Aman started a business on 1 st April 2023 with - 24,00,000 represented by 1,20,000 units of 20 each. During the financial year ending on 31 st…
CA Intermediate · Advanced Accounting · MTP · May 2025
Aman started a business on 1 st April 2023 with - 24,00,000 represented by 1,20,000 units of 20 each. During the financial year ending on 31 st March, 2024, he sold the entire stock for 30 each. In order to maintain the capital intact, calculate the maximum amount, which can be withdrawn by Aman in the year 2023-24 if Financial Capital is maintained at historical cost.
Suggested Answer and Working Notes:
Financial Capital Maintenance at Historical Cost (₹) Particulars Closing equity (30 x 1,20,000 units) 36,00,000 represented by cash Opening equity (1,20,000 units x 20) 24,00,000 Permissible drawings to keep Capital intact 12,00,000 (36,00,000 – 24,00,000)
Topics: AS 16
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