Bachelor of Commerce

B.Com

CHOICE BASED CREDIT SYSTEM

BCOC – 137: CORPORATE ACCOUNTING

ASSIGNMENT
2021-2022

Fourth Semester

School of Management Studies

Indira Gandhi National Open University
Maidan Garhi, New Delhi -110068
 BACHELOR OF COMMERCE
CHOICE BASED CREDIT SYSTEM
BCOC – 137: CORPORATE ACCOUNTING

ASSIGNMENT: 2021-22

Dear Students,

As explained in the Programme Guide, you have to do one Tutor Marked Assignment in this Course. The assignment has
been divided into three sections. Section-A Consists of long answer questions for 10 marks each, Section-B consists of
medium answer questions for 5 marks each and Section-C consists of short answer questions for 10 marks each.

Assignment is given 30% weightage in the final assessment. To be eligible to appear in the Term-end examination, it is
compulsory for you to submit the assignment as per the schedule. Before attempting the assignments, you should carefully
read the instructions given in the Programme Guide.

1. Those students who are appearing in June 2021 Term End Examination they have to submit latest by in 15th March
2021.
2. Those students who are appearing in December 2021 exams. They should download the new assignment and submit
the same latest by 15th October 2021.

You have to submit the assignment of all the courses to the Coordinator of your Study Centre.
 TUTOR MARKED ASSIGNMENT
PROGRAMME CODE : B.COM
COURSE CODE : BCOC – 137
SEMESTER : FOURTH
COURSE TITLE : CORPORATE ACCOUNTING
ASSIGNMENT CODE : BCOC – 137/TMA/2021-22
COVERAGE : ALL BLOCKS
Maximum Marks: 100

Note: Attempt all the questions.

Section – A
Q.1 Pawan Ltd. had authorized capital of Rs. 5 lakh divided into shares of Rs. 10 each.
It purchased a Building from Y for Rs. 2 lakh and issued fully paid shares to Y for
purchase consideration. It invited applications for the balance 30,000 shares of Rs.
10 each payable as follow: Rs 3 per share on application, Rs 3 per share on
allotment, Rs 2 per share on 1st call and Rs 2 per share on final call. Ashok who
had been allotted 500 shares failed to pay both the calls. His shares were forfeited
and re-issued at Rs 9 per share to Hari as fully paid up. Make necessary entries in
Journal and prepare the opening Balance Sheet of Company.
Q.2 X Ltd decides to buy back 10% of Rs. 100 crore paid up equity capital. The face value of per
equity share is Rs. 10, but the market price is Rs 15 per share. X Ltd took the following steps for
the buy back of its shares:
i) To issue 14 % debentures of Rs. 100 each at par for the face value of Rs.10 crores.
ii) To utilise the General Reserve.
iii) To sell investment of Rs. 7 crores for Rs 8 crores.
iv) To buy back the shares at the market price.
v) To immediately cancel the shares bought back.Pass
necessary journal entries.
Q.3 X Ltd wants to purchase the business of Y Ltd. Profit of Y Ltd for the past four (10)
years were Rs. 35,000 Rs. 60,000, Rs. 50,000 and Rs. 55,000 respectively. You are
informed that Rent at Rs. 4000 p.a. and manager salary @ Rs. 2,000 per month
which have been charged against profit of Y Ltd. will not be paid by X Ltd.
Average capital employed by Y Ltd. was Rs. 6,00,000 and normal rate of return of
the same type of business was 10%. Calculate the value of Goodwill by
capitalization method.

Q.4 Capital of Great India Ltd. comprise 1,000 6% participating preference shares of (10)
Rs. 100 each and 4000 equity shares of Rs. 100 each fully paid. Preference shares
are entitled to participate in profits to the extent of 4% after payment of an equity
dividend of 10%. Balance of profit is available for equity shareholders. The
Company’s normal profit (Less tax) is Rs 75000. Normal Rate of dividend to this
type of Company is 8% on participating preference shares and 10% on equity
shares. Determine the value of each type of shares on the basis of Dividend Yield
Method.
Q.5 How will you prepare a Consolidated Balance Sheet in case of partly owned (10)
subsidiary company with the help of a suitable example?
 Section – B
Q.6 Explain with imaginary figures, how the following items will appear in acompany’s balance
Sheet?

i) Share Capital
ii) Fixed Assets
Q.7 How are various activities classified while preparing the Cash Flow Statement? (5)
Q.8 Briefly explain the methods of internal reconstruction.
Q.9 Explain the difference between accounting treatment in the nature of merger and in (2.5, 2.5)
the nature of purchase.
 (2.5, 2.5)
Q.10 Give journal entries in the books of Transferor Company and the Transferee
Company in case of amalgamation.
Q.11 Give the Proforma of Profit and Loss Account of Banking Company without (5)
schedules.
 Section – C
Q.12 Explain the slip system of bank Book-keeping. Explain its advantages anddisadvantages?

In this system, posting is made from slips prepared inside the organisation itself or from slips
filled in by its customers. So entries are not made in the books of original entry or subsidiary
books, but posting of entries is done from slips. In a banking company, the main slips are
pay-in-slips, withdrawal slips and cheques and all these slips are filled in by clients of the
bank.
The main advantages of the slip system are:
(1) The bank saves a lot of clerical labour as most of the slips are filled in by its customers.
(2) Subsidiary books are avoided as posting is done from slips.
(3) Entries can be recorded with minimum delay as slips can easily pass from hand to hand
among clerks concerned.
The disadvantages of the slip system are :
(1) Slips may be lost, destroyed or misappropriated as these are loose.
(2) Books cannot be verified if subsidiary books are not kept.

Q.13 Write short notes on the following:

a) Non-Performing Assets

A non-performing asset (NPA) is a classification used by financial

institutions for loans and advances on which the principal is past due
and on which no interest payments have been made for a period of
time. In general, loans become NPAs when they are outstanding for 90
days or more, though some lenders use a shorter window in considering
a loan or advance past due.

Sub-Classifications for Non-Performing Assets (NPAs)

Lenders usually provide a grace period before classifying an asset as non-performing.

Afterward, the lender or bank will categorize the NPA into one of the following sub-
categories:
1. Standard Assets

They are NPAs that have been past due for anywhere from 90 days to 12 months, with a
normal risk level.

2. Sub-Standard Assets

They are NPAs that have been past due for more than 12 months. They have a
significantly higher risk level, combined with a borrower that has less than ideal credit.
Banks usually assign a haircut (reduction in market value) to such NPAs because they
are less certain that the borrower will eventually repay the full amount.

3. Doubtful Debts

Non-performing assets in the doubtful debts category have been past due for at least
18 months. Banks generally have serious doubts that the borrower will ever repay the
full loan. This class of NPA seriously affects the bank’s own risk profile.

4. Loss Assets

These are non-performing assets with an extended period of non-payment. With this
class, banks are forced to accept that the loan will never be repaid, and must record a
loss on their balance sheet. The entire amount of the loan must be written off
completely.

b) Commercial Banks

A commercial bank is a kind of financial institution that carries all the operations related to deposit and withdrawal of
money for the general public, providing loans for investment, and other such activities. These banks are profit-making
institutions and do business only to make a profit.
The two primary characteristics of a commercial bank are lending and borrowing. The bank receives the deposits and
gives money to various projects to earn interest (profit). The rate of interest that a bank offers to the depositors is
known as the borrowing rate, while the rate at which a bank lends money is known as the lending rate.