PROVISION FOR DEPRECIATION

PROVISION FOR DEPRECIATION :

Section 123(2) of the Companies Act 2013 provides that the depreciation shall be provided out of the profits of the company in accordance with the provisions of Schedule II. Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. The depreciable

amount of an asset is the cost of an asset or other amount substituted for cost, less its residual value. The useful life of an asset is the period over which an asset is expected to be available for use by an entity, or the number of production or similar units expected to be obtained from the asset by the entity. The term depreciation includes amortisation

Companies whose financial statements comply with the accounting standards prescribed for such class of
companies under section 133, shall have the useful life of an as indicated in Part C of schedule II. In respect of
other companies the useful life of an asset shall not be longer than the useful life and the residual value shall not be higher than that prescribed in Part C.

For intangible assets, the provisions of the Accounting Standards shall apply.

SCHEDULE XI

The useful lives of various tangible assets under Part C of Schedule II:

Nature of assets Useful Life

I. Buildings [NESD]
(a) Buildings (other than factory buildings) RCC Frame Structure 60 Years
(b) Buildings (other than factory buildings) other than RCC Frame Structure 30 Years
(c) Factory buildings -do-
(d) Fences, wells, tube wells 5 Years
(e) Others (including temporary structure, etc.) 3 Years
II. Bridges, culverts, bunders, etc. [NESD] 30 Years
III. Roads [NESD]
(a) Carpeted roads
(i) Carpeted Roads-RCC 10 Years
(ii) Carpeted Roads-other than RCC 5 Years
(b) Non-carpeted roads 3 Years
IV. Plant and Machinery

(i) General rate applicable to plant and machinery not covered under special
plant and machinery
(a) Plant and Machinery other than continuous process plant not covered under
specific industries 15 Years
(b) continuous process plant for which no special rate has been prescribed under
(ii) below [NESD] 25 Years
(ii) Special Plant and Machinery

(a) Plant and Machinery related to production and exhibition of Motion Picture Films
1. Cinematograph films – Machinery used in the production and exhibition of 13 Years
cinematograph films, recording and reproducing equipments, developing
machines, printing machines, editing machines, synchronizers and studio
lights except bulbs
2. Projecting equipment for exhibition of films -do-

(b) Plant and Machinery used in glass manufacturing

1. Plant and Machinery except direct fire glass melting furnaces –
Recuperative and regenerative glass melting furnaces 13 Years

2. Plant and Machinery except direct fire glass melting furnaces –
Moulds [NESD] 8 Years
3. Float Glass Melting Furnaces [NESD] 10 Years
(c) Plant and Machinery used in mines and quarries – Portable underground
machinery and earth moving machinery used in open cast mining [NESD] 8 Years

(d) Plant and Machinery used in Telecommunications [NESD]

1. Towers 18 Years

2. Telecom transceivers, switching centres, transmission and other network
equipment 13 Years

3. Telecom – Ducts, Cables and optical fibre 18 Years
4. Satellites -do-
(e) Plant and Machinery used in exploration, production and refining oil and gas [NESD]
1. Refineries 25 Years
2. Oil and gas assets (including wells), processing plant and facilities -do-
3. Petrochemical Plant -do-
4. Storage tanks and related equipment -do-
5. Pipelines 30 Years
6. Drilling Rig – do-
7. Field operations (above ground) Portable boilers, drilling tools, well-head tanks,
etc. 8 Years
8. Loggers do-
(f ) Plant and Machinery used in generation, transmission and distribution of power
[NESD]

