the report of the approving authonty of those events occurring after the balance sheet date that represent material changes and commitments aftecting the financial position of the enterprise the investment of Rs. 100 lakhs in April 2009 in the acquisition of another company should be disclosed in the report of the Board of Directors to enable users of financial statements to make proper evaluations and decisions (c) Due to major theft of stores in the preceding year (2007-08) which was detected only during the current financial year (2008 09), there was overstatement of closing stock of stores in the preceding year. This must have also resulted in the overstatement of profits of previous year, brought forward to the current year. The adjustments are required to be made in the current year as 'Prior Period items' as per AS 5 (Revised) on Net Profit or Loss for the Period, Pnor penod items and Changes in Accounting Policies Accordingly, the adjustments relating to both opening stock of the current year and profit brought forward from the previous year should be separately disclosed in the statement of profit and lass together with their nature and amount in a manner that their impact on the current profit or loss can be perceived Note: Alternatively, it may be assumed that in the preceding vear, the value of stock of stores as found out by physical verification of stocks was considered in the preparation of financial statements n 4of the preceding year in such a case only the disclosure as to the theft and the resulting lossis required in the notes to the accounts for the current yeari e. year ended 31st March 2009 Q6. (a) A Limited Company closed its accounting year on 30.6.09 and the accounts for that period were considered and approved by the board of directors on 20th August, 2009. The company was engaged in laying pipe line for an oil company deep beneath the earth. While doing the boring work on 1.9.2009 it had met a rocky surface for which it was estimated that there would be an extra cost to the tune of Rs. 80 lakhs. You are required to state with reasons, how the event would be dealt with in the financial statements for the year ended 30.6.09. (b) X Co. Ltd., has obtained an Institutional Loan of Rs. 680 lakhs for modernisation and renovation of its plant& machinery, Plant & machinery acquired under the modernisation scheme and installation completed on 31.3.09 amounted to Rs. 520 lakhs, 30 lakhs has been advanced to suppliers for additional assets and the balance loan of Rs. 130 lakhs has been utilized for working capital purpose. The total interest paid for the above loan amounted to Rs. 62 lakhs during 2008-09. You are required to state how the interest on the institutional loan is to be accounted for in the year 2008-09 (c) Y Co. Ltd., used certain resources of X Co. Ltd. In return X Co. Ltd. received Rs. 10 lakhs and Rs. 15 lakhs as interest and royalties respective from Y Co. Ltd. during the year 2008-2009. You are required to state whether and on what basis these revenues can be recognised by X Co. Ltd. (d) A Ltd. purchased fixed assets costing Rs. 3,000 lakhs on 1.1.09 and the same was fully financed by foreign currency loan (U.S. Dollars) payable in three annual equal instalments. Exchange rates were 1 Dollar = Rs. 40.00 and Rs. 42.50 as on 1.1.09 and 31.12.09 respectively. First instalment was paid on 31.12.09. The entire difference in foreign exchange has been capitalized. You are required to state, how these transactions would be accounted for. (e) A Limited Company finds that the stock sheets as on 31.3.08 had included twice an item the cost of which was Rs. 20,000. You are asked to suggest, how the error would be dealt with in the accounts of the year ended 31.3.09