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Reg. No.

III Semester M.Com. (CBCS) Degree Examination, January - 2020

CORPORATE ACCOUNTING
(Regular)
(Group A : Accounting and Finance)
Paper - 3.4(A)
Time : 3 Hours Maximum Marks : 80
Section - A
1. Answer any TEN of the following sub questions. Each sub question carries 02 marks. (10×2=20)
a) Define good will
b) What do you mean by super profits?
c) What is meant by internal reconstruction?
d) Explain the meaning of intangible asset.
e) What are the two types of amalgamation?
f) What do you mean by holding companies?
g) What do you mean by minority interest?
h) What are national calls in the case of partly paid equity shares?
i) What is meant by alternation of share capital?
j) What is purchase consideration?
k) What are the modes of winding-up?
l) State the order in which the liquidator distributes the proceeds of assets among various claimants.
Section- B
Answer any THREE questions. Each question carries 5 marks. (3×5=15)
2. State the circumstances under which the need for valuation of goodwill is felt.
3. State the conditions to be satisfied for amalgamation to be called as amalgamation in the nature of
‘merger’.
4. What are the advantages and disadvantages of Holding company?
5. From the following information calculate the value of goodwill at two years purchase of average profits
of the past five years.
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The following are the profits for the post five years.
2002-2003-Rs. 60,000 2003-2004-Rs. 70,000
2004-2005-Rs 78,000 2005-2006-Rs. 82,000
2006-2007-Rs. 90,000
While calculating the above profits, Loss by fire of Rs. 8,000 and capital expenditure on purchase of
loose tools worth Rs. 6000 were debited to profit and loss account of 2003-2004 and 2004-2005
respectively and a capital receipt of Rs. 10,000 was credited to profit and loss account of 2006-2007.
6. ‘A’ Ltd, went into liquidation. The following are the details.
Assets realised - Rs. 40,000
Liquidator’s
Remuneration  5,000
Unsecured creditors  20,000
Preference share capital is Rs. 20,000
(2,000 shares of Rs. 10 each) Equity Share capital consists of :
1,000 shares of Rs. 10 each,
Rs. 9 called and paid - up Rs. 9,000,
2000 Shares of Rs. 10 each,
Rs. 5 called and paid-up Rs. 10,000
You are required to prepare the “Liquidator’s Statement of Account”.
Section - C
Answer any THREE questions. Each question carries 15 marks. (3×15=45)
7. Differentiate between:
a) External reconstruction and internal reconstruction.
b) Alteration proper and reduction of share capital.
c) Cancellation of unissued shares and refunding surplus capital.
8. State the various accounting entries to be passed in the books of vendor company in the event of its
business being taken over by another company.
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9. The following is the balance sheet of XYZ company Ltd., as on 31-3-2016

Liabilities Rs. Assets Rs.
Share capital Good will 50,000
50,000 (non-tangible)
Equity shares Fixed Assets 7,00,000
of Rs. 10 each 5,00,000 (tangible)
fully paid current Assets 2,50,000
General reserve 2,00,000
Profit & Loss
Account 1,00,000
12% Debentures 1,50,000
Current Liabilities 50,000
10,00,000 10,00,000
On the above date the goodwill was independently valued at Rs. 60,000 and the fixed assets (tangible)
at Rs. 5,80,000.The net profits for the past 3 years were 2013-14 Rs. 1,20,000, 2014-15, Rs. 1,10,000
and 2015-2016 Rs 1,30,000 of which 20% is to be placed to general reserve, the proportion being
considered reasonable in the business in which the company is engaged and where a reasonable return
on investment may be taken at 16%.
Calculate the value of equity share of a company under
a) Net assets method and
b) Yield method.

10. ‘A’ Ltd. acquires ‘B’ Ltd, for a consideration of Rs. 38,00,000 to be satisfied in the form of fully paid
equity shares of Rs. 10 each. The balance sheets of the two companies on 31st Dec, 2005, the date of
acquisition, were as follows:

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BALANCE SHEET
as on 31st Dec, 2005
Liabilities ‘A’ Ltd ‘B’ Ltd Assets ‘A’ Ltd ‘B’ Ltd
Share capital Sundry
Equity shares Assets 96,00,000 58,00,000
of Rs. 10 each 40,00,000 25,00,000
General Reserve 15,00,000 30,00,000
Development Rebate
Reserve 3,00,000 1,00,000
Export profit Reserve 6,00,000 4,00,000
Profit & Loss A/c 12,00,000 9,00,000
Sundry liabilities 20,00,000 16,00,000
96,00,000 58,00,000 96,00,000 58,00,000
You are required to pass the necessary Journal entries in the books of ‘A’ ltd (transferee company)
when amalgamation is by way of
i) Merger and
ii) By way of purchase.
Also prepare the resultant Balance sheet presuming that development Rebate and export profit
Reserve are required to be continued.
11. From the balance sheets given below, prepare a consolidated balance sheet of ‘X’ Ltd. and its
subsidiary ‘Y’ Ltd. The interest of minority share holders in ‘Y’ Ltd is to be shown as a separate
item in the consolidated balance sheet.
Balance Sheet of ‘X’ Ltd and ‘Y’ Ltd.
as on 31 st March, 2012
Particulars Note No Amounts as at 31st March, 2012
X Ltd. ‘Y’ Ltd
I Equity and Liabilities
Share holder’s funds
a) Share capital 1 12,00,000 3,00,000
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b) Reserves & Surplus 2 3,70,000 1,50,000

current liabilities 1,50,000 50,000
17,20,000 5,00.000
II Assets
Non-current assets
a) Fixed Assets 3 12,00,000
b) Non-current
Investments 4 2,50,000 4,00,000
Current Assets
a) Inventories 1,40,000 65,000
b) Trade receivables 90,000 20,000
c) Cash and cash
equivalents 4 40,000 15,000
17,20,000 5,00,000
Notes :
‘X’ Ltd ‘Y’ Ltd
I Share capital
Authorized 12,00,000 3,00,000
Issued, subscribed
and paid - up
Equity shares of
Rs. 10 each 12,00,000 3,00,000
II Reserves and Surplus
General Reserves 2,50,000 -
General Reserves - 60,000
as on 1-4-2011
Credit Balance of
Profit & Loss A/c 1,20,000 90,000
3,70,000 1,50,000
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III Fixed Assets

Freehold building at cost 8,00,000 -
Lease hold’s property 3,00,00 -
Less Depreciation 50,000 - 2,50,000
Plant and Machinery
X Ltd.
Cost 4,00,000
Less depreciation 1,00,000 3,00,000 -
‘Y’ Ltd.
Cost 1,50,000
Less depreciation 50,000 1,00,000
Furniture
‘X’ Ltd.
Cost 1,20,000
Less Depreciation 20,000 1,00,000 -
‘Y’ Ltd.
Cost 65,000 50,000
Less depreciation 15,000
12,00,000 4,00,000
4 non - current Investments.
20,000 Fully paid equity shares in 2,50,000
S Ltd at cost
5 Cash and Cash equivalent’s
Balance with bank 40,000 15,000
On the 1st April, 2011, the date of acquisition of ‘X’ Ltd of its holding of 20,000 shares in ‘Y’ Ltd, the
latter company had a credit balance of Rs. 60,000 in its profit and loss account.
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