Unit ko samjho · NISM Series XVI
Accounting and Taxation
8 questions is unit mein
Sawaal aur jawaab English mein hain, kyunki NISM ka exam paper bhi English mein hota hai.
Is unit mein kya hai
- An entity applying Ind AS 109 buys a commodity option for ₹12 per unit covering 2,000 units. The premium equals its initial fair value. There are no transaction costs. What is the initial derivative asset recognised?
- A written commodity option is accounted for at fair value through profit or loss and is not in a hedge-accounting relationship. Its opening liability is ₹12,000 and its closing liability is ₹9,000. There are no settlements or other changes. What is the remeasurement result?
- A company buys commodity futures to offset a forecast input purchase. It claims hedge accounting is automatic because management calls the position a hedge. Which additional matter is required under Ind AS 109’s qualifying criteria?
- In a qualifying cash flow hedge under Ind AS 109, the cumulative hedging-instrument gain is ₹95,000 and the cumulative adverse change in the hedged item’s expected cash flows, measured for the effectiveness test, is ₹85,000. The reserve starts at zero. What amounts are recognised in the cash flow hedge reserve and profit or loss, respectively?
- A qualifying forecast commodity purchase results in inventory initially priced at ₹5,00,000. A ₹20,000 accumulated gain in the cash flow hedge reserve relates entirely to that purchase. Applying Ind AS 109 paragraph 6.5.11(d)(i), what is the inventory’s initial cost after the hedge basis adjustment? Ignore all other items.
- A commodity derivative measured through profit or loss changes from a ₹15,000 asset at the previous reporting date to an ₹8,000 liability at this reporting date. No cash flows or other adjustments occur between the dates. What is the period’s fair-value result?
- For this question only, assume a commodity transaction levy is 0.02% of selling notional, irrespective of trading profit. A sale of 3,000 units occurs at ₹300 per unit and the trade makes a loss. What is the levy? Ignore rounding and every other charge.
- For this calculation, brokerage is ₹100 and an exchange service charge is ₹50. Assume GST is 18% on exactly these two charges. A separate transaction levy of ₹200 is expressly outside this assumed GST base. What is the total amount of all charges including GST?
Zaroori ideas
Practice bank se · 1
An entity applying Ind AS 109 buys a commodity option for ₹12 per unit covering 2,000 units. The premium equals its initial fair value. There are no transaction costs. What is the initial derivative asset recognised?
A purchased derivative is initially recognised at its fair value, not at the underlying commodity’s full notional value. Total premium paid = ₹12 per unit × 2,000 units = ₹24,000. The question states that this amount equals initial fair value and that transaction costs are absent. The initial derivative asset is therefore ₹24,000. This does not represent physical inventory ownership. Remember: Convert per-unit option quotes to total fair value before recording the derivative.
Hint Common mistake: Treating an option’s underlying quantity as its carrying value, or deferring all recognition until exercise.
XVI-064Practice bank se · 2
A written commodity option is accounted for at fair value through profit or loss and is not in a hedge-accounting relationship. Its opening liability is ₹12,000 and its closing liability is ₹9,000. There are no settlements or other changes. What is the remeasurement result?
A decrease in the fair value of a derivative liability produces a gain under the stated profit-or-loss measurement basis. The liability decreases from ₹12,000 to ₹9,000, a decrease of ₹3,000. Under the given fair-value-through-profit-or-loss basis, this reduction is a ₹3,000 gain. The full closing liability is not itself the period’s profit, and the two balances are not added together. Remember: For a liability, distinguish a decrease in carrying value from a loss in asset value.
Hint Common mistake: Applying the asset-value sign convention to a written option liability.
XVI-065Practice bank se · 3
A company buys commodity futures to offset a forecast input purchase. It claims hedge accounting is automatic because management calls the position a hedge. Which additional matter is required under Ind AS 109’s qualifying criteria?
An economic risk-management purpose does not by itself satisfy the accounting conditions for hedge accounting. Ind AS 109 paragraph 6.4.1 includes formal designation and documentation at inception of the hedge relationship. Other qualifying conditions also apply, including eligibility and the required effectiveness relationship. A profit, an intention or exchange trading alone does not establish all those conditions. Remember: Separate the commercial purpose of hedging from eligibility for hedge accounting.
Hint Common mistake: Assuming any derivative used to reduce business risk automatically qualifies for special accounting.
