Sunday, April 14, 2019

Corporate Accounting Solved Question Papers - May' 2016 (Old Course)


CORPORATE ACCOUNTING SOLVED PAPERS
(OLD COURSE)
Full Marks: 80
Pass Marks: 32
1. (a) State whether the following statements are ‘True’ or ‘False’:                         1x4=4
                                 i.            A debenture holder is an owner of the company.                             False
                               ii.            Out of the face value of the shares, at least 20% is payable with application.  False
                              iii.            Reduction of share capital is unlawful except when sanctioned by the court.   True
                             iv.            Insolvency is not a necessary condition for liquidation of a company.
(b) Fill in the blanks:                                                                                                     1x4=4
                                 i.            Preference shares can be redeemed if they are Fully Paid-up.
                               ii.            The portion of the authorized capital which can be called up only on the liquidation of the company is called Reserve capital.
                              iii.            Consolidated Financial Statements are prepared as per Accounting Standard 21.
                             iv.            Accounting Standard 14 relates to Accounting for Amalgamation.
2. Write short notes on any four of the following:                                                           4x4=16
a) Preliminary Expenses.
b) Sinking Fund.
c) Minority Interest.
d) Amalgamation in the nature of purchase.
e) Winding-up of a company.
Ans: a) Preliminary Expenses.
Ans: Preliminary Expenses: Preliminary expenses are those expenses which are incurred on the formation of the company. Such expenses include stamp duty and fees payable on registration of the company, legal and printing charges for preparing the Prospectus, Memorandum and Articles of Association, Accountants’ and Valuers’ fees for reports, certificates, etc. Cost of printing the stamping letters of allotment and share certificates, cost of company seal, books of account, statutory books and statistical books, etc. Such expenses are written off from the Statement of Profit and Loss in the year in the year of their incurrence as per AS-26.
b) Sinking Fund.
Ans: Sinking fund is a fund into which a company sets aside money over time, in order to retire its preferred stock, bonds or debentures. Such fund is created mainly for some specific purposes which are:
1.       To redeem or repay long term liabilities.  For example: debentures, long term loans etc.
2.       To replace wasting assets. For example: mines etc.
3.       To replace an asset of depreciable nature. For example fixed assets.
Creation of Sinking fund for redemption of debentures:
For redemption of debentures or other long term liabilities, a fixed amount is kept aside yearly as sinking fund for the specific purpose and the same amount is invested in securities etc.  for a specific period so that the sufficient amount is available at the time of redemption of long term liabilities. The amount to be set aside can be determined with the help of Sinking fund table. The amount kept aside should not be debited to Profit and loss account but to Profit and loss appropriation account because the same is an allocation of profit not expenditure.
c) Minority Interest.
Ans: Minority Interest: When some of the shares in the subsidiary are held by outside shareholders they will be entitled to a proportionate share in the assets and liabilities of that company. The share of the outsider in the subsidiary is called minority interest.
Amount of minority interest is calculated by adding subsidiary company’s share in pre-acquisition profit, post-acquisition profit and in share capital of the company. Preference share capital to the extent of not purchased by holding company is also added with minority interest. In the consolidated balance sheet all the assets and liabilities of the subsidiary   are consolidated with assets and liabilities of the holding company and the minority interest representing the interest of the outsider in the subsidiary is shown as a liability.
d) Amalgamation in the nature of purchase.
Ans: Amalgamation in the nature of Purchase: An amalgamation will be treated as “Amalgamation in the nature of purchase” if any of the below mentioned conditions is not satisfied:
a. After amalgamation, all the assets and liabilities of the transferor company becomes the assets and liabilities of the transferee company.
b. Shareholders holding not less than 90% of the face value of the equity shares of the transferor company become the equity shareholders of the transferee company by virtue of amalgamation.
c. The business of the transferor company is intended to be carried on after the amalgamation by the transferee company.
d. Purchase consideration should be discharged only by issue of equity shares in the transferee company except that cash may be paid in respect of any fractional shares.
e. No adjustments are required to be made in the book values of the assets and liabilities of the transferor company, when they are incorporated in the financial statements of the transferee company. If any one of the condition is not satisfied in a process of amalgamation, it will not be considered as amalgamation in the nature of merger.
e) Winding-up of a company.
3. (a) Give a brief description of the books of accounts and registers which are to be maintained by a company as per provisions of the Indian Companies Act, 1956.               7+5=12
Ans: Statutory and Statistical Books Maintained by Company:
Statutory book: Such books are those which a limited company is under statutory obligation to maintain at its registered office with a view to safeguard the interests of shareholders and creditors. Main statutory books are:
a)      Register of investments held and their names
b)      Register of charges
c)       Register of members
d)      Register of debenture holders
e)      Annual returns
f)       Minute books
g)      Register of contracts
h)      Register of directors
i)        Register of director’s shareholdings
j)        Register of loans to companies under the same management
k)      Register of investment in the shares and debentures of other companies
l)        Register of fixed deposits
m)    Index of members where the number is more than fifty unless register of members itself affords an index
n)      Index of debenture holders where the number is more than fifty, unless the register of debenture holders itself affords an index
o)      Foreign register of members and debenture holders, if any
p)      Register of renewed and duplicate certificates.
Statistical Books:
In order to keep a complete record of numerous details of certain transactions and activities of the company the following statistical books are usually maintained by joint stock companies in addition to statutory books. The keeping of such books are optional. The main books are:
a)      Share application and allotment book
b)      Share calls book
c)       Share certificate book
d)      Debenture application and allotment book
e)      Debenture calls book
f)       Register of share transfers
g)      Dividend book
h)      Debenture interest book
i)        Register of documents sealed
j)        Register of share warrants
k)      Dividend mandates register
l)        Register of debenture transfers
m)    Register of powers of attorney
n)      Agenda book
o)      Register of lost share certificates
p)      Register of director’s Attendance
Or

