Monday, May 20, 2019

Gauhati University Question Papers:Advanced Corporate Accounting (Accountancy Major) (Nov-Dec’ 2015)


2015
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 directed:                                                     1x8=8

a)         Which of the following cannot be used for issuing partly paid up bonus shares?
1)         Profit and Loss A/c (Cr.) balance.
2)         General Reserve.
3)         Securities Premium A/c.
4)         None of the above.
(Choose the correct option)
b)         Pre-incorporation profit is transferred to _______ reserve. (Fill in the blank)
c)          The balance of Capital Reduction account is transferred to Capital Reserve. (State whether ‘true’ or ‘false’)
d)         Only successful companies undertake Capital Reduction. (State whether ‘True’ or ‘false’)
e)         Deficiency or surplus account prepared as per list H in case of compulsory winding up shows:
1)         Deficiency or surplus.
2)         Order of payment.
3)         Statement of assets and liabilities.
4)         None of the above.
(Choose the correct alternative)
f)          Liquidation of a company necessarily implies its insolvency. (State whether ‘true’ or ‘false’)
g)         A _______ Balance Sheet includes all assets and liabilities of the parent and its subsidiaries. (Fill in the blank)
h)         A company is called holding company only when it acquires the whole of the share capital of another company. (State whether ‘true’ or ‘false’)
2. Answer the following questions as directed:
a)         Explain any three situations which warrant the valuation of shares.        3
b)         Write a short note on internal reconstruction of companies.                             3
c)          Write a short note on the preferential creditors under the Companies Act.           3
d)         Briefly explain Minority Interest in the context of holding company.
3. Answer the following questions as directed:
(a) Explain the methods of computing profit or loss prior to incorporation.               5
Or
How is profit or loss made prior to incorporation treated in accounts?                           5
(b) Pass journal entries of the following with suitable narrations:                            2.5+2.5=5
1)         On 30.6.2015, Tangla Canes Ltd. passed a resolution regarding alternation of capital and it decided to consolidate 60,000 fully paid equity shares of Rs. 10/- each into fully paid equity shares of Rs. 100/- each.
2)         UK Ltd. decide on 25.7.2015 to sub-divide its 15,000 equity shares of Rs. 100/- each fully paid into equity shares of Rs. 10/- each fully paid.
Or
Briefly explain the different forms of internal reconstruction of companies.                                   5
(c) Barua Works Ltd. went into voluntary liquidation. The amount realized from assets is Rs. 60,000/- by the liquidator. The amount of unsecured creditors was Rs. 70,000/- (including preferential creditors Rs. 15,000/-)
Calculate liquidator’s remuneration if the liquidator is entitled to a remuneration of 6.5% on the assets realized and 2% on amount distributed to unsecured creditors.                                        5
(d) Distinguish between holding company and subsidiary company.                              5
4. (a) The Balance Sheet of Ashoka Industries Ltd. disclosed the following position as on 31.3.2015:
Liabilities
Rs.
Assets
Rs.
SHARE CAPITAL
40,000 shares of Rs. 10/- each
Reserves
Profit and Loss
5% Debentures
Current Liabilities

4,00,000
90,000
20,000
1,00,000
1,30,000
Fixed Assets
Investments
Current Assets
5,00,000
40,000
2,00,000

7,40,000

7,40,000
On the above date, the fixed assets were independently valued at Rs. 3,50,000/- and the investments at Rs. 50,000/-.
The net profit for the three years was:
2013: Rs. 51,600/-, 2014: Rs. 52,000/- and 2015: Rs. 51,650/- of which 20% was placed to Reserve Account each year and this proportion being considered reasonable in the industry in which the company is engaged and where a fair investment return may be taken at 10%.
Compute the value of each share of the company by:
a)         Intrinsic Value Method.
b)         Yield Value Method.
c)          Fair Value Method.                                                     4+4+2=10
Or
Explain the different methods of valuation of shares.                                     10
(b) The Balance Sheet of Bad Luck Ltd. was as follows on 31.03.2015:
Liabilities
Rs.
Assets
Rs.
SHARE CAPITAL
4,000 shares of Rs. 100/- each
6% Debentures
Creditors 

