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Advanced Capital Budgeting Decisions, Illustration 26
AFM
answered on 26-May-24 16:19
It was mentioned that acceptable level of risk is 20%, can we assume that IRR is 20% assuming that management doesn't accept any negative NPV.
latest answer
No what I have done in last 2-3 minutes is only right Risk is not disc rate
Raviteja Kusumanchi
Qualified CA
★ 42K+
1
415
What if we settle through delivery ?
AFM
answered on 26-May-24 16:09
Hi sir, Since they did not say anything if we assume he is already having the rice with him on day zero itself. And he wants to sell it after 3 months, so he entered into future @ 59 per kg. then on the date of maturity he will sell deliver the Rice and receives the money 59 per kg. Then he make profit of 2rs( spot of 57 and sale price of 59) right ?
latest answer
Yes
B. Dinesh
CA Final
★ 3K+
1
315
GTA Sec 9(3)
Indirect Taxation
answered on 29-May-24 12:35
If GTA is providing services to other than individual then in such case Forward charge 5 % - NO ITC, my doubt is if it is Reverse Charge then also it is 5 % but does it get eligible for ITC ?
latest answer
In case of RCM, recipient has to pay such tax under RCM and such tax paid under RCM can be claimed as ITC.
Harish Chandar T
CA Inter
★ 5
2
349
Buyer and seller of commodity derivative
AFM
answered on 28-May-24 14:42
Hi sir, In class you said Buyer of the commodity derivative deposits the Margin and Seller of the commodity market Accepts the margin. But the picture in the background states otherwise i.e Seller deposits Margin and buyer accepts the margin . please let me know which is correct. attaching the picture here for your reference
latest answer
Updated the video - thanks for highlighting
B. Dinesh
CA Final
★ 3K+
2
194
American option is greater than European Option
AFM
answered on 25-May-24 22:26
Hi sir, the question we solved is American put option(Abandonment option) and the value of the option is 52.7 million atleast.i will tell what i understood by the word "atleast" , please correct me if iam wrong. Normally BSM is used to compute European options value, here we used that even though it is an american option. So in European option value computing method i.e. BSM itself we are getting the option value as 52.7 million, in american option value computing method i.e. Binomial we will definitely get the option value more than 52.7 million. That's why we used "atleast"
latest answer
yes 100% right
B. Dinesh
CA Final
★ 3K+
1
342
Dividend treatment in Black scholes formula
AFM
answered on 25-May-24 20:11
Hi sir, in this question you said if there is a dividend it will get adjusted at two places i.e. In call option value formula at 'Spot' value and in d1 formula at 'r'. But in previous question no. 22 part 4, you said just to adjust the spot with PV of dividend and use the normal formula. by doing this we are giving the effect in Call option formula same as above. But the 2nd effect in d1 is not provided here na. Why is this sir ? Is it bcz its real options ?
latest answer
Ideally dividend should be adjusted at both places. ICAI has chosen to follow this weird method of adjusting dividend with spot in case of normal options and in both places in real options. They come up with their own explanations and interpretations
B. Dinesh
CA Final
★ 3K+
1
372
Illustration 4
Financial Reporting
answered on 27-May-24 14:54
In Illustration 4, if there is an impairment loss, Whether PPE to be reclassified as Investment Property at Carrying amount or Fair value ?
latest answer
If there is impairment loss, the asset will be valued at its recoverable amount (higher of fair value less costs to sell or value in use). This will be the carrying amount for reclassification. Please note that when the standard says that revaluation model is not permitted, it does not mean that impairment is not applicable.
Swathi S
CA Final
★ 975
1
166
Deferred Payment
Financial Reporting
answered on 27-May-24 15:03
What does it mean "Credit beyond normal terms"?
latest answer
Credit beyond normal terms refers to extending credit to a customer or borrower for a period longer than what is typically offered or agreed upon in the standard terms of sale or lending. So if normal credit period is 30 days and a 180 day credit period is provided, then its beyond normal terms.
Swathi S
CA Final
★ 975
1
186
Deferred Payment
Financial Reporting
answered on 27-May-24 15:20
If the interest cost meets the criteria under INDAS 23, whether the same shall be capitalized with Investment Property ?
latest answer
Yes.
Swathi S
CA Final
★ 975
1
182
Articleship
Others
answered on 07-Jun-24 13:58
Sir/mam can I do articles in Pondicherry?? Sir can you please refer some audit firms for me??
latest answer
Ok sir. Thank you
Priyanka R
CA Final
★ 20K+
5
327