From the following Trial Balance and other additional information furnished by AGN Ltd., prepare the Balance Sheet as at 31st…

(a)

Balance Sheet of AGN Ltd. as at 31st March, 2025 (Schedule III, Division I)

Equity and Liabilities

• Shareholders’ funds: Share capital ₹19,98,000 (Note 1); Reserves and surplus ₹6,40,000 (Note 2); total ₹26,38,000
• Non-current liabilities: Long-term borrowings ₹5,42,000 (Note 3)
• Current liabilities: Trade payables ₹4,00,000 (Note 4); Other current liabilities ₹1,28,000 (Note 5); Short-term provisions ₹1,38,000 (Note 6); total ₹6,66,000
• Total equity and liabilities: ₹38,46,000

Assets

• Non-current assets: Property, Plant and Equipment ₹24,20,000 (Note 7)
• Current assets: Inventories ₹5,00,000 (Note 8); Trade receivables ₹3,80,000 (Note 9); Short-term loans and advances ₹90,000 (Note 10); Cash and cash equivalents ₹4,56,000 (Note 11); total ₹14,26,000
• Total assets: ₹38,46,000

Notes to Accounts

1. Share Capital:

• 20,000 Equity Shares of ₹100 each fully called-up: ₹20,00,000
• Less: Calls-in-arrears: ₹2,000
• Paid-up share capital: ₹19,98,000
• Out of above, 6,000 equity shares were issued for consideration other than cash.

2. Reserves and Surplus:

• General Reserve: ₹4,60,000
• Surplus as per Profit and Loss A/c: ₹1,80,000
• Total: ₹6,40,000

3. Long-term Borrowings:

• Secured loan from SBI: ₹2,92,000 (secured by hypothecation of building; excludes ₹8,000 interest accrued but not due)
• Unsecured loans: ₹2,50,000 (treated as long-term; no current maturity given)
• Total: ₹5,42,000

4. Trade Payables: ₹4,00,000

5. Other Current Liabilities:

• Dividend payable: ₹1,20,000
• Interest accrued but not due on SBI loan: ₹8,000
• Total: ₹1,28,000

6. Short-term Provisions:

• Provision for taxation: ₹1,38,000

7. Property, Plant and Equipment:

• Land: ₹4,00,000
• Building: cost ₹9,60,000 − accumulated depreciation ₹1,60,000 = ₹8,00,000
• Plant and Machinery: cost ₹14,00,000 − accumulated depreciation ₹3,00,000 = ₹11,00,000
• Furniture: cost ₹1,80,000 − accumulated depreciation ₹60,000 = ₹1,20,000
• Net PPE: ₹24,20,000 (gross ₹29,40,000; accumulated depreciation ₹5,20,000)

8. Inventories:

• Raw materials: ₹1,00,000
• Finished goods: ₹4,00,000
• Total: ₹5,00,000

9. Trade Receivables:

• Outstanding for more than six months: ₹1,80,000
• Others: ₹2,00,000
• Total: ₹3,80,000

10. Short-term Loans and Advances:

• Advances: ₹90,000

11. Cash and Cash Equivalents:

• Cash at bank: ₹3,86,000
• Cash in hand: ₹70,000
• Total: ₹4,56,000

(b)

Let P/V ratio = p and monthly fixed cost = F. At sale ₹1,20,000, loss = ₹30,000:

• 1,20,000p − F = −30,000 … (1) At double sale ₹2,40,000, profit = ₹30,000:
• 2,40,000p − F = 30,000 … (2) Subtracting (1) from (2): 1,20,000p = 60,000, so p = 0.50 = 50%. Putting p in (1): 60,000 − F = −30,000, so F = ₹90,000.

(i) P/V ratio = 50%. (ii) Monthly fixed costs = ₹90,000. (iii) BEP = Fixed cost ÷ P/V ratio = 90,000 ÷ 0.50 = ₹1,80,000. (iv) MOS for profit ₹40,000 = Profit ÷ P/V ratio = 40,000 ÷ 0.50 = ₹80,000. (v) Profit at sale ₹3,00,000 = 3,00,000 × 0.50 − 90,000 = ₹60,000.

(c)(i)

Principles of inventory valuation under AS 2:

• Inventory is valued at lower of cost and net realisable value (NRV), generally item by item.
• Cost includes purchase cost, conversion cost and other costs incurred to bring inventory to its present location and condition.
• Abnormal waste, non-production storage, administration and selling overheads are excluded.
• Cost formula: specific identification for non-interchangeable goods; FIFO or weighted average for other inventories. LIFO is not permitted under AS 2.
• NRV = estimated selling price less estimated completion and selling costs.
• The comparison of cost and NRV is made at each balance sheet date, item by item or for groups of similar items; materials held for production are not written down below cost if the finished products are expected to sell at or above cost.

(c)(ii)

Permissible methods of depreciation under AS 10 (Property, Plant and Equipment):

• Depreciation is systematic allocation of depreciable amount over useful life. Depreciable amount = cost − residual value.
• Permissible methods include straight-line method, diminishing balance/written down value method, units of production/usage method, and any other systematic method reflecting the pattern of consumption of economic benefits.
• The method must be applied consistently; a change is treated as a change in accounting estimate and its effect is disclosed.
• Residual value and useful life are reviewed at least annually; changes are accounted prospectively.
• Depreciation begins when the asset is available for use and ceases on disposal or when fully depreciated; it is not stopped merely because the asset is idle.
• Significant components are depreciated separately; land is generally not depreciated unless it has a depletable nature.