements which improve the usefulness of the information furnished therein? (5 Marks)

(c) Following is the draft Profit & Loss Account of X Ltd. for the year ended 31st March, 2020:

Amount (₹) Amount (₹)
To Administrative Expenses 5,96,400 By Balance b/d 7,25,300
To Advertisement Expenses 1,10,500 By Balance from Trading A/c 42,53,650
To Sales Commission 1,05,550 By Subsidies received from Government 3,50,000
To Director’s fees 1,48,900
To Interest on Debentures 56,000
To Managerial Remuneration 3,05,580
Tp Depreciation on Fixed Assets 5,78,530
To Provision for taxation 12,50,600
To General Reserve 5,50,000
To Investment Revaluation Reserve 25,800
To Balance c/d 16,01,090
53,28,950 53,28,950

Depreciation on Fixed Assets as per. Schedule II of the Companies Act, 2013 was ₹ 6,51,750. You are required to calculate the maximum limits of the managerial remuneration as per Companies Act, 2013. (5 Marks)
Answer:
Computation of Net Profit:
CA Inter Accounts Question Paper Nov 2020 18
Thus,
Maximum Managerial remuneration = 11% of ₹ 29,34,550 = ₹ 3,22,800.

CA Inter Accounts Question Paper Nov 2020

(d) Following is the Balance Sheet of M/s. S. Traders as on 31st March, 2019:

Liabilities (₹) Assets (₹)
Capital: 1,50,000 Fixed Assets 1,05,000
11% Bank Loan 80,000 Closing stock 76,000
Trade payables 52,000 Debtors 68,000
Profit & Loss A/c 56,000 Deferred Expenditure 24,000
Cash & Bank 65,000
3,38,000 3,38,000

Additional information

  1. Remaining life of Fixed Assets is 6 years with even use. The net realizable value of Fixed Assets as on 31st March, 2020 is of 90,000.
  2. Firm’s Sales & Purchases for the year ending 31st March, 2020 amounted to ₹ 7,80,000 and ₹ 6,25,000 respectively.
  3. The cost & net realizable value of the stock as on 31st March, 2020 was ₹ 60,000 and ₹ 66,000 respectively.
  4. General expenses (including interest on Loan) for the year 2019-20 were ₹ 53,800.
  5. Deferred expenditure is normally amortised equally over 5 years starting from the Financial year 2018-19 i.e. ₹ 6,000 per year.
  6. Debtors on 31st March, 2020 is ₹ 65,000 of which ₹ 5,000 is doubtful. Collection of another ₹ 10,000 debtors depends on successful re-installation of certain products supplied to the customer.
  7. Closing Trade payable ₹ 48,000, which is likely to be settled at 5% discount.
  8. There is a prepayment penalty of ₹ 4,000 for Bank loan outstanding.
  9. Cash & Bank balances as on 31st March, 2020 is ₹ 1,65,200.

Prepare Profit & Loss Account and Balance Sheet for the year ended 31st March, 2020 assuming the firm is not a going concern. (5 Marks)
Answer:
Trading and Profit and Loss A/c
For the year ending 31st March, 2020
CA Inter Accounts Question Paper Nov 2020 19

Balance Sheet
As on 31st March, 2020
CA Inter Accounts Question Paper Nov 2020 20

CA Inter Accounts Question Paper Nov 2020

(e) Moon Ltd. was incorporated on 1st August, 2019 to take over the running business of a partnership firm w.e.f. 1st April, 2019. The summarized Profit & Loss Account for the year ended 31 st March, 2020 is as under:

Amount
₹
Gross Profit 6,30,000
Less : Salaries 1,56,000
Amount
Rent, Rates & Taxes 72,000
Commission on sales 40,600
Depreciation 60,000
Interest on Debentures 36,000
Director’s fees 24,000
Advertisement 48,000 4,36,600
Net profit for the year 1,93,400

Moon Ltd. initiated an advertising campaign which resulted in increase of monthly sales by 25% post incorporation.

You are required to prepare a statement showing the profit for the year between, pre-incorporation and post-incorporation. Also, explain how profits are to be treated in the accounts ? (5 Marks)
Answer:
Working Notes – For computation of Sales and Time ratio:
W. Note I:
Let monthly sales = x
Computation of Sales ratio:

Particulars
Sales for pre-incorporation period (x multiplied by 4 months) Sales for post-incorporation period (1.25 multiplied by 8 months) 4x

lOx

CA Inter Accounts Question Paper Nov 2020

Therefore,
Sales Ratio = 4 : 10 i.e. 2 : 5
W. Note II:

Computation of Time ratio:
1st April, 2019 to 31st July, 2019: 1st August, 2019 to 31st March, 2020
= 4 months: 8 months = 1 : 2
Therefore,
Time Ratio is 1 : 2

Statement showing Computation of Profits for pre-incorporation and post-incorporation periods for the year ended 31st March, 2020
CA Inter Accounts Question Paper Nov 2020 21

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