Corporate Accounting

St. Joseph’s College of Commerce B.Com. 2013 I sem Corporate Accounting Question Paper PDF Download

by

1
ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – OCTOBER 2013
B.COM – III SEM (TRAVEL & TOURISM)
CORPORATEACCOUNTING
TIME: 3 HOURS MAX. MARKS: 100
SECTION – A
I. Answer ALL the following questions. (10×2=20)
1. What is Pooling of Interest Method and when is this method applied?
2. Under which heading and sub-heading do the following items appear in the Balance
sheet as per Revised Schedule VI Part II:
a) Long term investments b. Preliminary expenses
3. State any two factors affecting valuation of shares.
4. Which sections of the Companies Act deals with Alteration of Share Capital and
Reduction of Share Capital?
5. “Goodwill has been said to be the attractive force which brings in customers” – in this
context what is Non-purchased Goodwill?
6. How is the balancing figure treated in case of Amalgamation in the nature of Purchase
when the assets and liabilities are taken over by the Purchasing Company?
7. Mention the three methods of Valuation of Shares.
8. What are the two situations when managerial remuneration is paid to managerial
personnel?
9. Closing capital employed is Rs.6,00,000; Net profit for the current year is Rs. 1,20,000.
What is the Average Capital Employed?
10. What is Capital Reduction A/c and when is it prepared?
SECTION – B
II. Answer ANY FOUR of the following questions. (4×5= 20)
11. Super Smart Ltd. absorbed Smart Ltd. by taking over the following assets and liabilities:
Assets taken over:
Land & Building Rs. 2,00,000; Plant & Machinery Rs. 5,00,000; Furniture & fittings Rs.
50,000; Stock Rs. 40,000; Debtors Rs. 10,000.
Liabilities taken over:
10% Debentures Rs. 1,00,000 (issued at a premium of 10%)
Creditors Rs. 35000
Bills payable Rs. 15,000.
Determine the purchase consideration as per AS-14 and discharge purchase
consideration into 50,000 Equity Shares of Rs.10 each and balance of the P.C in the form
of cash.
12. Alpha Ltd. proposed to purchase the business carried on by Beta Ltd. Goodwill for this
purpose is agreed to be valued at 3 years purchase of the Average Profits (using Simple
average) of the last 4 years.
2
Year Amount of Profits(Rs)
2009 1,01,000
2010 1,24,000
2011 1,00,000
2012 1,50,000
The business was looked after by the management. Remuneration from alternative
employment if not engaged in the business, comes to Rs. 6000 p.a. Find out the amount of
goodwill.
13. Under what headings and sub-headings will you show the following items in the
Balance Sheet of the Company as per Revised Schedule VI?
a) Goodwill f) Investments
b) Closing stockg) Reserve fund
c) Securities Premiumh) Live Stock
d) Proposed dividendi) Patents
e) Interest accrued and due on unsecured loans j) Land & Building
14. The following is the Balance Sheet of Million Dollar Co. Ltd. as on 31.12.2012
LIABILITIES AMOUNT ASSETS AMOUNT
2,000 6% preference shares
of Rs.100 each
2,00,000 Fixed Assets 3,00,000
30,000 equity shares of Rs.
10 each
3,00,000 Current Assets 3,00,000
Liabilities 1,00,000
6,00,000 6,00,000
The market value of fixed assets is 10% more than book value. The market value of current
assets is 5% less than book value. There is an unrecorded liability of Rs. 5,000. Assume
preference shares have no priority either as to repayment of capital or dividend. You are
required to calculate the intrinsic value per Equity and Preference share.
15. (a) Purchasing Co. agrees to issue 3 shares of Rs10 each, Rs. 8 paid up for every 5 shares
in the Vendor Co. Find the number and the amount of shares to be issued by the
purchasing company if the vendor company has Rs.5,00,000 paid up capital of shares of
Rs10 each, Rs. 5 paid up.
(b)Purchasing Co. agrees to issue 3 shares at Rs10 each, Rs9 paid up at the market value of
Rs15 per share for every 5 shares in the Vendor Company. Find the number and amount of
shares to be issued by the purchasing company, if the vendor company has 1,00,000 shares
of Rs10 each, Rs5 paid up (market value Rs8).
16. Explain in detail the legal procedure involved in Internal Reconstruction in case of
Reduction of Share Capital.
SECTION – C
III. Answer ANY THREE of the following questions. (3×15=45)
17. The following are the Balance Sheets of X Ltd. and Y Ltd. as on 31.12.2012
3
Liabilities X Ltd. Y Ltd. Assets X Ltd. Y Ltd.
Equity Share Capital (Rs.
100 per share)
1,00,000 60,000 Land & building 30,000 —
6% Debentures (Rs. 10
each )
20,000 — Plant & Machinery 1,10,000 50,000
Reserve Fund 34,000 — Stock 16,000 8,000
Revenue Reserve 4,000 — Debtors 14,000 9,000
Bills Payable 3,000 — Cash 3,000 1,000
Trade creditors 10,000 8,000
Profit & Loss A/c 2,000 —
1,73,000 68,000 1,73,000 68,000
The two companies agree to amalgamate and form a new company called Z Ltd. which
takes over the assets and liabilities of both companies. The Authorized Capital of Z Ltd. is
Rs. 10,00,000 consisting 1,00,000 equity shares of Rs. 10 each. The assets of X ltd. are taken
over at a reduced valuation of 10% with exception of land & building which are accepted
at book value.
Both the companies are to receive 5% of the valuation of their respective business as
Goodwill. The entire purchase consideration is to be paid by Z Ltd. in fully paid shares of
Rs. 10 each. In return for Debentures in X ltd. Debentures of the same amount at
denomination are to be issued by Z Ltd.
Prepare the necessary ledger accounts in the books of X Ltd and also prepare the New
Balance Sheet after Amalgamation assuming in the nature of purchase. Show necessary
workings.
18. The Balance Sheet of Karnavathi Ltd. as on 31.12.2012 is as follows:
Liabilities Rs. Assets Rs.
Sharecapital: Issued, subscribed
and paid up:2,000 shares of Rs.
100 each
2,00,000 Land & building 1,10,000
General Reserve 40,000 Plant & Machinery 1,30,000
Profit & Loss A/c 32,000 Patents 20,000
Sundry Creditors 1,28,000 Stock 48,000
Provision for tax 60,000 Debtors 88,000
Bank 52,000
Preliminary expenses 12,000
4,60,000 4,60,000
The expert valued the Land & building at Rs. 2,40,000, Goodwill at Rs. 1,60,000 and Plant
& Machinery at Rs. 1,20,000. Out of the total debtors, it is found that debtors of Rs. 8,000
are bad. The profits of the company have been as follows:
2010= Rs. 90,000; 2011= Rs. 80,000 and 2012= Rs. 1,06,000
The company follows the practice of transferring 25% of profits to General Reserve.
Normal Rate of Return is 10%. Ascertain the value of shares of the company under:
a. Intrinsic Value Method
b. Yield Value Method (on the basis of Rate of Dividend)
c. Fair Value Method
4
19. The following balances are left on the books of Seven Star Fashions Ltd. after its Profit &
Loss Statement has been prepared for the year ended 31.3.2013.
Particulars Amount Particulars Amount
Public deposits 1,50,000 Sundry debtors 5,20,000
Interest accrued but not due 2,500 Security deposit 80,000
Bank over draft 2,36,600 Interest accrued on Investments 6,000
Sundry creditors 1,75,000 Plant & machinery 15,40,000
General Reserve 2,00,000 Prepaid insurance 1,000
1,60,000 equity shares of Rs. 10 each 16,00,000 Vehicles 3,10,000
5,000 10% preference shares of Rs. 10
each
5,00,000 10% Government Bonds 60,000
Securities premium 2,00,000 Loan to staff 25,000
10% Secured Loan 1,80,000 Stock in Trade 4,10,700
Interest accrued and due on Secured
loan
4,800 Preliminary expenses 5,000
Net profit for the year ended
31.3.2013
3,20,000 Bills Receivable 22,000
Expenses owing 12,200 Cash and bank balance 15,400
Employee Benefit Fund 20,000 Land & building 6,44,000
Sinking Fund 38,000
36,39,100 36,39,100
Note: Bills Receivable discounted but not matured Rs.15,000.
It was resolved that:
(a) The General Reserve is increased by 50,000
(b) A dividend of 8% on Equity Share Capital and 10% on Preference Share Capital is
declared. Prepare the Company’s Balance Sheet as on 31st March, 2013 as per Revised
Schedule VI Part II.
20. The Balance Sheet of Mercy Ltd. is as follows as on 31.12.2012:
Liabilities Amount Assets Amount
Equity shares of Rs. 10 each 5,00,000 Fixed Assets less depreciation 4,00,000
General Reserve 2,00,000 Investments in 6% Government
Bonds
1,00,000
Profit & loss A/c 1,00,000 Current assets 4,00,000
Current Liabilities 1,00,000
9,00,000 9,00,000
Net profit after taxation: 2010= Rs. 1,30,000; 2011= Rs. 1,25,000 and 2012=Rs. 1,50,000
Goodwill may be taken at 4 year’s purchase of average super profits trading on the basis of
15% normal profit on average capital employed. The current assets are to be taken at Rs. 4,
20,000. 6% Interest on Government Bonds is treated as non-recurring item after taking
average profits. Ascertain the value of Goodwill.
21. Following is the Balance sheet of Unsuccessful Ltd. as on 31.12.2012:
Liabilities Amount Assets Amount
13% cumulative preference
shares of Rs. 100 each
1,00,000 Fixed Assets 15,00,000
Equity shares of Rs. 10 each 7,00,000 Current Assets 32,00,000
8% Debentures 3,00,000 Profit & Loss A/c 3,00,000
5
Current liabilities(included
Creditors)
39,00,000
50,00,000 50,00,000
The following scheme of reconstruction was adopted:
1. Fixed assets are to written down by 33.33%
2. Current assets are to be revalued at Rs. 24,00,000
3. One of the creditors of the company to whom the company owes Rs. 25,00,000
decides to forego 50% of his claim. He is allotted 1,00,000 equity shares of Rs. 5 each
in part satisfaction of the balance of his claim.
4. The rate of interest on debentures is increased to 11%. The debenture holders
surrender their existing debentures of Rs. 100 each and exchange the same for fresh
debentures of Rs. 75 each.
5. All existing equity shares are reduced to Rs. 5 each.
6. All preference shares are reduced to Rs. 75 each.
Pass Journal entries and show the Balance Sheet of the company after giving effect to the
above. Also prepare Capital Reduction A/c.
SECTION – D
IV. Answer the following question (COMPULSORY) (1×15=15)
22. St. Joseph’s College of Commerce started B.Com Travel & Tourism in the year 2012. The
first batch of the students were now in their second year of the course. The students were
well equipped with the New Revised Schedule VI after studying Corporate Accounting
subject.The following information is extracted from the Trial Balance of a company as on
31.3.2013. Assume you are one among the student of that batch and prepare the Profit &
Loss Statement and Balance Sheet as per Revised Schedule VI Part I and Part II as on
31.3.2013
Particulars (Dr) (Cr.)
Furniture 1,60,000
Land & building 6,74,000
Depreciation on furniture 16,000
Purchases (adjusted) 4,00,000
Salaries 80,000
Sales 10,00,000
10% Debentures (issued on 1st April, 2012) 1,00,000
Wages 1,20,000
Closing stock 1,50,000
Bank overdraft 2,00,000
Equity share capital – 2,000 shares of Rs. 100 each fully paid 2,00,000
Preference share capital – 1,000 6% shares of Rs. 100 each fully
paid.
1,00,000
TOTAL 16,00,000 16,00,000
Additional Information:
1. To declare an equity dividend at 10% on the paid-up capital.
2. To pay dividend on the Preference Share Capital in full.
3. To transfer Rs. 2, 00,000 to General Reserve.
Note: Marks carries for the format.

