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The following is included in this document: 1. SSF Question Bank 2. Theory on Segment Reporting 3. Prelim paper I & II 4. Solution to Prelim paper I & II
JMD TUTORIAL’S Question bank Concepts Sr. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 43
Covenants in Term Loan Technical Appraisal Economic Appraisal Margin Money Fixed v/s Floating charge. First Charge and Second Charge Pari Passu Charge Primary and Collateral Security Mortgage v/s Hypothecation v/s Pledge Sensitivity Analysis Moratorium Period Flash Report Due Diligence in Term Loan Features of Hire Purchase Primary v/s Secondary Market Functions of SEBI CRISIL Equity Grading Methods/ Types of Underwriting
Fund based v/s Non Fund based Role of Lead Manager Thin Capitalisation
Pg. 1 3 3 4 4 4 4 4 4/5 5 5 5 7 9 11 12 15 16 17 20 20
Sr. 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 44
Net Asset Value (NAV) PMS NBFC Taxability of ESOP’s Sweat Equity Shares Road Show Minimum Subscription Pro-rata Allotment Book Building Bought out Deal Private Placement Preferential Allotment Statement in Lieu of Prospectus Shelf Prospectus Red Herring Prospectus Risk Factors in Prospectus Deferred Tax Asset Deferred Tax Liabilty Segment Assets Segment Liabilities Segment Revenue Escrow Account
Theory Questions 1 2 3 4 5 6 7 8 9 10 11 12
Pg. 22 23 24 26 27 28 28 29 29 30 30 31 33 33 33 33 36 36
Pg.
What is the Procedure for Obtaining Term Loan. What is Lease and its Benefits and explain different types of Lease. Lease Financing vs. Hire Purchase Financing. Credit Rating-Objectives, Advantages & Disadvantages Functions of Merchant Banker Mutual Fund-Advantages, Disadvantages and Types of Mutual Fund EVA-Meaning, Significance, Advantages & Disadvantages ESOP’s-Meaning, Advantages & Disadvantages IPO-Procedure and Advantages & Disadvantages of IPO Contents Of Prospectus Briefly Explain Provisions of AS-22-Accounting for taxes on income Briefly Explain Provisions of AS-17- Segment Reporting
2 8 10 13 18 21 25 26 27 31 35
www.jmdtutorials.com SEGMENT REPORTING (AS-17) MEANING: Many enterprises deal in multiple products and services or operate in geographical areas that are subject to differing rates of profitability, opportunities for growth, future prospects, and risks. Information about different types of products and services of an enterprise and its operations in different geographical areas - often called segment information - is relevant to assessing the risks and returns of a diversified or multi-locational enterprise but may not be determinable from the aggregated data. Disclosure of such information is called segment reporting. Segment:
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There are two types of segments 1) Business Segment - Is a component of an enterprise which satisfies the following conditions— • It is distinguishable component of an enterprise, • It is engaged in providing an individual product or service or group of related products or services, and • It is subject to risks and returns that are different from those of other business segments. Factors that should be considered in determining whether products or services are related include: - The nature of products or services; - The nature of the production processes; - The methods used to distribute the products or provide the services; and - If applicable, the nature of the regulatory environment, i.e., banking, insurance or public utilities.
