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lecture no.26 : SUNK COST - (Historical costs)
Costing
answered on 21-Jul-25 15:26
Sir, i have a very specific query regarding Sunk Cost, wrt decision makings. By the end of this lecture , it was concluded that sunk costs lays no role in decision making process. But all the way to till the conclusion of this chapter, it was been taught that costing helps in taking managrial decisions. But suddenly in this lectures, the word costing is termed in its traditional name "historical cost", and which was later termed to be helpless in decision making. {MY INSIGHT} Is it due to the specific situation, where the validity to recover the cost has been concluded and hence, taking into consideration of such cost is no more meaningfull and hence termed as Sunk Cost.? Please guide me with this. Thank You sir
latest answer
The amount of cost you incurred to pay ticket is a sunk cost. You could save time by not watching the movie. Now this cost should not be considered for future decision making (i.e to continue to watch or not) However, if there is a cost being incurred in future or say a variable cost, such costs will be considered for decision making.
Vinod Kumar
CA Inter
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147
Dividend
AFM
answered on 20-Jul-25 08:58
Sir, in ICAI material page 9.9, they have given an example where they have used the formula (P-I)e^rt, where I is the present value of the income flow during the tenure of the contract. In the same example they have given dividend per share not the yield percentage. Just after the example, they have again rewritten this formula as Pe^n(r-y). Here they are saying y is the percentage yield. In this particular question also, we are following the second formula as we have the yield rate is given in the question. So my doubt is, do we need to follow the second formula if the dividend is given in percentage form and use the first formula if the dividend is given in Rupees? [Video Time Stamp: 05:52]
latest answer
Yes when yield is given it is continuous compounding and when direct int rate is given it is discrete compounding You can convert a discrete number to continuous value also, explained in one of the later problems
Abhijith K B
CA Final
★ 5
1
170
Cost of capital
Financial Management
answered on 20-Jul-25 08:59
While calculating ke , Some problems d1 is taken as directly and some other problems d1 is taken as d0(1+g). Please advise.
latest answer
Depends on question If there are indications I. Question that the value of dividend given pertains to next year we directly take d1 If q indicates that value is current dividend. Then we treat it as d0
Venkat L
CA Inter
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170
Q16-ICAI-Custom valuation
Indirect Taxation
answered on 28-Jul-25 17:45
Sir, in this question I am not understanding what and why i got the answer wrong because I added expenses based on our understanding of what to add and what to not. So, why my solution is not in line with that of the institute
latest answer
When 20% is considered it covers the entire cost of loading, unloading, freight and transport from factory of exporter till the port of importer.
Hrishikesh Pradhan
CA Final
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195
Value of Futures
AFM
answered on 19-Jul-25 21:13
Sir, I have a doubt regarding the valuation of the futures, here we are taking spot price + Carrying Cost - Dividends. If we use the formula given for continuous compounding, will we get the same result? If not, When can we use the formula given for continuous compounding for valuing the future contract? [Video Time Stamp: 06:54]
latest answer
Ok sir, understood. Thank you sir.
Abhijith K B
CA Final
★ 5
2
169
Non lease components
Financial Reporting
answered on 21-Jul-25 15:02
Why can't administrative tasks be non lease component. Since non lease components should involve transfer of goods or services. Administrative tasks isn't transfer of service?
latest answer
It can be considered as non-lease. Ind AS 116 allows a practical expedient to combine lease and non-lease
Banu Priya
CA Final
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142
Working papers as evidence
Auditing
answered on 22-Jul-25 10:09
1.Auditor as a evidence can ask working papers previous year ? 2.And also in this case Branch auditor , situation where working papers are only the one we obtained evidence? [video Time Stamp: 07:35]
latest answer
Working papers can never be asked. Only audit report he can refer. Working paper will be the property of previous auditor. Branch auditor also cannot be asked for working working for evidence purpose. Principal auditor can ask for audit report . And he has any doubt, he can himself visit the branch office and perform procedures .
Sri Kanth
CA Inter
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160
Introduction to FSA - part 2
CFA
answered on 21-Jul-25 15:31
Under the topic of audit report , could you please explain the Reasonable assurance of free from material misstatements? [Video Time Stamp: 26:30]
latest answer
An auditor provides an opinion of financial statement. Reasonable assurance is a high but not absolute level of confidence that auditors provide in an audit report when they state that the financial statements are free from material misstatements. When we use the term reasonable, it means not 100% assurance but high level of assurance.
Vignesh Vicky
CFA L1
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1
132
Interpretation
Indirect Taxation
answered on 29-Jul-25 23:05
In this, the 2nd one, i did not understood the meaning of this sentence. Could you please explain it in simple terms.
latest answer
May be based on quantity or value or type
Hrishikesh Pradhan
CA Final
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3
181
Query
Indirect Taxation
answered on 22-Jul-25 11:22
Why have we not added freight from Q factory to port and loading charges, as it is part of FOB. [Video Time Stamp: 10:12]
latest answer
Since 20 percent is directly considered, it is deemed to have been included
Hrishikesh Pradhan
CA Final
★ 18K+
1
173