St. Joseph’s College of Commerce BBM 2013 III Sem Corporate Accounting Question Paper PDF Download

by

1
ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXMAINATION – OCTOBER 2013
B.B.M – III SEMESTER
CORPORATE ACCOUNTING
TIME: 3 HOURS MARKS: 100
SECTION – A
I) ANSWER ALLTHE FOLLOWING QUESTIONS. (10X2=20)
1. What is the meaning of Statutory Reserve?
2. What is Reduction of share capital?
3. What are Preferential Creditors? Give example.
4. What is the meaning of External Reconstruction?
5. What is the meaning of Amalgamation of Company’s?
6. What is the difference between Interim Dividend and Final Dividend?
7. What is an intangible asset? Give two examples.
8. How do you deal with the balance in capital Reduction A/C?
9. What is ‘Net Assets’?
10. Who is a contributory?
SECTION – B
II) Answer ANY FOUR questions. (4×5=20)
11. Balance Sheet of Jordan Company stood as follows on 31/12/2012.
Balance Sheet
Liabilities Amount (Rs) Assets Amount (Rs)
19,000 Shares of 100 each 19,00,000 Land & Buildings 1,00,000
Creditors 1,00,000 Machinery 2,60,000
Debentures 1,00,000 Furniture 20,000
Stock 3,70,000
Debtors 1,80,000
Goodwill 2,00,000
Profit & Loss A/c 9,70,000
21,00,000 21,00,000
The company is to be reconstructed as follows:
(i) Shares of Rs. 100 are to be reduced to an equal number of fully paid shares of Rs. 40
each.
(ii) To issue 1,000 new shares of Rs. 40 each as fully paid up to debenture holders in full
settlement.
(iii) The amount available is to be utilized in writing off the Goodwill and Profit and loss
A/c and the balance in writing down the value of machinery.
(iv) Authorised capital of the company is 20,000 shares of Rs. 100 each.
Give the necessary Journal Entries.
2
12. Calculate the purchase consideration from the following:
Total assets at book value – Rs. 5,00,000
Assets are taken over at 10% less than book value.
Total liabilities – Rs. 2,00,000
Liabilities not taken over – Rs. 50,000
Liquidation expenses of Rs. 5,000 is to be borne by the purchasing company .
13. Explain briefly the differences between Amalgamation by Merger and Amalgamation by
Purchase Method.
14. Calculate liquidator’s remuneration and amount available to pay unsecured creditors:
(i) Balance of cash after paying preferential creditors Rs. 2,10,000
(ii) Other unsecured creditors are Rs. 2,50,000.
(iii) Liquidator’s remuneration is 5% on the amount paid to other unsecured creditors.
15. Briefly explain the functions of Accounting Standard Board.
16. What are the differences between Internal Reconstruction and External Reconstruction?
SECTION – C
III) Answer any THREE out the following : (3×15=45 )
17. American Ltd was absorbed by India Ltd on 31/12/2012 on which date the Balance Sheet of
American Ltd was as follows:
Liabilities Amount (Rs) Assets Amount (Rs)
Equity Share Capital 6,00,000 Buildings 4,00,000
5% Preference Share Capital 4,00,000 Plant 2,00,000
Sundry Creditors 1,10,000 Current Assets 2,00,000
Development Rebate Reserve 40,000 P& L A/c 3,50,000
11,50,000 11,50,000
India Ltd took over buildings at Rs. 3,00,000. Plant at Rs. 1,40,000 and Stock at Rs. 60,000.
The purchase consideration is to be satisfied by the issue of 8% Preference Shares of Rs. 100
each and Equity Shares of Rs. 10 each in 3:2 ratio.
The Preference Shareholders are to be settled in full by the allotment of new Preference
Shares. Sundry debtors realized Rs. 1,50,000 and Rs. 1,00,000 was paid to Sundry Creditors
in full settlement (There were no other current assets). Cost of liquidation Rs. 10,000.
Development Rebate Reserve is a Statutory Reserve to be continued to 2 more years.
Prepare necessary ledger accounts in the books of American Ltd. Opening Journal Entries
of India Ltd and its Balance Sheet.
3
18. Fast Consumption Ltd went into voluntary liquidation on 31/12/2012. The Balance Sheet as
on that date was:
Liabilities Amount (Rs) Assets Amount (Rs)
Share Capital:
5,000 , 6% Cumulative
preference Shares of Rs. 100
each fully paid
5,00,000
Land and Buildings
2,50,000
2,500 Equity Shares of Rs. 100
each Rs. 75 paid up
1,87,500
Machinery 6,25,000
7,500 Equity Shares of 100
each Rs. 60 paid up
4,50,000
Patents 1,00,000
5% Mortgage debentures 2,50,000 Stock 1,37,500
Interest outstanding on
debentures
12,500
Debtors 2,75,000
Creditors 3,62,500 Cash at Bank 75,000
Profit and Loss A/c 3,00,000
17,62,500 17,62,500
The liquidators is entitled to a commission of 3% on all assets relised except cash and 2%
on amounts distributed to unsecured creditors.
Creditors include Rs. 17,500 for Income tax due to Government Rs. 5,000 outstanding
Salaries of employees and an award of Rs. 15,000 made under Workmen’s Compensation
Act. It also includes a loan for Rs. 1,25,000 secured by mortgage on Land and Buildings. The
preference dividends were in arrears for two years. The assets realized as follows:
Assets Amount (Rs)
Land and Buildings 3,00,000
Machinery 5,00,000
Patents 75,000
Stock 1,50,000
Debtors 2,00,000
Expenses of Liquidation
amounted to
27,250
Prepare the Liquidators Final Statement of Accounts.
19. Briefly explain the following Accounting Standards.
AS-2 AS-6 AS-8
20. The State of Affairs of Texas Co Ltd on 31/12/2012 was as follows:
Liabilities Amount (Rs) Assets Amount (Rs)
20,000 Equity Shares of Rs. 10
each
2,00,000 Goodwill 80,000
15,000 7% preference shares of
Rs. 10 each
1,50,000 Buildings 1,75,000
13,000 5% preference shares of 65,000 Machinery 3,25,000
4
Rs. 10 each . Rs. 5 paid
5% Debentures 1,50,000 Patents 54,000
8% Debentures 3,00,000 Furniture 15,000
Sundry Creditors 4,50,000 Investments 75,000
Debenture interest due 19,500 Sundry Debtors 4,15,000
Cash 2,000
Bank 18,000
Profit and Loss A/c 1,75,500
13,34,500 13,34,500
The following scheme of capital reduction was submitted and approved by the court.
(a) Equity Shares of Rs. 10 each were to be reduced to Shares of Rs. 5 each.
(b) 7% preference shares of Rs. 10 each fully paid were to be reduced to 6% preference
shares of Rs. 10 each ,Rs. 6 per share paid.
(c) 5% preference shares of Rs. 10 each , Rs. 5 paid up were to be reduced to 4 ½ preference
shares of Rs. 10 each, Rs. 3 per share paid up.
The debenture holders agreed to forego the interest due to them. The company in the
meantime recovered as damages a sum of Rs. 84,000 from a third party and it was
decided to use this amount also to write off the Capital losses.
The reconstruction expenses comes to Rs. 7,250.
Give Journal Entries to record the above and draw the Reconstructed Balance Sheet.
21. P Ltd and Q Ltd agreed to Amalgamation by transferring their undertaking to a new
company to PQ Ltd. formed for that purpose. On the date of the transfer, Balance Sheets of
the two companies were as under:
Liabilities P Ltd Q Ltd Assets P Ltd Q Ltd
Equity Shares of Rs.
10 each
7,50,000 2,50,000 Sundry Assets 6,00,000 3,10,000
5% Debentures — 30,000 Freehold
property
30,000 —–
Reserve —- 20,000 Debtors 1,80,000 50,000
Mortgage Loan on
freehold property
50,000 —– Investments 1,30,000 30,000
Sundry Creditors 40,000 1,00,000 Bank 1,00,000 20,000
Profit & Loss A/c 2,00,000 10,000
10,40,000 4,10,000 10,40,000 4,10,000
The Purchase Consideration consisted of :
(i) The assumption of liabilities of both the companies.
(ii) The discharge of Debentures in Q Ltd by the issue of Rs. 35,000 4% Debentures in PQ
Ltd
(iii) The issue at a premium of Rs. 5 each to both the vendor companies equity shares of
Rs. 10 each in PQ Ltd.
For the purpose of transfer the assets are to be revalued as under:
5
Particulars P Ltd Q Ltd
Sundry Assets 6,50,000 3,56,000
Freehold property 50,000
Debtors 1,71,000 45,000
Investments 1,49,000 40,000
Goodwill 1,10,000 40,000
Write up Realisation account and the Shareholders account and PQ Ltd account in
each of the vendor company and Journal Entries in the Book of PQ Ltd. Under
amalgamation in the nature of purchase.
SECTION – D
IV) Compulsory question. (15 Marks)
22. Following is the trial balance of Indore Co.Ltd as at 31 March 2013:
Particulars Amount (Rs) Amount (Rs)
Stock 31/03/2012 70,000
Sales 3,50,000
Purchase 2,50,000
Wages 50,000
Discount 5,000
Furniture and Fittings 17,000
Salaries 7,000
Rent 4,950
Sundry Expenses 7,550
Surplus Account 31/03/2012 15,030
Dividends paid 4,000
Share Capital 1,00,000
Debtors and Creditors 37,500 17,500
Plant and Machinery 29,000
Cash and Bank 18,200
Reserve 15,500
Patents and Trade Mark 7,830
5,03,030 5,03,030
Prepare Statement of Profit and Loss for the year ended 31/03/2013 and Balance Sheet
as at the date. Take into consideration the following adjustments:
(i) Stock on 31/03/2013 was valued at Rs. 82,000.
(ii) Depreciation on fixed assets @ 10%.
(iii) Make a provision for income tax @ 50%
(iv) Ignore corporate dividend tax
*******************************************
6

