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Friday, May 06, 2016

Dibrugarh University Question Paper: Corporate Accounting (May' 2015)

2015 (May)
COMMERCE
(General / Speciality)
Course: 203
(Corporate Accounting)
Full Marks: 80
Pass Marks: 24
Time: 3 hours
(New Course)

1. (a) State the following statements whether ‘True’ or ‘False’:                  1x3=3
                                 i.            A debenture holder is a creditor of the company.
                               ii.            Out of face value of the shares, at least 20% is payable with application.
                              iii.            Internal Reconstruction and Reduction is Share Capital means the same.
(b) Fill in the blanks:                        1x3=3
                                 i.            The Companies Act, 1956 defines a subsidiary company under Section ____.
                               ii.            Preliminary Expenses are of ____ nature.
                              iii.            Consolidated Financial Statements are prepared as per Accounting Standard ____.
(c) Write the correct answer:      1x2=2
                           i.      Preference Shareholders are

1)Creditors of the company.
2)Owners of the company.
3)Customers of the company.
                         ii.      A contributory is a
1)Debenture holder.
2)Share holder.
3)Creditor.

2. Write brief notes on (any four):                            4x4=16
a)      Redeemable Preference Share.
b)      Payment of dividend out of capital profit.
c)       Determination of purchase consideration.
d)      Minority Interest.
e)      Forfeiture of share.
3. (a) Dhanshiri Co. Ltd. Issued 30000 shares of Rs. 100 each at a premium of 10% payable as under:-
On Application – Rs. 30
On Allotment – Rs. 60 (including premium)
On Call – Rs. 20
Bitul, holding 1000 shares failed to pay the allotment and call money. Ratul, holding 1800 shares failed to pay the call money. All these shares were forfeited and subsequently 1900 shares (including 900 shares of Ratul) reissued as fully paid-up for 80 per share. Give Journal Entries to record the above transactions and show the Balance Sheet of the company.                 10+4=14
Or
(b) (i) Under what circumstances can a company issue shares at a discount?                        5
(ii) Jokai Tea Ltd. issues 1000, 10% convertible debentures of Rs. 100 each. Give Journal Entries in each of the following cases:    3x3=9
1)      The debentures are issued at par and redeemable at par.
2)      The debentures are issued at 5% premium and redeemable at 10% premium.
3)      The debentures are issued at 5% discount and redeemable at 5% premium.

4. (a) Explain the treatment of the under-mentioned items in the preparation of final accounts of a company:
                     i.            Preliminary expenses.                                           3 ½ x4=14
                   ii.            Provisions and reserves.
                  iii.            Advance payment of tax.
                 iv.            Managerial remuneration.
Or
(b) Examine the relevance of Accounting Standards and IFRS in the preparation of financial statement of companies. 7+7=14

5. (a) Distinguish between the following:                              7+7=14
                     i.            Amalgamation in the nature of Merger and Amalgamation in the nature of purchase.
                   ii.            Pooling of interest method and Purchase method of amalgamation.
Or
(b) Ganapati Co. Ltd. had the following Ledger balances as on 31st March, 2015:
Cr. Balances
Rs.
Dr. Balances
Rs.
Issued and subscribed capital:
8000 shares of Rs. 100 each fully paid
800, 6% Debentures of Rs. 1,000 each
Bank Overdraft
Sundry Creditors
Bills Payable

8,00,000
8,00,000
2,40,000
3,00,000
1,00,000
Goodwill
Land and Buildings
Plant and Machinery
Stock
Sundry Debtors
Cash at Bank
Preliminary Expenses
Profit & Loss A/c (Dr.)
2,40,000
3,60,000
8,00,000
1,88,000
1,84,000
50,000
24,000
3,94,000