1. Thermal/ Gas/ Combined Cycle Power Generation Plant 40 Years
2. Hydro Power Generation Plant -do-
3. Nuclear Power Generation Plant -do-
4. Transmission lines, cables and other network assets -do-
5. Wind Power Generation Plant 22 Years
6. Electric Distribution Plant 35 Years
7. Gas Storage and Distribution Plant 30 Years
8. Water Distribution Plant including pipelines -do-
(g) Plant and Machinery used in manufacture of steel
1. Sinter Plant 20 Years
2. Blast Furnace -do-
3. Coke ovens -do-
4. Rolling mill in steel plant -do-
5. Basic oxygen Furnace Converter 25 Years
(h) Plant and Machinery used in manufacture of non-ferrous metals
1. Metal pot line [NESD] 40 Years
2. Bauxite crushing and grinding section [NESD] -do-
3. Digester Section [NESD] -do-
4. Turbine [NESD] -do-
5. Equipments for Calcination [NESD] -do-
6. Copper Smelter [NESD] -do-
7. Roll Grinder 40 Years
8. Soaking Pit 30 Years
9. Annealing Furnace -do-
10. Rolling Mills -do-
11. Equipments for Scalping, Slitting , etc. [NESD] -do-
12. Surface Miner, Ripper Dozer, etc., used in mines 25 Years
13. Copper refining plant [NESD] -do-
(i) Plant and Machinery used in medical and surgical operations [NESD]
1. Electrical Machinery, X-ray and electrotherapeutic apparatus and accessories
thereto, medical, diagnostic equipments, namely, Cat-scan, Ultrasound
Machines, ECG Monitors, etc. 13 Years
2. Other Equipments. 15 Years
(j) Plant and Machinery used in manufacture of pharmaceuticals and chemicals
[NESD]
1. Reactors 20 Years
2. Distillation Columns -do

3. Drying equipments/Centrifuges and Decanters -do-
4. Vessel/storage tanks -do-
(k) Plant and Machinery used in civil construction
1. Concreting, Crushing, Piling Equipments and Road Making Equipments 12 Years
2. Heavy Lift Equipments –
Cranes with capacity of more than 100 tons 20 Years
Cranes with capacity of less than 100 tons 15 Years
3. Transmission line, Tunneling Equipments [NESD] 10 Years
4. Earth-moving equipments 9 Years
5. Others including Material Handling /Pipeline/Welding Equipments [NESD] 12 Years
(l) Plant and Machinery used in salt works [NESD] 15 Years
V. Furniture and fittings [NESD]
(i) General furniture and fittings 10 Years
(ii) Furniture and fittings used in hotels, restaurants and boarding houses, schools,
colleges and other educational institutions, libraries; welfare centres; meeting
halls, cinema houses; theatres and circuses; and furniture and fittings let out
on hire for use on the occasion of marriages and similar functions. 8 Years
VI. Motor Vehicles [NESD]
1. Motor cycles, scooters and other mopeds 10 Years
2. Motor buses, motor lorries, motor cars and motor taxies used in a business of
running them on hire 6 Years
3. Motor buses, motor lorries and motor cars other than those used in a business
of running them on hire 8 Years
4. Motor tractors, harvesting combines and heavy vehicles -do-
5. Electrically operated vehicles including battery powered or fuel cell powered 8 Years
vehicles
VII. Ships [NESD]
1. Ocean-going ships
(i) Bulk Carriers and liner vessels 25 Years
(ii) Crude tankers, product carriers and easy chemical carriers with or without 20 Years
conventional tank coatings.
(iii) Chemicals and Acid Carriers:
(a) With Stainless steel tanks 25 Years
(b) With other tanks 20Years
(iv) Liquified gas carriers 30 Years
(v) Conventional large passenger vessels which are used for cruise purpose also -do-
(vi) Coastal service ships of all categories -do

(vii)Offshore supply and support vessels 20 Years
(viii) Catamarans and other high speed passenger for ships or boats -do-
(ix) Drill ships 25 Years
(x) Hovercrafts 15 Years
(xi) Fishing vessels with wooden hull 10 Years
(xii) Dredgers, tugs, barges, survey launches and other similar ships used mainly for
dredging purposes 14 Years

2. Vessels ordinarily operating on inland waters –
(i) Speed boats 13 Years
(ii) Other vessels 28 Years
VIII. Aircrafts or Helicopters [NESD] 20 Years

IX. Railways sidings, locomotives, rolling stocks, tramways and railways used
by concerns, excluding railway concerns [NESD] 15 Years
X. Ropeway structures [NESD] 15 Years
XI. Office equipment [NESD] 5 Years
XII. Computers and data processing units [NESD]
(i) Servers and networks 6 Years
(ii) End user devices, such as, desktops, laptops, etc. 3 Years

XIII. Laboratory equipment [NESD]

(i) General laboratory equipment 10 Years

(ii) Laboratory equipments used in educational institutions 5 Years

XIV. Electrical Installations and Equipment [NESD] 10 years

XV. Hydraulic works, pipelines and sluices [NESD] 15 Years

The following are the useful lives of various tangible assets:

1. “Factory buildings” does not include offices, godowns, staff quarters.