2) Geographical segment - Is a component of an enterprise, which satisfies the following conditions: • It is distinguishable component of an enterprise; • It is engaged in providing products or services within a particular economic environment. The risks and returns of an enterprise are influenced both by - the location of production or service facilities and other assets of an enterprise; or - the location of its customers. Reportable Segments: Identification of Reportable Segments (Sub-segments) Business segment or geographical segment which has been identified as reportable segment shall be further divided to include sub-segments based on the following conditions: • Segment Revenue from sales to external customers and internal transfer is 10% or more of the total external and internal revenue of all segments Or • 10% or more of segment result (Segment result means: if some segments are in loss then total of loss of all loss-making segments or if some segments are in profit, total profit of all profit-making segments. Whichever is higher i.e. total profit or total loss figure in absolute term.) Or • Segment asset is 10% or more of the total assets of all segments • All the above three criteria must be applied first and— - Further, Management may at its discretion choose any segment as reportable segment even if such segment does not fulfill the criteria stated above. - Ensure whether at least 75% of total external revenue should be in the reportable segments. - If 75% of total external revenue is not in the reportable segments, then additional reportable segments should be identified ignoring 10% threshold limits until at least 75% of total external revenue is included in reportable segments. Note: Any segment, which was reportable segment in the previous year on the fulfillment of 10% threshold limit, should be reportable segment during current year even if 10% threshold limit in current year is not fulfilled.
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DEFINATION: 1) Enterprise revenue - Enterprise revenue is revenue from sales to external customers as reported in the statement of profit and loss. 2) Segment Revenue - Segment revenue is the aggregate of— • The portion of enterprise revenue that is directly attributable to a segment, • The relevant portion of enterprise revenue that can be allocated on a reasonable basis to a segment, and • Revenue from transactions with other segment of enterprise. Segment revenue does not include:— (a) Extraordinary items (b) Interest or dividend income including interest earned on advances or loans to other segments; and (c) Gains on sales of investments or on extinguishments of debt. However, segment revenue shall include items in (b) and (c) above if two operations of the segment are primarily of a financial nature. 3) Segment Expenses - Segment expense is the aggregate of— • The expenses resulting from the operating activities of a segment that is directly attributable to the segment, • The relevant portion of enterprise expense that can be allocated on a reasonable basis to the segment, • Expenses relating to the transactions with other segments of the enterprise, Segment expense does not include:
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(a) Extraordinary items (b) Interest expenses, including interest incurred on advances or loans from other segment, unless the operations of the segment are primarily of a financial nature; (c) Losses on sales of investments or losses on extinguishments of debt unless the operations of the segment are primarily of a financial nature; (d) Income-tax expense; and (e) General administrative expenses, head office expenses and other expenses that arise at the enterprise level and relate to the enterprise as a whole. 4) Segment Result - Segment result is segment revenue less segment expenses (it is segment profit or loss). 5) Segment Assets (a) Segment assets are those operating assets that are • Employed by a segment in its operating activities, and • Directly attributable to the segment or can be allocated to the segment on a reasonable basis (i.e., Current Asset, Tangible and Intangible Fixed Assets). (b) Segment assets do not include— • Income-tax assets • Assets used for general enterprise or head office purpose. (c) Segment assets are determined after deducting related allowances/provisions that are reported as direct offsets in the balance sheet of the enterprise e.g., fixed asset less depreciation provision or debtors less provision for doubtful debts. 6) Segment Liabilities (a) Segment liabilities are • Operating liabilities • That result from the operating activities of a segment • That either is directly attributable to the segment or can be allocated to the segment on a reasonable basis (i.e., trade and other payables, accrued liabilities, customers advances, pro duct warranty provisions, and other claims relating to the provision of goods and services) (b) Segment liabilities do not include— • Income-tax liabilities • Borrowing and other liabilities that are incurred for financing rather than operating purposes.
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DISCLOSURE REQUIREMENTS: The disclosure requirements of primary segments are as under:• Revenue from external customers. • Revenue from transactions with other segments. • Segment result. • Cost to acquire tangible and intangible fixed assets. • Depreciation and amortization expenses. • Carrying amount of segment assets. • Segment liabilities. • Non-cash expenses other than depreciation arid amortization. • Reconciliation of revenue, result, assets and liabilities.