St. Joseph’s College of Commerce B.B.M. 2014 I Sem Corporate Accounting Question Paper PDF Download

by

 

  1. JOSEPHS COLLEGE OF COMMERCE (AUTONOMOUS)

END SEMESTER EXAMINATION – SEPT /OCT 2014

B.B.M. – III SEMESTER

CORPORATE ACCOUNTING

Duration: 3 Hours                                                                                       Max. Marks: 100

SECTION – A

 

  1. Answer ALL the questions. Each carries 2 marks.                                       (10 x2 =20)

 

  1. Give the treatment of following as per the Revised Schedule 6.
  2. Provision for taxation
  3. Journalise the following transaction. Creditors have decided to forego 60% of their claim amounting to Rs 1, 00,000.
  4. Write the journal entry for closing the assets taken over by the purchasing company.
  5. What are accounting standards?
  6. Define Purchase Consideration. Which are the methods for calculating Purchase consideration? Show the journal entry for the same with some imaginary figures.
  7. What is Liquidators Final Statement of Accounts?
  8. Write a note on Valuation of inventories as per “AS 2”.
  9. Explain briefly when does goodwill arise in the books of purchasing company?
  10. What is liquidation? Mention the types of liquidation
  11. What is Internal Reconstruction?

 

SECTION – B

  1. Answer any FOUR Each carries 5 marks.                        (4×5=20)

 

  1. As per AS 14 state the conditions of Amalgamation in the nature of a merger.
  2. Calculate the purchase consideration from the following
  3. Agreed value of assets taken over   Rs 18, 21,570
  4. Liabilities as per Balance sheet  Rs 3, 21,570
  5. Liabilities not taken over                         Rs     21,570
  6. Payment to Debenture holders of selling Company Rs 1, 50,000
  7. Show the shareholders fund as per Revised Schedule 6 from the following data

Authorised Capital                   2, 00,000 shares of Rs 10 each.

Issued Capital                           1, 00,000 shares of Rs 10 each.

Subscribed Capital                       90,000 shares of Rs 10 each.

Called up Capital                           90,000 shares of Rs 8 each.

Calls in arrears                               60,000 shares of Re 1 each.

Opening balance of Profit and Loss Account:                               Rs   1, 00,000

Profit after tax for the year:                                                               Rs   2, 00,000

Equity dividend @ 10 %.

 

  1. Prepare Liquidators Final Account from the following data

The following particulars relate to a Limited Company which has gone into voluntary liquidation. You are required to prepare the liquidators Final Account allowing for his remuneration at 2 % on the assets realized and 1 % of payment made to unsecured creditors.

Preferential Creditors Rs 10,000
Unsecured Creditors Rs 32,000
Debentures(having floating charge) Rs 10,000
The assets realized the following sums

 

  
Land and Buildings Rs 10,000
Plant and Machinery Rs 18,650
Fixtures and Fittings Rs 1,000

The liquidation expenses amounted to Rs 1,000.

 

  1. Journalise the following transactions with respect to Internal Reconstruction and prepare the Balance sheet after reconstruction.
LIABILITIES Amount (Rs) ASSETS Amount (Rs)
Equity share capital   Plant and machinery 3,00,000
50,000 shares of 10 fully paid 5,00,000 Land and building 4,00,000
10 % debentures of Rs 10 each 2,00,000 Goodwill 20,000
Creditors 2,80,000 Patents 30,000
Interest on debenture outstanding 20,000 Debtors 50,000
    Preliminary expenses 25,000
    Discount on issue of shares 25,000

 
    Profit and Loss A/C 1,50,000
       
Total 10,00,000 Total 10,00,000
       

 

It is resolved by the company on the basis of following scheme

  1. 50,000 shares of Rs 10 each are to be reduced to an equal number of fully paid shares of Rs 2 each.
  2. The claims of creditors are reduced to 60 %.
  3. The amount obtained as a result of internal reconstruction is used to write off Profit and Loss account, Goodwill and other miscellaneous expenditure.

 

  1. Write a note on the meaning, importance and disclosure requirements of Accounting Standard 1 on disclosure of accounting policy.

SECTION – C

 

III)      Answer any THREE questions.    Each carries 15 marks.                   (3×15=45)

  1. The following are the Balance sheet of A Ltd and B Ltd as on 31st March 2013.
Liabilities  A Ltd B Ltd Asset A Ltd B Ltd
Equity Share Capital(Rs 10 each)    50 L  30 L Land& Building  25 L 15.5 L
14%preferenceshare capital(Rs 100 each)    22 L  17 L Plant& Machinery  32.5 L  17 L
General Reserve   4 L  2.5 L Furniture& Fittings  5.75 L  3.5 L
Export Profit Reserve(statutory Reserve)   4 L   2 L Investments   6 L   5 L
Investment Allowance Reserve(Statutory)     1 L Stock  13.5 L  9.5 L
P & L Account   7.5 L   5 L Debtors  9 L  10.3 L
13 % debentures(Rs 100 each)    5 L   3.5 L Cash at Bank  7.25 L   5.2 L
Trade Creditors   4.5 L   3.5 L      
Other Current Liabilities    2 L    1.5 L      
   Total     99 L    66 L     Total  99 L   66 L

 

AB   Ltd is formed to take over A Ltd and B Ltd for the following consideration.

 

      A Ltd

.

  • Issue of 4, 80,000 Equity Shares of Rs. 10 each of AB Ltd at par to the equity shareholders.
  • Issue of 15% preference shares of Rs. 100 each of AB Ltd to discharge the preference shareholders of A Ltd at 5 % premium

 

B Ltd

  • Issue of 3, 50,000 Equity Shares of Rs. 10 each of AB Ltd., at par, to the equity shareholders.
  • Issue of 15% Preference Shares of Rs. 100 each of AB Ltd to discharge the liability of preference share holders at par.

Show the opening entries in the books of AB Ltd and prepare the Balance sheet of   AB Ltd after amalgamation assuming amalgamation on the nature of merger.

 

  1. Green  Ltd went into voluntary liquidation .The assets of the company realized Rs 18,000 and their liabilities amounted to Rs 3,000.The capital of the company consisted of 1,000 preference shares of Rs 10 each on which Rs 8 was called up and paid up. The holders of 600 shares how ever paid full Rs 10 as an advance of calls .Holders of 100 share holders had paid only Rs 6 per share. There were also 1,000 equity shares of Rs 10 each on which 9 Rs per share was called. The holders of 150 shares had however paid only Rs 8, while holders of 300 shares had paid the full Rs 10 in advance of calls. Cost of winding up amounted to Rs 150 .The calls in arrears on preference shares and equity shares   were duly collected by liquidator.

Prepare Liquidators Final Statement of Accounts and compute deficiency in both the cases

 

  1. Assuming the preference shares   has no prior rights as to repayment of capital.
  2. Assuming the preference shares has prior right as to repayment of capital.

 

  1. From the following figures prepare Profit and Loss Account for the year ending 31 st March 2013.

.

 

Salaries               2,25,000
Rent paid                  60,000
Telephone Charges                   4,000
Printing and Stationery                  42,000
Freight outwards                  20,000
Carriage inwards                     2,000
Depreciation on machinery                      3,000
Goodwill written off                      5,000
Purchases               26,00,000
Purchases Returns                      2,000
Sales              33,17,000
Debtors                5,00,000
Creditors                 2,00,000
Stock as on 01.04.2012                    45,000
Discount allowed                      2,000
Sales Returns                    15,000
Profit on sale of machinery                     5,000
Loss on sale of furniture                     6,000
Sale of old newspapers                        800
Interest on debenture                     30,000
Discount received                       1,000
General Expenses                       5,000
Other  Income                       2,000
Loss on account of earthquake                      2,000

            Additional Information

  1. Stock as on 31 st March 2013 is Rs 40,000(Net Realisable value being 35,000).
  2. Provision for doubtful debts is to be provided at 1 % on the amount of debtors.
  3. Debenture interest outstanding Rs 3,000.
  4. Rent of Rs 12,000 is outstanding.
  5. Provision for discount on creditors is to be provided at 2 %.
  6. Prepaid salary amounted to Rs 5,000
  7. Provide tax @ 40 %.
  8. Total number of Equity shares of Company is 20,000 shares.

 

  1. Write a note on Accounting Standard Board, its functions and also explain the meaning, importance and disclosure requirements of AS 18 on related party disclosure.

 

  1. The following is the Balance Sheet of Blue Ltd as on 31.03.2013.
      Liabilities         Rs         Asset              Rs
20,000 shares of Rs 100 each    20,00,000 Goodwill           25,000
12 % debentures       5,00,000 Land and Building          1,50,000
Outstanding Debenture Interest      1,20,000 Plant and Machinery        3,00,000
Creditors      3,00,000 Furniture           80,000
    Stock           70,000
    Debtors           60,000
    Cash at bank          2, 35,000
    Preliminary  Expenses           20,000
    Profit and Loss A/c         19,80,000
Total    29,20,000  Total        29,20,000

The following scheme of reconstruction is executed:

  1. Equity Shares are reduced by Rs.95 per share. They are then consolidated in to 10000 Equity shares of Rs.10 each.
  2. Debentures holders agree to forgo outstanding debentures interest. As compensation 12% debentures are converted into 14% Debentures.
  3. Creditors are given the option to either accept 50% of their claims in cash in full settlement or to convert their claims into equity shares of Rs. 10 each. Creditors for Rs.1, 00,000 opted for shares in satisfaction of their claims.
  4. To make payment to creditors opting for cash payment and to augment working capital, the company issues 50,000 equity shares of Rs.10 each at par, the entire amount being payable along with the applications. The issued was fully subscribed.
  5. Land and building are revalued at Rs.2, 00,000/- whereas Plant and machinery is to be written down to Rs.2, 10,000/.
  6. The balance available is used for writing off accumulated losses, Goodwill and other miscellaneous expenditure.

