PDF · Test series
AS 16 and AS 19 Test Questions for CA Inter Advanced Accounting (Chapter 5)
- Shared by
- Kavyansh
- Course
- CA Inter
- Subject
- Advanced Accounting
- Added
- 5 Nov 2026
Part of: CA InterAdv Accounting
Continue reading in the Studycaller app
The full PDF — free to read, save and share in the app.
This is a chapter test from CA Inter Advanced Accounting covering two Accounting Standards: AS 16 on Borrowing Costs and AS 19 on Leases. The questions cover a lessee's valuation of leased machinery and the finance charges for each year, the capitalisation of borrowing costs on a building under construction using special and general loans, and the treatment of lease rentals for a machine taken on lease for a shorter period than its effective life. It suits students practising for CA Inter exam questions on these standards.
What the test covers
The paper has three questions for a total of 20 marks. Question 1 asks you to find the value of machinery to be recorded by a lessee, using the fair value, annual lease payments, guaranteed and estimated residual values, implicit rate of return and present value factors, and then to work out the finance charge for each year. Question 2 is a borrowing cost problem: a special loan and two non-specific loans finance a building built from April 2022 to March 2023, with expenditure spread over several dates. You calculate the eligible amount and the borrowing cost to capitalise. Question 3 asks how a lessee should treat lease rentals for a machine needed for only 3 years out of a 14-year effective life, using the annuity factor given.
How to use it for revision
Attempt the test under timed conditions, with 15 minutes for reading and 40 minutes for solving, as the cover page suggests. Work out the present value and finance charge tables step by step, since the marks are given for the workings as well as the final figures. For Question 2, list each expenditure date with the weighted average borrowing rate separately, so you can check the capitalisation period. Compare your answers with the model solutions, and note the points where the lessee's and the lessor's estimates differ, as this is a common area of confusion in AS 19.
Key topics in these notes
- Lessee's valuation of leased asset under AS 19
- Guaranteed and unguaranteed residual value
- Finance charge allocation using implicit rate
- Present value factors and annuity factor
- Borrowing costs under AS 16
- Special loan and general borrowings
- Capitalisation period and expenditure dates
- Lease rentals in arrears for short lease term
Related notes
- Finance and Accounting Basics Interview Questions and Answers Sonu Thomas
- CA Inter Advanced Accounting – Model Test Paper Analysis (MTP 1–8)
- CA Inter G1 Advanced Accounting v2
- Questions of TEST 4 AS 2,10,13
- TEST 3 Questions of AS 24,AS 25
- ca inter advanced accounting jan 2026 exam question paper by icai 1767702846
- TEST 2 Questions of AS 18,AS 20
- Questions of TEST 1 AS 1,3,17
Frequently asked questions
Which accounting standards does this test cover?
The test covers AS 16 Borrowing Costs and AS 19 Leases, as stated in the chapter details on the first page.
What is the total marks and time for this test?
The test is of 20 marks, with 15 minutes reading time and 40 minutes solving time as mentioned on the paper.
How is the value of leased machinery calculated in Question 1?
The lessee uses the present value of the lease payments and the guaranteed residual value, discounted at the implicit rate of 15% using the given present value factors.
What does Question 2 ask students to calculate?
It asks for the borrowing cost to be capitalised on a building under construction, using a special loan and two non-specific loans with their respective interest rates and expenditure dates.
How can I get the full PDF?
Open it free in the Studycaller app.