Page 4 - 32. ANALYSIS OF FS

Q2 (RTP Nov 20)

Deepak started a new company Softbharti Pvt. Ltd. with Iktara Ltd. wherein investment of 55% is done by
Iktara Ltd. and rest by Deepak. Voting powers are to be given as per the proportionate share of capital
contribution. The new company formed was the subsidiary of Iktara Ltd. with two directors, and Deepak
eventually became one of the directors of the company. A consultant was hired and he charged Rs. 30,000
for the incorporation of the company and to do other necessary statutory registrations. Rs. 30,000 is to be
charged as an expense in the books after incorporation of the company. The company, Softbharti Pvt. Ltd.

was incorporated on 1st April 2019.
The financials of Iktara Ltd. are prepared as per Ind AS.
An accountant who was hired at the time of company’s incorporation, has prepared the draft financials of
Softbharti Pvt. Ltd. for the year ending 31st March, 2020 as follows:
Statement of Profit and Loss

Particulars Amount (Rs.)
Revenue from operations 10,00,000
Other Income 1,00,000
Total Revenue (a) 11,00,000
Expenses:
Purchase of stock in trade 5,00,000

(Increase)/Decrease in stock in trade (50,000)
Employee benefits expense 1,75,000
Depreciation 30,000
Other expenses 90,000
Total Expenses (b) 7,45,000
Profit before tax (c) = (a)-(b) 3,55,000
Current tax 1,06,500

Deferred tax 6,000
Total tax expense (d) 1,12,500
Profit for the year (e) = (c) – (d) 2,42,500

Balance Sheet
Particulars Amount (Rs.)

EQUITY AND LIABILITIES
(1) Shareholders’ Funds
(a) Share Capital 1,00,000
(b) Reserves & Surplus 2,27,500
(2) Non-Current Liabilities
(a) Long Term Provisions 25,000
(b) Deferred tax liabilities 6,000
(3) Current Liabilities
(a) Trade Payables 11,000
(b) Other Current Liabilities 45,000

32.3