2. Where, during any financial year, any addition has been made to any asset, or where any asset has been sold, discarded, demolished or destroyed, the depreciation on such assets shall be calculated on a pro rata basis from the date of such addition or, as the case may be, up to the date on which such asset has been sold, discarded, demolished or destroyed.

3. The following information shall also be disclosed in the accounts, namely: –
(i) depreciation methods used; and
(ii) the useful lives of the assets for computing depreciation, if they are different from the life specified in the Schedule.
4. Useful life specified in Part C of the Schedule is for whole of the asset. Where cost of a part of the asset is significant to total cost of the asset and useful life of that part is different from the useful life of the remaining asset, useful life of that significant part shall be determined separately.

5. The useful lives of assets working on shift basis have been specified in the Schedule based on their single shift working. Except for assets in respect of which no extra shift depreciation is permitted (indicated by NESD in Part C above), if an asset is used for any time during the year for double shift, the depreciation will increase by 50% for that period and in case of the triple shift the depreciation shall be calculated on the basis of 100% for that period.

6. From the date this Schedule comes into effect, the carrying amount of the asset as on that date—

(a) shall be depreciated over the remaining useful life of the asset as per this Schedule;

(b) after retaining the residual value, may be recognised in the opening balance of retained earnings where the remaining useful life of an asset is nil.

7. ‘‘Continuous process plant’’ means a plant which is required and designed to operate for twenty-four hours a day.

Illustration
Given is the Trial Balance of Marathon Limited as on 31st March, 2014. You are require to prepare the Profit and loss Account and Balance Sheet on 31st March, 2014

*Particulars*	*Dr.*	*Cr.*
Authorised Share capital divided into 8,000, 6% preference shares of `100 each and 20,000 equity shares of `100 each
		28,00,000
*Subscribed Capital*
5,000 6% preference shares of `100 each		5,00,000
Equity Share Capital		8,00,000
Capital Reserve		5,000
Purchases – Coco, Tea, Coffee	58,800
– Bakery products	36,200
Wages and Salary	15,300
Rent, Rates and Taxes	8,900
Laundry	750
Sales – Coco, Tea and Coffee		82,000
– Bakery products		44,000
Coal and Firewood	3,290
Carriage	810
Sundry Expenses	5,840
Advertising	8,360
Repair	4,250
Rent of Rooms		48,000
Receipt from Billiards		5,700
Miscellaneous Receipts		2,800

Discount Received		3,300
Transfer Fee	700
Freehold Land and Building	8,50,000
Furniture and Fittings	86,300
Stock on hand, 1st April, 2013
Coco, Tea, Coffee	12,800
Bakery products	5,260
Cash in Hand 2,200
Cash with Bank	76,380
Preliminary and Formation Expenses	8,000
2000, 8% debentures of `100 each		2,00,000
Profit and Loss Account		41,500
Sundry Creditors		42,000
Sundry Debtors	19,260
Investment	2,72,300
Goodwill at Cost	5,00,000
General Reserve		2,00,000
	19,75,000	19,75,000

Additional Information:
– Wages and Salaries outstanding 4,280
– Stock as on 31st march,2012
– Coco, Tea, Coffee 22,500
– Bakery Products 16,400
– Provide 5% depreciation on Furniture and Fittings and 2% on Land and Building.

The equity capital on 1st April, 2013 stood at `7, 20,000, that is 6,000 shares fully paid and 2,000 shares of `60 paid. The directors made a call of ` 40 per share on 1st October, 2013. A shareholder could not pay the call on 100 shares and his shares were then forfeited and reissued at `90 per share as fully paid. The director proposes a dividend of 8% on equity shares, transferring any amount that may be required from general reserve. Ignore taxation.

