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MTPs QUESTIONS

Q8 (Aug.18 Series) (Analysis of Financial Statements)

Following is the financial statements of Arish Ltd. prepared on the basis of Accounting Standards: (Note all
figures are in INR million)

Balance Sheet
Particulars Note As at 31st March, 2018
EQUITY AND LIABILITIES
Shareholders’ funds

Share capital (shares of Rs. 10 each) 1,000
Reserves and surplus 1 2,000
Non-current liabilities
Long-term borrowings 2 5,555
Deferred tax liabilities 3 200
Current liabilities
Trade payables 300
Short-term provisions 250
Other current liabilities 4 150
TOTAL 9,455
ASSETS
Non - current assets
Fixed Assets 5,655
Deferred Tax Assets 3 500
Current assets
Inventories 1,000

Trade receivables 5 1,100
Cash and bank balances 1,200
TOTAL 9,455

Note 1: The Company has achieved a major breakthrough in its consultancy services in Middle East following

which it has entered into a contract of rendering services with Finland Inc for INR 6 billion during the year.
The termination clause of the contract is equivalent to INR 7 Million and is payable in case transition time

schedule is missed from 15th December 2022. The management however is of the view that the liability
cannot be treated as onerous.

Note 2: The Company is not able to assess the final liability for a particular tax assessment pertaining to
assessment year 2018-2019 wherein it has received a demand notice of INR 6 Million. However, the company

is contesting the same with CIT (Appeals) as on the reporting date.
Statement of Profit & Loss

Particulars Note Year ended March 31, 2018
Revenue from operations 5,500
Expenses:
Employee Benefit Expense 1,200
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