CORPORATE ACCOUNTING SOLVED QUESTION PAPERS (2010 TO 2018)

(b) The Balance Sheet of J. K. Ltd. as on 31st March, 2016 is given below:
Liabilities
Amount
Assets
Amount
9% Redeemable Preference Shares of Rs. 100
 each fully paid-up
Equity Shares of Rs. 5 each fully paid-up
General Reserve
Profit & Loss A/c
Sundry Creditors

6,50,000
2,25,000
1,00,000
2,60,000
57,500
Sundry Assets
Investments
Cash at Bank
9,50,000
2,75,000
67,500


12,92,500

12,92,500
The Preference Shares are to be redeemed on 1st April, 2016 at a premium of 7 ½ %. In order to facilitate redemption, the company had decided the following:
a)      To sell the investments for Rs. 2,60,000.
b)      To finance a part of the redemption from the company’s Reserve Fund.
c)       To issue sufficient equity shares at a premium of Rs. 1 per share to raise the balance of the fund required.
d)      Minimum bank balance to be retained at Rs. 10,500. The investments were sold, the equity shares were fully subscribed and the preference shares were dully redeemed. Show the Journal Entries and prepare the balance sheet after redemption.                                      7+5=12
Journal Entries
In the Books of J.K. Ltd
Date
Particulars
L/F
Amount
Amount

Bank A/c                                                              Dr.
Surplus A/c                                                         Dr.
      To Investment A/c
(Being the investment sold at Rs. 2,60,000 and loss debited to P/L A/c.)

2,60,000
15,000


2,75,000

9% Redeemable preference Share Capital A/c  Dr.
Premium on redemption A/c                              Dr.
      To Preference Shareholders A/c
(Being the preference share capital due for redemption at a premium of 7.5%)

6,50,000
48,750


6,98,750

Bank A/c                                                                  Dr.
      To Equity share capital A/c
      To Securities Premium A/c

3,81,750

3,18,125
63,625

General Reserve A/c                                            Dr.
Surplus A/c                                                          Dr.
      To Capital Redemption Reserve A/c
(Being the amount of preference share capital redeemed out of profit transferred to Capital Redemption Reserve.)