22,40,000

22,40,000
The following scheme of reconstruction was adopted:
a)      Without altering the number of shares in issued and subscribed capital, the face value and paid-up value of each share was to be reduced to Rs. 50.
b)      The existing debentures be converted into 400, 7 ½ % debentures of Rs. 1,000 each, fully paid.
c)       The assets be revalued as under:
Land and Building – Rs. 3,28,000
Plant and Machinery – Rs. 7,20,000
Stock – Rs. 1,78,000
Sundry Debtors subject to a Bad Debts provision of Rs. 20,000
d)      Goodwill, Preliminary Expenses and the debit balance of Profit & Loss A/c will be completely written off.
Give Journal Entries to implement the above scheme and prepare the Balance Sheet after the reconstruction scheme is carried through.                          8+6=14
6. (a) (i) Give the legal definition of holding company and a subsidiary company.                         6
(ii) Mention four advantages and four disadvantages of a holding company.                        4+4=8
Or
(b) On 31st March, 2015 the ledger balances of H Ltd. and its subsidiary S. Ltd. stood as follows:
Cr. Balances
H Ltd.
Rs.
S Ltd.
Rs.
Dr. Balances
H Ltd.
Rs.
S Ltd.
Rs.
Equity Shares Capital
General Reserves
Profit & Loss A/c
Creditors
8,00,000
1,50,000
90,000
1,20,000
2,00,000
70,000
55,000
80,000
Fixed Assets
75% Equity Shares in S Ltd. (at cost)
Stock
Other Current Assets
5,50,000
2,80,000
1,05,000
2,25,000
1,00,000
---------
1,77,000
1,28,000

11,60,000
4,05,000

11,60,000
4,05,000
Draw the Consolidated Balance Sheet as on 31st March, 2015 after taking into consideration the following information also:                                 14
a)      H Ltd. acquired the shares on 31st July, 2014.
b)      S Ltd. earned a profit of Rs. 45,000 for the year ended 31st March, 2015.
c)       In January 2015, S Ltd. sold to H Ltd. goods costing Rs. 15,000 for Rs. 20,000. On 31st March, 2015, half of these goods were lying unsold in the godown of H Ltd.

(Old Course)
Full Marks: 80
Pass Marks: 32

1. (a) Choose the correct answer and fill in the blanks:                    1x5=5
a)      Profit on reissue of forfeited shares is transferred to ____ (Capital Reserve/General Reserve).
b)      In case of cum-interest price, the interest accrued on debenture is ____ (included/excluded) in the price quoted.
c)       Accounting for amalgamation is associated with Accounting Standard ____ (14/15/16)
d)      In liquidation, liquidator’s final statement of account shows ____ (cash receipts and payments/assets and liabilities).
e)      Profit & Loss A/c balance including reserves after acquisition, is considered as ____ (capital profit/ revenue profit).

(b) State the following items whether ‘True’ or ‘False’: 1x3=3
a)      External reconstruction means reduction of share capital of a company which is to be reconstructed.
b)      Consolidated financial statements are prepared as per Accounting Standard – 21.
c)       A debenture holder is the owner of a company.

2. Write short notes on the following:                    4x4=16
a)      Legal provisions in respect to redemption of preference shares.
b)      Redemption of debentures by sinking fund method.
c)       Four points of distinction between bonus shares and right shares.
d)      Minority interest.

3. (a) XYZ Co. invited applications for 10000 shares of Rs. 100 each. The shares were issued at a premium of 10%. The amount was payable as follows:
On Application – Rs. 20
On Allotment – Rs. 40 (including premium of Rs. 10)
The balance on first and final call
Applications for 15000 shares were received. Applications for 3000 shares were rejected and allotment was made to the remaining applicants on pro-rata basis. All calls were made and were duly received except the final call on 100 shares. These shares were forfeited and reissued at Rs. 110 per shares as fully paid up.  Pass necessary Journal Entries and prepare the Balance Sheet in the books of the XYS Co.                    7+5=12
Or
(b) Write in brief the latest SEBI guidelines (prior to the Companies Act, 2013) for disclosure and investor protection pertaining to issue of bonus shares.                                        12
4. (a) On 1st January, 2010 Ashok Co. Ltd. Issued 1000, 6% debentures of Rs. 100 each, repayable at par at the end of 4 years. It was decided to create a sinking fund for repayment of the debentures and invest the amount of fund in 6% Government Securities. Show the Ledger A/c for 4 years assuming that the investments were realized for Rs. 70,000 only and the debentures were paid-off at the end of the period.  Annual installment to provide Rs. 1 at the end of 4 years at 6% compound interest is Rs. 0.228591.                          10
(b) Define debenture. Which is the best method of redemption of debenture? Justify your opinion.                       4+6
5. (a) The summarized Balance Sheet of Ranjan Ltd. as on 31st March, 2013 was as follows:
Liabilities
Rs.
Assets
Rs.
Shares of Rs. 10 fully paid
General Reserve
Profit & Loss A/c
12% Debentures
Creditors
6,00,000
1,70,000
1,10,000
1,00,000
20,000
Goodwill
Land and Buildings & Plant
Stock
Debtors
Cash