The Disclosure requirements of Secondary Segments are given in table below: PRIMARY FORMAT IS BUSINESS SEGMENT
Required Secondary Disclosures Revenue from external customers by location of customers Carrying amount of segment assets by location of assets Cost to acquire tangible and intangible Fixed assets by location of assets Other Required Disclosures Basis of pricing mice-segment transfers and any change therein Changes in segment accounting policies Types of products and services in each business segment Composition of each geographical segment
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Code: PN - 246 JMD TUTORIAL’S TYBMS – V SEM – FINANCIAL MANAGEMENT PRELIMINARY EXAM - A - 2010-11
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NB: All questions in Section I are compulsory. : Answer any three questions in Section II. SECTION I (MARKS 30) Q1) a) Concept Testing 1. Fund
2. 3. 4. 5.
based and Non Fund based services Thin Capitalisation Segment Asset & Segment Liability Sweat Equity Shares Book Building
Q 1) b) Attempt any 2
i) From following data compute for 2007-08: (a) Current tax (b) Tax expenses (c) Deferred tax asset/liability (d) Pass Journal Entry for Deferred tax asset/liability (Amount in Rs.) 2007-08 2008-09 2009-10 Pre-tax accounting income 1,40,000 Temporary difference (1,20,000) 2,00,000 Depreciation (80,000) 10000 30,000 Warranty cost 40,000 Taxable Income 1,00,000 30% 25% Income-tax rate 30%
ii) On 1/4/2006, JMD Ltd. a listed company granted 50 stock options each to 100 employees at Rs. 50 each. The Market Price of the Share is Rs. 150 and the Face value of the share is Rs. 10 each. The above option is vested with immediate effect and the maximum exercise period is one year. During the year 60 employees exercised all the options; 30 employees exercised 20 options each and the rest of the options lapsed. Show how the journal entries would appear in the books of JMD ltd. iii) What are the appraisals carried out by the bank while evaluating a term loan proposal? Q.2)Priya purchased a machine for $ 12 lacs on 30th June, 2004. Out of this $ 10 lacs was financed by a foreign currency loan. On the date of acquisition, the exchange rate was 1$ = Rs. 46. Priya closes books on 31st December every year. Depreciation is provided at 15% on WDV basis. Priya paid $ 2 lacs on 31st December, 2004 and $ 1.5 lacs on 31st December, 2005. The exchange rate of Dollar was Rs. 46.50 on 31st December, 2004 and Rs. 47 on 31st December, 2005. You are required to show Journal Entries in books of Priya Ltd for the above in accordance with AS 11 (Revised), and also prepare Loan Account and Machinery Account in the Ledger of Priya Ltd.
www.jmdtutorials.com SECTION II (MARKS 30)
Q 3)
What is Credit Rating? What is the objective of credit rating? What are the advantages and disadvantages of credit rating? Q.4) On 1st January, 1997; M/s Tallboy & Co. Ltd. took delivery from Plain Vans Ltd. of 5 Motor Vans on hire purchase system. 2,000 being paid on delivery and the balance in five instalments of Rs.3,000 each payable annually on 31st December, the vendor company charges 5% interest p.a on yearly balances. The cash value of Motor Vans was Rs. 15,000. Show journal entries and the Vendors Account, Interest account and the Motor Vans Accounts in the books of M/S Tallboy & Co. Ltd. for five years under: 1. Credit Purchase Method providing depreciation @ 20% on the diminishing balances. 2.
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Q.5) As the manager of a financial services company, you have received a proposal seeking a term loan of Rs 300 lakh, from a firm planning an investment in fixed assets of Rs 500 lakh in a new project. The loan is indicated to be repayable in three annual instalments commencing from the end of the second year. The following information concerning the project is available: Particulars 1 2 3 4 Gross profit (before depreciation) 75 100 150 150 Depreciation 50 45 40 35 Interest on term loan 25 45 30 15 Working capital borrowing (interest) 10 15 20 20 Provision for tax --10 30 Assuming other techno-economic criteria to be satisfactory, you are required to: (a) Compute appropriate financial ratio which, in your opinion, would guide the financing decision, and (b) Interpret briefly the ratio so computed and give your views on the proposal.
