3. 12% Convertible Debentures Increase in net profit {` 30,00,000 x 0.12 x ( 1 - 0.30)} ` 2,52,000 No. of incremental shares {30,000 x 4} 1,20,000 (
Options
A
BComputation of annual lease payment:
Particulars
`
Cost of equipment
12,50,000.00
Unguaranteed residual value
1,20,000.00
Present value of unguaranteed residual value
(` 1,20,000 x 0.735)
88,200.00
Present value of lease payments
(` 12,50,000 -` 88,200)
11,61,800.00
Present value of annuity for four years is 3.312
Annual lease payment [11,61,800/3.312]
3,50,785.02
Classification of lease:
Parameter 1:
The present value of the lease payment i.e. ` 11,61,800 which equals 92.94%
of the fair market value i.e. ` 12,50,000.
The present value of minimum lease payments substantially covers the fair
value of the leased asset.
Parameter 2:
The lease term (i.e. 4 years) covers the major part of the life of asset (i.e. 6
years).
Therefore, it constitutes a finance lease.
Computation of Unearned Finance Income:
Particulars
`
Total lease payments (Rs 3,50,785.02 x 4)
14,03,140.08
Add: Unguaranteed residual value
1,20,000.00
Gross investment in the lease
15,23,140.08
Less: Present value of lease payments and residual
value i.e.
Net Investment (` 88,200 + ` 11,61,800)
(12,50,000.00)
Unearned finance income
2,73,140.08
(
CDifference between Defined Contribution Plan and Defined Benefit
Plan:
S No.
Defined Contribution Plan
Defined Benefit Plan
1
Fixed Contributions are paid by
the employer into a separate
fund
and
will
have
no
obligation
to
pay
further
contributions.
Detailed actuarial calculation is
performed to determine the
charge.
2
The employer has no obligation
to pay further contributions if
the
fund
does
not
hold
sufficient assets to pay all
employee benefits and the
employee has to bear the
investment and actuarial risk.
The
employer
ensures
that
sufficient funds are available to
meet the promised benefits
regardless of fund performance
and the actuarial and investment
risk fall on the employer.
ADVANCED ACCOUNTING
Computation of defined benefit liability /Asset:
Particulars
` in lakhs
Present value of the defined benefit obligation as on
31.3.2024
36.00
Less: Past service cost not yet recognized
(7.50)
28.50
Less: The fair value of plan assets
(38.50)
Defined benefit Asset
10.00
In case where fair value of plan assets is high, it may so happen that the net
amount under defined benefit liability turns negative (giving rise to net
assets).
As per AS 15 the enterprise, in such a situation, should measure the
resulting asset at the lower of:
(i) the amount so determined, i.e. ` 10 lakh; and
(ii) the present value of available future refunds from the plan i.e. ` 6 lakh.
Therefore, defined benefit asset will be recognised at ` 6 lakhs.
D
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