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Example 1

Calculate Domestic Income

GNP MP 6000
Subsidies 200
Depreciation 100
NFIA 400
Indirect Taxes 300

 

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Example 2

Calculate GNP FC

NDP MP 25000
Depreciation 5000
Subsidies 30
Factor Income from Abroad 400
Factor Income to Abroad 600

 

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Practicals

Question 1

Calculate GNPFC  (Rs in crores)

NDP MP 80,000
NFIA -200
Depreciation 4950
Subsidies 1770
Indirect Tax 10,600

 

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Question 2

Calculate the Domestic Income (Rs in crores)

GNP MP 58,350
Indirect Tax 2590
Subsidies 1540
Depreciation 1625
NFIA -240

 

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Question 3

Calculate GDP MP

National Income 6700
Consumption of Fixed Capital 180
Factor income from abroad 100
Indirect Taxes 130
Subsidies 70
Factor income to abroad 150

 

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Question 4

Calculate Domestic Income

GNP FC 2700
Indirect Tax 60
Factor income from abroad 150
Factor income to abroad 180
Replacement of Fixed capital 150

 

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Question 5

Gross National Product at market prices of an economy is Rs65,000 crores.

The capital stock of the economy is valued at Rs1,20,000 crores, which depreciates at the rate of 10% per annum.

Indirect taxes amount to Rs6,000 crores and subsidies amount to Rs1,000 crores.

Estimate National Income of the economy.