Q.6)The Income Statement and Balance Sheet of Five Star Ltd. Is given below: Particulars Rs. Rs. Lakhs Lakhs Sales 500 Interest on Investments 10 Profit on sale of old asset 5 Total Income 515 Less: Manufacturing cost 180 Administration cost 60 Selling and distribution cost 50 Depreciation 30 Loss on sale of an old Machine 5 325 EBIT 190 Less: Interest 20 EBT 170 Less: Tax @ 30% 51 PAT 119 The Cost of equity is to be calculated as per CAPM. The Risk free rate of return is 8%. The market rate of return is 14%. The beta factor of the company is 0.8. The debt equity mix of the company is 0.20:0.80. The average interest rate of the company is 15%. The total capital employed of the company is 150 lakhs. Determine the EVA of the company.
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Code: KM - 007 JMD TUTORIAL’S TYBMS – V SEM – SPECIAL STUDIES IN FINANCE PRELIMINARY EXAM - B - 2010-11
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NB: All questions in Section I are compulsory. : Answer any three questions in Section II. SECTION I (MARKS 30) Q1) a) Concept Testing 1) Pari Passu charge 2) Sensitivity Analysis 3) Underwriting 4) NAV 5) Escrow Account Q 1) b) Attempt any 2 i) JMD Ltd. is incorporated with an authorized capital of Rs. 20,00,000 divided into 20000 shares of Rs 100 each. The company issued 10000 shares in the price band of Rs. 250-280 per share. Applications were received for 15000 shares as follows: Application for 8000 shares was received at the cap (upper) price band whereas applications for 3000 shares were received at floor (lower) price band. The balance application was received from a institutional investor at the rate of Rs. 270 per share. The directors decided to allot the shares as follows: • The applications received at the cap price band were allotted in full • The applications received at the floor price band were rejected in full • The institutional investors were allotted the balance shares. The board of directors decided to allot the shares to all the investors @ Rs. 280 per share. Pass the Journal entries required to record the above in the books of JMD Ltd. Show necessary workings. ii) The NPAT is 210 crores. Tax rate is 30%. The company had paid interest of Rs. 100 crores. The capital employed of the company is Rs. 800 crores. WACC is 20%. Calculate EVA. iii) Primary market v/s. Secondary market
www.jmdtutorials.com Q.2) Toy Ltd has a new project for the manufacture of computerized toy. The product is a novelty in the toy market. The company estimates a five-year market life for the product. The maximum number it can produce in any given year is limited to 40 lacs. The expected market scenario will support a sales equivalent of 25%, 60%, 100%, 100% and 40% of the capacity in the first, second, third, fourth and fifth year respectively. Given below are details regarding cost of project: Cost of Project Rs Land Building and civil works 10,50,000 Machinery and equipment 79,00,000 Product Development 10,00,000 Working Capital margin 4,55,000 Total 1,04,05,000 The project will be financed by a combination of equity and term loans in the ratio as close to 20 : 80 as practicable. Loans will carry an interest rate of 14% p.a on reducing balance basis. One year moratorium on principal will be available after which, it will be payable in eight equal half yearly instalments. Selling price per unit will be Rs.7. Material cost will be Rs.2 and conversion cost will be Rs.1 per unit. Product promotion expenses for the first three years will be Rs.4 lacs, 3 lacs and 1.5 lacs respectively Depreciation on land building and civil works and machinery is to be charged on straight-line basis. Total Salvage value to be taken as 9,50,000 of both. Product Development expenses are to be w/off, in the next five year. Tax rate is 35%. 1. Calculate the relevant ratios and comment on acceptability from the point of view of the lending institution 2. Also prepare opening balance sheet and projected balance sheet at the end of year one. SECTION II (MARKS 30) Q 3) Explain Merchant Banking. What are the functions carried out by Merchant Bankers?