Pass journal entries and draft the company’s balance sheet immediately after reconstruction.

 

                                                          SECTION – D

       ONE Compulsory Case study                                                           1 x 15 = 15 Marks

     

  1. The balance sheet of Blue Ltd as on 31 st March 2013 is as under.
Liabilities Amount Asset Amount
Paid up Capital

10,000 6 % preference shares of Rs 10 each

   1,00,000 Plant and Machinery  1,50,000
20,000 equity shares of Rs 10 each   2,00,000 Land and building 1,80,000
Reserve       20,000 Stock      80,000
Profit and Loss Account       10,000 Debtors      70,000
6 % debentures   1,20,000 Bank balance      15,000
Creditors       50,000 Preliminary Expenses       5,000
       
Total     5,00,000 Total   5,00,000

                A company Green Ltd took over the business of Blue Ltd. Green Ltd took over Plant and Machinery and Land and Building for Rs 2, 00,000 and 1, 60,000 respectively. Stock of Blue Ltd was taken over at par. Bank balance of Blue Ltd was also taken over by B Ltd. Debtors which were not taken over by Green Ltd were collected by Blue Ltd at a discount of 10%. The only liability which is taken over by Green Ltd is 6 % debentures of Blue Ltd. Creditors are settled by Blue Ltd at par.

Liquidation expenses borne by Green Ltd amounted to Rs 2,000.

 

The purchase consideration was satisfied as follows.

  1. The preference share holders of Blue Ltd were allotted 5 shares of Rs 12 each for every 4 shares held by them.

 

  1. The equity share holders were allotted 5 equity shares of Rs 9 paid up for every 4 shares held by them.

Write journal entries in the books of Blue Ltd to close their accounts assuming amalgamation to be in the nature of purchase.

 

 

 

                                   

St. Joseph’s College of Commerce B.Com. 2014 III Sem Corporate Accounting Question Paper PDF Download

by
  1. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

END SEMESTER EXAMINATION – OCTOBER 2014

B.Com (Travel & Tourism) – III SEMESTER

 CORPORATE ACCOUNTING

Duration: 3 Hours                                                                                         Max. Marks: 100

 

SECTION – A

 

  1. Answer ALL the questions. Each carries 2 marks.                                      (10×2=20)                                             

 

  1. Give 2 differences between Reserves & Provisions ?
  2. What is meant by Statutory Reserves ?
  3. The Shareholders get Rs. 5 cash for every share in X Ltd. (Shares in X Ltd. is 10,000 shares of Rs. 10 each ) and 2 shares of Rs. 20 each for every 5 shares held b X Ltd. Calculate purchase consideration.
  4. What is Capital Reduction Account ?
  5. What is meant by Inter Company Owings?
  6. What is Unclaimed Dividend ? How is it treated while preparing the final accounts of a company ?
  7. Explain the meaning of Corporate Dividend Tax.
  8. What is the meaning of Fair value per share?
  9. Closing capital employed is Rs 6,00,000, net profit for the current year is 1,20,000. What is average capital ?
  10. Mention 2 factors determining the value of Goodwill.

 

SECTION – B

  1. Answer any FOUR Each carries 5 marks.                                         (4×5=20)

 

  1. Under what heading do you show the following items in the Balance sheet of a company?

(a)   Provision for taxation

(b)   Bills payable

(c)   Livestock

(d)  Bills receivable

(e)  Work-in –progress

(f)  Patterns

(g) Accrued interest on investments

(h) Patents and Trade Marks.

(i) Unclaimed dividend

 

  1. Explain the differences between Amalgamation by purchase method & Amalgamation by Merger Method?
  2. A company Ltd. is absorbed by B company Ltd. The consideration being :

(a) Assumption of liabilities .

(b) Discharge of debentures at a premium of 5% by the issue of 5% debentures in B  Company Ltd.

(c) A payment of Cash of Rs. 30. Per share and

(d) To exchange 3 shares of Rs.10 each in B company Ltd. at an agreed value of Rs. 15 per share. For every share in A company Ltd.

 

Liabilities Rs. Assets Rs.
Share Capital:

60,000 Shares of Rs.50 each fully paid

 30,00,000 Goodwill 2,50,000
General Reserve 3,20,000 Land& Buildings 7,65,000
Profit & Loss A/c 1,80,000 Plant & Machinery 22,00,000
5% Debentures 15,00,000 Patents 50,000
Creditors 2,00,000 Patterns 25,000
Investments 50,000
    Stock 10,60,000
    Debtors 4,50,000
    Bank 3,50,000
  52,00,000   52,00,000

 

Pass journal entries to close the books of A company Ltd. under purchase method

  1. Raj Ltd. Proposed to purchase the business carried on by Mr. Ram. Goodwill for this purpose is agreed to be valued at 3 years purchase of the weighted average profits of the past 4 years. The appropriate weights to be used are :

1998                1

1999                2

2000                3

2001                4

The profits for these year are:

1998                Rs.1,01,000

1999                Rs.1,24,000

2000                Rs.1,00,000

2001                Rs.1,50,000

On a scrutiny of the accounts the following matters are revealed:

On 1st January. 2000 a major repair was made in respect of the plant incurring Rs.30,000 which amount was charged to revenue. The said sum is agreed to be capitalized for goodwill calculation subject to adjustment of depreciation of 10% p.a. on reducing balance method.

The closing stock for the year 1999 was overvalued by Rs.12,000.

To cover management cost an annual charge of Rs. 24,000 should be made for the purpose of goodwill valuation.

Compute the value of goodwill of the firm.

 

  1. The following is the Balance sheet of Sunmate Ltd. As on 31.3.2013:

 

Liabilities  Rs Assets  
2,000. 6% Preference shares of Rs 10. Each 20,000 Buildings 55,000
8,000 Equity shares of Rs 10 each 80,000 Machinery 65,000
Reserve Fund 50,000 Patents 10,000
Profit & Loss A/c 16,000 Stock 28,000
Workmen’s saving A/c 15,000 Sundry Debtors 40,000
Sundry Creditors 49,000 Cash 26,000
    Preliminary expenses 6,000
  2,30,000   2,30,000

 

 

  1. a)  It was discovered that machinery was under depreciated by Rs.5,000.
  2. b) Value for buildings is Rs.1,30,000 and Goodwill is Rs.20,000.
  3. 6,000 worth of debts are bad.
  4. The preference shares have priority for capital repayment.

 

Find out the intrinsic value of both types of shares.

 

  1. Given below is the Balance Sheet of Unsuccessful Limited as on 31.12.2001:
Liabilities Amount Rs. Assets Amount Rs.
5,000, 8% Preference Shares of Rs. 10 each  50,000 Goodwill 1,00,000
5,000 Equity shares of Rs 10 each 50,000 Buildings 4,000
Creditors 18,000 Plant 5,000
Bank Overdraft 20,000 Debtors 1,200
Stock 22,000
Preliminary expenses 3,000
    Profit & Loss A/c 2,500
    Cash 300
  1,38,000   1,38,000

 

The following scheme of Reconstruction was adopted:

 

  1. Rs.10 Preference Shares were to be reduced to an equal number of fully paid shares of Rs.8 each.
  2. Rs. 10 Equity Shares were to be reduced to an equal number of fully paid shares of Rs.5 each.
  3. Creditors agreed to forego Rs.8,000.
  4. The amount thus available was to be utilized to the nominal assets and the balance if any, to be written off Goodwill.

 

Pass necessary Journal Entries

 

SECTION – C

 

III)      Answer any THREE questions.      Each carries 15 marks.                        (3×15=45)

 

  1. The following is the T.B. of Reliance Co.Ltd.. as on 31.3.2013:
Particulars Dr Rs Cr Rs
     
Share Capital   3,00,000
Reserve Fund   1,50,000
Furniture 40,000 –
Building 80,000 –
Wages 50,000 –
Salaries 20,000 –
Debtors 1,60,000 –
Bills Receivable 60,000 –
Interim Dividend 30,000 –
Audit Fees 10,000 –
Freight charges 5,000
Director’s Fees 5,000 –
Light and Water 10,000 –
Printing and Stationery 12,000 –
Purchases 2,40,000 –
Sales – 3,80,000
Loose Tools 40,000 –
P&L Appropriation A/c – 20,000
Cash at Bank 50,000 –
Forfeited Share Capital A/c – 10,000
Calls in Arrears 20,000 –
General Expenses 10,000 –
Goodwill 50,000 –
Stock (1.4.2008) 60,000 –
Investments 50,000 –
Machinery 40,000 –
Creditors – 1,80,000
Returns 20,000 10,000
Bills Payable – 20,000
Cash in Hand 38,000 –
Securities Premium   30,000
  11,10,000 11,10,000

 

  1. Stock on 31.3.2013 was valued at Rs 90,000.
  2. Depreciate machinery at 10% and buildings at 5%.
  3. Provide RDD at 5 % on Debtors.
  4. Transfer 25,000 to Reserve fund.
  5. Director’s recommended dividend of 10% for the year.
  6. Make provision for taxation 10,000.

Prepare final accounts of the company.

