Please Answer all the parts of the following questions. If answers not provided for all parts I will give unhelpful rating.

Question 1:

John Ltd. Exports goods, and provides after sales warranty for 2 years to its customers. Based on past experience, the company has been following the policy formaking provision for warranties on the invoice amount warranty period:

Less than 1 year: 2% reserve

More than 1 year: 3% reserve

The company has raised bills as under:

Invoice Date Amount($)

19th January. 2016 80,000

29th January, 2017 50,000

15th October, 2017 1,80,000

Calculate the provision to be made for warranty under IAS as at 31st March, 2017 and 31st March, 2018. Also compute amount to be debited to profit and loss Account for the year ended 31st March, 2018.

Brandon Limited has borrowed a sum of Euro $ 20,00,000 at the beginning of Financial year 2017-18 for its residential project at LIBOR +3%. The interest is payable at the end of the financial year.

At the time of availment exchange rate was 61 per Euro $ and the rate as on 31st March, 2018 was 65 per Euro $. If Brandon Builders Limited had borrowed the loan in India in Indian Rupee equivalent, the pricing of loan would have been@ 10.50%.

Compute Borrowing cost and exchange difference for the year ending 31 st March, 2018

as per IAS 16. (Applicable LIBOR is 1%).

Ron Ltd. sold a machine having WDV of $125 lakhs to Jana Ltd. for $150000 and the same machine was leased back by Jana Ltd. to Ron Ltd. under Operating lease system:

Comment according to relevant Accounting Standard if:

(1) Sale price of $ 150 lakhs . is equal to fair value.

(ii) Fair value is $125 lakhs and Sale price is $112.50 lakhs.

(iii) Fair value is $ 37.50 lakhs and Sale price is $155 lakhs.

(iv) Fair value is $ 1 12.50 lakhs and Sale price is $120 lakhs.

(d) Carolina acquired patent right for $ 1200 lakhs. The life cycle has been estimated to be 5 years and the amortization was decided in the ratio of estimated future cash flows which are as under:

Year 1 2 3 4 5

Estimated future cash flows

($ in lakhs)

600

600

600

300

300

After 3rd year, it was ascertained that the patent would have an estimated balance future life of 3 years and the estimated cash flow after 5th year is expected to be $ 150 lakhs. Determine the amortization under IAS 26.