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Q.4) ALL leasing company bought a machine costing Rs. 150000 with estimated useful life of four years at the end of which residual value is expected at Rs. 7500. This machine is leased to user industries for full term at varying lease payments. Year Rs. 1 87500 2 40000 3 20000 4 11250 The lease is payable at commencement of the year The present value of varying rates is as under: Year-end 12% 14% 16% 1 0.893 0.877 0.862 2 0.797 0.769 0.743 3 0.712 0.675 0.641 4 0.636 0.592 0.552 You are required to: 1. Calculate implicit rate of interest 2. Prepare Lease schedule 3. Also state the presentation in Profit and Loss account and Balance sheet of the lessor Q.5) Mr. Taitler purchased raw material from M/s Richo Inc of USA on 1st October, 2008 for US $ 8,400. Amount to be paid in four equal half yearly installments commencing from 31st March, 2009 along with interest @12% per annum. Rate of exchange per US $ as on various dates was as follows: Rs. 45 per US $ 1st October, 2008 Rs. 46 per US $ 31st March, 2009 Rs. 43 per US $ 30th September, 2009 Rs. 44 per US $ 31st March, 2010 Pass necessary journal entries in the books of Mr, Taitler for the years ended 31st March, 2009 and 31st March, 2010.
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Q.6) (a) Assume that Beta Ltd. began operations on January 1, 2008. During 2008, Beta Ltd. purchased various marketable equity securities and on December 31, 2008 purchased debt security at face amount. The cost and fair value of these securities at the end of 2008 were as follows: Face value Cost Market Unrealized Loss Gain Red Ltd. Stock Rs. 10 2,000 2,500 500 Blue Ltd. Stock Rs. 10 3,000 2,600 400 White Ltd. Stock Rs. 10 1,000 1,200 200 Pink Ltd. Stock Rs. 10 1,500 1,350 150 Gold Ltd. Stock Rs. 1000 1,000 1,060 60 8,500 8,710 550 760 Show how the above investments will be reported as per AS-30: a) Assuming all of the securities qualify as trading securities i.e FVTPL. b) Assuming all of the securities qualify as available for sale securities (b)From the following details of X Ltd. for the year ended 31-3-2007, calculate the deferred tax asset/liability as per AS-22 Rs. Accounting Profit 5,00,000 4,50,000 Book profit as per MAT 50,000 Profit as per Income-tax Act 30% Tax rate 7.50% MAT rate CHARNI ROAD (E): SAI STUDY CENTRE, OPP. GAIWADI BUS STOP, 1ST RIGHT FROM CENTRAL PLAZA
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SOLUTION TO PAPER – I
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SECTION I (MARKS 30) Q1) a) Concept Testing 1. Refer
2.
3. 4. 5.
JMD Theory Notes pg no 20 THIN CAPITALIZATION: – thin capitalization means a firm or company where the higher proportion of funds is from loans and borrowings and not from equity capital. Some companies take large loans to take the benefit of tax deduction. It means if the loan amount is high, the companies need to pay higher amount of interest and tax burden will be lower. Means companies may use it as a tax saving instrument. Like if the companies take the equity capital instead of loan, then the companies need to pay dividend which is almost like interest amount and the dividend is not tax deductible, one need to pay income tax first and then distribute dividend to the shareholders. But now government is planning to introduce ‘thin capitalization’ rule to check this type of tax evasion. Segment Asset & Segment Liability- Refer JMD Theory Notes on AS-17 Sweat Equity Shares- Refer JMD Theory Notes pg no 27 Book Building- Refer JMD Theory Notes pg no 29
Q 1) b) Attempt any 2
i) for 2007-08: (i) Current tax= Taxable Income * Incometax rate= 100000*30%=Rs.30000 (ii) Tax expenses=Accounting Income* Incometax rate= 140000*30%= Rs.42000 (iii) Deferred tax liability=Tax Expense- Current Tax= 42000-30000= Rs.12000 (iv) Journal Entry for Deferred tax liability Profit & Loss Account Dr Rs.12000 To Deferred Tax Liability Rs.12000
www.jmdtutorials.com ii) EVA NOPAT: Let NPBT be Î 100 Î ?? Less: Tax Î 30 NPAT Î 70 Î 210 Therefore NPBT = 300 + Interest = 100 EBIT = 400 NOPAT = EBIT – Tax = 400 – (400 X 30%) NOPAT = 400 – 120 = 280 Cost of Funds: = Capital employed X WACC = 800 X 20% = 160 EVA = NOPAT – Cost of funds = 280 – 160 = 120 crores iii) Refer JMD Tutorials Theory Notes pg no 3 Q.2) Refer JMD Tutorials Practical Notes SECTION II (MARKS 30) Q 3) Refer JMD Tutorials Theory Notes pg no 13
Q.4) Refer JMD Tutorials Practical Notes Q.5) DSCR is the most appropriate ratio for the lending company as it indicates relationship between the total cash funds available with the borrowing firm to pay instalments.
