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CA Final · Integrated Business Solutions (Multidisciplinary Case Study with Strategic Management) · Advanced Financial Management

Case: Aryan Textiles Ltd is being valued by an asset-based approach before acquisition by Bharat Weaves Ltd. Book value of net assets is ₹80 crore. Fixed assets have a fair value ₹15 crore above book, inventory is overstated by ₹4 crore, and an unrecorded contingent liability of ₹3 crore is probable and measurable (to be provided). What is the adjusted net asset value?

Adjusted net asset value is ₹88 crore. Start with book net assets of ₹80 crore, add the ₹15 crore fixed asset revaluation, then deduct the ₹4 crore inventory overstatement and the ₹3 crore probable liability that must be recognised.

  1. A₹88 croreCorrect
  2. B₹92 crore
  3. C₹98 crore
  4. D₹91 crore

Explanation

Adjusted NAV = 80 + 15 - 4 - 3 = ₹88 crore. ₹92 crore ignores the liability, ₹91 crore ignores the inventory overstatement but includes the liability, and ₹98 crore adds back the adjustments with wrong signs.

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