CA Inter Advanced Accounting Test: AS 15 and AS 29 Solved Questions

The test has four questions, each carrying 5 marks, for a total of 20 marks. Question 1 deals with accounting for warranty costs where the company expects reimbursement from the original supplier, and asks whether the treatment follows AS 29. Question 2 looks at an actuarial surplus in a pension scheme and how it should be recognised in the statement of profit and loss. Question 3 examines whether a settlement allowance for retiring employees can be accounted for on a claim basis. Question 4 tests recognition and measurement of a provision for compensation on a undelivered contract, including whether the provision is the excess of compensation over profit.

Attempt the test within the stated time of about 40 minutes of solving, then compare your answers with the model answers. Pay attention to how each answer moves from the standard's principle to the facts of the question, since that is the format examiners look for. Note the points where the answer treats a defined benefit scheme differently from a claim-basis approach, and where a provision is required even when the amount is uncertain. Repeat the questions after a few days to check that the reasoning has stuck.

This test is useful for CA Inter students revising AS 15 and AS 29 as part of the Advanced Accounting paper. It is also helpful for students who want to practise short-answer questions on provisions, reimbursements and employee benefit accounting before a mock exam. Students who find the difference between a provision and a contingent liability confusing will find the Question 1 and Question 4 answers particularly relevant.

• AS 29 Provisions
• Contingent liabilities and contingent assets
• Reimbursement of provisions
• AS 15 Employee Benefits
• Defined benefit scheme
• Actuarial gains and losses
• Settlement allowance for retiring employees
• Onerous contracts and compensation provision