1,00,000
2,31,875


3,31,875

Securities Premium A/c                                        Dr.
      To Premium on redemption A/c
(Being the premium payable on redemption of Preference share charged to securities premium.)

48,750

48,750

Preference shareholders A/c                                  Dr.
      To Bank A/c
(Being the final payment made to preference shareholders.)

9,45,000

9,45,000
Balance Sheet of JK Ltd
Particulars
Amount
I. Equity & Liabilities:
A) Shareholder’s Fund
1) Share Capital : Equity shares of Rs.5 each
2) Reserve & Surplus:
Surplus
Capital Redemption reserve
Securities Premium Reserve
B) Non-Current Liabilities
C) Current Liabilities:
Trade Payable (Creditors)


5,43,125

13,125
3,31,875
14,875
Nil

57,500
Total (A+B+C)
9,60,500
II. Assets:
A) Non-Current Assets
Fixed Assets:
Tangible (Sundry Assets)
B) Current Assets:
Cash and cash equivalents (7,60,000 – 4,20,000)



9,50,000

10,500
Total (A+B)
9,60,500
Cash A/c
Particulars
Amount
Particulars
Amount
To Balance b/d
To Investment A/c
To Equity Share Capital
To Securities Premium
67,500
2,60,000
3,18,125
63,625
By preference shareholders A/c
     (6,50,000 + 48,750)
By balance c/d
6,98,750

10,500

7,09,250

7,09,250

4. (a) (i) What do you mean by ‘buyback of shares’? State the legal provisions relating to buyback of shares.  2+3=5
(ii) Mention any three advantages and three disadvantages of buyback of shares.      3+3=6
Ans: Out of Syllabus
Or
(b) XYZ Co. Ltd. issued 500, 6% debentures of Rs. 100 each on 1st January, 2012, repayable at a premium of 5% at the end of 3 years. In order to ensure repayment, a sinking fund was created at 5% p.a. at compound interest. Investment realized Rs. 33,000 on 31st December, 2014 and the debentures were paid of on that date. Sinking Fund Table shows that Rs. 0.317208 amounts to Rs. 1 in 3 years at 5% compound interest. Pass the necessary Journal Entries.          11
Ans: Refer Q.N. 3(b) of 2018 Exam Question Paper (New Course)
5. (a) X Ltd. and Y Ltd. decided to amalgamate and a new company XY Ltd. is formed to take over both the companies as on 31st March, 2016. The following are the Balance Sheets of the companies as on that date:
Liabilities
X Ltd.
Y Ltd.
Assets
X Ltd.
Y Ltd.
Share Capita:
Shares of Rs. 10 each fully paid
Reserve fund
Profit & Loss A/c
Dividend Equalization Fund
Workmen Compensation fund
Bank Overdraft
Sundry Creditors
Bills Payable

5,00,000
2,00,000
30,000
-
20,000
-
1,00,000
50,000

3,00,000
1,50,000
50,000
1,00,000
-
50,000
1,20,000
30,000
Goodwill
Land and Buildings
Plant and Machinery
Patents and Trade Mark
Stock
Sundry Debtors
Bills Receivable
Cash at Bank
1,00,000
2,50,000
2,00,000
-
2,00,000
1,00,000
-
50,000
80,000
1,90,000
2,55,000
52,500
1,50,000
50,000
20,000
2,500

