The balance sheet of Kismat Kytes Ltd comprises the following details:

During the accounting year 2010–11, the following information has been extracted from the books of accounts and other documents 

(i) External factors indicate that the value in use of plant is ₹1,17,000 and net sales value is  ₹1,24,000.

(ii) A change in external factors indicates that the net recoverable value is  ₹1,40,000. In the previous years, an impairment loss amounting to  ₹80,000 had been recognized out of which  ₹35,000 was debited to profit and loss account.

(iii) Goodwill is considered to be discarded as it is not likely to have any future economic benefits.

(iv) Market value of finished stock is  ₹3,750.

(v) Out of net debtors  ₹100 is confirmed bad debts.

Discussion Question

Carry the effect of the information on different items of asset and elaborate how these are to be recognized in the annual accounts.

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Liabilities Capital 2,10,000 Add: Net profit 1,06,512 Revaluation Reserve for furniture Revaluation Reserve for plant Sundry creditors Outstanding wages Unearned commission Balance Sheet as on March 31, 2010 Amount (2) 3,16,512 12,000 Furniture 28,000 Goodwill 10,000 2,000 500 Plant Building Less: Provision For depreciation 3,69,012 Assets Cash Stock Raw material Work-in-process Finished goods Pre-paid salary Sundry Debtors Less: Provision for doubtful debts Less Provision for discount 1,00,00 10,000 30,000 1,200 288 Amount (2) 1,80,000 90,000 40,000 16,000 3,500 6,000 4,000 1,000 28,512 3,69,012