February 12, 2023 – Super 30 CA

If there is the factory and there is the fire in that factory and the machine was rendered un-useable and then we sold the machine for scrap, 100,000 was the original value and 50,000 was the written down value showing on the books and the scrap value is 10,000 and from insurance company we were able to recover 30,000, and we purchase another machine to replace the machine for 100,000. How to record the transaction?

Note: This is assuming all transactions are in the same period. If Fire is in Year 1 and Recovery is in Year 2, impairment will be done in Year 1…

How much dividend should we declare? Is there an alternative?

Dividend should be declared based on future needs of the organisation. If the company has positive NPV projects available do not declare dividend, else do. Alternatives to distribution of dividend:…

Suppose we issued equity to purchase a machinery, how will it be affecting cash flow statement for the entire year?

Ther will be no direct impact in cash flow statement either in Investing activity or financing activity as there is no cash flow. However the tax sheid on depreciation which…

Difference between research and development?

Research is original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding. Development is the application of research findings or other knowledge to…

Keys to effective controllership

It’s not enough to simply know the financial controller role. There are clear ways to be more efficient and effective in this position, and to move from simple data processing…

Controller vs CFO

This is another interesting dynamic. In smaller finance teams, the controller and CFO may even be the same person.The CFO is both the leader of the finance team and a…

Controlling vs accounting

The controller is intricately involved in the company accounting process. And in many cases, they will do a lot of accounting day to day. But in larger finance teams, there’s…

What does a Financial Controller do?

The FC is a senior leader in the finance team. For this reason, it’s usually expected that job applications show significant experience in accounting and tax issues, plus the ability…

What is a Controller in Finance? OR What is Finance Controller?

A financial controller essentially is a company’s lead accountant. They oversee accounting activities and ensure that ledgers accurately reflect money coming in and out of the company. Strategic controllers also…

Difference between broad money and narrow money?

The term "narrow money" typically covers the most liquid forms of money, i.e. currency (banknotes and coins) as well as bank-account balances that can immediately be converted into currency or…

What SLR, CRR, REPO, Reverse Repo and rates?

CRR is a reserve maintained by banks with the RBI. It is a percentage of the banks' deposits maintained in cash form. SLR is an obligatory reserve that commercial banks…

What is the substantial period under Ins As for capitalizing borrowing cost w.r.t qualifying assets?

Generally, a period of 12 months is considered as a substantial period unless a shorter or longer period can be justified based on facts and circumstances of the case. Borrowing…

IND AS 16 : What is the concept of Component accounting as per Ind AS 16 ? Why Component Accounting is used ?

Each major part of an item of PPE with cost being significant in relation to total cost of the item, should be depreciated separately, even though it may not have…

Ind AS 16 : What is the Deemed cost exemption as per Ind AS 16?

As per Ind AS 101, the deemed cost exemption is applicable to PPE as defined under Ind AS 16 and recognised as Fixed Assets in the financial statements at the…

Ind AS 40 : Definition of Investment property?

IAS 40 permits treatment of property interest held in an operating lease as investment property, if the definition of investment property is otherwise met and fair value model is applied.…

IND AS 19 (Employee Benefit) ?

The Indian Accounting Standard (Ind AS) 19 aims to prescribe accounting and disclosure for employee benefits. It requires recognition of the liability by an entity when an employee provides services…

Ind As 102 ( share based payment ) : how you will record share based payment in books, what other implications of shared based payment would be possible?

• Detailed guidance available for accounting and disclosures of equity-settled and cash-settled transactions in Ind AS 102 • Ind AS 102 also covers share based payment transactions with non-employees as…

How can a company inflate sales?

Sales to Related Parties Sale to fictitious entities Prepone booking of sales Recording Sales gross of massive discounts, and recording the discount as expense Sales done to uninterested parties asking…

What is window dressing?

What is Window Dressing? Window dressing is actions taken to improve the appearance of a company's financial statements. Window dressing is particularly common when a business has a large number…

IPO AND BOOK BUILDING PROCESS

An initial public offering (IPO) is the first time that the stock of a private company is offered to the public. (HDFC Standard life Insurance) (Biggest IPO – COAL INDIA…

Explain CSR in depth as per companies act.

Corporate Social Responsibility (CSR) implies a concept, whereby companies decide voluntarily to contribute to a better society and a cleaner environment – a concept, whereby the companies integrate social and…

Effect of change in valuation of inventory from FIFO to weighted average in an inflationary environment?

Let’s assume three months, the goods were purchased in January of rupees 5 and February of rupees 10, in March it was all sold. Suppose we are following FIFO and…

Difference between EBITDA and cash flow from operation?

The main difference between EBITDA and cash flow from operation is working capital changes and taxes. In EBITDA, it is before tax and in cash flow from operations, it is…

What all items are added in inventory cost?

Cost of Inventory includes:The costs of purchase of inventories include: 1. Cost of purchase 2. Cost of conversion 3. Other cost to bring the inventory to the present location and…

Suppose the machine is destroyed in fire but the insurance exists, so what should be the treatment for the same?