Solution

Profit and Loss Account of Marathon and Limited

for the year ended on 31st March, 2012

Particulars	Notes	Amount (Rs.)
I Revenue from Operations	10	1,79,700
II Other Receipts 11	11	6,800
III Total Revenue (I + II)		1,86,500
IV Expenses
Purchase of Stock in Trade	12	95,000
Change in Inventories of Finished Goods	13	-20,840
Employee Benefit Expenses	14	19,580
Other Operating Expenses	15	23,840
Selling and Administrative Expenses	16	8,360
Finance Costs	17	16,000
Depreciation and Amortization Expenses	18	21,315
Total expenses		1,63,255
V Profit(Loss) for the period (III-IV)		23,245
Balance from Previous Years		41,500
Transfer from General Reserve		29,255
Less: Proposed Dividend
– Preference Share Capital @6%		30,000
– Equity Share Capital @ 8%		64,000
Profit (Loss) carried to Balance Sheet		0

Balance Sheet of Marathon Limited as on 31st March, 2014

Particulars	Notes	Amount (Rs.)
I Equity and Liabilities
1. Shareholders’ Fund
(a) Share Capital	1	13,00,000
(b) Reserve and Surplus	2	1,75,745
2. Non-current liabilities
(a) Long term liabilities	3	2,00,000
3. Current liabilities
(a) Trade Payables	4	46,280
(b) Short Term Provisions	5	1,10,000
TOTAL		18,32,025
II Assets
1. Non-Current Assets
(a) Fixed assets
(i) Tangible Fixed Assets	6	9,14,985
(ii) Intangible Assets (Goodwill)		5,00,000
(b) Non – Current Investments		2,72,300
2. Current Assets
(a) Inventories	7	38,900
(b) Trade Receivables		19,260
(c) Cash and Cash Equivalents	8	78,580
(d) Other Current Assets	9	8,000
TOTAL		18,32,025

Notes to the Financial Statements

1. Share Capital
Equity Share Capital
– Authorised Equity Share Capital : 20,000 Equity Shares		20,00,000
of `100 each

– Issued and Subscribed8,000 Equity Shares of `100 each		8,00,000
Preference share capital

Authorised Preference Share Capital
– 8,000, 6% Preference Shares of `100 each		8,00,000

– Issued and Subscribed		5,00,000
5,000 6% Preference Shares of `100 each		————–
		13,00,000
2. Reserve and Surplus
– Capital Reserve 5,000
– General Reserve	2,00,000
Less : Amount used to pay dividend on Equity
and Preference Share Capital	29,255	1,70,745
		1,75,745
3. Long Term Borrowings
– 2000, 8% Debentures of `100 each		2,00,000

4. Trade Payables
– Sundry Creditors 42,000
– Wages and Salaries Outstanding		4,280
		46,280
5. Short term Provisions
– Interest on Debentures		16,000
– Proposed Preference Dividend		30,000
– Proposed Equity Dividend		64,000
		110000

6. Tangible Assets
– Freehold Land and Building	8,50,000
Less : Depreciation @2%	17,000	8,33,000
– Furniture and Fitting 86,300	86,300
Less : Depreciation @5%	4,315	81,985
		9,14,985
7. Inventories
– Coco, Tea, Coffee		22,500
– Bakery Products		16,400
		38900
8. Cash and Cash Equivalents
– Cash at Bank		76,380
– Cash in Hand		2,200
		78580
9. Other Current Assets
– Preliminary and Formation Expenses		8,000
10. Revenue from Operations
Sale of products
– Coco, Tea and Coffee	82000
– Bakery Products	44,000	1,26,000
Sale of services
– Rent of Rooms	48,000
– Receipt from Billiards	5,700	53,700
		1,79,700
11. Other Receipts
– Miscellaneous Receipts		2,800
– Discount Received		3,300
– Transfer Fee		700
		6800
12. Purchases of Stock in Trade
– Coco, Tea and Coffee		58,800
– Bakery Products		36,200
		95000

13.	Change in Inventories of Finished Goods — Coco, Tea, Coffee
	Opening Stock	12,800
	*Less:* Closing Stock	22,500	(9,700)
	— Bakery Products
	Opening Stock	5,260
	*Less :* Closing Stock	16,400	(11,140)
			(20,840)
14.	Employee Benefit Expenses
	Wages and Salaries		15,300
	*Add:* Outstanding Wages and Salaries		4,280
			19,580
15.	Other Operating Expenses
	— Rent Rates and Taxes		8,900
	— Coal and Firewood		3,290
	— Laundry		750
	— Carriage		810
	— Repair		4,250
	— Sundry Expenses		5.840
			23.840
16.	Selling and Distribution Expenses
	— Advertising		8,360
17.	Finance Cost
	— Interest on Debentures		16,000
18.	Depreciation and Amortization Expenses
	— Land and Building		17,000
	— Furniture and Fittings		4,315
			21,315

