Friday, November 9, 2018

Nature of Economics:
let’s understand the nature of economics:
When we say, nature of a particular subject or discipline we are actually referring to its contents  and how and why they find a place  in the subject. We can understand the nature of any subject by going through definitions and for Economics as well we have to go through definitions given by notable economists.
But here issue is there are multiple definitions for economics – this has made some scholars to comment that a search for a clear definition of Economics is an exercise in futility. J. M. Keynes, once observed “Political Economy is said to have strangled itself with definitions”.
Jokes apart, definitions makes studying a subject even more interesting, exciting, and enjoyable. When a science grows stage by stage, its newer definition will emerge at every stage,  and a concept associated with newer definition will receive special attention. And there should be clear cut definition and boundary for clear understanding of a subject.
As for as Economics is concerned, 4 definitions are available and each definition refers to a particular stage of the growth of the subject.
First definition is given by Adam Smith and it is understood as Wealth Definition and this definition represents Classical era.
Second definition given by Marshall – understood as Welfare Definition and this definition represents Neo-Classical.
Third one is Robbins’ Scarcity Definition representing the New Age and Fourth one is Samuelson’s Growth Definition which represents Modern Age.
In the following sessions, lets discuss each and every definition and their relevance.
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Thursday, November 8, 2018


Capital gains with respect to slump sale  -  this is provided in SECTION 50B

First of all,  what is slump sale? Let us say there are two companies -  One is seller company  and the other one is buyer company.  If Seller Company sells its whole or part of the undertaking as a Going Concern to buyer company on ‘as is where is’ basis,  for a lump sum consideration, We call that as slump sale.  Here, either whole / part of undertaking is sold that too as going concern and Sale is made for lump sum consideration and no values are assigned for individual Assets and liabilities. When slump sale is made, it could result in some capital gains / losses - In this session, let us focus on Long term capital gain / short term capital gains arising from Slump Sale. At first, we have to arrive at capital gain and then finalize whether it LTCG / STCG? First, let’s focus on Capital gain computation:
Full Value of Consideration                                                                      xxx
Less: Deemed  cost of acquisition & cost of improvement                     (xxx)
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Capital Gain                                                                                              xxx
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Now comes big question:  what is deemed cost of acquisition & cost of improvement.?
Net worth of the undertaking or the division which is getting sold is the deemed cost of acquisition and the cost of improvement. OK - So, it is Networth which is considered as deemed cost of acquisition and cost of improvement. Let’s see how to compute Networth:

Aggregate value of total assets of the undertaking or division                   xxx
Less: Value of liabilities of undertaking or division
(as per books of accounts)                                                                         xxx
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Networth                                                                                                      xxx
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If there are any change in the value of assets on account of revaluation of assets, it will not be considered in this calculation.This aggregate value of total assets figure will vary according to nature of asset. If they are depreciable assets, then WDV of block of assets have to be considered.If they are already depreciated fully (100%), then no value should be considered. If whole expenditure has already been allowed u/s 35AD, then again NO value should be considered. For all other assets, only book value should be considered.
Having dervied Capital Gain, we have to decide whether they are LTCG / STCG?
If the undertaking sold has been held for more than 36 months then profits or gains which arised from slump sale will be chargeable to income-tax as capital gains arising from the transfer of long-term capital assets and it will deemed as income of the previous year in which the transfer took place. If the undertaking sold has not  been held for more than 36 months then profits or gains which arised from slump sale will be chargeable to income-tax as Short Term Capital Gains. Another Important point to be noted here is, NO indexation benefit would be available when assets are sold under Slump Sale Model. There is also an additional compliance requirment for slump sale  - At the time of filing return of income - assessee should also furnish a report of a chartered accountant -  This report should be in a prescribed form and it should show computation of net worth of the undertaking / division and it should have the certificate that Net worth of the undertaking or division has been correctly arrived as per  provisions of this section.
To know more about slump sales and direct taxation, enroll our course https://bit.ly/2PRR7ug


Wednesday, November 7, 2018

Comparative Information in the Financial Statements


           Comparative Information in the Financial Statements
          Let’s understand about providing Comparative information in the Financial Statements:Ind AS 1 Says Minimum comparative information should be provided – What is that? Let’s see – Ind AS Says “An entity should present comparative information in respect of the preceeding period for all amounts reported in the current period’s financial statements except when Ind AS permit or require otherwise”. It means, when you present an information in the Financial Statement for the current period, its comparable figure for the previous period should also be presented. If you present current year sales, then PY sales information should also be given. “ALL AMOUNTS REPORTED IN CURRENT PERIOD’S FINANCIAL STATEMENTS” is the focus. For each and every items reported in the CY, corresponding PY figures should be given.  But if Ind AS permits or requires you otherwise, then PY comparative information need not be furnished.
Some times certain narrative and descriptive information will be given in order to understand current period’s financial statements. In those cases, Comparative information for narrative and descriptive information should be given for previous year as well.
Let’s take an Eg – If an entity has disclosed status of a legal dispute last year and if its outcome was considered as uncertain at the end of the preceding period, then that entity should continue giving the narrative and descriptive information and mention that outcome was uncertain at the end of the immediately preceding reporting period and record that fact that dispute is yet to be resolved. 
So, what are the components of Comparative Information:
In order to enable comparison, entity should present, minimum: 
2 Balance Sheets   
2 Statement of Profit and Loss
2 Statement of Cash Flows
2 Statement of Changes in Equity and  Related Notes.
Whether any additional comparative information can be provided?
Yes ! Additional comparative information can be presented i.e., these are all in addition to the minimum comparative financial statements required by Ind Ass. But the point is those information should be prepared in accordance with  Ind AS. 
This comparative information can have one or more statements which we have discussed in ‘Complete set of financial statements’ but they need not comprise a complete set of financial statements. 
To know more about Ind AS1, enroll this course

Tuesday, July 24, 2018

Crossing of Cheque and different types


In the lecture, let us understand  about crossing of cheque and different kinds of crossing . 

So what is crossing of cheque? 

This is nothing but drawing two parallel lines  on the  face of the cheque. By crossing you are giving instruction to the banker not to pay the cheque by cash but you are directing to  pay the money only through bank account or to the credit of the account of the customer.

To know more and understand about types of crossing, watch this lecture:


This lecture is party of our course
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Monday, July 23, 2018

What is Letter of Credit?

Imagine a normal sale scenario where the buyer and seller are involved. The buyer would make the cash payment first then the seller would be dispatching the goods. This would generally happen when the buyer has cash at his disposal. But imagine a scenario where buyer does not have cash but in need of goods and seller not ready to give credit just by looking the face of the buyer.

There comes the role of letter of credit. In order to understand the letter of credit we should understand all the three parties involved.
Party 1 - Seller
Party 2 - Buyer
Part 3 - Banker

Continue with this video Lecture to understand in depth:







This lecture is party of our course

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statement to review the overall health of a company

If You could use only 1 statement to review the overall health of a company, which statement would you use and why?

Post your comments below.

Thursday, July 12, 2018

Analysis of TNW, TOL/TNW and Adj.TOL/TNW 

Analysis of TNW, TOL/TNW and Adj.TOL/TNW is very critical in Credit Analysis and this video lecture will take you through that:



This video is part of my Online Course
HOW TO WRITE BANK LOAN PROPOSAL