2012
CORPORATE ACCOUNTING
Full Marks: 80
Time: 3 hours
(The figures in the margin indicate full marks for the questions)
1. Answer as directed: 1x10=10
a) Write the accounting treatment of ‘CENVAT credit’ in the final accounts of a company.
b) Write meaning of ‘Value of Right’ in the context of issue of Rights shares.
c) The issue of bonus shares must be recommended by the Board of Directors and approved by _______. (Fill in the blanks)
d) Which of the following employees are not eligible to participate in Employee Stock Option Scheme?
1) Permanent employees of the company working outside India.
2) Employees of subsidiary company.
3) An employee who is a promoter of the company.
e) For which purpose ‘Premium received on issue of debentures’ can be used? Select the correct answer from below:
1) To write off all types of Fixed Assets.
2) To write off capital losses.
3) To pay discount to debtors.
f) Sree Ltd. purchased a machine from Om Ltd. at a price of Rs. 2,47,500 and the payment was settled by issuing sufficient number of 10% debentures at a premium of 10%. How many debentures were issued to Om Ltd? Select correct answer from below:
1) 2,750
2) 2,475
3) 2,250
4) 2,050
g) After the redemption of debentures, the balance of Debenture Redemption Reserve A/c will be transferred to _______. (Fill in the blanks)
h) Define absorption in the context of amalgamation of companies.
i) Which Indian Accounting standard deals with accounting for amalgamation?
j) _______ method is applied in case of amalgamation in the nature of merger. (Fill in the blanks)
2. Answer the following:
1) How would you deal with the following items while preparing the final accounts of a company registered under the Companies Act, 1956: 2+2=4
a) Unclaimed dividend.
b) TDS on interest received from investment in debenture of other companies.
2) IPC Ltd. issued 2,000 Equity shares of Rs. 10 each to its employment at an exercise price of Rs. 40 per share under ESOP on 1.9.2012. The market price of the share was Rs. 100 on that date. Show the journal entry to record the transaction in the books of the company. 2
3) Sindhu Ltd. issued 500, 9% debentures of Rs. 100 each payable in full along with application at a premium of 10% and redeemable also at a premium of 10%. All the debentures were subscribed by the public. Give the journal entry for the issue of debentures in the books of the company. 2
4) The following terms and conditions have been finalized between Plant Ltd. and Tree Ltd. in a scheme of amalgamation.
a) Assets and liabilities of Plant Ltd. valued at Rs. 9,00,000 and Rs. 3,60,000 respectively, are taken over by Tree Ltd.
b) Shareholders of Plant Ltd. are paid Rs. 2,00,000 in cash by Tree Ltd. and the balance of consideration is discharged by issue of shares of Rs. 10 each at Rs. 20 per share. How many shares have been issued to the shareholders of Plant Ltd. by Tree Ltd? 2
3. Answer the following:
(a) The total tax liability of Z Ltd. for the year 2009-10 is finalized at Rs. 30,000 during the assessment year 2010-11 in which year the net profit before tax amounted to Rs. 70,000. Other details of tax related matter of the company are given below: (Balances are on 31.3.2011): 5
| | Rs. |
| P/L Account balance (Cr.) Provision for tax (2009-10) (Cr.) Advance tax paid (Dr.) 2009-10 Advance tax paid (Dr.) 2010-11 Tax deducted at source 2010-11 Tax rate applicable is 30% | 25,000 25,000 20,000 15,000 3,000 |
You are required to show how these various items will appear in the company’s Balance Sheet as on 31.3.2011.
Or
From the following balances and information, you are required to prepare Profit and Loss A/c of Robin Ltd. for the year ended 31.3.2011 in vertical form.
| | Rs. |
| Sales Import license fee Dividend received Cost of goods sold Administrative expenses Selling expenses Provision for tax 30% Proposed dividend 20% Share Capital Corporate dividend tax 17% Profit and Loss A/c Balances on 1.4.2010 | 3,50,000 4,000 6,000 1,20,000 70,000 6,000 1,00,000 Rs. 44,000 (Cr.) |
Transfer to General Reserve 20% on profit after tax.
(b) Mention the conditions satisfied under section 77 (A) (2) of the Companies Act for buy-back of shares. 5
Or
Blue Ltd decided to buy-back 20% of its share capital directly from shareholders at Rs. 9 per share. The company’s capital structure before buy-back is:
Paid up Capital Rs. 4,50,000 in equity share of Rs. 10 each, Securities premium account Rs. 25,000 and General Reserve Rs. 45,000.
For the purpose of buy-back the company issued Rs. 20,000, 10% preference shares of Rs. 100 each.