Illustration : You are required to prepare financial statements from the following trial balance of Mehul Company Ltd. for the year ended 31st March, 2014

Mehul Company Ltd.
Trial Balance as at 31st March, 2014

*Particulars*		*Particulars*
Stock	68,000	Equity Shares Capital	2,50,000
		(Shares of Z10 each)
Furniture & Fixtures	50,000	11% Debentures	50,000
Discount	4,000	Bank Loans	64,500
Loan to Directors	8,000	Bills Payable	12,500
Advertisement	2,000	Creditors	15,600
Bad Debts	3,500	Sales	4,26,800
Commission	12,000	Rent Received	4,600
Purchases	231,900	Transfer Fees	1,000
Plant and Machinery	86,000	Profit & Loss Appropriation Account	13,900
Rentals	2,500	Provision for Depreciation on Plant	14,600
		& Machinery
Current Account	4,500
Cash	800
Interest on Bank Loan	11,600
Preliminary Expenses	1,000
Wages	90,000
Consumables	8,400
Freehold Land	1,54,600
Tools and Equipments	24,500
Goodwill	26,500
Debtors	28,700
Bills Receivables	15,300
Dealer Aids	2,100
Transit Insurance	3,000
Trade Expenses	7,200
Distribution Freight	5,400
Debentures Interest	2,000
	8,53,500		8,53,500

Additional Information :
– Closing stock as on 31st march, 2014, `82,300
– Depreciation on furniture & fixtures @5%, Freehold land @2% and Tools and Equipments @5% to be provided.

Solution

Profit and Loss Account of Mehul Company Ltd.
for the year ended on 31st March, 2014

Particulars	Notes	Amount (Rs.)
I Revenue from Operations		4,26,800
II Other Receipts 8 5,600	8	8 5,600
III Total Revenue (I + II)		4,32,400
IV Expenses
Purchase of Stock in Trade	9	2,31,900
Change in Inventories of Finished Goods	10	-14,300
Employee Benefit Expenses 11	11	90,000
Other Operating Expenses	12	48,100
Selling and Administrative Expenses	13	2,000
Finance Costs	14	13,600
Depreciation and Amortization Expenses	15	6,817
Total Expenses		3,78,117
V Profit (Loss) for the Period (III-IV)		54,283
Balance from Previous Years		13,900
Profit (Loss) carried to Balance Sheet		68,183

Balance Sheet of Mehul Company Ltd.
as on 31st March, 2014

particulars	Notes	Rs.
I Equity and Liabilities
1 Shareholders’ Fund
(a) Share Capital	1	2,50,000
(b) Reserve and Surplus	2	68,183
2. Non-Current Liabilities
(a) Long Term Liabilities	3	1,14,500
3. Current liabilities
(a) Trade Payables	4	28,100
TOTAL
II Assets
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible Fixed Assets	5	2,93,683
(ii) Intangible Assets (Goodwill)		26,500
2. Current Assets

particulars	Notes	Rs.
(a) Inventories		82,300
(b) Trade Receivables		28,700
(c) Cash and Cash Equivalents	6	5,300
(d) Short Term Loan and Advances	7	23,300
(e) Other Current Assets		1,000
TOTAL		4,60,783

Notes to the Financial Statements

1. Share Capital
– Equity Share Capital
Authorised Share Capital
25,000 equity shares of `10 each		2,50,000
Issued and Subscribed
25,000 equity shares of `10 each		2,50,000
2. Reserve and Surplus		2,50,000
– Balance as per last Balance Sheet		13,900
Add : Balance in Current Year Profit		54,283
3. Long Term Borrowings		68,183
11% Debentures of `100 each		50,000
Bank Loan		64,500
		1,14,500
4. Trade Payables		15,600
Sundry Creditors		12,500
Bills Payables		28,100