 

  1. The following are the balance sheet as on 31st December 1999 of X Ltd. and Y Ltd.
Liabilities X Ltd. Y Ltd. Assets X Ltd. Y Ltd.
Equity Share Capital 1,00,000 60,000 Land & Buildings 30,000  
(Rs. 100 per share) – Plant & Machinery 1,10,000 50,000
6 % Debentures (Rs. 10 each)  20,000   Stock 16,000 8,000
Reserve Fund 34,000 – Debtors 14,000 9,000
Dividend Equalization Fund 4,000 – Cash 3,000 1,000
Employees Provident Fund 3,000 –      
Trade Creditors 10,000 8,000      
Profit & Loss A/c 2,000 –      
  1,73,000 68,000   1,73,000 68,000

 

The two companies agree to amalgamate and form a new company called Z Ltd. which takes over the assets and liabilities of both companies. The authorized Capital of Z Ltd. is Rs. 10,00,000 consisting of Rs. 1,00,000 equity shares of Rs. 10 each. The assets of X Ltd. are taken over at a reduced valuation of 10% with the exception of Land and Buildings which are accepted at a book value.

Both the companies are to receive 5% of the valuation of their respective business as Goodwill the entire purchase price is to be paid by Z Ltd. in fully paid shares. In return for Debentures in X Ltd. Debenture of the same amount at denomination are to be issued by Z Ltd.

Prepare the necessary ledger accounts in the books of X Ltd. and Y Ltd. and show the opening Balance sheet of Z Ltd. Under amalgamation in the nature of purchase.

 

  1. Following is the Balance sheet of Venus Ltd:

Balance Sheet as on 31.12.2001

Liabilities Amount Rs. Assets Amount Rs.
Share Capital

15,000 Preference share of Rs. 5 each fully paid

  75,000 Buildings 50,000
30,000 Equity Shares of Rs. 5 each fully paid 1,50,000 Stock 1,00,000
Debentures 50,000 Debtors 1,15,000
Loan Creditors

(Secured by Investments)

 25,000 Investments 35,000
Trade Creditors 75,000 Profit & Loss A/c 75,000
  3,75,000   3,75,000

 

The company was reconstructed on the following lines:

  1. Loan creditors are to be paid off by selling Investments which realised Rs. 35,000.
  2. Trade creditors agree to accept Preference Shares of Rs.5 to extend of two-third of their dues in full satisfaction.
  3. The preference shares are to be reduced to shares of Rs. 3 each fully paid.
  4. The Equity shares are to be reduced to shares of Rs. 3 each and shareholders are to pay Rs.2 per share making the share again Rs.5 fully paid.

Prepare Capital Reduction Account and the reconstructed Balance sheet of Venus Ltd.

 

  1. Balance sheet of Weak Ltd. as on March 31,2002

 

  Rs.   Rs.
Share capital   Sundry asssets 5,10,000
10,000, 6% preference shares of Rs 10 each, fully paid 1,00,000 Discount on debentures 10,000
30,000 ordinary shares of Rs 10 each, fully paid 3,00,000 Preliminary expenses 30,000
Debenture Redemption Fund 30,000 Profit and Loss A/c 60,000
7% Debentures 50,000    
Depreciation fund 30,000    
Sundry creditors 1,00,000    
  6,10,000   6,10,000

 

The sundry assets are worth Rs 5,25,000. One year’s interest is owing on debentures and the dividends on preference shares are in arrears for two years. You are required to value the shares on the Net Assets Method, if:

(a) Preference shares have priority both as to the payment of capital and arrears of dividend in the event of liquidation.

(b) Preference shares have no priority as to capital or arrears of dividend.

(c) Preference shares have priority as to payment of capital only.

(d) Preference shares have priority as to the payment of arrears of dividend only.

 

  1. The Balance sheet of X Ltd. as on 31.3.2002 is as follows.
Liabilities Rs. Assets RS.
8% 5,000 Preference shares of Rs 10 each 50,000 Goodwill 10,000
10,000 Equity shares of Rs 10 each 1,00,000 Fixed Assets 1,80,000
Reserves (including provision for taxation Rs 10,000) 1,00,000 Investments (5% Govt. Loan) 20,000
8% Debentures 50,000 Current Assets 1,00,000
Creditors 25,000 Preliminary Expenses 10,000
    Discount on Debentures 5,000
  3,25,000   3,25,000

 

The average profit of the company (after deducting interest on debentures and taxes) is Rs 31,000. The market value of the machinery included in fixed assets is Rs5,000 more. Expected rate of return is 10% . Evaluate the goodwill of the company at five times of the super Profits.

 

 

SECTION – D

 

  1. IV) Case study- Compulsory questions.              (15 marks)

 

  1. The Creditors and Shareholders agreed upon a scheme of reconstruction the Unsound Company Ltd., went into voluntary liquidation. The Balance Sheet as on 31.12.2001 stood as follows.

Balance sheet of Enterprise Ltd.

Liabilities Rs. Assets Rs.
25,000 share of Rs.10 each 2,50,000 Goodwill 30,000
8% Debentures 1,00,000 Factory Building 95,000
Trade  Creditors 40,000 Plant 1,05,000
Depreciation Fund 27,000 Stock 50,000
    Debtors 60,000
    Cash at Bank 2,000
    Profit & Loss A/c 75,000
  4,17,000   4,17,000

 

The scheme of reconstruction provided:

 

  1. That a new company called Sound Ltd., be formed with a share capital of Rs.5,00,000 in 50,000 shares of Rs.10 each to take over from the above company stock and debtors at 20% less than the book value. Factory Buildings and Plant at Rs.77,000 and Rs.1,00,000 respectively.
  2. The Debenture holders were to be satisfied by the issue of 9% Mortgage Debentures of Rs.1,05,000 in Sound Ltd., in exchange for the old Debentures.

 

  1. The trade creditors agreed to receive Rs.35,000 from Sound Ltd., in full satisfaction of their claims.

 

  1. The Shareholders agreed to receive 25,000 shares of Rs.10 each, credited with Rs.5 per share paid up, with a call of Rs.2.50 per share to be made forthwith.

 

  1. The Bank balance was utilized in payment of reconstruction cost.

 

Pass necessary journal entries to close the Books of Unsound Ltd., and also the opening entries in the Books of Sound Limited assuming that the call made on the shareholders was duly received.

 

 

 

St. Joseph’s College of Commerce B.B.A. 2015 III Sem Corporate Accounting Question Paper PDF Download

by

 

 

ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – SEPT/OCT. 2015
B.B.M  – III SEMESTER
M1 11 301:  CORPORATE ACCOUNTING 
Duration: 3 Hours                                                                                      Max. Marks: 100
SECTION – A
I) Answer ALL the questions.  Each carries 2 marks.                                (10×2=20)
  1. Distinguish between calls in Arrears and calls in Advance.
  2. Who is a contributory?
  3. What are the different methods of calculating Purchase Consideration?
  4. What is External Reconstruction?
  5. State the order in which Capital Reduction Account must be used.
  6. How do you treat  Preliminary Expenses in the final accounts of company?
  7. Who is a Liquidator?
  8. What does Accounting Standard 26 pertain to?
  9. Who are preferential creditors?
  10. What is the meaning of Accounting Standard?
SECTION – B
II) Answer any FOUR questions.  Each carries 5 marks.                              (4×5=20)
  11. Bring out the difference between two methods of accounting for Amalgamation
  12. From the following particulars, prepare Income Statement for the year ended 31st March 2014.

Particulars Amount  (Rs)
P/L A/c balance brought forward 1,00,000
Net Profit before tax (Provision for taxation 40%) 8,75,000
Transfer to Reserve Fund 1,25,000
The share capital consists of the following :

(i)                 10,000 12% preference shares of Rs. 100 each fully paid

(ii)              10,000 Equity shares of Rs. 100 each Rs. 80 paid

  
The Directors propose a dividend of 20% on equity shares.  
  13. The Balance Sheet of X Ltd and Y Ltd as on 31/12/2014 are given below:

Particulars X Ltd Y Ltd
I.                   Equity and Liabilities    
1.      Shareholders Funds:    
Share Capital

(Rs.10 each)

 1,00,000 1,20,000
General Reserve 50,000 70,000
Export Profit Reserve 20,000 30,000
2.      Non-Current Liabilities:    
14% Debenture 50,000 50,000
3.      Current Liabilities    
Creditors 20,000 10,000
Provisions 45,000 50,000
                           Total 2,85,000 3,30,000
     
II.                Assets X Ltd Y Ltd
1.      Non-Current Assets:    
Fixed Assets 1,65,000 2,10,000
Investment 50,000 ——
2.      Current Assets    
Stock 40,000 50,000
Debtors 25,000 65,000
Cash and Bank 5,000 5,000
     
                           Total 2,85,000 3,30,000

XY Ltd has been formed for the amalgamation , which took over X Ltd and Y Ltd and in exchange shares of XY Ltd . (of Rs. 10 each) were issued. To arrive at purchase consideration, fixed assets of X Ltd and Y Ltd were valued at Rs. 1,55,000 and Rs. 2,30,000 respectively  . 14% new Debentures are to be issued to the debenture holders of X Ltd and Y Ltd . Expenses for amalgamation were Rs. 1,000.

Calculate Purchase Consideration.
   
  14. Calculate liquidator’s remuneration and amount available to pay unsecured creditors:

(i)                 Balance of cash after paying preferential creditors Rs. 2,10,000.

(ii)              Other unsecured creditors are Rs. 2,50,000.

(iii)            Liquidator’s remuneration is 5% on the amount paid to other unsecured creditors.
  15. Balance Sheet of a private company stood as follows on 31/12/2014:

Balance Sheet

Liabilities Amount (Rs) Assets Amount (Rs)
19,000 Shares of Rs. 100 each 19,00,000 Land & Building 1,00,000
Creditors 1,00,000 Machinery 2,60,000
Debentures 1,00,000 Furniture    20,000
    Stock 3,70,000
    Debtors 1,80,000
    Goodwill 2,00,000
    Profit & Loss A/c 9,70,000
  21,00,000   21,00,000

The company is to be reconstructed as follows:

(a)   Shares of Rs. 100 are to be reduced to an equal number of fully paid shares of Rs. 40 each.

(b)   To issue 1,000 new shares of Rs. 40 each as fully paid up to debenture holders in full settlement.

(c)    The amount available is to be utilized in writing off the goodwill and Profit and loss A/c and the balance in writing down the value of machinery .

