LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
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M.Com. DEGREE EXAMINATION – COMMERCE
FOURTH SEMESTER – APRIL 2007
CO 4958 – CORPORATE ACCOUNTS & ACCOUNTING STANDARDS
Date & Time: 23/04/2007 / 9:00 – 12:00Dept. No. Max. : 100 Marks
SECTION – A
Answer ALL the questions (10 * 2 = 20)
- What are the objectives of accounting standards?
- State the three fundamental accounting assumption as per AS – 1.
- When should the revenue be recognized in the case of real estate transation?
- State any two assets which fall under the fixed assets category but AS 10 is not
applicable.
- What is potential equity share?
- When an asset is said to be impaired?
- What is the meaning of “Provision” as per AS – 29?
- What is restructuring cost?
- What is purchase consideration?
- On 31-3-02, A Ltd traded is an old machine having carrying amount of
Rs.16,800 and paid cash difference of Rs.6000 for a new machine having a
total cash price of Rs.20,500. On 31-3-02, what amount of loss should ALtd
recognize on this exchange?
SECTION – B
Answer any five questions (5*8 = 40)
- What is meant by value added ratio ? Explain the different value added ratios
and their importance.
- Briefly explain the provisions of AS-4 on contingencies and events occurring
after the balance sheet date.
- a) NDA Co.purchased a machine costing Rs.1,25,000 for its manufacturing
operations and paid shipping costs of Rs. 20,000.NDA spent an additional
amount of Rs.10,000 for testing and preparing the machine for use. What
amount should NDA record as the cost of the machine.
- b) On Dec 1,2001, Induga Co, purchased Rs.4,00,000 worth of land for a
factory site. Induga razed an old building on the property and sold the
materials it salvaged from the demolition. It incurred additional costs and
realized salvage proceeds during December 2001 as follows :
Demolition of old building Rs.50,000 Legal fees for purchase contract and recording ownership Rs.10,000
Title guarantee insurance Rs.12,000
Proceeds from sale of salvaged materials Rs. 8,000
In its December 31,2001 Balance sheet ,at what value Induga Co, should report in the balance sheet under land account.
- What is merger as per AS – 14? What method of accounting is suggested in
merger?
- X Ltd ,is having a plant (Asset) carrying amount of which is Rs.250 lakhs on
31-3-2002 its balance useful life is 5 years and residual value at the end of 5
years is Rs.5 lakhs. Estimated future cash flow from using the plant in next 5
years are :-
for the year ended estimated cash inflow(Rs.in lakhs)
31.3.03 50
31.3.04 30
31.3.05 30
31.3.06 20
31.3.07 20
Calculate value in use for plant if the discount rate is 10% and also calculate
the recoverable amount and impairment loss , if net selling price of plant on
31-3-2002 is Rs.60 lakhs.
- What is enterprise resource planning? State the advantages of it.
- A company carried forward a balance of Rs.1,20,000 in the profit & loss account from the year ended 31st March 1996.During the year 1997 it made a further profit before tax of Rs.8,00,000.It was decided that following provisions and transfers be carried out :
- i) Dividend equalization account Rs.30,000
- ii) Provision for taxation Rs.2,20,000
iii) General reserve Rs.1,05,000
- iv) Development rebate reserve Rs.1,10,000
- v) Dividend at 9% (tax free) on preference shares of rs.5,00,000
- vi) Dividend at 15% on 1,00,000 equity shares of Rs.10 each fully paid.
You are required to give profit & loss appropriation account and give journal entries for payment of dividend. Tax deducted at source is 20%.
- On 01-01-2001 Bermin Ltd. Had 500000 shares outstanding, on 01-03-2001,it issued one new share for each five shares outstanding at Rs.15.Fair value of one equity share immediately before the right issue was Rs.21.Net profit for the year 2000 was Rs.11,00,000 and for 2001 Rs.15,00,000. Calculate the basic EPS for 2001 restated EPS for 2000.
SECTION-C
Answer any two questions: (2*20 =40)
- Following are the balance sheet of A Ltd and B Ltd .as on 31.03.2002
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Particulars |
A Ltd
Rs. |
B Ltd
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Particulars |
A Ltd
Rs. |
B Ltd |
| Share Capital : 40,000 Equity shares of Rs.100 each
General Reserve Current Liabilities Provision for tax Proposed dividend |
40,00,000
30,00,000 30,00,000 – –
1,00,00,000 |
10,00,000
5,00,000 1,00,000 1,00,000 2,00,000
19,00,000
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Fixed Assets
Investments Good will Current Assets |
30,00,000
5,00,000 – 65,00,000
1,00,00,000
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3,50,000
– 50,000 15,00,000
________ 19,00,000
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B Ltd . is to be absorbed by A Ltd .On the following terms :
1) B Ltd , declares a dividend of 20% before absorption for the payment of which it
is to retain sufficient amount of cash .
2) The net worth of BLtd is valued at Rs.16,00,000.
3) The purchase consideration is satisfied by the issue of fully paid – up shares of
Rs.100 each in A Ltd.
Following further information is also to be taken into consideration :
- i) A Ltd holds 5,000 shares of BLtd at a cost of Rs . 3,00,000
- ii) The stocks of BLtd include item valued at Rs.1,00,000 purchased from A
Ltd (cost to A Ltd Rs.75,000)
iii) The creditors of B Ltd include Rs.50,000 due to A Ltd.
Show ledger accounts in the books of BLtd. To give effect to the above and balance
sheet of A Ltd after completion of the absorption.
20.The following are the Balance sheet of Hltd. And S ltd.as on 31st march 1999.
Liabilities Hltd. Sltd. Assets Hltd. Sltd.
Shares of Rs.100Each 5,00,000 4,00,000 Fixed assets 2,50,000 2,00,000
General reserve 1,00,000 1,00,000 investment in
Sltd. 2,50,000 —
Profit/loss a/c 2,00,000 1,50,000 Current Assets 4,00,000 5,50,000
Current liabilities 1,00,000 1,00,000
————– ———– ———- ———–
9,00,000 7,50,000 9,00,000 7,50,000
————— ———— ———- ———–
- Hltd.acquired 2000 shares in Sltd.on 1.4.98 when the latter’s general reserve
and profit /loss a/c were Rs.2,50,000 and Rs.1,00,000 respectively.
- on 30.6.98 Sltd. Declared 20% dividend out of pre-acquisition profits and
Hltd. Credited the amount received to its P/La/c.
- on 31.10.98 Sltd. Issued bonus shares in the ratio of 3for 5 shares held out of
the general reserve.Hltd. made no entry in its books for the bonus shares
received.
- Sltd. owed Hltd.Rs.50,000 on 31.3.99 on account of goods supplied on credit.
However all of those goods were already disposed off by Sltd.
Prepare a consolidated Balance sheet as at 31st march 1999.
- When do you recognize revenue in the following cases as per AS-9
- Sale of goods
- Rendering of services
Explain the above two with revenue recognition norms for different categories of
sales and services.
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