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FM Query..plss help..its urgent

Dimple (Student) (364 Points)

04 May 2010

1. In fund flow statement, what is the treatment regarding bonus shares??

2. In fund flow statement, What will be the treatment of Reserves for Machinery, given in liabilities side?

3. If in fund flow question, in additional information, it is given that depreciation for the year or depreciation charged is RsXXX and in another point, it is given that machinery sold, cost of which was RsXX, WDV Rs XX, sold at Rs XX, then, depreciation regarding that machine will also be calculated and shown in adjusted p&l a/c or depreciation for the year will be shownin p&l a/c?????

4. In capital budgeting question, if market value of existing machine is given, then, will it be always treated or taken as the existing machine is sold???

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(Guest)

Originally posted by : Dimple

1. In fund flow statement, what is the treatment regarding bonus shares??

ans:--bonus issue will go to the p & l adj a/c

2. In fund flow statement, What will be the treatment of Reserves for Machinery, given in liabilities side?

ans:--reserve for machinery will go to the P & L adjustment A/C

3. If in fund flow question, in additional information, it is given that depreciation for the year or depreciation charged is RsXXX and in another point, it is given that machinery sold, cost of which was RsXX, WDV Rs XX, sold at Rs XX, then, depreciation regarding that machine will also be calculated and shown in adjusted p&l a/c or depreciation for the year will be shownin p&l a/c?????

ans:--The current depriciation will be shown in the p & l adj a/c and the depriciation on the machinery sold will go to the accumulated depriciation a/c

4. In capital budgeting question, if market value of existing machine is given, then, will it be always treated or taken as the existing machine is sold???

ans:-- if the question is of Replacement then my ans will be yes because it is the indirect way of telling that the exsisting machinery if will be sold in the zero period then we realise that value.

If you have further enquiry then u can ask me.......

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(Guest)

find the attachment

Attached File : 1 book1.xls downloaded: 198 times

(Guest)

In reference to question asked by you, here is the solution for it.

Dr. Land & Building A/c Cr.


To Bal. B/d 600000	By P&L (dep) 50000
To Bank(purchase) {b.f} 150000	By bal. C/d 700000
Total 750000	Total 750000

Dr. Plant and machinery A/c Cr.


To bal.b/d 900000	By P&L ( dep.) 120000
To bank (purchase) { b.f} 360000	By bank ( sale) 32000
	By P&L( Loss on sale) 8000 { 40000 – 32000}
	By bal. c/d 1100000
Total 1260000	Total 1260000

Explanation---

1- As per info transfer all the balances to respective accounts.

2- Charge dep on building Rs 50000 by debiting Land & building A/c.

3- Balance the land and building A/c , you will get purchase of land and building Rs 150000

4- Similarly in Plant and machinery charge dep. Of 120000

5- In plant and machinery, there is a sale of old machine whose WDV is 40000(this is after charging dep. on total plant and machinery A/c Rs 120000) and is sold for Rs 32000. So there is a loss of 8000 which will be credited to plant and machinery a/c along with sale value of Rs 32000.

6- Balance the account and you will get purchase of plant and machinery as Rs 360000.

Posting to Fund Flow---

1- Transfer both dep (120000 + 50000) to dr. of adjusted p&l a/c.

2- Loss on sale of machine Rs 8000 to Dr. of Adjusted p&l a/c.

3- Sale of machine Rs 32000 to sources in fund flow.

4- Both purchases (150000 + 360000) to applications in fund flow.

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