XVI-066Practice bank se · 4
In a qualifying cash flow hedge under Ind AS 109, the cumulative hedging-instrument gain is ₹95,000 and the cumulative adverse change in the hedged item’s expected cash flows, measured for the effectiveness test, is ₹85,000. The reserve starts at zero. What amounts are recognised in the cash flow hedge reserve and profit or loss, respectively?
For the stated qualifying cash flow hedge, the effective accumulated portion is limited using the lower absolute cumulative amount, with remaining ineffectiveness in profit or loss. Lower absolute amount = min(₹95,000, ₹85,000) = ₹85,000. This effective part of the instrument’s gain enters the cash flow hedge reserve through other comprehensive income. The remaining instrument gain is ₹95,000 − ₹85,000 = ₹10,000 and is recognised in profit or loss as ineffectiveness. ₹85,000 + ₹10,000 reconciles to the full ₹95,000 derivative gain. Remember: Preserve both the lower-amount limit and the sign when splitting a qualifying cash flow hedge result.
Hint Common mistake: Sending all derivative gains to the reserve or treating every ineffective amount as a loss.
XVI-067Practice bank se · 5
A qualifying forecast commodity purchase results in inventory initially priced at ₹5,00,000. A ₹20,000 accumulated gain in the cash flow hedge reserve relates entirely to that purchase. Applying Ind AS 109 paragraph 6.5.11(d)(i), what is the inventory’s initial cost after the hedge basis adjustment? Ignore all other items.
When the specified qualifying hedge results in a non-financial asset, the related reserve amount is included in that asset’s initial cost rather than left as an unrelated balance. The commodity purchase gives an unadjusted inventory cost of ₹5,00,000. The accumulated hedge gain offsets ₹20,000 of that purchase cost. Adjusted initial cost = ₹5,00,000 − ₹20,000 = ₹4,80,000. An accumulated hedge loss would have the opposite sign under the same basis-adjustment mechanism. Remember: Track the sign of the hedge reserve when it is included in a purchased non-financial asset’s cost.
Hint Common mistake: Treating removal from the hedge reserve as necessarily an immediate profit-or-loss gain.
XVI-140Practice bank se · 6
A commodity derivative measured through profit or loss changes from a ₹15,000 asset at the previous reporting date to an ₹8,000 liability at this reporting date. No cash flows or other adjustments occur between the dates. What is the period’s fair-value result?
An asset-to-liability transition crosses zero, so the two positive magnitudes cannot simply be subtracted. Represent the opening asset as +₹15,000 and the closing liability as −₹8,000. Change in value = −₹8,000 − ₹15,000 = −₹23,000. The stated profit-or-loss basis therefore gives a ₹23,000 loss for the period. Remember: Put asset and liability values on a signed scale before calculating the period change.
Hint Common mistake: Subtracting the two displayed positive carrying amounts without accounting for their different balance-sheet sides.
XVI-141Practice bank se · 7
For this question only, assume a commodity transaction levy is 0.02% of selling notional, irrespective of trading profit. A sale of 3,000 units occurs at ₹300 per unit and the trade makes a loss. What is the levy? Ignore rounding and every other charge.
A transaction-based charge uses its specified transaction base, which need not be the investor’s profit. Selling notional = 3,000 × ₹300 = ₹9,00,000. Convert 0.02% to 0.0002. Levy = ₹9,00,000 × 0.0002 = ₹180. The trading loss does not change the explicitly assumed levy rule. This does not establish a current statutory CTT rate or exemption. Remember: Identify whether a tax or fee is based on transaction value, premium, income or another measure before calculating it.
Hint Common mistake: Assuming a loss-making trade is automatically exempt from every transaction-based charge.
XVI-142Practice bank se · 8
For this calculation, brokerage is ₹100 and an exchange service charge is ₹50. Assume GST is 18% on exactly these two charges. A separate transaction levy of ₹200 is expressly outside this assumed GST base. What is the total amount of all charges including GST?
A tax calculation must use the specified taxable base without automatically including every separately listed levy. The assumed GST base is ₹100 + ₹50 = ₹150. GST = ₹150 × 18% = ₹27. Total charges = brokerage ₹100 + exchange charge ₹50 + separate levy ₹200 + GST ₹27 = ₹377. The calculation is confined to the supplied base and rates. It does not settle legal GST treatment for a real invoice. Remember: Calculate the tax on its defined base, then reconcile it into the complete invoice.
Hint Common mistake: Applying a percentage to the final pre-tax bill without checking exclusions from the tax base.
XVI-143