5. Tangible Assets
Book Value	Depreciation	Net value
Freehold Land and Building 1,54,600	3,092	1,51,508
Furniture and Fixtures 50,000	2,500	47,500
Plant and Machinery 86,000	14,600	71,400
Tools and Equipments 24,500	1,225	23,275
Total 3,15,100	14,600	2,93,683
6. Cash and Cash Equivalents
Cash at Bank 4,500		4,500
Cash in Hand 800		800
		5300
7. Short Term Loans and Advances
Loan to Directors 8,000		8,000
Bills Receivables 15,300		15,300
		23,300
8. Other Income
Rent Received 4,600		4,600
Transfer Fee 1,000		1,000
		5,600
9. Purchase of Stock in Trade
Purchases		2,31,900
10. Change in Inventories of Finished Goods
Closing Stock		82,299
Less : Opening Stock		68,001
		14,300
11. Employee Benefit Expenses
Wages		90,001
12. Other Operating Expenses
Consumables		8,400
Bad Debts		3,500
Discount		4,000
Rentals		2,500
Commissions		12,000
Dealer’s Aid		2,100
Transit Insurance		3,000
Trade Expenses		7,200
Distribution Freight		5,400
		48,100
13. Selling and Administrative Expenses
Advertisements		2,000
14. Finance Costs
Interest on Bank Charges		11,600
Debenture Interest		2,000
		13,600
15. Depreciation and Amortization Expenses
Freehold Land and Building		3,092
Furniture and Fixtures		2,500
Tools and Equipments		1,225
		6,817

Illustration :

The following are the balances from the Ledger of Black Mango Hotel Ltd., on 31st March 2014:

	(Rs.)
Share capital – Credit Balance on 1st January, 2014	566,850
Preliminary Expenses	75,000
Freehold Premises	4,68,000
Furniture and Fittings	89,340
Glass and China	11,010
Linen	8,400
Cultery and Plate	3,900
Rates, Taxes and Insurance	17,130
Salaries	24,000
Wages 43,050
Stocks on 31st March, 2013
Malto ` 12,390, Cold drinks ` 3780, Frooti `	17,820
Vitamins ` 1470, Protiens ` 1,140	2,610
Sundry Provision and Stoes ` 1,830, Coal ` 1500	3,330
Purchases
Rice ` 36,270 Floor ` 39,600	75,870
Sundry Provisions and Stores ` 52,200	52,200
Malto ` 18810 Cold drinks ` 21900, Frooti ` 11520	52,230
Vitamins ` 10500, Protiens ` 2400	12,900
Laundry	9,510
Coal and Gas	21,600
Electric Light	11,280
General Expenses	17,100
Sales –
Malto ` 38,700, Cold drinks ` 43,350, Frooti ` 18,630	100,680
Vitamins ` 21,600, Protiens ` 3,900	25,500
Meals	238,290
Rooms	93,750
Fires in Bedrooms	5,820
Washing charges	2,190
Repairs, Renewals and Depreciation
Premises ` 3480, Furniture and Fittings ` 6600	10,080
Glass and China ` 6090, Linen ` 3900	9,990
Cultery and Bonchina Plate ` 2070	2.07
Cash Book – Debt Balances :
In Bank	21,480
On Hand	2,190
Visitors Accounts unpaid	4,890
Sundry Creditors	33,900
Stocks on 31st March, 2013
Malto ` 11,970, Cold drinks ` 3,330, Frooti ` 1,740
Vitamins ` 3570, Protiens ` 690
Sundry Provision and Stores ` 1410, Coal ` 990

The Manager is entitled to a commission of 5% of the net profits after charging his commission. The authorized share capital is 100,000 shares of ` 10 each of which 57,000 shares were issued, the whole of the amount being called up. The final call on 2100 shares @ ` 1.50 per share was unpaid; the directors forfeited these shares at their meeting held on 15th March, 2014.

The tax liability is estimated at ` 43,000 and the directors propose to declare a dividend at the rate of 6 per cent. Prepare the Final Accounts for presentation to the shareholders.