9,00,000
8,00,000

9,00,000
8,00,000
Show how the amount payable to each company is arrived at the prepare the amalgamated Balance Sheet of XY Ltd. assuming amalgamation is done in the nature of purchase.            5+6=11
Journal Entries
In the books of XY Ltd.
Particulars
L/F
Amount
Amount
Business Purchase A/c                                                 Dr.
To Liquidator of X Ltd.
To Liquidator of Y Ltd.
(Being the purchase consideration due to the liquidator of X Ltd and Y Ltd)

13,50,000

7,50,000
6,00,000
Goodwill A/c                                                         Dr.
Land & Building A/c                                             Dr.
Plant & Machinery A/c                                          Dr.
Stock A/c                                                                  Dr.
Sundry Debtors A/c                                                    Dr.
Cash at Bank A/c                                                        Dr.
To Sundry Creditors A/c
To Bills Payable A/c
To Business Purchase A/c
(Being the assets and liabilities of X Ltd taken over)

1,00,000
2,50,000
2,00,000
2,00,000
90,000
50,000






90,000
50,000
7,50,000
Goodwill A/c                                                                    Dr.
Land & Building A/c                                                       Dr.
Plant & Machinery A/c                                                  Dr.
Patent & Trade Marks A/c                                            Dr.
Stock A/c                                                                  Dr.
Sundry Debtors A/c                                                    Dr.
Bills Receivable A/c                                                  Dr.
Cash at Bank A/c                                                        Dr.
To Bank Overdraft A/c
To Sundry Creditors A/c
To Bills Payable A/c
To Purchase Consideration A/c
(Being the assets and liabilities of Y ltd taken over)

80,000
1,90,000
2,55,000
52,500
1,50,000
40,000
20,000
2,500








50,000
1,10,000
30,000
6,00,000
Liquidator of X Ltd. A/c                                                  Dr.
Liquidator of Y Ltd. A/c                                                   Dr.
To Equity Share Capital A/c
(Being the final payment made to the liquidators of X Ltd and Y Ltd)

7,50,000
6,00,000


13,50,000
Balance Sheet
Particulars
Amount
I. Equity & Liabilities:
1)       Shareholders fund:
a)       Share Capital


13,50,000

2)       Non Current Liabilities:
3)       Current Liabilities
a)       Short term borrowing
b)      Trade Payable
Nil

50,000
2,80,000
Total (1 + 2 + 3)
16,80,000
II. Assets:
1)     Non Current Assets:
a)     Fixed Assets
Tangible Fixed Assets:
Land & Building                        4,40,000
Plant & Machinery                   4,55,000

Intangible Fixed Assets:
Patent & trademarks                           52,500
Goodwill (1,00,000 + 80,000)         1,80,000

2)      Current Assets
a)      Inventories
b)      Trade receivable:
Bills Receivable                          20,000
Debtors                                    1,30,000
c)       Cash & cash equivalent





8,95,000



2,32,500


3,50,000


1,50,000
52,500
Total (1 + 2)
16,80,000
Calculation of Purchase Consideration Net Assets Method
Assets – Liabilities
X Ltd.
Y Ltd.
Assets taken over:
Goodwill
Land & Building
Plant & Machinery
Patent & Trademarks
Stock
Sundry Debtors
Bills Receivable
Cash at Bank

1,00,000
2,50,000
2,00,000
-
2,00,000
90,000
-
50,000

80,000
1,90,000
2,55,000
52,500
1,50,000
40,000
20,000
2,500

Less: Liabilities taken over:
Bank Overdraft
Sundry Creditors
Bills Payable
8,90,000

