CA Inter Advanced Accounting Jan 2026 Warm Up Session

CA Inter Advanced Accounting Jan 2026 Warm-Up Session is a focused preparation guide for students appearing in the upcoming CA Intermediate exams. This session is designed to strengthen problem-solving skills, reinforce key accounting concepts, and boost confidence for exam day. It covers essential topics from accounting standards such as AS 11, AS 20, AS 3, and AS 21 through practical examples and solutions.

Advanced Accounting Warm-Up Session

This warm-up session is ideal for students preparing for CA Inter Advanced Accounting. The main objective is to improve exam readiness by practising numerical problems and understanding the application of accounting standards. The session emphasizes clarity, structured working notes, and correct application of formulas, which are crucial for scoring well in the CA Intermediate exam.

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Key Accounting Standards Covered

The session provided a deep dive into several critical standards. Mastery of these is essential for CA Inter Advanced Accounting:

• AS 11 (Foreign Exchange Rates): Students learned how to calculate exchange gains and losses. The session explained the treatment of monetary liabilities and assets clearly.

• AS 20 (Earnings Per Share): The instructor covered Basic and Diluted EPS. Understanding anti-dilutive shares is a common challenge in CA Inter Advanced Accounting.

• AS 3 (Cash Flow Statements): The indirect method was explained step-by-step. This included adjustments for non-cash items like depreciation.

• AS 21 (Consolidated Financial Statements): This is often a lengthy topic in CA Inter Advanced Accounting. The session focused on goodwill, minority interest, and revaluation adjustments.

AS 11: Effects of Changes in Foreign Exchange Rates

Foreign currency transactions are common in advanced accounting exams. AS 11 provides guidance on handling exchange differences for monetary items.

Long-Term Foreign Currency Loan

• Loan Amount (INR): ₹40,89,520

• Transaction Rate: $1 = ₹72

• Balance Sheet Rate: $1 = ₹73.60

Calculation of Exchange Loss:

• Loan in USD = ₹40,89,520 ÷ 72 = $56,799

• Rate Increase = ₹1.60 per USD

• Exchange Loss = $56,799 × ₹1.60 = ₹90,878.40

Treatment Options:

1. Debit the loss to the Profit & Loss Account.

2. Record in the Foreign Currency Monetary Item Translation Difference Account (FCMITDA) and amortize over the loan’s remaining life.

Trade Receivables

• Receivable Amount (INR): ₹20,00,010

• Transaction Rate: $1 = ₹73.40

• Balance Sheet Rate: $1 = ₹73.60

Calculation of Exchange Gain:

• Receivable in USD = ₹20,00,010 ÷ 73.40 = $27,250

• Rate Increase = ₹0.20 per USD

• Exchange Gain = $27,250 × ₹0.20 = ₹5,450

Treatment:

• Recognize gain in Profit & Loss Account.

• FCMITDA is not used for short-term items like trade receivables.

Key Insight: Correctly identifying whether an exchange difference applies to a monetary liability or asset is essential for exam questions.

AS 20: Earnings Per Share (EPS)

CA Inter Advanced Accounting requires understanding both Basic and Diluted EPS calculations. AS 20 covers these concepts along with anti-dilutive scenarios.

Formulas:

• Basic EPS: Earnings attributable to equity shareholders ÷ Weighted average number of equity shares

• Diluted EPS: (Earnings + Effect of potential equity shares) ÷ (Weighted average shares + Potential equity shares)

Example: Consolidated Financial Statements

• Profit = ₹40,00,000

• Weighted Average Shares = 5,00,000

• Potential Equity Shares = 1,00,000

• Basic EPS = ₹40,00,000 ÷ 5,00,000 = ₹8.00

• Diluted EPS = ₹40,00,000 ÷ 6,00,000 = ₹6.67

Since diluted EPS < basic EPS, the shares are dilutive.

Anti-Dilutive Case in Separate Financial Statements

• Loss = ₹2,00,00,000

• Weighted Shares = 5,00,000

• Potential Shares = 1,00,000

• Basic EPS (Loss) = ₹(40.00)

• Diluted EPS = ₹(33.33) → anti-dilutive

• Reported Diluted EPS = ₹(40.00)

Key Insight: Potential shares are ignored if their conversion reduces loss per share or increases EPS.

AS 3: Cash Flow Statement (Indirect Method)

The session provides detailed preparation of cash flow statements using the indirect method.

Key Steps:

1. Adjust net profit for non-cash and non-operating items (e.g., depreciation, interest, gains/losses on investment).

2. Classify cash flows into operating, investing, and financing activities.

3. Account for working capital changes.

4. Handle non-cash transactions, like share issuance for asset purchase.

Example:

• Net Profit Before Tax = ₹30,00,000

• Adjusted for Depreciation, Interest, Discounts → Operating Profit = ₹42,00,000

• Changes in working capital → Cash Generated = ₹40,41,000

• Net Cash from Operating Activities = ₹26,01,000

Investing and financing activities are adjusted similarly to reflect cash inflows and outflows.

Key Insight: Understanding indirect method adjustments is vital for exam accuracy.

AS 21: Consolidated Financial Statements

This section focuses on preparing a consolidated balance sheet for a parent and subsidiary.

Key Components:

1. Date of Acquisition (DOA): Helps bifurcate pre-acquisition (capital) and post-acquisition (revenue) profits.

2. Goodwill Calculation: Cost of investment – share of net assets.

3. Minority Interest: Share of equity and profits belonging to minority shareholders.

4. Revaluation Adjustments: Pre-acquisition losses and post-acquisition depreciation savings impact consolidated profits.

Key Insight: Accurate calculation of goodwill, minority interest, and consolidated reserves is critical for exam success.