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Note: Gross profit (before depreciation) is presumed to be EBDIT. In the above problem there are two interests given i.e. one on term loan and second on working capital. In this case we are evaluating term loan. Therefore to find cash available for repayment of term loan we would add back only interest on term loan to NPAT Particulars 1 2 3 4 Gross profit (before depreciation)/ EBDIT 75 100 150 150 Less: Depreciation 50 45 40 35 Less: Interest on term loan 25 45 30 15 Less: Working capital borrowing (interest) 10 15 20 20 Less: Provision for tax --10 30 NPAT (10) (5) 50 50 Add: Depreciation 50 45 40 35 Add: Interest on Term Loan 25 45 30 15 Cash flow available for repayment of Debt 65 85 120 100 Instalment 25 145 130 115 DSCR (in times) 2.6 0.59 0.92 0.87 Comment: The DSCR is very unsatisfactory as it is less than one for all the three years in which instalments are to be paid. The firm will not have enough cash to service instalment and is likely to commit default. The proposal is not financially viable and term loan should not be sanctioned by the financial services company.
www.jmdtutorials.com Q.6) NOTE: We have inserted new formula of cost of equity and final definition of NOPAT (as per the books suggested). For Cost of Equity: (learn this new formula as per Capital Asset pricing model : CAPM) Ke = Rf + beta (Rm – Rf) Where Rf = Risk free rate of return Rm = Return on market portfolio (Rm – Rf) = Risk premium of the market. (note: the above formula will be used only when the above information is given. If dividend and MPS is given then we use the same old formulas) Ke = 8 + {0.80 (14 – 8)} Ke = 8 + 4.8 = 12.8% Kd = I(1 – t) Kd = 15(1 – 0.30) Kd = 10.5% WACC Source Proportion Specific Cost WACC Debt 0.2 10.5 2.1 Equity 0.8 12.8 10.24 12.34
Cost of Funds = capital employed X WACC = 150 X 12.34% = 18.51 lakhs NOPAT = (NPBT + Interest + NOE – NOI) - Tax @ 30% Î NOTE THIS NEW FORMULA NOPAT = (170 + 20 + 5 – 10 – 5) - Tax @ 30% NOPAT = 180 – (180 X 30%) NOPAT = 180 – 54 = 126 lakhs (note: Depreciation is not to be added back) (Write a note that Depreciation is added only when we find cash value added i.e CVA) EVA = 126 – 18.51 = 107.49 lakhs SOLUTION TO PAPER - II SECTION I (MARKS 30) Q1) a) Concept Testing 1 Refer
JMD Theory Notes pg no 4 2 Refer JMD Theory Notes pg no 5 3 Refer JMD Theory Notes pg no 17 4 Refer JMD Theory Notes pg no 22 5 Refer JMD Theory Notes pg no
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Q1. B) i) Refer JMD Tutorials Practical Notes ii) Refer JMD Tutorials Practical Notes iii Refer JMD Tutorials Theory Notes pg no 13 Q.2) Hints & Important points:
Product Development expenses are to be written off over five years equally (10,00,000/5) = Rs. 200000 For calculation of cash available for repayment of Debt we normally add depreciation and interest to NPAT. But in this sum even product development exp written off is to be added as it is a non cash expense. Moratorium means holiday from repayment of principal. Repayment is under equal principal method. To understand the repayment schedule refer sum no 5 from JMD practical notes. The projected income statement format is made below with some figures filled up. Rest of the figures u can fill up from repayment schedule. For opening and projected balance sheet refer sum no 8 of JMD practical notes.
