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MGT401 Financial Accounting II Assignment 2 Solution Fall 2012

ASSIGNMENT QUESTION:
Following are the information extracted from the records of Local Industries Ltd. on 31st
December 2012.
PARTICULARS Rs.
(000)
Obligation under lease finance 120
Gratuity payable 120
Issued, subscribed and paid up capital
(50, 000 ordinary shares of Rs. 10 each – issued for cash) 500
General reserve 140
Share premium 250
Creditors, accruals and other liabilities 25
Dividend Payable 20
Current maturity of obligation under lease finance 35
Accumulated depreciation:
Building
Machinery & equipment
90
140
Opening stock:
Raw material
Work in process
Finished goods
30
20
110
Additional Information:
 Authorized capital: 80,000 ordinary shares of Rs. 10 each
 Bonus issue (declared on December 31, 2012) from share premium account 40%
 Income tax to be provided Rs. 30,000
 Deferred tax to be provided Rs. 90,000
 At 31/12/2012, the land was revalued upwards by Independent Valuer at Rs. 15,000
 There were no disposals of fixed assets during the year.
 Closing stock at 31st December 2012:
Raw material Rs. 35,000; Work in process Rs. 55,000; & Finished goods Rs. 360,000
 Cost of fixed assets at the beginning of the year (assuming all external additions at
the start of the year).
Land Rs. 100,000; Building Rs. 180,000; & Machinery and equipment Rs. 240,000
 Depreciation:
Building – 10% on cost; & Machinery and equipment – 20% on cost
Required:
1. Prepare a statement of financial position (Report form/Statement form) of
Local Industries Ltd. as on 31st December 2012. 20 Marks
2. Show necessary notes to the accounts separately. 10 Marks

Solution:

Fixed assets 


 

Particulars Cost R

A

T

E

%

Accumulated Depreciation WDV

As On 31st Dec 2012

As on jan 1st  2012 Add

ition

Dis

Po

sal

As On Dec 31 2012 As On jan 1 2012 On Dis

po

sal

For The Year As On Dec 31 2012
Land 100,000 100+

15000

115,100       115100
Building 180,000 200 180,200 10 90 18011 18101 162099
Machinery & equipment 240,000 300 240300 20 140 48032 48172 192128
                     

 

Building=   180200-90= 180110*10/100=18011

Machinery & equipment= 240300-140=240160*20/100=48,032


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