Give Journal entries to record the above transaction relating to buy-back in the books of the company. 5
(c) Ashis Ltd. had Rs. 5,00,000, 12% debentures of Rs. 100 each on 1st April, 2011 and interest on these is payable half yearly on 30th September and 31st March. The company decided to purchase some of these debentures at Rs. 95 ex-interest for investment purpose. Accordingly 500 debentures were purchased on 1st August, 2011and these were sold @ Rs. 102 cum-interest on 1st February 2012. Books of accounts are closed on 31st March, each year. You are required to show necessary journal entries to be passed on 1st February and 31st March, 2012 relating to sale of own debentures. 5
Or
Explain the legal provisions for redemption of debentures. 5
(d) Mention the steps that are taken while making entries under ‘Pooling of interest method’ of amalgamation. 5
Or
Mention any five points of differences between Pooling of Interest method and Purchase method. 5
4. Answer as directed:
(a) From the following balances as on 31st March, 2011 and information available on that date, prepare Balance Sheet of Star Ltd. in vertical form. 10
| Balances | Rs. |
| Paid up capital (Equity Share of Rs. 10 each) (Equity Share of Rs. 10 each) Unclaimed dividend Depreciation reserve Trade creditors General Reserve P/L A/c 10% debentures Staff Provident Fund Buildings and furniture (at cost) | 8,00,000 10,000 81,000 40,000 2,80,000 40,000 50,000 29,000 5,70,000 |
(b) NB Ltd. has the following capital structure on 31.3.2012.
| | Rs. |
| Equity share capital of Rs. 10 each. Rs. 8 paid up Equity share capital of Rs. 10 each, fully paid up Securities Premium Profit & Loss A/c General Reserve | 4,80,000 8,00,000 3,00,000 4,00,000 2,50,000 |
On that day the company has the following assets:
| | Rs. |
| Cash and bank balance Other assets | 7,00,000 15,30,000 |
The company decided to capitalize the required amount of the balance in reserve and surplus in the following way.
1) By paying a bonus of Rs. 2 to make partly paid up shares fully paid up.
2) By paying a bonus of fully paid up share to the holders of fully paid up shares in the same ratio as in (1) above.
Pass Journal entries showing the issue of two types of bonus shares separately. Also show necessary calculation. 10
Or
Discuss the legal provisions regarding the capitalization of profits. 10
(c) Sia Ltd. has an outstanding balance of 8% debentures of Rs. 5,00,000. The company gave notice of its intention to redeem these debentures at 105 percent with the following options to apply redemption moneys –
1) To subscribe for 10% debentures at 95 percent or
2) To have their holdings redeemed for cash.
60% of the holders accepted the proposal (1) and the remaining holders opted for the proposal (2) The redemption of all the debentures is completed.
Pass journal entries for redemption of these debentures with proper narration. 10
Or
Explain various methods of Redemption of debentures. 10
(d) The abridged Balance Sheets of R Ltd. and T Ltd. as on 31.3.2012 are given below:
| | R Ltd. Rs. | T Ltd. Rs. |
| Share Capital: Equity Rs. 10 each 10% Preference Rs. 100 each General Reserve Statutory Reserve Profit and Loss A/c 11% debentures Current liabilities | 40,000 - 6,000 400 600 - 1,000 | 15,000 5,000 1,000 200 400 400 1,000 |
| | 48,000 | 23,000 |
| Assets: Fixed Assets Current Assets | 40,000 8,000 | 20,000 3,000 |
| | 48,000 | 23,000 |
R Ltd. takes over T Ltd. on 1.4.2012 on the following terms:
1) Equity shareholders of T Ltd. will get 1200 equity shares of R Ltd. at par i.e. at Rs. 10 each.
2) Preference shareholders of T Ltd. will get 60, 10% preference shares of R Ltd. at par (Rs. 100 each)
3) The debentures of T Ltd. will be converted into equity number of 13% debentures of Rs. 100 each.
4) Statutory Reserve will be maintained for two more years.
You are required show the Balance Sheet immediately after the above mentioned scheme of amalgamation has been implemented assuming that the amalgamation is either.
1) In the nature of merger, or
2) In the nature of purchase. 10
| | Rs. |
| Books debt Cash and Bank balances Investments Vehicles (at cost) Inventories of goods Advance payment of tax | 2,20,000 1,30,000 70,000 3,00,000 20,000 20,000 |
Information:
A claim of Rs. 4,000 for workmen’s compensation is being disputed by the company.
-000-
Post a Comment
Kindly give your valuable feedback to improve this website.