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Transcript

Example 1 Calculate Domestic Income GNPMP 6000 Subsidies 200 Depreciation 100 NFIA 400 Indirect Taxes 300 -a- We are given GNPMP We have to calculate Domestic Income i.e NDPFC From GNPMP we have to go to NDPFC GNPMP 6000 Less Dep 100 NNPMP 5900 Less NFIA 400 NDPMP 5500 Less Net Indirect Taxes 100 (300-200) NDPFC 5400 Working Note Net Indirect Taxes = Taxes - Subsidy = 300-200 = 100 -ea- Example 2 Calculate GNPFC NDPMP 25000 Depreciation 5000 Subsidies 30 Factor Income from Abroad 400 Factor Income to Abroad 600 -a- NDPMP 25000 Add Dep 5000 GDPMP 30000 Less Net Indirect Taxes -30 (0-30) GDPFC 30030 Add NFIA -200 (400-600) GNPFC 29830 Working Note 1 Net Indirect Taxes = Taxes - Subsidy = 0-200 = -200 Working Note 2 NFIA = Factor Income from Abroad - Factor Income to Rest of world = 400-600 = -200 -ea- Practicals Question 1 Calculate GNPFC (Rs in crores) NDPMP 80,000 NFIA -200 Depreciation 4950 Subsidies 1770 Indirect Tax 10,600 -a- NDPMP 80,000 Add Dep 4950 GDPMP 84,950 Add NFIA -200 GNPMP 84,750 Less Indirect Tax 10,600 Add Subsidies 1770 GNPFC 75,920 -ea- Question 2 Calculate the Domestic Income (Rs in crores) GNPMP 58,350 Indirect Tax 2590 Subsidies 1540 Depreciation 1625 NFIA -240 -a- Domestic Income = NDPFC GNPMP 58,350 Less Dep 1625 NNPMP 56,725 Less NFIA -240 NDPMP 56,965 Less Indirect Tax 2590 Add Subsidies 1540 NDPFC 55,915 -ea- Question 3 Calculate GDPMP National Income 6700 Consumption of Fixed Capital 180 Factor income from abroad 100 Indirect Taxes 130 Subsidies 70 Factor income to abroad 150 -a- NNPFC 6700 Add Dep 180 GNPFC 6880 Less NFIA -50 GDPFC 6930 Add Net Indirect Tax 60 GDPMP 6990 Working Note 1 NFIA = Factor income from abroad - Factor income to abroad NFIA = 100 - 150 NFIA = -50 Working Note 2 Net Indirect Tax = Indirect Tax - Subsidy = 130 - 70 = 60 -ea- Question 4 Calculate Domestic Income GNPFC 2700 Indirect Tax 60 Factor income from abroad 150 Factor income to abroad 180 Replacement of Fixed capital 150 -a- Domestic Income = NDPFC GNPFC 2700 Less Dep 150 NNPFC 2550 Less NFIA -30 NDPFC 2580 Working Note NFIA = Factor income from abroad - Factor income to abroad NFIA = 150 - 180 NFIA = -30 Replacement of Fixed Capital is Depreciation. -ea- Question 5 Gross National Product at market prices of an economy is Rs65,000 crores. The capital stock of the economy is valued at Rs1,20,000 crores, which depreciates at the rate of 10% per annum. Indirect taxes amount to Rs6,000 crores and subsidies amount to Rs1,000 crores. Estimate National Income of the economy. -a- Capital Stock = 1,20,000 Depreciation rate = 10% Dep = 12,000 National Income = NNPFC GNPMP 65,000 Less Dep 12,000 NNPMP 53,000 Less Net Indirect Tax 5000 NNPFC 48,000 Working Note Net Indirect Tax = Indirect Tax - Subsidies = 6000 - 1000 = 5000 -ea- Calculate Domestic Income. GNPMP 6000 Subsidies 200 Depreciation 100 NFIA 400 Indirect Taxes 300 -a- We are given GNPMP We have to calculate Domestic Income i.e NDPFC From GNPMP we have to go to NDPFC GNPMP 6000 Less Dep 100 NNPMP 5900 Less NFIA 400 NDPMP 5500 Less Net Indirect Taxes 100 (300-200) NDPFC 5400 Working Note Net Indirect Taxes = Taxes - Subsidy = 300-200 = 100 -ea- Example 3 Calculate GNPFC. NDPMP 25000 Depreciation 5000 Subsidies 30 Factor Income from Abroad 400 Factor Income to Abroad 600 -a- NDPMP 25000 Add Dep 5000 GDPMP 30000 Less Net Indirect Taxes -30 (0-30) GDPFC 30030 Add NFIA -200 (400-600) GNPFC 29830 Working Note 1 Net Indirect Taxes = Taxes - Subsidy = 0-200 = -200 Working Note 2 NFIA = Factor Income from Abroad - Factor Income to Rest of world = 400-600 = -200 -ea- Practicals Question 1 Calculate GNPFC(Rs in crores) NDPMP 80,000 NFIA -200 Depreciation 4950 Subsidies 1770 Indirect Tax 10,600 -a- NDPMP 80,000 Add Dep 4950 GDPMP 84,950 Add NFIA -200 GNPMP 84,750 Less Indirect Tax 10,600 Add Subsidies 1770 GNPFC 75,920 Question 2 Calculate the Domestic Income (Rs in crores) GNPMP 58,350 Indirect Tax 2590 Subsidies 1540 Depreciation 1625 NFIA -240 -a- Domestic Income = NDPFC GNPMP 58,350 Less Dep 1625 NNPMP 56,725 Less NFIA -240 NDPMP 56,965 Less Indirect Tax 2590 Add Subsidies 1540 NDPFC 55,915 -ea- Question 3 Calculate GDPMP. National Income 6700 Consumption of Fixed Capital 180 Factor income from abroad 100 Indirect Taxes 130 Subsidies 70 Factor income to abroad 150 -a- NNPFC 6700 Add Dep 180 GNPFC 6880 Less NFIA -50 GDPFC 6930 Add Net Indirect Tax 60 GDPMP 6990 Working Note 1 NFIA = Factor income from abroad - Factor income to abroad NFIA = 100 - 150 NFIA = -50 Working Note 2 Net Indirect Tax = Indirect Tax - Subsidy = 130 - 70 = 60 Question 4 Calculate Domestic Income. GNPFC 2700 Indirect Tax 60 Factor income from abroad 150 Factor income to abroad 180 Replacement of Fixed capital 150 -a- Domestic Income = NDPFC GNPFC 2700 Less Dep 150 NNPFC 2550 Less NFIA -30 NDPFC 2580 Working Note NFIA = Factor income from abroad - Factor income to abroad NFIA = 150 - 180 NFIA = -30 Replacement of Fixed Capital is Depreciation. -ea- Question 5 Gross National Product at market prices of an economy is Rs65,000 crores. The capital stock of the economy is valued at Rs1,20,000 crores, which depreciates at the rate of 10% per annum. Indirect taxes amount to Rs6,000 crores and subsidies amount to Rs1,000 crores. Estimate National Income of the economy. -a- Capital Stock = 1,20,000 Depreciation rate = 10% Dep = 12,000 National Income = NNPFC GNPMP 65,000 Less Dep 12,000 NNPMP 53,000 Less Net Indirect Tax 5000 NNPFC 48,000 Working Note Net Indirect Tax = Indirect Tax - Subsidies = 6000 - 1000 = 5000 -ea-

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CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 12 years and a teacher from the past 16 years. He teaches Science, Economics, Accounting and English at Teachoo