Monday, May 20, 2019

Gauhati University Question Papers:Advanced Corporate Accounting (Accountancy Major) (Nov-Dec’ 2013)


2013
ADVANCED CORPORATE ACCOUNTING
(ACCOUNTANCY MAJOR)
Full Marks: 80
Time: 3 hours
(The figures in the margin indicate full marks for the questions)
1. Answer the following as per direction:                                                            1x10=10

a)         What is the fair market value of a share?
b)         What is bonus share?
c)          State the meaning of winding up of a company.
d)         What is meant by a subsidiary company?
e)         What is meant by consolidated balance sheet?
f)          Intrinsic value of a share is based on the value of _______. [Fill in the blank]
g)         Profit earned prior to incorporation can be distributed as dividend. [State true or false]
h)         The liquidation caused by inability to pay debt is referred to as _______ liquidation. [Fill in the blank]
i)           A subsidiary company cannot buy shares of the holding company after it has becomes its subsidiary. [State ‘true’ or ‘false’]
j)           Which one of the following statements is not correct?
1)         Post-acquisition profits are treated as capital profits.
2)         According to AS21, a company can become a part or holding company by controlling the board of directors of another company.
3)         Amount of interest or equity acquired minus cost of acquisition-capital reserve.
4)         Preferential creditors are those who have been given preference for payment under section 530(1) of the Companies Act.
2. Answer as directed:                                                                              2x5=10
a)         Lovelock Ltd. was incorporated on 1st July 2012 in order to take over the business of Steward from 1st April 2012. Lovelock Ltd. prepares its final financial statements on 31st March, 2013. Total sales for the year ended 31st March, 2013 amounted to Rs. 8,00,000.
Calculate the ratio of sales of pre and post-incorporation periods assuming that the sales were effected evenly during the year.
b)         S. Ltd. has the capital of Rs. 75,00,000 in shares of Rs. 100 each; out of which H. Ltd. purchased 60% shares at Rs. 70,00,000. The profits of S. Ltd. at the time of purchase of shares by H. Ltd. were Rs. 40,00,000.
Calculate the interest (equity) acquired in S. Ltd. by the H. Ltd.
c)          Amount realized by sale of securities Rs. 3,000 crores at the winding up of the company; the amount of principal and interest due to the secured creditors Rs. 2,000 crores; the company is solvent at winding up. Ascertain the amount payable to secured creditors; and ascertain where the balance amount would go.
d)         Mention the different forms of holding companies.
e)         State the meaning of reconstruction of companies.
3. Answer as directed:
(a) Following is the balance sheet of Nongphu Strawberry Ltd. as on 31-3-2012.

Rs.

Rs.
Share Capital:
1,000 6% Preference shares of           Rs. 100 each
40,000 equity shares of Rs. 10 each
Reserves
6% Debentures
Sundry Creditors


1,00,000

4,00,000
2,00,000
50,000
1,00,000
Sundry Assets
8,50,000

8,50,000

8,50,000
Compute the value of each equity share assuming of goodwill Rs. 50,000 included in Sundry assets.                       5
Or
Explain the method of valuation of shares after the issue of bonus shares.                          5
(b) The Share Capital Srabani Care Ltd. consisted of 25,000 equity shares of Rs. 100 each fully paid up. The company has suffered huge losses during the last four years. It was decided to reorganize the capital structure of the company. For the purpose equity shareholders decided to forego 60% of their claim. Pass journal entries for sacrifice made by shareholders assuming that par value of shares is also reduced proportionately.                                                           5
Or
Explain the different forms of internal reconstruction.                                                                                                   5
(c) Abin Pharla Ltd. went into voluntary liquidation. Cash available before payment to unsecured creditors: Rs. 60,000. Unsecured creditors: Rs 20,000
Share Capital (shares of Rs. 10 each) = 40,000
Calculate remuneration of liquidator if he is entitled to a commission of 5% on the amount distributed among unsecured creditors; and 2% on the amount distributed among shareholders.                                                                          5
(d) From the following balance sheets of H Ltd. (Holding Co.) and S Ltd. (Subsidiary Co. ) prepare a consolidated balance sheet of H. Ltd. and its subsidiary S. Ltd.                                     5
Liabilities
H. Ltd.
Rs.
S. Ltd.
Rs.
Assets
H. Ltd.
Rs.
S. Ltd.
Rs.
Share Capital:
Equity shares of Rs. 10 cases
Sundry Liabilities


