Loyola College M.Com April 2008 Corporate Accounts & Accounting Standards Question Paper PDF Download

LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

RO 56

M.Com. DEGREE EXAMINATION – COMMERCE

FOURTH SEMESTER – APRIL 2008

    CO 4958 – CORPORATE ACCOUNTS & ACCOUNTING STANDARDS

 

 

 

Date : 25/04/2008            Dept. No.                                        Max. : 100 Marks

Time : 9:00 – 12:00

SECTION: A

Answer all questions:                                                                                         10 x 2 = 20

  • What are fundamental accounting assumptions?
  • Write short note on events occurring after the balance sheet date.
  • Given an example for prior period item and extraordinary item as per AS5
  • B Ltd submits you the following information to calculate the weighted average number of shares outstanding during the year 2002 for the purpose of calculation of earnings per share.

Number of shares outstanding as on 1.1.02 – 9000

Number of shares on 31.05.02 – 3000

Number of shares bought back as on 1.11.2002 – 1500

  • Define “Value Added”.
  • Write short not on “Minority Interest”
  • Distinguish between amalgamation and absorption.
  • Calculate the maximum remuneration payable to the whole time director on the profits after charging his remuneration. Net profit for calculating managerial remuneration Rs.400000.
  • What are inter-company Owings? How are they treated on consolidation?
  • Stock of Rs.1, 60,000 held by H Ltd consists of Rs.60, 000 goods purchased from S Ltd who has charged Profit on Sale of 20%. H Ltd acquired 80% of shares of S Ltd. Calculate the amount of unrealized profit included in stock.

SECTION – B

Answer any five only:                                                                                    5 x 8 = 40

  • Write short note on: a) Cost of Control; b) Unrealized Profit; c) Consolidated Balance sheet.
  • Distinguish between Merger method and Purchase method of Accounting for amalgamation.
  • Briefly explain the accounting treatment on revaluation of fixed Assets.
  • Determine the maximum remuneration payable to the part time directors and Manger of B Ltd., a manufacturing company under section 309 and 387 of the company’s act 1956 from the following particulars.

Before charging any such remuneration, the Profit and Loss account showed a credit balance of Rs.23, 05,000 for the year ended 31st march 2005 after taking into account the following matters:

Rs.

Profit on sale of investments                                      2,05,000

Subsidy received from government                            4,10,000

Loss on sale of fixed assets                                           65,000

Ex-gratia to an employee                                               30,000

Compensation paid to injured workman                        75,000

Provision for taxation                                                 2,79,000

Bonus to foreign technicians                                      3,12,000

Multiple shift allowance                                             1,00,000

Special depreciation                                                       75,000

Capital expenditure                                                     5,10,000

Profit on sale of assets                                                1,00,000

(Cost price Rs.2, 50,000 and written down value

Rs.1, 80,000)

Company is providing depreciation as per section 350 of the companies’ act 1956.

  • From the following items in the trial balance of a company on 31.12.2005 and the adjustments given hereunder, show how the items would appear in the relevant accounts and details in the balance sheet.

                                Trial Balance                        DR.               CR.

Advance tax paid (2005)                                            Rs.60, 000

Provision for tax (2005)                                                                      Rs.80, 000

Tax deducted at source                                               Rs.10, 000

Adjustments:

Income tax for 2005 has been assessed at Rs.1, 00,000 against which the

Advance Payment of tax deducted at source is to be adjusted.

Provide Rs.60, 000 for taxation on current profits.

 

  • NDA Company had 20,00,000 equity shares outstanding as on 1.1.2001. On 1.10.2001 it issued 2 equity shares bonus for each share outstanding on 30.09.01. Net profit for 2000 was Rs.18, 00,000; net profit for 2001 was Rs.60, 00,000. Calculate basic EPS 2001 and Adjusted EPS 2000.

 

  • The East Karnataka Ltd. Sells its business to Basu Product Ltd. as on 31-12-2005. On which date its balance sheet was as under:

Liabilities                                Rs.                   Assets                          Rs.

Paid up share capital:

2000 shares of Rs.100 each    2, 00,000         Goodwill                     50,000

Debentures                              1, 00,000         Freehold property     1, 50,000

Creditors                                    30,000          Plant and Tools            83,000

General Reserve                         50,000          Stock                            35,000

Profit & Loss a/c                        20,000          Bills Recivable               4,500

Debtors                       27,500

Cash at bank               50,000

4,00,000                                            4,00,000

 

Basu Products Ltd. agreed to take over the assets (exclusive of goodwill and cash) at 10% less then the book values, to pay Rs.75000 for goodwill and to take over debentures.

The purchase consideration was to be discharged by the allotment to the East Karnataka Co.Ltd.1500 shares of Rs.100 each at a premium of Rs.10 per share and the balance in cash.

The cost of liquidation amounted to Rs.3, 000.

Show the calculation of purchase consideration and opening entries in the books of Basu Product Ltd.