Solution:

Balance Sheet of Black Mango Hotel Ltd., as on 31st March, 2014

Particulars	Note No `	Rs.
Equity and Liabilities
1 Shareholders’ Funds
(a) Share capital	1	5,66,850
(b) Reserves and Surplus	2	22,823
2 Current Liabilities
(a) Trade Payables	3	39,003
(b) Short-term provisions	4	79,234
Total		7,07,910
Assets
1. Non-current assets
(a) Fixed Assets
– Tangible assets	5	5,57,340
2. Current assets
(a) Inventories	6	47,010
(b) Trade receivables		4,890
(c) Cash and cash equivalents	7	23,670
(d) Other current assets	8	75,000
Total		7,07,910

Profit and Loss Account of Black Mango Hotel Ltd.
For the year ended 31st March, 2014

Particulars `	Note No	Rs.
I Revenue from operations (A)	9	466,230
II Expenses :
Cost of materials consumed	10	75,870
Purchase of Stock-in Trade	11	1,17,330
Changes in inventories of finished
goods work-in-progress and
stock-in-Trade	12	60
Employee benefits expenses	13	29,103
Other operating expenses	14	1,07,580
Administrative and general expense	15	34,230
Total Expenses (B)		364,173
III Profit before tax (VII – VIII) ( A — B)		102,057
IV Provision for tax		43,000
V Profit (Loss) for the period		59,057
VI Proposed Dividend		32,940
Dividend Distribution tax (3.294 x 0.10)		3,294
VII Profit (Loss) carried forward to Balance Sheet		22,823

Notes to accounts

1. Share Capital
Authorised
100,000 equity shares of ` 10 each		10,00,000
Issued & subscribed & called up
54,900 Equity Shares of ` 10 each	549,000
Forfeited Shares	17,850	566,850
		5,66,850
2 Reserve and Surplus
Surplus (Profit & Loss) A/c)		22,823
		22,823
3 Trade Payables
Sundry Creditors		33,900
Manager’s Commission Outstanding		5,103
		39,003
4 Short-term provisions
Provision for taxation		43,000
Proposed Dividend		32,940
Dividend Distribution tax		3,294
		79234
5 Tangible assets
Freehold Premises	471,480
Less: Depreciation	3,480	4,68,000
Furniture & Fittings	95,940
Less: Depreciation	6,600	89,340
		5,57,340
6 Inventories
Raw Material
Malto, Cold drinks and Frooti	17,040
Vitamins and Protiens	4,260
Sundry Provisions & Stores	2,400	23,700
Loose tools
Linen	12,300
Less: Depreciation	3,900	8,400
Cutlery & Plate	5,970
Less: Depreciation	-2,070	3900
Glass and China	17,100
Less : Depreciation	-6,090	11,010
		47010
7 Cash and Cash equivalents
Cash at Bank	21,480
Cash in hand	2,190	23,670
8 Other current assets
Preliminary expenses	75,000	75,000
9 Revenue from operations
Sale of products
Malto, Cold drinks and Frooti	100,680
Vitamins and Protiens	25,500	1,26,180
Sale of services
Meals	2,38,290
Rooms 93,750	93,750
Fires in Bed Rooms	5,820
Washing charges	2,190	3,40,050

		4,66,230
10 Cost of materials consumed
Rice, Floor		75,870
11 Purchase of Stock-in-Trade
Malto, Cold drinks and Frooti		52,330
Vitamins, Protiens		12,900
Sundry Provisions & Stores		52,220
		1,17,330
12 Changes in inventories of finished
goods work-in-progress and
stock-in-Trade
Opening Stock
Malto, Cold drinks and Frooti	17,820
Vitamins, Protiens	2,610
Sundry Provisions & Stores	3,330	23,760
Less: Closing stock
Malto, Cold drinks and Frooti	-17,040
Vitamins, Protiens	-4,260
Sundry Provisions & Stores	– 2400	-23,700
		60
13 Employee benefits expenses
Salaries	24,000
Manager’s commission (on ` 102060 @ 5%)	5,103	29,103
		29,103
14 Other operating expenses
Wages		43,050
Coal and Gas		21,600
Laundry		95,100
Electricity Light		11,280
Repairs, Renewals and Depreciation
Premises	3,480
Furniture and Fittings	6,600
Glass and China	6,090
Linen	3,900
Cutlery & Plate	2,070	22,140
		1,07,580
15 Administration and general expenses
Rates, Taxes and Insurances	17,130
General expenses	17,100	34,230
		34,230

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