-
90,000
50,000
7,90,000

50,000
1,10,000
30,000
Purchase Consideration
7,50,000
6,00,000
Or
(b) (i) Distinguish between Amalgamation and Absorption.
Ans: Meaning of Amalgamation: Amalgamation means the merging of two or more than two companies for eliminating competition among them or for growing in size to achieve the economies of scale. Amalgamation is a broad term which includes mergers (uniting of two existing companies) and acquisition (one company buying out another company).
Meaning of Absorption: Absorption is the process in which the one dominant company takes control over the weaker company.
Difference between Amalgamation and Absorption:
1) Two or more companies are liquidated in the process of amalgamation. One or more companies are liquidated in absorption.
2) Amalgamation involves formation of a new company. However, Absorption of companies does not involve formation of a new company
3) There is no such matter of size of amalgamating companies. Generally, size of purchasing company is greater than that of vendor company in absorption.                                                    4
 (ii) What do you mean by internal reconstruction of a company? Explain its scope.                        3+4=7
Ans: Internal Reconstruction: Internal reconstruction means a recourse undertaken to make necessary changes in the capital structure of a company without liquidating the existing company. In internal reconstruction neither the existing company is liquidated, nor is a new company incorporated. It is a scheme in which efforts are made to bail out the company from losses and put it in profitable position. Internal reconstruction of a company is done through the reorganization of its share capital. It is a scheme of reorganization in which all interested parties in the capital structure volunteer to sacrifice. They are the company’s shareholders, debenture holders, creditors etc. Under internal reconstruction, the accumulated trading losses and fictitious assets are written off against the sacrifice made by these interest holders in the form of reduction of paid up value of their interest.
Forms of Internal reconstruction of a company (Scope of Internal reconstruction)
Internal reconstruction of a company can be carried out in the following different ways. These are as under:
(A) Alteration of Share Capital; and
(B) Reduction in Share Capital
Alteration of Share Capital: Memorandum of Association contains capital clause of a company. Under Section 61 of the Companies Act 2013, a company, limited by shares, can alter this capital clause, if is permitted by (i) the Articles of Association of the company; and (ii) if a resolution to this effect is passed by the company in the general meeting. A company can alter share capital in any of the following ways:
(a) The company may increase its capital by issuing new shares.
(b) It may consolidate the whole or any part of its share capital into shares of larger amount.
(c) It may convert shares into stock or vice versa.
(d) It may sub-divide the whole or any part of its share capital into shares of smaller amount.
(e) It may cancel those shares which have not been taken up and reduce its capital accordingly.
To alter capital by any of the above modes require a resolution at a general meeting, but does not require confirmation by the National Company Law Tribunal. The company is required to give a notice to the Registrar within thirty days of alteration.
Reduction of Capital: Sometimes there may be a genuine necessity for the reduction of capital. This power is, given by Section 66 of the Companies Act, 2013, subject to the compliance of conditions. According to this, a company may,
(1) Extinguish or reduce the liability on any of its shares in respect of share capital not paid up
(2) cancel any paid-up share capital which is lost or is unrepresented by any available assets;
(3) pay off any paid-up share capital which is in excess of what is required by the company. Conditions for effecting a reduction
Following conditions are required to be fulfilled by a company to reduce its share capital –
(a) The Articles of Association of the company must permit it to reduce its capital;
(b) The company in general meeting shall pass a special resolution to reduce its capital; and
(c) The approval of National Company Law Tribunal (previously Court) shall be obtained for the scheme of reduction in share capital.

6. (a) (i) Who are the preferential creditors?                                                       3
(ii) XYZ Ltd. went into voluntary liquidation on 31st March, 2016. The position of the company on that date as follows:

Rs.
Share Capita: 5000 Equity shares of Rs. 10 each, Rs. 8 per share called up
Unsecured Creditors:
Preferential
Non-preferential
Secured creditors (secured on Plant and Machinery)
Cash in hand
40,000