(d)  Authorized capital of the company is 20,000 shares of Rs. 100 each. Prepare Capital Reduction Account.
  16. What are the functions of Accounting Standard Board?
SECTION -C
III) Answer any THREE questions.  Each carries 15 marks.                      (3×15=45)
  17. Bharath Limited was absorbed by Indian Limited on 31/12/2014 on which date the Balance Sheet of Bharath Limited was as follows:

Particulars Amount (Rs)
I.                   Equity and Liabilities:  
1.Shareholders Funds:  
Equity Share Capital 6,00,000
5% Preference Share Capital 4,00,000
2.  Current Liabilities:  
Sundry Creditors 1,50,000
3.      Other Current Liabilities:  
-P&L Account (3,50,000)
Total 8,00,000
   
   
II.Assets Amount (Rs)
1.      Non-Current Assets:  
Buildings 4,00,000
Plant 2,00,000
2.Current Assets 2,00,000
Total 8,00,000
   

Indian Limited took over buildings at Rs. 3,00,000, Plant at Rs. 1,40,000 and Stock at Rs. 60,000 . The purchase consideration is to be satisfied by the issue of 8% Preference Shares of Rs. 100 each and Equity Shares of Rs. 10 each in 3:2 ratio.

The Preference Shareholders are to be settled in full by the allotment of new Preference Shares. Sundry debtors realized Rs. 1,50,000 and Rs. 1,10,000 was paid to Sundry Creditors in full settlement (There were no other current assets). Cost of liquidation Rs. 1,000.

Prepare necessary ledger accounts in the books of Bharath Limited. Opening Journal Entries of Indian Limited  and its Balance Sheet.
  18. Following are the balances of NSK Ltd as at 31/03/2014. You are required to prepare the final accounts of the company after taking additional information into consideration.

Particulars Amount (Rs) Particulars Amount (Rs)
Premises 30,72,000 Share capital 40,00,000
Plant 33,00,000 12% Debentures 30,00,000
Stock (1/4/2013)   7,50,000 P&L A/c   2,62,500
Debtors 8,70,000 Creditors 7,70,000
Goodwill 2,50,000 Sales 41,50,000
Cash and Bank 4,06,500 General Reserve 2,50,000
Calls in arrears    75,000 Reserve for DD (1/04/2013)   35,000
Interim Dividend 3,92,500    
Purchases 18,50,000    
Preliminary Expenses   50,000    
Wages 9,79,800    
General Expenses   68,350    
Salaries 2,20,250    
Bad Debts   21,100    
Debenture interest paid 1,62,000    
  1,24,67,500   1,24,67,500

Adjustments:

1.      Closing stock is valued at Rs. 10,50,000

2.      Depreciate plant at 15%

3.      Write off Rs. 5,000 from preliminary expenses.

4.      Half yearly debenture interest is due.

5.      Write off Rs. 20,000 further bad debts and unused new RDD at 5% on debtors.

6.      Transfer Rs. 25,000 to General Reserves.
  19. The following is the Balance Sheet of X ltd as on 31/12/2014

Liabilities Amount (Rs) Assets Amount (Rs)
4,000 6% Preference Shares of Rs. 100 each 4,00,000 Land 2,00,000
2,000 Equity shares of Rs. 100 each Rs. 75 paid up 1,50,000 Plant 5,00,000
6,000 Equity shares of Rs. 100 each, Rs. 60 per share paid up 3,60,000 Patents 80,000
5% Debentures 2,00,000 Stock 1,10,000
Outstanding Debenture Interest 10,000 Debtors

Cash

 2,20,000

60,000
Creditors 2,90,000 Profit & Loss A/c 2,40,000
  14,10,000   14,10,000

On the date of Balance Sheet the company went into liquidation . The dividends on preference shares are in arrears for 2 years. The arrears are payable on liquidation as per Articles of Association. The Debentures have a floating charge on the assets of the company. Creditors include a loan of Rs. 1,00,000 secured by mortgage of land. The assets realized are as under:

Land Rs. 2,40,000 ;Plant Rs. 4,00,000 ; Patents Rs. 60,000 ; Stock Rs. 1,20,000; Debtors 1,60,000.

The expenses of liquidation amounted to Rs. 21,800. The liquidator is entitled to a commission of 3% on all assets realized including cash and a commission of 2% on the amount distributed to unsecured creditors. Preferential creditors amounted to Rs. 30,000.

Prepare Liquidators final Statement of Account.
  20. The Creditors and Shareholders having agreed upon a scheme of Reconstruction for the Unsound Company Ltd. which went into voluntary liquidation . The Balance Sheet as on 31/12/2014 stood as follows:

Particulars Amount (Rs)
I.                   Equity and Liabilities:  
1.      Shareholders Funds:  
25,000 Shares of Rs. 10 each 2,50,000
2.      Non-Current Liabilities:  
8% Debentures 1,00,000
Depreciation Fund  27,000
3.      Other Non-Current Liabilities:  
P/L Account (75,000)
4.      Current Liabilities  
Trade Creditors   40,000
                             Total 3,42,000
   
II.                Assets Amount (Rs)
1.      Non-Current Assets:  
Goodwill 30,000
Factory Building 95,000
Plant 1,05,000
2.      Current Assets:  
Stock  50,000
Debtors 60,000
Cash at Bank  2,000
Total 3,42,000

The scheme of reconstruction provided:

(i)                 That a new company called Sound Ltd to be formed with a share capital of Rs. 5,00,000 in 50,000 shares of Rs. 10 each to take over from the above company stock and debtors at 20% less than the book value, Factory Buildings and Plant at Rs. 77,000 and Rs. 1,00,000 respectively.

(ii)               The Debenture holders were to be satisfied by the issue of 9% Mortgage Debentures of Rs. 1,05,000 in Sound Ltd., in exchange for the old Debentures.

(iii)             The trade creditors agreed to receive Rs. 35,000 from Sound Ltd., in full satisfaction of their claims.

(iv)             The Shareholders agreed to receive 25,000 shares of Rs. 10 each, credited with Rs. 5 per share paid-up, with a call of Rs. 2.50 per share to be made forthwith.

(v)               The Bank balance was utilised in payment of reconstruction cost.

Pass necessary journal entries to close the Books of UnsoundLtd. and also the opening entries in the Books of Sound Limited assuming that the call made on the shareholders was duly received.
  21. Briefly explain the following Accounting Standards:

a)      Accounting Standard-10

b)       Accounting Standard-6

c)      Accounting Standard -1.
SECTION – D
IV) Compulsory question.                                                                              (15 marks)
  22. a) Prakash Ltd. went into liquidation on 31.12.2014. Following information is available with the liquidator.

Creditors amount to rs.75,660 of which Rs.8,000 are preferential, 6% Debentures having a floating charge on the assets of the company amounted to Rs.80,000.  Debentures to be paid interest upto 30.6.2015.

The Assets realised as follows:

Stock Rs.84,000

Plant and Machinery Rs.60,600

Cash in hand stood at Rs.500.  Debentures were paid off on 30-6-2015 with interest.  Liquidator’s expenses amounting Rs. 1,902 and he is to be given a remuneration at 3% on the amount realised and 2% on the amount distributed to unsecured creditors excluding preferential creditors.

 

Calculate  the amount payable to unsecured creditors.

 

b)  From the following particulars prepare Income statement for the year ending 31st March 2013.

i) P&L A/c balance from last year Rs.62, 500.

ii) N/P for the year before tax 5,40,000 (provision for tax at 40%)

iii) Transfer to General reserve Rs.52,500, Dividend Equalisation fund 40,000 and development reserve 37,500.

iv)Dividend on 7.5% on preference shares 3,00,000

v) Dividend on 12.5% on 50,000 equity shares of Rs.10/- Rs.7.50 called-up (calls in arrears Rs.13,000).

 

 

&&&&&&&&&&&&&&&&&&&&&&&&&&

 

 

St. Joseph’s College of Commerce II Sem Corporate Accounting Question Paper PDF Download

by
REG NO:

ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – MARCH/APRIL 2016
B.COM(T.T)  – II  SEMESTER
C2 15 MC 201  : CORPORATE ACCOUNTING
Duration: 3 Hours                                                                                             Max. Marks: 100
SECTION – A
I) Answer ALL the questions.  Each carries 2 marks.                                        (10×2=20)
  1. Mention the different methods of calculating Purchase Consideration.
  2. What are the methods of valuing goodwill?
  3. What do you understand by the term intrinsic value? How it is calculated?
  4. How do you calculate Fair value of the share?
  5. What are the different methods of accounting for amalgamation?
  6. The Shareholders  get Rs. 5 cash for every share in X Ltd. (Shares in X Ltd. is 10,000 shares of Rs. 10 each ) and 2 shares of Rs. 20 each for every 5 shares held b X Ltd. Calculate purchase consideration.
  7. What is Capital Reduction account?
  8. Distinguish between Internal Reconstruction and External Reconstruction.
  9. What do you mean by Accounting Standards?
  10. What is IFRS?
SECTION – B
II) Answer any FOUR questions.  Each carries 5 marks.                                      (4×5=20)
  11. Explain the conditions to be satisfied for an Amalgamation in the Nature of Merger according to AS-14.
  12. Elucidate the factors that should be considered in valuing goodwill.
  13. Following information relates to D Ltd.

4,000 , 10% Preference share of Rs.100 each – Rs.4,00,000

5,000 , Equity shares of Rs.100 each -Rs.5,00,000

Average profits before tax- Rs. 3,22,580

Rate of tax  – 38%

Transfer to be made to Reserve – 20%

Normal rate of return – 15%

Ascertain the value of each equity share under Yield method.

 
  14. Following is the Balance sheet of ABC Ltd. as on 31st March 2015.

Liabilities Amount Assets Amount
2,00,000 Equity shares of Rs.10 each fully paid up 20,00,000 Plant & machinery 9,00,000
6,000 8% Preference shares of Rs.100 each 6,00,000 Furniture & fitting 2,50,000
9% Debentures 12,00,000 Patents 70,000
Bank overdraft 1,50,000 Investments ( at cost )

Market value Rs.55,000

 68,000
Trade payables 5,92,000 Inventory 14,00,000
    Trade receivables 14,39,000
    Cash and bank balances 10,000
    Profit & loss a/c 4,05,000
  45,42,000   45,42,000

 

The following scheme of reconstruction was finalized:

a.      Preference shareholders would give up 30% of their capital in exchange for allotment of 11% Debentures to them.

b.      Debenture holders having charge on plant & machinery would accept plant & machinery in full settlement of their dues.

c.       Inventory equal to Rs.5,00,000 in book values will be taken over by trade payables in full settlement of their dues.

d.     Investment value to be reduced to market price.