5,00,000
1,00,000


2,00,000
25,000
Sundry Assets
Investments:
20,000 equity shares of Rs. 10 each of S Ltd.
4,00,000



2,00,000
2,25,000

6,00,000
2,25,000

6,00,000
2,25,000

Or
Describe the treatment of issue of bonus share by the subsidiary company in consolidated balance sheet.     5
4. [A] The following is the balance sheet of Dighalpar Marine Co. Ltd. as on 31st March, 2012.                                       10
Liabilities
Rs.
Assets
Rs.
1,00,000 equity shares of Rs. 10 each
Sundry Creditors
10,00,000
1,73,000
Land
Plant & Machinery
Furniture
Inventory
Debtors
Cash at bank
Profit and Loss A/c
1,00,000
2,30,000
68,000
1,50,000
70,000
5,000
5,50,000

11,73,000

11,73,000
The approval of the Tribunal was obtained to undertake the following scheme of reduction of capital.
1)         The equity shares to be reduced to Rs. 4 per share;
2)         Plant and Machinery to be written down to Rs. 1,50,000.
3)         Inventory to be revalued at Rs. 1,40,000.
4)         The provision on debtors for doubtful debts to be created Rs. 2,000.
5)         Land to be revalued at Rs. 1,42,000.
6)         The creditors foregone Rs. 73,000 from their claim; and the amount will be retained in free reserves.
Pass journal entries to give effect to the above arrangement and also prepare Reconstruction Account.
Or
What are the situations that call for internal reconstruction of a company? Discuss the provisions of the Companies Act with regard to reduction of capital.                            10
[B] Silviculture Ltd. was incorporated on 1st May 2012 to take over the business of Rose Ltd. from the preceding 1st January. The accounts were made upto 31st December 2012 in the normal course. The Trading and Profit & Loss Account showed the following result:                                                                                                                                                               10

Rs.

Rs.
To Opening Inventory
To Purchases
To Gross Profit c/d
2,40,000
8,10,000
3,00,000
By Sales
By Closing Inventory

11,00,000
2,50,000

13,50,000

13,50,000
To Salaries
To Rent & Taxes
To Directors fees
To auditors fees
To Operating expenses
To Net Profit
50,000
19,000
18,000
50,000
49,000
1,14,000
By Gross Profit b/d
3,00,000

3,00,000

3,00,000
It is reported that the sales for November and December are one and half times the average sales for the year; while sales for February and March are only half the average. Prepare Profit and Loss Account showing pre and post-incorporation profits.                                                  10
Or
Explain the accounting treatment of profit/loss prior to incorporation. Also state the procedure for ascertaining such profit/loss.                                                                                     10
[C] Subha Clinics Ltd. were into voluntary liquidation on 31st January 2012. Prepare liquidator’s final statement of account from the following information assuming that preference shareholders have preferential right as regards the payment of dividend but does not have preferential rights as to refund of capital.

Rs.
Long term loan
Trade creditors
20,000 8% Preference Shares of Rs. 10 each fully paid up
20,000 equity shares of Rs. 10 each fully paid up
Preference dividend is in arrear for one year
Assets realized Rs. 3,92,000
40,000
24,000
2,00,000
2,00,000
Liquidation expenses amounted to Rs. 5,000. Liquidator is entitled to a remuneration of 10% on the amount distributed to shareholders.                                                                              10
Or
a)         Prepare the list of preferential creditors in respect of liquidation of a company.
b)         State the meaning of contributory and their responsibility over liquidation of companies.                                                                                                                                  5+5=10
[D] The following is the balance sheets of H. Ltd. and its subsidiary S. Ltd. as on 31st March, 2012.
Liabilities
H. Ltd.
Rs.
S. Ltd.
Rs.
Assets
H. Ltd.
Rs.
S. Ltd.
Rs.
Share Capital:
Shares of Rs. 10 each
Profit & Loss A/c
Creditors


60,000
6,000
22,000


20,000
2,000
4,000
Sundry Assets
Investments:
1,600 shares in S. Ltd.
68,000


20,000

26,000


-

88,000
26,000

88,000
26,000
The shares were acquired by H. Ltd. on 1st October 2011. Prepare the consolidated balance sheet of the holding company and its subsidiary as on 31st March 2012.                                 10
Or
Discuss the provisions of AS-21 in regard to preparation of consolidated balance sheet.         10

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