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CA Inter AS 13 Accounting for Investments — practice questions

Explore 64 free AS 13 Accounting for Investments questions in CA Inter Accounting. Open each question or exercise to read its content, reference answers and available explanation.

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AS 13 Accounting for Investments questions and exercises with answers

Showing questions 1–30 of 64.

AS 13 treats an asset as an investment when it is held mainly to:Read the answer and worked solution →Shares kept for sale in the ordinary course of business are classed as:Read the answer and worked solution →A current investment is intended to be held for what period from the date it is made?Read the answer and worked solution →An investment that is not a current investment is classified as:Read the answer and worked solution →Land held but not substantially occupied for the holder's own operations is:Read the answer and worked solution →Fair value is the amount at which an asset could be exchanged between:Read the answer and worked solution →Market value of an investment is its open-market sale value, net of:Read the answer and worked solution →Brokerage, fees and duties paid when buying shares are:Read the answer and worked solution →1,000 shares are bought at Rs 40 each; brokerage is Rs 600 and duty Rs 400. Cost of the investment?Read the answer and worked solution →A firm issues 2,000 own shares of Rs 10 par, fair value Rs 25 each, to buy an investment. Cost?Read the answer and worked solution →A machine with book value Rs 2,00,000 and fair value Rs 3,00,000 is swapped for shares. Cost of the shares?Read the answer and worked solution →1,000 own shares with fair value Rs 30 each plus Rs 5,000 cash buy an investment. Cost?Read the answer and worked solution →Rs 1,00,000 12% debentures, interest due 31 Dec, bought 1 Nov at Rs 1,02,000 cum-interest. Cost?Read the answer and worked solution →Interest paid for in the price, then later received, is:Read the answer and worked solution →The cost of right shares subscribed for is:Read the answer and worked solution →Sale proceeds of rights that are not subscribed for are generally:Read the answer and worked solution →Shares carried at Rs 30,000 get 500 rights taken up at Rs 20 each. New carrying amount?Read the answer and worked solution →Current investments are carried at:Read the answer and worked solution →The most prudent way to value current investments is to carry:Read the answer and worked solution →Cost/fair value in thousands: X 50/45, Y 30/36, Z 20/18. Total at lower of each pair, in Rs?Read the answer and worked solution →A write-down of current investments to fair value, and its reversal, goes to:Read the answer and worked solution →A current investment of cost 60,000 was written down to 52,000; fair value is now 57,000. Credit to profit and loss?Read the answer and worked solution →Cost Rs 60,000, written down to Rs 52,000; fair value is now Rs 70,000. New carrying amount?Read the answer and worked solution →A current investment costing Rs 40,000 has a fair value of Rs 44,000. Carrying amount?Read the answer and worked solution →Long term investments are usually carried at:Read the answer and worked solution →A provision against a long term investment is made for a decline that is:Read the answer and worked solution →Long term shares costing Rs 80,000 dip to a market value of Rs 60,000, a temporary dip. Carrying amount?Read the answer and worked solution →Long term shares costing Rs 80,000 fall to Rs 60,000 and the fall is not temporary. Charge to profit and loss?Read the answer and worked solution →Long term holdings: P cost 40,000, value 30,000 (lasting fall); Q cost 25,000, value 30,000. Carrying total?Read the answer and worked solution →A long term investment value is judged by market value, investee results and:Read the answer and worked solution →

Worked practice questions

AS 13 treats an asset as an investment when it is held mainly to:

  1. earn income or capital appreciation
  2. manufacture goods for resale
  3. meet daily operating needs
  4. settle trade payables quickly
Show answer and solution

Correct answer: A. earn income or capital appreciation

Investments are held for dividends, interest, rentals or capital appreciation rather than for operations or trading.

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Shares kept for sale in the ordinary course of business are classed as:

  1. stock-in-trade, not investments
  2. held as long term investments
  3. classed as investment property
  4. treated as current investments
Show answer and solution

Correct answer: A. stock-in-trade, not investments

Securities held to be sold in the normal course of trade are inventory, so they fall outside the definition of investments.

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A current investment is intended to be held for what period from the date it is made?

  1. exactly five years
  2. not more than one year
  3. at least two years
  4. more than three years
Show answer and solution

Correct answer: B. not more than one year

Besides being readily realisable, a current investment is meant to be held for one year or less.

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More Accounting topics

AS 3 Cash Flow StatementSchedule III Division I Financial StatementsAS 19 LeasesValuation of Inventories (AS 2)AS 22 Taxes on IncomeAS 28 Impairment of AssetsProperty, Plant and EquipmentAS 17 Segment Reporting