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Intermediate Course, Study Material, (Modules 1 to 3), , Paper 1, , Accounting, Module – 3, , BOARD OF STUDIES, THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA, © The Institute of Chartered Accountants of India

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ii, This study material has been prepared by the faculty of the Board of Studies. The, objective of the study material is to provide teaching material to the students to, enable them to obtain knowledge in the subject. In case students need any, clarifications or have any suggestions to make for further improvement of the, material contained herein, they may write to the Director of Studies., All care has been taken to provide interpretations and discussions in a manner, useful for the students. However, the study material has not been specifically, discussed by the Council of the Institute or any of its Committees and the views, expressed herein may not be taken to necessarily represent the views of the, Council or any of its Committees., Permission of the Institute is essential for reproduction of any portion of this, material., ©, , The Institute of Chartered Accountants of India, , All rights reserved. No part of this book may be reproduced, stored in a retrieval, system, or transmitted, in any form, or by any means, electronic, mechanical,, photocopying, recording, or otherwise, without prior permission, in writing, from, the publisher., Edition, , :, , September, 2021, , Website, , :, , www.icai.org, , E-mail, , :, , [email protected], , Committee/, , :, , Board of Studies, , Department, ISBN No., , :, , Price (All Modules), , :, , `, , Published by, , :, , The Publication Department on behalf of The, Institute of Chartered Accountants of India, ICAI, Bhawan, Post Box No. 7100, Indraprastha Marg, New, Delhi 110 002, India., , Printed by, , :, , © The Institute of Chartered Accountants of India

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iii, , CONTENTS, MODULE I, CHAPTER 1:, , Introduction to Accounting Standards, , CHAPTER 2:, , Framework for Preparation and Presentation of Financial, Statements, , CHAPTER 3:, , Overview of Accounting Standards, , MODULE II, CHAPTER 4:, , Financial Statements of Companies, , CHAPTER 5:, , Profit or Loss Pre and Post Incorporation, , CHAPTER 6:, , Accounting for Bonus Issue and Right Issue, , CHAPTER 7:, , Redemption of Preference Shares, , CHAPTER 8:, , Redemption of Debentures, , MODULE III, CHAPTER 9:, , Investment Accounts, , CHAPTER 10:, , Insurance Claims for Loss of Stock and Loss of Profit, , CHAPTER 11:, , Hire Purchase and Instalment Sale Transactions, , CHAPTER 12:, , Departmental Accounts, , CHAPTER 13:, , Accounting for Branches Including Foreign Branches, , CHAPTER 14:, , Accounts from Incomplete Records, , © The Institute of Chartered Accountants of India

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iv, , DETAILED CONTENTS: MODULE – 3, CHAPTER 9: INVESTMENT ACCOUNTS ............................................... 9.1 – 9.46, Learning Outcomes ................................................................................................................ 9.1, Chapter Overview ................................................................................................................... 9.2, 1., , Introduction ................................................................................................................ 9.3, , 2., , Classification of Investments ................................................................................. 9.3, , 3., , Cost of Investments ................................................................................................... 9.5, , 4., , Disposal of Investments .......................................................................................... 9.9, , 5., , Reclassification of Investments ........................................................................... 9.32, , Summary ................................................................................................................................. 9.33, Test Your Knowledge ........................................................................................................... 9.34, CHAPTER 10: INSURANCE CLAIMS FOR LOSS OF STOCK AND LOSS OF, PROFIT ......................................................................... 10.1 – 10.50, Learning Outcomes .............................................................................................................. 10.1, Chapter overview ................................................................................................................... 10.2, 1., , Introduction .............................................................................................................. 10.4, , 2., , Meaning of Fire ....................................................................................................... 10.4, , 3., , Claim for Loss of Stock .......................................................................................... 10.5, , 4., , Claim for Loss of Profit ....................................................................................... 10.19, , Summary .............................................................................................................................. 10.34, Test Your Knowledge ........................................................................................................ 10.37, CHAPTER 11: HIRE PURCHASE AND INSTALMENT SALE, TRANSACTIONS .......................................................... 11.1-11.49, Learning Outcomes .............................................................................................................. 11.1, Chapter Overview ................................................................................................................. 11.2, 1., , Introduction .............................................................................................................. 11.3, , 2., , Nature of Hire Purchase Agreement ................................................................... 11.3, , © The Institute of Chartered Accountants of India