5,000
25,000
15,000
1,000
Plant and Machinery finally realized Rs. 10,000 and other assets realized Rs. 10,000. The liquidation expenses amounted to Rs. 500 and the liquidator was entitled to a remuneration of 5% on the amount realized excepting cash in hand and 2% on the amount distributed to unsecured creditors.
Prepare the Liquidator’s Final Statement Account showing the percentage of distribution finally made to unsecured creditors.                                                                             8
Or
(b) What do you understand by the ‘Liquidator’s Final Statement of Account? Give a proforma of such an account with imaginary figures.                                                            4+7=11
7 (a) From the following Balance Sheets of H. Ltd. and its subsidiary company S Ltd. drawn up on 31st March, 2016, prepare a Consolidated Balance Sheet as on that date. On the date of acquisition of the shares, the General reserve of S Ltd. amounted to Rs. 20,000 and the Surplus A/c balance amounted to Rs. 40,000 (Cr.):                          11
Liabilities
H Ltd.
S Ltd.
Assets
H Ltd.
S Ltd.
Share Capita:
Shares of Rs. 10 each fully paid
General Reserve
Surplus A/c
Sundry Creditors

10,00,000
1,00,000
1,50,000
1,50,000

4,00,000
20,000
60,000
40,000
Freehold Property (at cost)
Plant & Machinery
(at cost less  depreciation)
Investment:
40000 shares in S Ltd. at cost.
Stock
Sundry Debtors
Bank Balance
2,00,000
2,50,000


4,00,000
1,50,000
2,00,000
2,00,000
-
1,20,000


-
2,00,000
1,00,000
1,00,000

14,00,000
5,20,000

14,00,000
5,20,000
Ans:  a) Degree of Control: H Ltd = 100%; S Ltd = NIL
b) Control Chart A:
Particulars
Total
H  Ltd
S Ltd
        I.            Pre-acquisition Profit:
General Reserve                                           20,000
P/L A/c                                                            40,000


60,000



60,000
60,000
NIL
      II.            Post-acquisition Profit
General Reserve                                           20,000
Less: Pre                                                         20,000
Surplus                                                            60,000
Less: Pre                                                         40,000


NIL

20,000



20,000
20,000
NIL
    III.            Share Capital
4,00,000
4,00,000
NIL



NIL
C) Control Chart B:
Particulars
Amount (Rs.)
Cost of Investment
Less: (i) H Ltd. shares in Pre-acquisition Profit
(ii) H Ltd. shares in S Ltd Share Capital
4,00,000
60,000
4,00,000
Capital Reserve
(60,000)
D) Control Chart C:
Particulars
P/M
Freehold Property
Stock
Debtors
Bank
Creditors
H. Ltd
S. Ltd
2,50,000
2,00,000
2,00,000
-
1,50,000
2,00,000
2,00,000
20,000
2,00,000
1,00,000
1,50,000
40,000

4,50,000
2,00,000
3,50,000
2,20,000
3,00,000
1,90,000
Consolidated Balance Sheet of H Ltd. & S Ltd
Particulars
Amount (Rs.)
I. Equity & Liabilities:
a)      Shareholder’s Fund
1)      Share Capital
2)      Reserve & Surplus
General Reserve                                                         1,00,000
Surplus                                          1,50,000
Add: Revenue  Profit                     20,000
Add: Capital Reserve                     60,000                2,30,000

b)     Minority Interest
c)      Non-Current Liabilities
d)     Current Liabilities: Sundry Creditors 


10,00,000




3,30,000

NIL
NIL
1,90,000
Total (a + b + c + d)
15,20,000
II. Assets:
a)     Non-Current Assets
1)     Fixed Assets
Tangible (Freehold + Plant & Machinery)

b)     Current Assets:
1)     Inventories (Stock)
2)     Trade Receivable (Debtors)
3)     Cash & Cash Equivalent