4,00,000
2,00,000
2,50,000
Goodwill
Buildings
Machinery
Stock
Debtors
Preliminary Expenses
Profit & Loss A/c
60,000
1,00,000
4,00,000
90,000
60,000
10,000
1,30,000

8,50,000

8,50,000
The following scheme of reconstruction was adopted:
1)         Fictitious assets were to be written off.
2)         Machinery was to be written down to its proper value of Rs. 3,00,000/-.
3)         The Shares were to be reduced to Rs. 20/- each.
The approval of the Tribunal was duly obtained.
Pass journal entries and show the Balance Sheet after the scheme is completed.            10
Or
Explain the meaning of Capital Reduction by a company. Mention the legal requirements for Capital Reduction.    4+6=10
(c) The following is the Balance Sheet of UNSOUND Co. Ltd. as on 31.3.2015:
Liabilities
Rs.
Assets
Rs.
SHARE CAPITAL
8,000 Preference shares of Rs. 10/- each
12,000, Equity shares of Rs. 10/- each
Bank Loan
8% Debentures
Interest outstanding on Debentures
Creditors 


80,000
1,20,000
4,00,000
1,00,000
8,000
1,92,000
Land & Building
Other Fixed Assets
Stock
Debtors
Profit & Loss A/c
1,75,000
50,000
4,25,000
2,00,000
50,000

9,00,000

9,00,000
The company went voluntary liquidation on that date. Prepare Liquidator’s Final Statement of Account after taking into consideration the following:
1)         Liquidation expenses and Liquidator’s remuneration amounted to Rs. 3,000/- and Rs. 10,000/- respectively.
2)         Bank Loan was secured by pledge of stock.
3)         Debentures and Interest thereon were secured by a floating charge, on all assets.
4)         Fixed Assets were realized at book value and current assets at 70% of book values.   10
Or
What are the different modes of winding up of a company? Describe the powers of the liquidator under the compulsory winding up of companies.                                              3+7=10
(d) HORSE Ltd. acquired 640 equity shares of DONKEY Ltd. on 1st January, 2014. The following are the Balance Sheets of the two companies as at 31st December, 2014:
Liabilities
Horse Ltd.
Rs.
Donkey Ltd.
Rs.
Assets
Horse Ltd.
Rs.
Donkey Ltd.
Rs.
Share Capital:
Shares of Rs. 100/- each
General Reserves
(01.01.2014)
Profit & Loss A/c
Profit for the year 2014
Sundry Creditors
Bills Payable


1,60,000
32,000

8,000

16,000
8,000
2,400


80,000
16,000

4,800

6,400
8,000
800
Land & Building
Plant & Machinery
Stock
Sundry Debtors
Investment in share of Donkey Ltd.
Bills Receivable
Cash & Bank
40,000
40,000
12,000
8,000

80,000
6,400
40,000


24,000
48,000
8,000
9,600

-
800
25,600
Total
2,26,400
1,16,000
Total
2,26,400
1,16,000
Additional information:
1)         Bills Receivable of HORSE Ltd. include Rs. 800/- accepted by DONKEY Ltd.
2)         Sundry Debtors of HORSE Ltd. include Rs. 4,000/- due from DONKEY Ltd.
3)         Stock of DONKEY Ltd. includes goods purchased from HORSE Ltd. for Rs. 4,800/- which was invoiced by HORSE Ltd. at a profit of 20% on sale.
Prepare a consolidated Balance Sheet of HORSE Ltd. and its subsidiary DONKEY Ltd. as at 31st December, 2014.        10
Or
Explain the advantages and disadvantages of a Holding Company.                     5+5=10

-000-

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