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v, 3., , Special Features of Hire Purchase Agreement ................................................. 11.3, , 4., , Terms Used in Hire Purchase Agreements. ....................................................... 11.4, , 5., , Ascertainment of Cash Price ................................................................................ 11.5, , 6., , Ascertainment of Interest ..................................................................................... 11.9, , 7., , Accounting for Hire Purchase Transaction ................................................... 11.14, , 8., , Repossession .......................................................................................................... 11.26, , 9., , Instalment Payment System ............................................................................... 11.37, , 10., , Difference of Hire Purchase Agreement and Instalment, Payment Agreement ........................................................................................... 11.38, , Summary ............................................................................................................................... 11.40, Test Your Knowledge ........................................................................................................ 11.41, CHAPTER 12: DEPARTMENTAL ACCOUNTS ..................................... 12.1 – 12.35, Learning Outcomes .............................................................................................................. 12.1, Chapter Overview ................................................................................................................. 12.2, 1., , Introduction .............................................................................................................. 12.3, , 2., , Advantages of Departmental Accounting ........................................................ 12.3, , 3., , Methods of Departmental Accounting ............................................................. 12.4, , 4., , Basis of Allocation of Common Expenditure among Different, Departments ............................................................................................................. 12.4, , 5., , Types of Departments ........................................................................................... 12.6, , 6., , Inter-Departmental Transfers .............................................................................. 12.6, , 7., , Memorandum Stock and Memorandum Mark Up Account Method .... 12.19, , Summary .............................................................................................................................. 12.23, Test Your Knowledge ........................................................................................................ 12.25, CHAPTER 13: ACCOUNTING FOR BRANCHES INCLUDING FOREIGN, BRANCHES ................................................................. 13.1 – 13.100, Learning Outcomes .............................................................................................................. 13.1, Chapter Overview ................................................................................................................. 13.2, 1., , Introduction .............................................................................................................. 13.2, , © The Institute of Chartered Accountants of India

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vi, 2., , Distinction between Branch Accounts and Departmental Accounts ......... 13.3, , 3., , Dependent Branches .............................................................................................. 13.4, , 4., , Methods of Charging Goods to Branches ........................................................ 13.5, , 5., , Accounting for Dependent Branches ................................................................ 13.5, , 6., , Accounting for Independent Branches .......................................................... 13.40, , 7., , Adjustment and Reconciliation of Branch& Head Office Accounts ........ 13.42, , 8., , Incorporation of Branch Balance in Head Office Books ............................ 13.51, , 9., , Incomplete Information in Branch Books ...................................................... 13.61, , 10., , Foreign Branches .................................................................................................. 13.64, , 11., , Accounting for Foreign Branches .................................................................... 13.64, , 12., , Techniques for Foreign Currency Translation .............................................. 13.66, , 13., , Change in Classification ..................................................................................... 13.68, , Summary ............................................................................................................................... 13.75, Test Your Knowledge ........................................................................................................ 13.77, CHAPTER 14: ACCOUNTS FROM INCOMPLETE RECORDS ............. 14.1 – 14.69, Learning Outcomes .............................................................................................................. 14.1, Chapter overview .................................................................................................................. 14.2, 1., , Introduction .............................................................................................................. 14.3, , 2., , Types ............................................................................................................................ 14.4, , 3., , Ascertainment of Profit by Capital Comparison ............................................. 14.5, , 4., , Techniques of Obtaining Complete Accounting Information ................. 14.16, , Summary .............................................................................................................................. 14.49, Test Your Knowledge ........................................................................................................ 14.50, , © The Institute of Chartered Accountants of India