The Hindu Business Line : Add some finance to your senses

PRASANNA Chandra needs no introduction for those in finance. Tata McGraw-Hill (www.tatamcgrawhill.com) has brought out the third edition of Prasanna's classic, Finance Sense to impart finance for `non-finance executives'. Five new chapters are included, the author would inform in the preface, and these are: financial forecasting, financial system, risk and return, financial management - an overview, and value-based management. Also, he has `rewritten and expanded' some of the earlier content in cost methods and systems, financing strategy, mergers and so on.

No knowledge of accounting is presumed and that makes the book an ideal read for accounting students too because they often delude themselves as possessing sound basic knowledge. For instance, you may find a CA student blink if you were to ask him or her what a non-monetary liability is.

If you had read what comes early on in the book, in page 15, you may be able to explain to the budding CA: "Some liabilities are non-monetary, meaning that the firm expects to discharge them by delivering goods or providing services, rather than paying cash. For example, a magazine publisher may collect cash for subscriptions and promise delivery of magazines for many months to come."

So simple! Yes, but don't forget that cash is received now while service would be delivered in future. Okay, at what amount should we show the liability — at the amount of cash received or the expected cost of publishing the magazine? Psst... do you want to know where to look for the answer?

Bloody wars to scary boards

WARS in business may be bloodless but they are no less fierce. How frightening, but that statement is from the blurb of Dennis Laurie's From Battlefield to Boardroom, published by Leads Press (www.bjainbooks.com). The book "identifies ten winning military strategies" — picked from ancient Greece to Operation Desert Storm. There are two dimensions to war, Dennis would explain in chapter 1, titled appropriately as `reconnaissance'. "There is the primordial violence and carnage of physical war, and there is the coldly, intellectually calculated strategy for waging it."

Among the factors of success that the book lists are: Satellite snapshot and stealth mode. The first is to get all information that is highly detailed and accurate; and the second advises you to stay away from the rival's radar, as long as possible, otherwise you may be "swatted away by a stronger adversary".

So, prepare a strategy to go from reading room to bookshop.

Tax gyan for CA wannabes

POWER Line Ltd approaches you with a query. "Sir, we are engaged in generation and distribution of power. We have transformers worth Rs 50 lakh WDV as on April 1, 2003. In September 2003, we acquired new transformers for Rs 70 lakh. Ah, we almost forgot to tell you that in August we sold old transformers for Rs 70 lakh, and they had originally cost us Rs 65 lakh when we bought them in 1998. Advise us about the tax implications."

Without batting an eyelid, you steamroll: "As per Appendix 1A to the Income-Tax Rules, 1962, depreciation in respect of transformers is deductible at 7.81 per cent of the actual cost if the transformers have a rating of 100 Kilovolt amperes and over. Therefore, for the new transformers Power Line can claim depreciation on actual cost from the year of acquisition.

"As for the old transformers, WDV is 50, and so excess of sale price over WDV is chargeable to tax as follows: Sale consideration exceeding original cost is chargeable as capital gain; and the balance of sale consideration (equal to original cost) less WDV is chargeable as balancing charge. Thus, Rs 5 lakh is capital gain and Rs 15 lakh is chargeable to tax as balancing charge." They say, "Thanks," and you don't say, "You're welcome," but hand them a bill for consultancy.

"Next," you call, and in comes Gautam. "Ji, on March 31, 2003, I converted into stock in trade my plot of land purchased in July 1994 for Rs 60,000. On that date, the fair market value of the land was Rs 1,60,000," he explains. "You still have some plots left of Gautam Nagar?" you ask tentatively. But he replies, "No, sir, I sold the entire stock in January 2004 for Rs 2 lakh."

Tic-tic-tic, you punch the calculator and do some mental gymnastic to advise him, "See, your long-term capital gain chargeable to tax in AY 2004-05 is Rs 56,450." He asks, anxiously, "How, ji, how?" And you hide something quickly inside your drawer; and that's your copy of V. K. Subramani's Income Tax for CA PE-II Students, published by The Tax Publishers (www.tax-publishers.com).

Neither a borrower, nor a lender be

PTC is not a transport corporation but `pass through certificate' and SC/RC has nothing to do with some caste, but securitisation and reconstruction company. You may not lose an asset, because you're clinging on to it dearly, but check if it a `loss asset' — something uncollectible and of little value that its continuance as a bankable asset is not warranted although there may be some salvage or recovery value.

Now, where to you get all these inputs? Check out Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002, published by Bharat Law House (www.bharatlawhouse.com). The book also includes a commentary on Recovery of Debts Due to Banks & Financial Institutions Act, 1993.

The law is among the hot topics these days. Remember the recent Mardia Chemicals case? An important piece of legislation, for people on both ends of a loan, be it receiving or giving, though you may believe in what William Shakespeare's had said: "Neither a borrower, nor a lender be; for loan oft loses both itself and friend, and borrowing dulls the edge of husbandry." (Hamlet)

From Beckham to business

AN OFFBEAT quote of Swami Vivekananda is that you will be nearer to heaven through football than through the study of the Gita. Perhaps David Bolchover and Chris Brady believe in something similar. Their book, The 90 Minute Manager, published by Pearson Education (www.pearsoned.co.in) is on "business lessons from the dugout".

The authors analyse the characteristics of the very best football managers. But, why? Because "football managers lead high-talent teams under intensely stressful conditions, where every action is open to scrutiny — just like today's business environment." So, if you love to succeed in business, here is the prescription: Watch `Bend it like Beckham' and read about all of 90 minutes.

Tailpiece

"I... "

"This is what happens if you watch the swearing-in fully."

ReadingRoom@TheHindu.co.in

D. Murali

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