CA Inter Advanced Accounting Test on AS 18 Related Parties and AS 20 Earnings Per Share

The test has four questions. Question 1 asks how transactions with a company running a business under contract, and a relative of key management personnel, are treated for AS 18 as at 31 March 2023. Question 2 asks for basic EPS for the year ended 31 March 20X2 after deducting preference dividend, with shares paid up at different dates. Question 3 asks whether a relative of key management personnel should be identified as a related party at the closing date. Question 4 asks for basic EPS including a comparative figure after a bonus issue and a shares issue at full market price, along with an explanation of why the two are treated differently.

Attempt the paper under the timing shown on the page, with 40 minutes for solving. Work Question 2 and Question 4 carefully, since EPS questions depend on weighted average shares and the bonus adjustment factor. For AS 18, write the reasoning in words for each party as well as the conclusion, because the question asks for suggestions and examiners reward a clear basis. Compare your answers with the model solution once you finish.

This test is useful for CA Inter students revising Advanced Accounting, particularly those practising AS 18 and AS 20 for the paper. Students who find EPS adjustments for bonus issues confusing will benefit from Question 4 part (ii), which explains the difference in treatment. Those who want more practice on related party identification can use Questions 1 and 3 together.

• AS 18 related party identification
• Key management personnel and relatives
• Related party disclosures at closing date
• Basic EPS computation
• Preference dividend deduction from net profit
• Weighted average number of equity shares
• Bonus issue adjustment in EPS
• Issue at full market price and EPS