Treatment in Final accounts: (i) Loss of goods due to fire, the theft or accident is known as an abnormal loss of goods. If such goods were insured by the…

What is related party as per various laws? – Companies Act, Ind AS, GST, Income Tax

As per 2(76) of Companies Act: a. a director or his relative; b. a key managerial personnel or his relative; c. a firm, in which a director, manager or his…

What is segment reporting criteria?

An operating segment is a component of an entity: (a) that engages in business activities from which it may earn revenues and incur expenses (b) whose operating results are regularly…

What is AGR dues in telecom?

Adjusted Gross Revenue (AGR) is the usage and licensing fee that telecom operators are charged by the Department of Telecommunications (DoT). It is divided into spectrum usage charges and licensing…

How is a firm valued?

Financial analysts can evaluate a corporation in a variety of ways. The discounted cash flow (DCF) approach and the relative valuation method are the two most popular methods of valuation.…

How to calculate DCF

We take cash flows for each year and discount them with either cost of equity or WACC depending upon which cash flows we are using.

What is DCF and why do we calculate DCF?

A discounted cash flow (DCF) is a valuation method used to estimate the attractiveness of an investment opportunity. DCF analysis uses future free cash flow projections and discounts them to…

What is payback period and discounted payback period?

The payback period is the length of time required to recover the cost of an investment. The payback period of a given investment or project is an important determinant of…

How to evaluate investment in the concept of capital budgeting?

The most common capital investment evaluation tools are the Payback Period (PP), Return on Investment (ROI), Net Present Value (NPR), and Internal Rate of Return (IRR). Each method can provide…

Techniques of capital budgeting?

• Payback Period. • Discounted Payback Period. • Net Present Value • Internal Rate of Return.

What is Capital budgeting? Give an example of a capital budgeting decision.

Capital budgeting is the process a business undertakes to evaluate potential major projects or investments. Construction of a new plant or a big investment in an outside venture are examples…

What is securitization?

Securitization is the process of taking an illiquid asset, or group of assets, and through financial engineering, transforming it (or them) into a security. Securitization is the financial practice of…

What is loan syndication?

Loan syndication is the process of involving several different lenders in providing various portions of a loan. Loan syndication most often occurs in situations where a borrower requires a large…

WHAT IS THE DIFFERENCE BETWEEN NPV AND XNPV in Excel?

NPV assumes that the cash flows come in equal time intervals. XNPV assumes that the cash flows don’t come in equal time intervals.

Explain NPV and IRR and how do you calculate the same?

Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyse the…

What is minority interest?

Ind AS 110 defines Non Controlling Interest (earlier called Minority Interest) - NCI is Equity in a subsidiary not attributable, directly or indirectly, to a parent. Minority Interest also referred…

Slightly positive NPV question

Q If the project’s initial investment is of 100 crores and NPV of the same is ₹10 lakhs, will you go for the project or not? Suppose I am getting…

How will you calculate enterprise value? And how is it different from market capitalisation

Enterprise Value, or EV for short, is a measure of a company's total value, often used as a more comprehensive alternative to equity market capitalization. The market capitalization of a…

What is accretion and dilution?

Accretion is asset growth through addition or expansion. Accretion can occur through a company’s internal development or by way of mergers and acquisitions. Dilution is a reduction in earnings per…

What is cost of debt and cost of equity?

Cost of Debt is the future interest rate application to the company, net of taxes. It is calculated using Yield to Maturity less taxes, where the bonds are listed. It…

What is book value?

The book value of a company is the net difference between that company's total assets and total liabilities, where book value reflects the total value of a company's assets that…

Provision vs Contingent Liability

As per Ind AS 37, a provision is a liability of uncertain timing or amount. A liability is a present obligation of the entity arising from past events, the settlement…

Tell me some Liquidity and Coverage ratios?

Liquidity - Current ratio; Quick Ratio; Cash Ratios Liquidity Ratios A company with adequate liquidity will have enough cash available to pay its ongoing bills in the short run. Here…

Difference between solvency and liquidity?

Solvency is defined as the firm’s potential to carry on business activities in the foreseeable future, to expand and grow. It is the measure of the company’s capability to fulfil…

Suppose there are two companies, how to compare them based on profitability?

The operating margin ratio uses operating income and revenue to determine the profit a company is getting from its operations. This ratio, along with net profit margin, can give investors…

What are some Profitability and valuation ratios

Profitability Ratio 1. Gross Profit Margin 2. Net profit Margin 3. Return on equity 4. Return on assets 5. Return on capital employed 6. Gross Profit margin 7. Net Profit…

How to calculate FCFE and FCFF?

FCFE = Net Income + D&A + Net Borrowings - Net Capital Expenditure - Net Change in working capital FCFF = Net Income + D&A + Interest (1-T) - Net…

Meaning and formula of WACC

WACC – Weighted Average cost of capital - (E/E+D)*Ke + [D(1-t)/E+D]*Kd E – Market Value of Equity D – Market Value of Debt Ke – Cost of equity Kd –…

What is the difference between commercial and investment banking?

Commercial bank: accepts deposits from customers (retail depositors, commercial depositors etc. and makes consumer and commercial loans using these deposits. It may also offer anciliary services like credit cards Investment…