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Materiality SA 320
Auditing
answered on 05-Oct-24 09:04
What are the audit procedure to beperformed by the auditor, while auditor determined the lower level of Materiality. Explain in accordance with SA 320 for planning and performing the audit of materiality
latest answer
Larger sample size, revision in originally prepared audit plan, more testing, analytical procedures .
Rana Darshan
CA Final
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3
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Sweat equity Shares
Corporate & Other Laws
answered on 02-Oct-24 14:42
'Hum aur Tum' LTD is engaged in the manufacturers of Different types of Mobiles . The company Equity share capital ₹1000000 divided ₹20 for each. Company required to issue a sweat equity share to their Director and Employees who are providing know how to the company. Company issue a sweat equipment share in the form of Machinery , patents and Stock to their Directors and employees for ₹ 10 lakh, 3 Lakh and ₹12.5 respectively. What are the accounting treatment given by the Hum aur Tum LTD for the issue of sweat equity share Other than cash . Explain the the light of the provision of company act 2013.
latest answer
To address the scenario provided, it involves the issuance of sweat equity shares under the Companies Act, 2013, which is governed by Section 54. ### Sweat Equity Shares and Their Provisions: 1. **Meaning of Sweat Equity Shares**: Sweat equity shares refer to shares issued by a company to its directors or employees at a discount or for consideration other than cash, in exchange for: - Intellectual property rights, or - Providing know-how or value additions such as skills and efforts for the growth of the company. 2. **Conditions under Section 54 of the Companies Act, 2013**: - The company must pass a special resolution in the general meeting to issue sweat equity shares. - Sweat equity shares can be issued to directors or employees. - The resolution should specify the number of shares, current market price, consideration if any, and the class of directors or employees to whom such shares are issued. - The company should not have issued sweat equity shares exceeding 25% of the paid-up capital in a year. - The sweat equity shares issued must be locked in for a minimum of three years. 3. **Valuation of Sweat Equity Shares**: - The valuation of the intellectual property or know-how should be conducted by a registered valuer. - For non-cash consideration, the valuation report and basis should be presented to the shareholders. ### Accounting Treatment for Non-Cash Consideration: In this case, **"Hum Aur Tum Ltd"** is issuing sweat equity shares for non-cash consideration in the form of machinery, patents, and stock. The accounting treatment for this is as follows: 1. **Machinery (₹10 lakh)**: - Debit: Machinery (Fixed Asset) ₹10 lakh - Credit: Share Capital (₹20 per share) and Securities Premium (for excess over face value) 2. **Patents (₹3 lakh)**: - Debit: Intangible Asset (Patent) ₹3 lakh - Credit: Share Capital (₹20 per share) and Securities Premium (for excess over face value) 3. **Stock (₹12.5 lakh)**: - Debit: Inventory ₹12.5 lakh - Credit: Share Capital (₹20 per share) and Securities Premium (for excess over face value) ### Conclusion: In the light of the Companies Act, 2013, the issuance of sweat equity shares in this manner is permissible, provided it follows the outlined conditions such as passing a special resolution, proper valuation of assets, and lock-in of shares for three years. The accounting treatment involves debiting the respective assets and crediting the share capital and securities premium based on the face value of ₹20 per share.
Rana Darshan
CA Final
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1
2K+
Direct or Indirect Quote
AFM
answered on 03-Oct-24 12:06
Sir, Which quote is GBP/INR in London , GBP/USD in New York???
latest answer
Thankyou Sir!!
R M
ACCA Professional
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6
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Illustration Doubt
Financial Reporting
answered on 03-Oct-24 13:03
In the Illustration why we did not factored the CPI Index as on Commencement Date which was given in Question to compute Lease Liability and why have we considered CPI Index as on the date of remeasurement ?
latest answer
As on date of commencement, we will not factor in any future increases in CPI (since we do not know future CPI) On the date of re-measurement, we know the increase in CPI and hence it is factored in.
M Naresh
CA Final
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4
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Articleship
Others
answered on 10-Oct-24 11:34
I started my Articleship in Nov.2023, But unfortunately I was unable to submit form 103, I have form 102 executed on Nov.2023, How can I register now ?
latest answer
You can register with late fee.
Rishikesh Prajapati
CA Final
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1
875
Beta calculation
AFM
answered on 01-Oct-24 20:50
Sir, In the calculation of portfolio beta after entering into long position in Nifty future, if question specify on margin requirement on future contracts, is it correct to include margin money along with portfolio value in the denominator? Whether any changes required in the numerator part ? Kindly advise.
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Beta & margin
Venkatesh S
CA Final
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1
458
CA-FINAL exam
Exams
answered on 02-Oct-24 11:31
I have dropped from CA-FINAL in 2020 and my registration is lapsed need to re-register.Should I need to pass SPOM before writing CA-FINAL or after
latest answer
Check screenshots below
bharathi mammula
CA Final
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3
596
Syllabus introduction
Accountancy
answered on 01-Oct-24 22:03
What is the meaning of legislation
latest answer
Legislation refers to laws that are created and enacted by a governing body, such as a parliament or legislature. It is a formal process through which rules, regulations, and statutes are established to govern a society, manage organizations, or regulate behavior. Legislation outlines the legal rights and obligations of individuals, businesses, and government entities, providing a framework within which a society operates. In simple terms, legislation is the body of laws that are passed by lawmakers to organize, control, and guide actions in a country or community. These laws are enforceable and carry legal consequences if not followed. Examples of legislation in India include: - The **Companies Act, 2013**, which regulates companies and corporate governance. - The **Limited Liability Partnership Act, 2008**, which governs the formation and operation of LLPs. - The **Income Tax Act**, which deals with taxation laws.
DEBJANI Dutta
CA Inter
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2
781
Valuation of Bonds - Illustration 27
AFM
answered on 01-Oct-24 20:57
In this solution we have concluded that redemption option is better than conversion option (i.e., Mr. A already has the bonds at his disposal) But the question says that Mr. A has been offered the bond & asks us to determine the minimum price he has to pay if his expected return is 11%. So it means that we have to give the price of Rs. 980.785/- that he'll offer since it is the lower of the two options. Or if we assume that the equity price may go up or down but the bond returns including redemption value are fixed, the minimum price he'll be willing to pay is Rs. 1,001.88/- (i.e., irrespective of the equity prices he'll get the fixed returns on the bond)
latest answer
Ok sir
Vigneshwar M
CA Final
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Ind as2
Financial Reporting
answered on 03-Oct-24 14:51
Scrap sale revenue deducted from inventory cost ? Or Other income
latest answer
Cost
Ravi Teja
CA Final
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673