Case-Based Application
How the case is set
A case typically supplies condensed financials, one or two notes, and an issue: revenue cut-off, a lease, a group structure, a cost-record gap or an ethical dilemma. Marks come from issue-spotting, naming the standard or section, quantifying, and concluding.
A four-step discipline
- Identify the accounting or compliance issue and the applicable standard or section.
- Establish the facts and compute the adjustment.
- State the journal effect and the disclosure.
- Conclude on profit, assets, ratios and the auditor's opinion.
Worked example
Facts: goods invoiced ₹50 lakh on 29 March but delivered 4 April; ₹12 lakh of staff training capitalised as an intangible; the cost auditor was not appointed for the year. Analysis: under Ind AS 115 control passes on delivery, so ₹50 lakh is a contract liability, not revenue, reducing profit by that amount less related cost and tax. Staff training is not a separable intangible under Ind AS 38, so ₹12 lakh is expensed and any amortisation reversed. Non-appointment breaches Section 148(3), attracting Section 148(5), and the board's report is misleading. Conclusion: adjustments, disclosures, a qualified cost audit position and a governance report.
Traps
- Spotting the issue but not quantifying it.
- Citing a standard without the operative principle.
- Ignoring knock-on effects on covenants, EPS and tax.