 

  • Balance sheets as at 31.12.2000

Liabilities                    H               S          Assets                    H                  S

Shar Capital Re.1        10,000       5000    Sundry Assets       19000          15000

Reserves                        5000      ——      5000 shares in

S Ltd.                     6000

P&L A/C                       4000        1800

Creditors                       6000        8200

25000      15000                                  25000          15000

 

Shares of S Ltd were purchased by H Ltd on 30th June 2000. On 1st Jan2000 the balance sheet of S Ltd showed a loss of Rs.3000.

Prepare the consolidated Balance sheet.

 

SECTION – C

Answer any two only:                                                                                  2 x 20 = 20

 

  • The Auto Parts Manufacturing Co.Ltd., was registered with an authoried capital of Rs.7,50,000 divided into 3000, 6% cumulative preference shares of rs.100 each and 4500 equity shares of Rs.100 each. The following are the balance taken as on 31.12.2006

 

Particulars                                      Rs                    Particulars                               Rs

Calls in arrear                                      18750              Plant and Machinery               900000

Stock 1.4.02                                      187500              Fixtures                                     18000

Debtors                                             217500              Buildings                                 750000

Purchases                                          462500              Interim dividend paid               18750

Rent                                                    12000              General Expense                       12250

Debenture interest                               22250              Bills Payable                             95000

General Reserves                                62500              P&L Appropriation A/C(cr)      36250

Equity shares (fully called up)        1150000              Preliminary Expense                 12500

Goodwill                                             62500              Freight                                       32750

Cash in Hand                                        6125              Wages                                     212000

Directors fees                                      14350              Cash at Bank                             95750

Commission on sales                           18000              Bad Debts                                   5275

Debentures                                        750000              Salaries                                      36250

Government securities                      150000              Sales                                      1037500

Sundry creditors                               125000              Provision for bad debts               8750

 

The stock on 31st March,2003 was estimated at Rs.2,52,500. The following adjustments have also to be made:

 

  • Depreciation of plant and Machinery at 10% and on Fixtures at 5%
  • Wages include Rs.25000 paid for the construction of additional rooms to the building
  • Final dividend at 5% to be provided
  • Preliminary expenses to be written off by 20%
  • Provision for bad debts to be maintained at 5% on debtors
  • 25000 to be transferred to General Reserve.
  • A provision for income tax was the extent of Rs.62500 was to be made.

 

You are required to prepare the trading and profit and loss account and appropriation account for the year ending 31st March 2003 and the balance sheet as on the same date.

 

  • Following are the Balance Sheets of HLtd. and its subsidiary SLtd. as on31.3.06

 

Liabilities                   H. Ltd.       S. Ltd.                     Assets          H. Ltd        S Ltd 

                             Rs.              Rs.                                          Rs.            Rs.

Share Capital        20, 00,000     8, 00,000      Fixed Assets   16, 00,000  10,00,000

(Rs.100 each)

General Reserve    6,40,000        2,40,000      Stock                  4, 00,000    3,60,000

P&L A/C               5,60,000        3,60,000      Debtors               1,60,000    3,00,000

Creditors               3,20,000        3,60,000      Investments:

6400 shares in

S.Ltd at cost   12, 00,000      ——–

Bank                    1,60,000    1,00,000

35,20,000    17,.60,000                                35,20,000 17,.60,000

 

  • Ltd. acquired the shares in S.Ltd on 1st Oct.2005.

 

  • The Profit and loss account of S.Ltd. on 1- 4 – 2005 showed a balance of

Rs.2, 80, 000 out of which a dividend of 20% was paid for the year

2004- 2005, in the month of Oct 2005. H.Ltd credited the dividend to its

Profit and Loss account.

 

3)  Sundry creditors of S.Ltd includes Rs.60, 000 for goods supplied by H.Ltd.

The closing stock of S.Ltd includes goods worth Rs.24, 000 which were

supplied by H.Ltd. at a profit of 25% on cost.

 

Prepare Consolidated Balance Sheet.

 

 

  • The balance sheet of O LTd. And P Ltd as on 31st March, 2004 are as under:

(Rs. .Lakhs)

Liabilities              O               P              Assets                      O                     P

Equity (Rs.10)      25               50            Fixed Assets           110                  50

Reserves             131              29.25        Investments                16.25            25

12% Debenture     11                5.50       Current Assets           40.25              3.25

Creditors                 8                2.75       Misc. Expenditure        8.50              9.25

175              87.50                                             175            87.50

 

Investments of O Ltd represent 125000 shares of P Ltd. Investments of P Ltd are considered worth Rs.30 lakhs. P Ltd is taken over by O Ltd on the basis of the intrinsic value in their respective books of accounts. Prepare a statement showing the number of shares to be allotted by O Ltd to P Ltd and the opening entries in the books of O Ltd and also show the Balance sheet of O Ltd after absorption of P Ltd.

 

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