Q2 Solve (15)

The Assets and Liabilities of Ajit Ltd,as on 31 st December 2018 were as follows :

Liabilities Rs Assets Rs
2500 shares of Rs100 250000 Land and Building 525000
each fully paid
Profit & Loss A/c 50000 Plant and Machinery 150000
Debentures 100000 Furniture and Fitting 10000
Trade Creditors 300000 Delivery van 20000
Provision for Taxation 90000 Stock 55000
Proposed Dividend 20000 Book Debts 25000
Cash 25000
810000 810000
The Net Profit of the Company before tax were as follows :

Year Profit (Rs)

2014 62000
2015 64000
2016 71000
2017 78000
2018 85000
Income Tax may be taken @30% Normal Rate of Return may be assumed as 12.5%. Find out the
value of goodwill on five year’s purchase of the average super-profit for the last five years also find
the value of goodwill as per capitalization of super profit method.

OR

From the following Balance sheet of Ajinkya Co.Ltd as on 31 st March 2018 find out the intrinsic value
of each equity share :

Liabilities Rs Assets Rs
Share capital
8% preference share 200000 Goodwill 25000
of Rs100 each fully
paid
2500 equity share of 250000 Land and Building 100000
Rs100 each
General Reserve 20000 Plant and Machinery 250000
Profit and Loss A/c 25000 Stock 180000
9% Debentures 100000 Sundry Debtors 50000
Sundry Creditors 30000 Investment 5%
Government
Securities (face value 30000
Rs25000)
Provision for taxation 35000 Cash at bank 10000
Preliminary expense 15000
660000 660000
Goodwill should be valued at 5 year’s purchase of super profit.The average profit of the company
for the last three years after charging income tax is Rs75000.Fair return on capital employed is
10%.Assets to be revalued: Land and Building Rs 150000 and Plant and Machinery Rs200000
Q2 Solve (15)

The Balance sheet of F.Y.B.B.I Ltd as on 31 st march 2018 is as follows :

Liabilities Rs Assets Rs
10% Preference 320000 Goodwill 24320
Capital
Equity Capital (FV 10 320000 Land & Building 416000
each)
Profit and Loss A/c 128000 Plant & Machinery 384000
10% Bank loan 128000 Furniture 19200
Trade Creditors 24000 Investments 36480
Provision for taxation 12800 Stocks 25600
Book debts 18000
Cash 9200
932800 932800
Additional Information

-Realizable value of goodwill is Rs48000 and that of Land & Building is Rs461000

-The expected rate of return on capital employed is 15 %

-Average annual profit is Rs180000,Tax rate is 50%

You are required to find fair value of each equity share

OR

The following is the Balance sheet of Satyam Ltd. As on 31.12.2018 :

Liabilities Rs Assets Rs
Share capital Land and Building 42000
7500 shares of Rs10 75000
each
General Reserve 15000 Plant and Machinery 48000
(WDV)
Taxation Reserve 22500 Trade Marks 7500
Workmen’s Saving 11250 Stock 18000
Account
Profit and Loss 12000 Debtors 33000
Account
Creditors 36750 Cash at Bank 19500
Preliminary expense 4500
172500 172500
The plant and machinery is worth Rs45000 and land and building have been valued at Rs90000 by
an independent value,Rs3000 of the debtors are bad the profit of the company have been follows:

2016 : 30000Rs

2017 : 33750Rs

2018 : 39750Rs
 It is the company’s practise to transfer25%of the profit to reserve ,Ignoring taxation, find out the
value of shares on the yield basis and also the net asset basis .Similar companies give return 10% on
the market value value of their shares. Goodwill may be taken worth Rs60000.

Q3 Solve (15)

A company issued Rs1,80,000 redeemable preference share at par 1 st January,2015;redeemable at

the option of the company on or after 31 st December,2016 in whole or in part.

The following redemption were made out of profits:

On 30th June, 2017:Rs60,000; On 30th June,2018:Rs40,000.

In December 2018;the company issued equity shares of the face value of Rs60,000 at a premium of
2% and on 31st December in the same year,it redeemed the balance of preference share

Pass the necessary Journal Entries to record the above transaction

OR

A Ltd .company has 12000 redeemable preference shares of Rs100 each fully paid .The company
decides to redeem these shares at 10% premium:

The company make the following issues:

a)3,000 equity shares of Rs100 each at 10% premium

b)2,000 debentures of Rs100 each.

The issue was fully subscribed and allotment were made.The redemption was carried out .The
company has sufficient profit.

Journalise the transaction

Q3 Solve (15)

X.Ltd company issued Rs2,00,000 redeemable preference share at par on 1 st January 2016,rede