Question

Sandhu Ltd.has reported a profit of Rs. 7,00,000 for the current year after incorporating the following:

Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
Loss on sale of equipment	90,000	Profit from sale of assets	4,00,000
Premium on redemption of debentures	15,000	Provision for tax	2,20,000
Discount on issue of debentures	20,000	Dividend received	40,000
Depreciation on machinery	2,00,000	Transfer to General Reserve	50,000
Depletion of natural resources	1,00,000	Preliminary expenses	10,000
Interim dividend	2,50,000	Profit on revaluation	25,000
Loss on sale of investment	10,000	Goodwill written off	3,00,000

Calculate Funds from Operations.

Answer 1

            Calculation of Funds From Operations

Particulars		Amount (Rs.)
Add: Non – fund items debited to P&L Account		7,00,000
Goodwill written off	3,00,000
Loss on sale of equipment	90,000
Transfer to General Reserve	50,000
Depreciation on machinery	2,00,000
Discount on issue of debentures	20,000
Depletion of natural resources	1,00,000
Provision for tax	2,20,000
Preliminary expenses	10,000
Premium on redemption of debentures	15,000
Interim dividend	2,50,000
Loss on sale of investment	10,000	12,65,000
Less: Non – fund items credited to P&L Account
Profit on sale of assets	4,00,000
Profit on revaluation	25,000
Dividend income	40,000	4,65,000
Funds from operations		15,00,000

ADJUSTED PROFIT AND LOSS ACCOUNT