THE CHAMBER OF TAX CONSULTANTS

Transcription

1 THE CHAMBER OF TAX CONSULTANTS 3, Rewa Chambers, Ground Floor, 31, New Marine Lines, Mumbai Tel.: / Fax: office@ctconline.org Website: Full Day Workshop on Income Computation & Disclosure Standards (ICDS) Date : 17 th June, 2017 Mock Test Questions 1. ICDS will apply to which of the following assessee(s) (all the assessee are following mercantile system of accounting) i. Resident Individual, tax audit u/s 44AB is applicable ii. Non-Resident Individual, tax audit u/s 44AB is applicable iii. Resident Partnership firm, tax audit u/s 44AB is not applicable iv. Resident HUF, tax audit u/s 44AB is not applicable a. i, ii and iii b. i,ii and iv c. i, iii and iv d. ii, iii and iv 2. Does ICDS impact the computation of income under the provisions of MAT/AMT a. Yes, ICDS will impact computation of MAT and AMT, ICDS will not impact computation of MAT and AMT c. ICDS will only impact computation of MAT and not AMT d. ICDS will only impact computation of AMT and not MAT 1

2 3. In case there is a conflict between the provisions of the Act/Rules and ICDS, which provision shall prevail? a. Provisions of ICDS will prevail over Act and Rules b. Provisions of Act and Rules will prevail over ICDS c. Provisions of ICDS will prevail over provisions of Rule but Act will prevail over provisions of ICDS d. Provisions of ICDS will prevail over provisions of the Act but Rule will prevail over provisions of ICDS 4. Which of the following statements are true in relation to ICDS I - Accounting Policies i. ICDS I is silent on 'materiality' and 'prudence' ii. ICDS I provides that the accounting policies/computational policies shall not be changed without reasonable cause iii. ICDS I requires that accounting policies/computation policies to be reported in the notes to financial statements a. Statement i and ii only b. Statement ii and iii only c. Statement i and iii only d. All of the above 5. Disclosure requirements of ICDS is applicable to a. All assessee to whom ICDS applies b. Only to the assessee to whom ICDS applies and are liable for tax audit c. Only companies to whom ICDS applies d. All assessee other than Individual and HUF to whom ICDS applies 2

3 6. For the purpose of ICDS III Construction Contract, which of the following statements are true i. Revenue and costs from construction contracts are to be recognized under POCM ii. Recognition of profits/losses cannot be postponed beyond 25% stage of completion of contract iii. Expected losses from contract have to be recognised in full iv. Retention money is included in the contract revenue a. i,ii and iii b. i,ii and iv c. i,iii and iv d. ii, iii and iv 7. Will ICDS III Construction Contract apply to a three year construction contract which has commenced in January 1, 2016 (earlier assessee was following completed contract method) and 50% of stage of completion is not achieved before April 1, 2016? a. Yes 8. As per ICDS IV Revenue Recognition Service provider has to compulsorily follow percentage completion method for revenue recognition a. Yes, percentage completion method is compulsory, percentage completion method is not compulsory, completed contract method can be followed c. Yes, percentage completion method is compulsory only if duration of service contract is more than 90 days d. Yes, percentage completion method is compulsory only if duration of service contract is more than one year 3

4 9. On July 1, 2016 Mr. A has invested Rs. 10 lacs in a 12% bond. Coupon date is 30, June and 31, December. For the previous year ended Interest income of Mr. A as per ICDS IV Revenue Recognition will be: a. 30,000 b. 60,000 c. 90,000 d. 1,20, Mr. A has specifically borrowed Rs % on April 1, 2016 for construction of a fixed asset. Payment to the seller of the fixed asset (out of the borrowing) was made on May 1, The fixed asset has been put to use on October 1, As per ICDS IX Borrowing Cost, any interest capitalisation is required a. No interest capitalisation is requires b. Yes interest for the entire year needs to be capitalised c. Yes interest from April 1, 2016 to October 1, 2016 needs to be capitalised d. Yes interest from May 1, 2016 to October 1, 2016 needs to be capitalised 11. Company has commenced construction of an asset with specific borrowings on 1 April However, due to certain unforeseen circumstances, Company had to suspend the construction on 1 August 2016 and recommenced on 1 February Whether Company needs to capitalise borrowing cost incurred for the period of suspension (1 August 2016 to 1 February 2017)? a. Yes 12. Bank guarantee charges incurred for obtaining loan from bank is a borrowing cost under ICDS IX Borrowing Cost. a. True b. False 4

5 13. Qualifying Asset for capitalisation of borrowing costs would not only include qualifying assets acquired during the year but also opening value of capital work in progress of the qualifying asset. a. True b. False 14. How are government grants relating to compensation for expenses/ losses for going to a backward area be recognized? a. Recognized as Capital receipt b. Recognized as expense c. Recognized as Income 15. ICDS - VIII - Securities applies to? a. Securities held as stock-in-trade b. Securities held as investments c. All kind of Securities 16. For a firm trading in commodities market, will ICDS VIII - Securities apply to commodity derivatives held as stock in trade? a. Yes 17. How are assets (security held as stock-in-trade or fixed asset) which are acquired in exchange of other asset recognized? a. Recognized at the book value of asset given up b. Recognized at the fair value of the asset given up c. Recognised at the book value of the asset received (in the transferor s book) d. Recognised at the fair value of the asset received 18. Would Actual cost of shares (held as stock-in-trade) include the amount paid as securities transaction tax? 5

6 a. Yes 19. Which of the following methods for valuation of inventory are recognized by ICDS II - Valuation of Inventories? i. FIFO ii. Standard cost iii. LIFO iv. Weighted average cost a. Option i, ii and iv only b. Option i and ii only c. Option i and iv only d. Option ii and iii 20. For the purpose of ICDS V- Tangible Fixed Assets, which of the following statements are True i. Expenditure incurred on start-up and commissioning of a project including expenditure on test runs and experimental production is to be capitalized; ii. ICDS V does not recognise the concept of 'materiality' iii. Fair Value of an asset is the amount for which that asset could be exchanged between knowledgeable, willing parties in an arm's length transaction a. ii and iii b. i and iii c. i and ii d. i, ii and iii 6

7 21. Premium/discount on forward contracts entered into for trading/ speculative purposes need to be recognized a. At the date of entering into the contract b. At year end c. At settlement date d. None of the above 22. As per ICDS VI Effects of Changes in Foreign Exchange Rates, exchange differences arising from restatement of foreign currency loans taken for acquiring assets in India are required a. to be adjusted against the cost of assets in accordance with Section 43A of the Act b. to be recognized as income or expense c. to be accumulated in foreign currency translation reserve in the balance sheet 23. A provision is recognized under ICDS X Provisions, Contingent Liabilities and Contingent Assets when i. a person has a present obligation as a result of a past event; ii. a reliable estimate can be made of the amount of obligation; and a. when Probable that an outflow of resources will be required to settle the obligation b. when Reasonably certain that outflow of resources will be required to settle the obligation c. when virtually certain that outflow of resources will be required to settle the obligation 24. When a contingent asset and related income is recognised under ICDS X Provisions, Contingent Liabilities and Contingent Assets a. when Probable that an inflow of economic benefit will arise b. when Reasonably certain that an inflow of economic benefit will arise c. when virtually certain that an inflow of economic benefit will arise 7