www.jmdtutorials.com Particulars Max units Actual Demand Units sold Selling Price Sales Less: Expenses Material @ 2 p.u Conversion cost @ 1 p.u Product promotion Product Development written off Depreciation EBIT Less: Interest NPBT Less: Tax @ 35% NPAT Add: Non Cash Expenses: Depreciation Product Dev Exp w/off Add: Interest Cash available for repayment of Debt Annual Instalment DSCR ICR
1 40,00,000 25% 10,00,000 7 70,00,000
2 40,00,000 60% 24,00,000 7 1,68,00,000
3 40,00,000 100% 40,00,000 7 2,80,00,000
4 40,00,000 100% 40,00,000 7 2,80,00,000
5 40,00,000 40% 16,00,000 7 1,12,00,000
20,00,000 10,00,000 400000 200000 1600000
48,00,000 24,00,000 300000 200000 1600000
80,00,000 40,00,000 150000 200000 1600000
80,00,000 40,00,000 0 200000 1600000
32,00,000 40,00,000 0 200000 1600000
1600000 200000
1600000 200000
1600000 200000
1600000 200000
1600000 200000
SECTION II (MARKS 30) Q 3) Refer JMD Tutorials Theory Notes pg no 18
Q.4) Calculation of Implicit rate of return: Lease is received in advance. Year-end Lease 12% PV 0 87500 1 87500 1 40000 0.893 35720 2 20000 0.797 15940 3 11250 0.712 8010 4 7500 (SV) 0.636 4770 151940 The cost of Machine is Rs. 150000. PV 2 14% is return is taken as 14%.
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14% 1 0.877 0.769 0.675 0.592
PV 16% PV 87500 1 87500 35080 0.862 34480 15380 0.743 14860 7594 0.641 7211 4440 0.552 4140 149984 148191 149984, the difference is insignificant. Hence implicit rate of
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Investment Analysis Schedule/ Calculation of items for final accounts: Year Investment Interest @ 14% Reduction MLP at received in beginning Investment 1 2 3 = 1 X 14% 4 =2-3 0 150000 87500 0 87500 1 62500 40000 8750 31250 2 31250 20000 4375 15625 3 15625 11250 2188 9062 4 6563 7500 937 7500 Bal figure
JMD Tutorials Net Investment @ the end 5=1-4 62500 31250 15625 6563 0
Disclosure in the books of Lessor: Income side of P & L A/c. Incomes Lease Rentals
1 8750
2 4375
3 2188
2 31250
3 15625
4 937
Asset Side of Balance Sheet Asset Lease Rent Receivable
1 62500
4 7500 (last year always write Scrap value)
Q.5) Refer Extra sum no 2 on forex from JMD sheet given in the last session.
Q.6) (a) Refer AS-31 sum from JMD sheet. (b) Refer AS-22 sum no 3 from JMD sheet.
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ADMISSION IN PROGRESS FOR TYBMS VI SEM: INTERNATIONAL FINANCE INVESTMENT ANALYSIS AND PORTFOLIO MANGEMENT - IAPM
OPERATION RESEARCH JMD has been teaching IAPM in TYBBI since last 6 years and has vast experience in this newly introduced subject for TYBMS. University toppers in all the attempts at TYBBI.
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