Give necessary journal entries reflecting the above scheme of reconstruction in the books of ABC Ltd.
  15. The following is the Balance Sheet of Small Ltd. as on 31.3.2015.

Liabilities Amount Assets Amount
Equity Share Capital (Rs. 10 each) 20,000 Goodwill 4,000
Profit & Loss A/c 7,000 Fixed Assets 16,500
Debentures 10,000 Current Assets 19,500
Creditors 3,000    
  40,000   40,000

Big Ltd. agreed to take over the assets (exclusive of goodwill, fixed assets of Rs. 4,000 and cash Rs. 1,000 which is included in current assets) at 10% less than book value and to discharge the trade creditors and to pay Rs. 6,000 for goodwill.

The purchase consideration was to be settled by the allotment of 2,000 shares of Rs. 10 each, Rs. 8 called up at a market value of Rs. 15 per share and the balance in cash. Liquidation expenses amounted to Rs. 400.

Show the calculation of purchase consideration and discharge.

 
  16. What are the objectives of Accounting Standards?
 

SECTION – C
III) Answer any THREE questions.  Each carries 15 marks.                                (3×15=45)                                                                                                
  17. The following is the Balance sheet of X Ltd on 31st Dec 2015.

 

 

Liabilities Amount Assets Amount
Equity share capital of Rs.10 each 5,00,000 Building 1,65,000
General reserve 2,00,000 Machinery 85,000
Profit & Loss a/c

 

 1,00,000 Furniture 50,000
Creditors 60,000 Motor vans 1,00,000
Bills payable 20,000 Investments 1,00,000
Provision of Tax 20,000 Stock 1,50,000
    Debtors 80,000
    Bank 1,70,000
  9,00,000   9,00,000

Net profit before tax 2013 – Rs.2,10,000 , 2014 – Rs.2,20,000 , 2015 – Rs.2,50,000. Rate of tax 40% .Income from investments may be taken at 6%. Normal rate of return on average capital employed is 15%. Building is valued at Rs.1,80,000 and Machinery at Rs.90,000. Taking weighted average profits after tax as basis, calculate the value of goodwill based on:

 a. 5 years purchase of super profits

b.  Capitalisation of super profits

 c. Annuity of super profits taking Annuity rate at 3.35. ( Ignore depreciation on Building & Machinery )

 
  18.   Balance sheet of Diamond Ltd as on 31-12-2013.

LIABILITIES Amt ASSETS Amt
Share capital:

Issued, subscribed and paid up: 2,000 shares of Rs.100 each

  

 

2,00,000

 Land & Buildings 1,10,000
General Reserve 40,000 Plant & Machinery 1,30,000
Profit and Loss a/c 32,000 Patents & Trademarks 20,000
Sundry Creditors 1,28,000 Stock 48,000
Income Tax Reserve 60,000 Debtors 88,000
    Bank 52,000
    Preliminary expenses 12,000
  4,60,000   4,60,000

The expert valuer valued Land & Building at Rs.2,40,000;  Goodwill at Rs.1,60,000 and Plant and Machinery  at Rs.1,20,000. Out of the total Debtors, it is found that debtors of Rs.8,000 are bad.

The profits of the company after tax have been as follows:

 

2011 2012 2013
80,000 90,000 1,06,000

 

The company follows the practice of transferring 25% of the profits to General reserve. Similar type of companies each, earns a profits at 10% of the value of their shares. Income Tax rate applicable to the company is 50%.  Ascertain the value of shares of the company under:

a)      Intrinsic value method             b)  Yield value method            c)Fair value method
  19. Following is the balance sheet of X Ltd.

Liabilities Amount Assets Amount
Preference share capital 5,00,000 Plant & machinery 5,00,000
Equity share capital 10,00,000 land & building 10,00,000
Profit & loss a/c 2,00,000 Investments 2,00,000
General reserve 3,00,000 Stock 3,00,000
Debentures 2,00,000 Debtors 4,00,000
Creditors 3,00,000 Cash 10,000
    Bank 90,000
  25,00,000   25,00,000

X ltd. is absorbed by Y ltd. following terms:

a.    Equity shares are to be redeemed at 6% premium by issuing equity shares in Y ltd. at par.

b.   Nine preference shares in Y ltd. are to be issued for five preference shares held in X ltd. the face value of preference share of both companies is same.

c.    Stock is not taken over by Y ltd. and it realised Rs.1,00,000.

d.   The fair value of assets taken over is as under:

Plant & machinery Rs.4,00,000

Land & building Rs,17,00,000

Investments Rs.1,00,000

Debtors book value less 10%

Prepare the necessary ledger accounts in the books of X Ltd.

 
  20. Following is the Balance sheet of Unsuccessful Ltd. as on 31.12.2012:

Liabilities Amount Assets Amount
13% cumulative preference

shares of Rs. 100 each

 1,00,000 Fixed Assets 15,00,000
Equity shares of Rs. 10 each 7,00,000 Current Assets 32,00,000

 
8% Debentures 3,00,000 Profit & Loss A/c 3,00,000

 
Current liabilities(included

Creditors)

 39,00,000

 

    
  50,00,000   50,00,000

The following scheme of reconstruction was adopted:

a. Fixed assets are to written down by 33.33%

b. Current assets are to be revalued at Rs. 24,00,000

c. One of the creditors of the company to whom the company owes

Rs. 25,00,000 decides to forego 50% of his claim. He is allotted 2,50,000

equity shares of Rs. 5 each in full satisfaction of his claim.

d. The rate of interest on debentures is increased to 11%. The debenture holders surrender their existing debentures of Rs. 100 each and exchange the same for fresh debentures of Rs. 75 each.

e. All existing equity shares are reduced to Rs. 5 each.

f. All preference shares are reduced to Rs. 75 each.

Pass Journal entries and show the Balance Sheet of the company after giving effect to the above. Also prepare Capital Reduction A/c.

 
  21. Explain any 5 Accounting Standards in detail.

 
SECTION – D
IV) Case Study – Compulsory question.                                                                 (1×15=15)                                                                                           
  22.  

    A Ltd. acquired the undertaking of B Ltd. on 31.3.2015 for a purchase consideration of Rs. 2,50,00,000 to be paid by fully paid Equity Shares of Rs. 10 each. The Balance Sheets of the two companies on the date of acquisition were as follows:

Liabilities A Ltd. B Ltd. Assets A Ltd. B Ltd.
Equity Shares of Rs. 10 each fully paid up 2,50,00,000 1,50,00,000 Land & Building 1,20,00,000 80,00,000
General Reserve 1,20,00,000 18,00,000 Plant & Machine. 2,00,00,000 1,80,00,000
Profit & Loss A/c 10,00,000 53,00,000 Furniture & Fixtures 10,00,000 20,00,000
Dev. Rebate Reserve 10,00,000 37,00,000 Stock 55,00,000 40,00,000
Worker’s Comp. Fund 15,00,000 24,00,000 Debtors 45,00,000 40,00,000
Current Liabilities 45,00,000 95,00,000 Bank Balance 20,00,000 17,00,000
  4,50,00,000 3,77,00,000   4,50,00,000 3,77,00,000

Pass the necessary journal entries in the books of the New Company (Incorporation entries) when Amalgamation is in the Nature of Merger. Also prepare the Balance Sheet of A Ltd. after amalgamation assuming that Development Rebate Reserve and Worker’s Compensation Fund of B Ltd. are required to be continued in the books of A Ltd.

 

&&&&&&&&&&&&&&&&&&&&&

 

 

 

 

 

St. Joseph’s College of Commerce II Sem Corporate Accounting Question Paper PDF Download

by
REG NO:

 

 

ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

END SEMESTER EXAMINATION – MARCH/APRIL 2016
B.COM (Regular ) – II SEMESTER
C1 15MC201: CORPORATE ACCOUNTING
Duration: 3 Hours                                                                                             Max. Marks: 100
SECTION – A
I) Answer ALL the questions.  Each carries 2 marks.                                        (10×2=20)
  1. Mention any two factors affecting the valuation of shares.
  2. What is Non-purchased Goodwill?  Mention any two features of Non-purchased Goodwill.
  3. Mention the four methods of calculation of Purchase Consideration.
  4. What is Minority Interest?  How do you calculate it?
  5. Can partly paid preference shares be redeemed? What is the procedure to redeem partly paid preference shares?
  6. Explain Pre-acquisition Profits and Post-acquisition Profits with respect to Consolidation of Financial Statements.
  7. Write any two accounting differences between an amalgamation in the nature of merger and amalgamation in the nature of purchase.
  8. Given that Yield Value of a Share is Rs. 188 and the Fair Value of a Share is

Rs. 194, find the Intrinsic Value per Share.
  9. During the year 2010-11, X Ltd. issued 50,000  11% Preference Shares of Rs. 100 each at a premium of 5%, which are redeemable at the end of 3rd year at par.  At the end of the 3rd year, the company did not have sufficient cash resources to redeem the preference shares.  Hence it issued 10,000 Equity Shares of Rs. 100 each at a premium of 10%.  Calculate the amount to be transferred to Capital Redemption Reserve at the time of redemption of Preference Shares.
  10. Find the value of Goodwill, if it is to be calculated at 3 years purchase of average profits of last four years.  The last four year’s profits are as below:

Year 1 Profit Rs. 25,000 Year 2 Loss Rs. 10,000
Year 3 Profit Rs. 35,000 Year 4 Profit Rs. 40,000
 

SECTION – B
II) Answer any FOUR questions.  Each carries 5 marks.                                      (4×5=20)
  11. Balance Sheet Extract of H Ltd. and S Ltd. as at 31st March 2015 is as below:

Rs. In thousands

Liabilities H Ltd S Ltd Assets H Ltd S Ltd
Equity Shares of Rs. 10 each fully paid up 1,050.00 175.00 13,125 shares of S Ltd. 192.50 0
General Reserve 87.50 52.50      
Surplus A/c 140.00 70.00      

 

 

Additional Information:

At the time of acquisition of 13,125 shares by H Ltd in S Ltd, S Ltd had Rs. 42,000 in General Reserve and Rs. 66,500 credit balance in Profit and Loss A/c from which 15% dividend was paid by S Ltd and dividend received by H Ltd. on these shares were credited to Surplus A/c.