1,00,000
6,40,000
1,68,000
36,000
56,000

10,00,000

10,00,000
Anjan Ltd. agreed to absorb the business of Ranjan Ltd. with effect from 1st April, 2013. The purchase consideration payable by Anjan Ltd. was agreed as follows:
1)      A cash payment equivalent to Rs. 2.50 for every Rs. 10 shares in Ranjan Ltd.
2)      The issue of 90000 equity shares of Rs. 10 each fully paid in Anjan Ltd. having an agreed value of Rs. 15 per share.
3)      The issue of such an amount of fully paid 14% debentures in Anjan Ltd. at Rs. 96 per debenture as is sufficient to discharge 12% debentures in Ranjan Ltd. at a premium of 20%. While computing purchase consideration, Anjan Ltd. valued Land, Building and Plant at Rs. 12,00,000, stock Rs. 1,42,000 and Debtors at their face valued subject to a reserve of 5% for doubtful debts. The cost of liquidation of Ranjan Ltd. was Rs. 5,000.
                     i.            Prepare Realization A/c in the books of Ranjan Ltd.                  4
                   ii.            Pass Journal Entries in the books of Anjan Ltd.                           8
Or
(b) Define ‘internal reconstruction’. Explain various ways in which internal reconstruction of a company can be carried out.                 4+8=12
6. (a) The following particulars relate to a limited company which has gone into voluntary liquidation. You are required to prepare the Liquidator’s Final A/c, allowing for his remuneration @2% on the amount realized and 2% on the amount distributed to insecured creditors other than preferential creditors:                                                        12
Preferential Creditors: Rs. 10,000
Insecured Creditors: Rs. 32,000
Debentures: Rs. 10,000
The assets realized the following sums:
Land and Building: Rs. 20,000
Plant and Machinery: Rs. 18,650
Fixtures and Fittings: Rs.   1,000
The liquidation expenses amount: Rs.   1,000
Or
(b) Discuss various modes of winding up of companies in detail.
7. (a) A Ltd. (holding company) acquired 4000 shares of B Ltd. (subsidiary company) as on 1st January, 2013. Their Balance Sheet as on 31st December, 2013 stood as follows:
Liabilities
A Ltd.
Rs.
B Ltd.
Rs.
Assets
A Ltd.
Rs.
B Ltd.
Rs.
Shares Capital
10000 Equity shares of Rs. 10
each, fully paid
5000 Equity Shares of Rs. 10
each fully paid
Profit & Loss A/c
Creditors


1,00,000

-
40,000
40,000


-

50,000
10,000
20,000
Fixed Assets
Investment:
4000 Equity Shares
of B Ltd. at Rs. 12.50
Current Assets
1,00,000


50,000
30,000


60,000


-
20,000

1,80,000
80,000

1,80,000
80,000
On 1st January, 2013, the Profit & Loss A/c of B Ltd. showed a loss of Rs. 15,000 which was written off out profits earned in 2013. Prepare a Consolidated Balance Sheet as on 31st December, 2013.                                                10
Or
(b) How do you treat the following while preparing the Consolidated Balance Sheet?            5+5=10
                     i.            Capital profit and revenue profit of subsidiary company.
                   ii.            Cost of control, goodwill and capital reserve.

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