10. X Ltd. sold Plant & Machinery having WDV of ` 60 lakhs to Y Ltd. for ` 75 lakhs (Fair value of ` 75 Lakhs) and the same plant was leased back by Y Ltd. to X Ltd. The lease back is in the nature of operating lease. The treatment will be:
Options
AX Ltd. should amortize the profit of ` 15 lakhs over the lease term.
BX Ltd. should recognize the Profit of ` 15 lakhs immediately.
CNo profit/loss, as fair value is equal to sale price.
DY Ltd. should recognize the profit of ` 15 lakhs immediately.
Case Scenario - III
Following information is given by Z Ltd as o 31st March 2025:
` in lakhs
Share Capital
Equity shares of ` 10 each fully paid up
800
11% Redeemable Preference shares of ` 100 each fully paid up
200
Reserve and surplus
Capital redemption Reserve
50
Securities Premium
100
General Reserve and profit and Loss (Combined balance)
600
Secured Loans
9% Debentures
250
Current Liabilities
10
Fixed Assets
1200
ADVANCED ACCOUNTING
Investments
95
Cash at bank
320
Other Current Assets
840
On 1st April, 2024 Z Ltd redeemed all its preference shares at a premium of 5%.
Z Ltd. bought back 8,00,000 equity shares @ ` 20 per share.
Buy back is fully authorized by Z Ltd.'s articles and necessary resolution has been
passed for this. The payment for buy back of shares will be made through
available balance in bank account.
To finance Redemption of preference shares and buy back of shares, company has
decided to sell its investments for ` 98 Lakhs.
Z Ltd had 80,000 Equity stock options outstanding on the above mentioned date,
to the employees @ ` 15 per share when the market price was ` 20 per share.
(This was included under the head current liabilities). On 1st April, 2024,·70% of
the employees exercised their options.
Based on the information given in the above Case Scenario, answer the following
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