6,50,000


3,50,000
2,20,000
3,00,000
Total (a + b)
15,20,000
Or
(b) Describe the documents in respect of each subsidiary company to be attached to the Balance Sheet of the holding company under Section 212 of the Indian Companies Act, 1956.                                                                                11
Ans: Section 212 of the Companies Act stipulates the conditions regarding the manner in which the Balance Sheet of the holding Company should be prepared. The provisions of the Section are given below:
(1)  There shall be attached to the Balance Sheet of a holding company having a subsidiary or subsidiaries at the end of the financial year as at which the holding company’s Balance Sheet is made out, the following documents in respect of such subsidiary or of each such subsidiary, as the case may be:
(a) A copy of the Balance Sheet of the subsidiary;
(b) A copy of its Profit and Loss Account;
(c) A copy of the Report of its Board of Directors;
(d) A copy of the Report of its Auditors;
(e) A statement of holding company’s interest in the subsidiary;
(f) The statement referred to in sub-section (5) if any; and
(g) The report referred to in sub-section (6), if any.
(2) The Balance Sheet, profit and loss accounts and the reports of the board of directors and the auditors shall be made out in accordance with the requirements of this Act.
(i) As the end of the financial year of the subsidiary, where such financial year coincides with the financial year of the holding company;
(ii) As at the end of the financial year of the subsidiary last before that of the holding where the financial year of the subsidiary does not coincide with that of the holding company.
Where the financial year of a subsidiary is shorter in duration than that of its holding company, then financials statements of subsidiary company shall be construed for two more financial years of the subsidiary company the duration of which, in the aggregate, in not less than the duration of holding company’s financial year.
(3) The statement holding company’s interest in subsidiary company shall specify.
(a) The extent of the holding company’s interest in the subsidiary at the end of the financial year or of the last of the financial year of the subsidiary;
(b) the net aggregate amount, so far as it concerns members of the holding company and is not dealt with in the company’s accounts, of the subsidiary’s profit after deducting its losses or vice versa.
(i) For the financial year or years of the subsidiary aforesaid; and
(ii) For the previous financial years of the subsidiary since it became the holding company’s subsidiary;
(c) The net aggregate amount of the profits of the subsidiary after deducting its losses or vice versa.
(i) For the financial year of years of the subsidiary aforesaid; and
(ii) For the previous financial years of the subsidiary since it became the holding company’s subsidiary;
(4) Clauses (b) and (c) of sub-section (3) shall apply only to profits and Losses of the subsidiary which may properly be treated in the holding company’s accounts as revenue profits or losses, and the profits or losses attributable to any shares in a subsidiary for the time being held by the holding company or any other of its subsidiaries shall not (for that on any other propose) be treated as aforesaid so far as they are profits or losses for the period before the date on or as from which the shares were acquired by the company or any of its subsidiaries.
(5)  Whether the financial year or years of a subsidiary do not coincide with the financial year of the holding company, a statement containing information on the following matters shall also be attached to the Balance Sheet of the holding Company:
(a) Whether there has been any, and if so, what change in the holding company’s interest in the subsidiary between the end of the financial year or of the last of the financial years of the subsidiary and the end of the holding company’s financial year;
(b) Details on any material changes which have occurred between the end of the financial year or of the last of the financial years of the subsidiary and the end of the holding company’s financial year in respect of
(i) The subsidiary’s fixed assets ;
(ii) Its investments ;
(iii) The money lent by it ;
(iv) The money borrowed by it for any purpose other than that of meeting current liabilities.
(6) If, for any reason, the Board of Directors of the holding company is unable to obtain information on any of the matter required to be specified by sub-section (4), a report in writing to that effect shall be attached to the Balance Sheet of the holding company.
(7) The documents referred to in clauses (c), (f) and (g) of sub-section (1) shall be signed by the persons by whom the Balance Sheet of the holding company is required to be signed.
(8) The Central Government may, on the application or with the consent of the Board of Directors of the company, direct that in relation to any subsidiary, the provisions of this section shall not apply or shall apply only to such extent as may be specified in the direction.
(9)          If the board of directors of the holding company fails to take all reasonable steps to comply with the provisions of this Section, he shall, in respect of each offence, be punishable with imprisonment for a term which may extent to six months, or with a fine which may extend to one thousand rupees, or with both :  Provided that no person shall be sentenced to imprisonment for any such offence unless it was committed willfully.

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