You are required to calculate:

A) Analysis of Profits of S Ltd B) Minority Interest
  12. Liabilities and Assets of Vivek Ltd. as on 31st Dec, 2015 stood as under:

Rs. In Lakhs

Liabilities Amount Assets Amount
10% Preference Shares of Rs. 100 each 25.5 Fixed Assets 110.5
Equity Shares of Rs. 10 each 51.0 Investments 20.4
General Reserve 30.6 Current Assets 17.0
12% Debentures 23.8    
Current Liabilities 17.0    
Total 147.9 Total 147.9

Karan Ltd. signified its agreement to take over the assets and liabilities of Vivek Ltd. as per the following terms and conditions:

a)      Fixed assets at 110% of the books value.

b)     Investments at 25% below the par value.

c)      Current assets and liabilities at book value except that stock in trade at cost amounting to Rs. 10 lakh was agreed to be taken over at a discount of 20%.

d)     12% Debentures are to be discharged at a premium of 10% by issuing 12% debentures of Karan Ltd.

Calculate Purchase consideration for the takeover under Net Assets Method.
  13. The Board of Directors of a Company decided to issue minimum number of equity shares of Rs. 10 each at 10% discount to redeem Rs. 15,00,000 preference shares.  The maximum amount of divisible profits available for redemption is Rs. 8,00,000.  Calculate the number of shares to be issued (if the company decides to issue shares in multiple of 50 only) by the company to ensure that provisions of the companies act is not violated.  Also pass the necessary Journal Entries.
  14. From the following information, calculate the value of an Equity share under the yield method.

a.      The paid up share capital of the company consists of 1,000, 15% preference shares of Rs. 100 each and 20,000 Equity shares of Rs.10 each.

b.      The average annual profit of the company, after providing for depreciation and taxation amounted to Rs. 1,01,250. It is considered necessary to transfer Rs.13,500 to general reserve before declaring dividend.

c.       The normal return expected by investors on Equity shares from this type of business on by the company is 12%.
   

 

 

15.

  

 

 

From the information given below, Compute Cost of Control.

Cost of Acquisition Rs. 5,00,000
Dividend from Post Acquisition Profits received by holding Co. Rs. 10,000
Dividend from Pre-acquisition Profits received by holding Co. Rs. 20,000
Paid up Share Capital held by the holding Co. in Subsidiary Co. Rs. 4,50,000
Holding Company’s share of Capital Profits in Subsidiary Co. Rs. 50,000
Holding Company’s share of Revenue Profits in Subsidiary Co. Rs. 75,000
   

16.

  

What is Goodwill?  Mention any four factors affecting the value of Goodwill.
 

SECTION – C
III) Answer any THREE questions.  Each carries 15 marks.                                (3×15=45)                                                                                                 
  17. The following is the balance sheet of XYZ Ltd as on 31-12-2015.

LIABILITIES Rs. ASSETS Rs.
11,520 15% Preference shares of Rs.100  each 11,52,000

 

 Sundry assets (book value) 34,56,000
17,280 Equity shares of Rs.100 each 17,28,000    
Bills payable 1,44,000    
Creditors 4,32,000    
       
Total 34,56,000 Total 34,56,000

The market value of 60% of the assets is supposed to be 15% more than the book value and that of the remaining 40% at 10% less than the book value. There is an unrecorded liability of Rs. 28,800.   Find the value of each Equity share.

 
  18. The Financial Position of Ojaswi Ltd. at 1st January was as follows:

Equity and Liabilities Rs. Assets Rs.
4,000  5% Redeemable Preference Share Capital of Rs. 10 each 4,00,000 Sundry Assets 8,40,000
20,000 Equity Shares of Rs. 10 each fully paid 2,00,000 Cash and Bank 3,00,000
Securities Premium 50,000    
Profit and Loss A/c 2,80,000    
Sundry Liabilities 2,10,000    
Total 11,40,000   11,40,000

As per the terms of issue of the Preference Shares, these were redeemable at a premium of 5% on 1st February, and it was decided to arrange this as far as possible out of the Company’s resources subject to leaving a balance of Rs. 50,000 in the credit of the profit and loss account.  It was also decided to raise the balance amount by issue of 17,000 Equity Shares of Rs. 10 each at a premium of Rs. 2.50 per share.

 

You are required to pass necessary Journal Entries and draft the balance sheet after redemption.
  19. XYZ Co. intends to purchase the business of ABC Co.  Goodwill for this purpose is agreed to be valued at 3 years purchase of the weighted average profits of the past 4 years.  The profits after tax for these years and the appropriate weights to be used are:-

Year Profits after tax (Rs) Weights
2012 1,80,000 1
2013 2,05,000 2
2014 2,75,000 3
2015 3,05,000 4

The following information was available:-

a.      On 1.1.2013 a major repair   was made in respect of a plant at a cost of Rs. 60,000 and was charged to revenue. The said sum is agreed to be capitalized for goodwill calculation, subject to adjustment of depreciation at 15% on diminishing balance method.

b.     The closing stock for the year 2012 was overvalued by Rs.13,000.

c.       The Closing Stock for the year 2014 was undervalued by Rs. 2,000.

d.      There was an abnormal loss of Rs. 38,000 in the year 2013.

e.      Abnormal gain in the year 2015 amounted to Rs. 3,500.

f.       To cover the management cost an annual charge of Rs. 25,000 should be made for the purpose of goodwill valuation.

Compute the value of goodwill for the company.  Tax rate = 50%.

 
  20. From the Balance Sheets given below as at 31st March, prepare a Consolidated Balance Sheet of H Ltd. and its subsidiary company S Ltd. as at that date.

Rs. In thousands

Liabilities H Ltd S Ltd Assets H Ltd S Ltd
Equity Shares of Rs. 10 each fully paid up 425.00 85.00 Fixed Assets 340.00 51.00
Surplus A/c 170.00 51.00 Stock 255.00 102.00
Reserve 51.00 34.00 Debtors 63.75 72.25
Bills Payable 0 12.75 Bills Receivable 17.00 0
Trade Creditors 93.50 51.00 Shares in S Ltd. (6375 share at cost) 63.75 0
      Preliminary Expenses

 

 0 8.50
Total 739.50 233.75 Total 739.50 233.75

 

Additional Information:

a.      The bills accepted by S Ltd. are all in favour of H Ltd.

b.      The stock of H Ltd. includes Rs. 21,250 bought from S Ltd. at a profit to the latter at 20% of sales.

c.       All the surplus of S Ltd. has been earned since the shares were acquired by H Ltd. but there was already the reserve of Rs. 34,000 at that date.

 

 
  21. Balance Sheets as at 31st March

Rs. In Thousands

Liabilities Ram Ltd. Rahim Ltd. Assets Ram Ltd. Rahim Ltd.
Equity Shares of Rs. 10 each 2,500 1,500 Building 1,250 775
14% Preference Shares of Rs. 100 each 1,100 850 Plant and Machinery 1,625 850
General Reserve 250 250 Furniture and Fixture 287.50 175
Export Profit Reserve 150 100 Investments 350 250
Investment Allowance Reserve 0 50 Stock 625 475
Profit and Loss A/c 375 125 Sundry Debtors 400 460
15% Debentures (Rs. 100 each) 250 175 Bills Receivable 50 55
Trade Creditors 150 75 Cash at Bank 362.50 260
Bills Payable 75 100      
Other Current Liabilities 100 75      
Total 4,950 3,300   4,950 3,300

 

All the Bills Receivables of Rahim Ltd. were having Ram Ltd’s acceptances.  Ram Ltd. takes over Rahim Ltd. on the above data.

The Purchase Consideration is discharged as follows:

a)      Issued 82,500 Equity Shares of Rs. 20 each at par to the Equity Shareholders of Rahim Ltd.

b)     Issued 15% Preference Shares of Rs. 50 each to discharge the Preference Shareholders of Rahim Ltd., at 10% premium.

 

c)      The Debentures of Rahim Ltd. will be converted into equivalent number of Debentures of Ram Ltd.

 

d)     The Statutory Reserves of Rahim Ltd. is to be maintained for two more years.

e)      Expenses of Amalgamation amounting to Rs. 50,000 will be borne by Ram Ltd.

You are required to:

i)                   Compute Purchase Consideration.

ii)                 Show the necessary Ledger Accounts in the books of Rahim Ltd. and

iii)              The Opening Balance journal entries in the books of Ram Ltd.  on the assumption that the amalgamation is in the nature of Purchase.
 

SECTION – D

 
IV) Case Study –                                                                                                    (1×15=15)                                                                                          
  22.  X Ltd. and Y Ltd. amalgamated on and from 1st Jan.  A new Company Z Ltd. was formed to take over the business of the existing companies.  Their Balance Sheets as on 31st December was:

Rs. In thousands

Liabilities X Y Assets X Y
Share Capital:

Equity Shares of Rs. 10 each

 4,500.00 5,250.00 Sundry Fixed Assets 6,375.00 5,625.00
General Reserve 1,125.00 1,500.00 Investments 787.50 412.50
Profit and Loss A/c 750.00 375.00 Stock 937.50 2,062.50
Investment Allowance Reserve 375.00 75.00 Debtors 1,350.00 3,000.00
Export Profit Reserve 37.50 75.00 Cash and Bank 337.50 300.00
12% Debentures 2,250.00 3,000.00      
Sundry Creditors 750.00 1,125.00      
Total 9,787.50 11,400.00 Total 9,787.50 11,400.00

Z Ltd. issued requisite number of shares to discharge the claims of the Equity Shareholders of the Transferor companies.

 

You are required to:

Draft the Balance Sheet of Z Ltd (after amalgamation in nature of Merger) as per Schedule III of the Companies Act 2013.  Notes forming part of the balance sheet need not be provided.

 

 

 

OR

 

You are required to calculate value of each Equity Share based on Discounted Cash Flow Method from the information given below:

i)       Free Cash Flow Estimates:

Year 1 2 3 4 5
Free Cash Flows (Rs) 3,00,000 3,20,000 2,80,000 2,10,000 1,80,000

 

ii)                 After tax Cost of Capital is 17.5%

 

iii)              Present Value factor at 17.5%

Year 1 2 3 4 5
PVF @ 17.5% 0.851 0.724 0.616 0.525 0.446

iv)               No. of Equity Shares = 50,000.

 

 

&&&&&&&&&&&&&&&&&&&&&&&&&&&

 

 

 

 

© Copyright Entrance India - Engineering and Medical Entrance Exams in India | Website Maintained by Firewall Firm - IT Monteur