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71880/C 120

Reg. No.

III Semester M.Com. 3 Degree Examination, January 2019

(CBCS)
Commerce
Paper 3.4 A : Corporate Accounting
(Group : Accounting and Finance)
Time : 3 Hours Max. Marks : 80
SECTION – A
1. Answer any ten of the following questions. Each question carries 2 marks. (10×2=20)
a) What are the books of accounts to be maintained by company as per Sec. 128 of I. co. Act 2013 ?
b) State the arrangement of assets under vertical B/S of I. co. Act 2013.
c) What are reasons of shares valuation ?
d) What do you mean by yield method ?
e) Define absorption of company.
f) How do you treat employees compensation fund under absorption ?
g) State the reasons for compulsory winding up of co.
h) What is deficiency account ?
i) What is group-holding company ?
j) How dividend declared by subsidiary co. is treated in accounts ?
k) In a financial year March to April, opening loss was Rs. 25,000 and closing loss was
Rs. 20,000, and the business acquired on June. How do you treat this in holding co-accounts ?
l) How unclaimed dividend is treated u/s 124 of Co. Act ?
SECTION – B
Answer any three of the following. Each question carries 5 marks. (3×5=15)
2. What is common accounting practice in amalgamation process and how it distinguish between
purchase and pooling of interest methods ? Explain.
3. “The liquidator has to follow a set of order based on the priorities of liabilities while liquidating
the company” -Explain the statement.
4. The following particulars are relating to Ambi. Co. ltd. Bgm. for the year 31-12-2017.
Particulars Amt.
Profit on sale of investments 4,200
Loss of sale of fixed assets 1,400
P.T.O.
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Capital expenditure 10,500
Govt. subsidy received 8,400
Depreciation 2,100
Workment compensation paid 2,100
Provision for taxation 57,400
Bonus to foreign technician 6,300
Determine the maximum remuneration payable to part-time directors and managers of a
manufacturing company under section 309 and 387 of Co. Act. Before charging any such
remuneration, the P & L A/c has a credit balance of Rs. 46,200 for the year ended after taking
in to account the above transaction. The company also provides depreciation as per section
350 of the Act.
5. The following particulars are relating to Honey Co. Ltd.
a) The profits for the previous 3 years profits
2010 – 2011 6,000
2011 – 2012 7,200
2012 – 2013 6,600
b) Normal rate of return expected 12%
c) Capital employed 24,000
d) The P.V. of an annuity of one rupee for 5 years at 10% Rs. 3.78.
e) The profits included a non-recurring profit on an average basis of Rs. 240/- a year
From the above, you are requested to calculate the value of G/W.
i) as per 6 years purchase of super profits.
ii) as per capitalisation of super profits at 10%
iii) as per annuity method.
6. H Co. Ltd. acquired 45 equity shares in ‘S’ ltd. on 1st October, 2017. On 31-3-2018 the B/S
of S Co. Stood as follows
Particulars Note Amount 31-3-2018
I. Equity and Liability
share capital 1 600
Res. and sur. 2 230
current liabilities
Trade Payables – 80
II. Assets
Tangible Assets 3 544
Inventories 156
BR 110
Cash 100
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Notes :
1) Share capital
Equity 50 shares of 10/- each 500
Preference (14%) 10 shares of 10/- each 100
2) Reserves and Surplus Rs.
General Reserve 150 –
Less : Pref. exp. 40 110
P & L A/c 01.4.17 (Credit) 30 –
Add : closing profit for 2018 90 120
3) Tangible Assets
Land and Building – 250
Machinery 1-4-2017 250
Less : depreciation 37 213
Furniture 1-4-2017 85
Less : depreciation 4 81
On the date of acquisition H Ltd. found, land and building were undervalued by Rs. 50/-
and the value of Machinery to be Rs. 200/-. In preparing the consolidated B/s, it is decided
to use the proper value of assets and decided to eliminate preliminary expenses. Calculate
1) Capital profits
2) Revenue profits.
SECTION – C
Answer any three questions. Each question carries 15 marks. (3×15=45)
7. Explain in detail the provisions relating to the accounts to be maintained by companies as per
Indian Co. Act, 2013.
8. Critically evaluate the methods of valuation of shares and objectives of valuation.
9. ‘Om’ Co. ltd. acquired 80% of shares of ‘Sam’ Ltd. On 1-8-2017. The following are the B/S
of both as on 31-3-2018.
Particulars Note Amts. 31-3-2018
Om Co. Sam Co.
I. Equity and liabilities
Share capital 1 20,00,000 10,00,000
Reserves and Surplus 2 7,00,000 3,40,000
Trade Payables 3 1,30,000 1,10,000
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II. Assets
Tangible Assets 4 10,00,000 9,00,000
Non Current Investments 5 10,00,000 –
Inventories – 1,50,000 1,00,000
Trade Receivables 6 1,80,000 1,30,000
Cash and equivalents 7 5,00,000 3,20,000
Notes :
1) Share Capital
Subscribed equity of Rs. 10 each 20,00,000 10,00,000
2) Reserves and surplus
General Reserve as on 1-4-2017 4,00,000 2,00,000
P & L A/c Credit bal. on 1-4-2017 1,00,000 60,000
Add : Current year profit 2,00,000 80,000
3) Trade payables
Accounts of goods suppliers 1,00,000 1,00,000
BP 30,000 10,000
4) Tangible Assets
Land and Building 5,00,000 3,00,000
Plant and Machinery 4,10,000 5,00,000
Furniture 90,000 1,00,000
5) Non current investments
Equity shares in Sam Ltd. 10,00,000 –
6) Trade Receivables
Accounts of suppliers 1,00,000 1,20,000
Br 80,000 10,000
7) Cash
Bank balance 4,70,000 3,00,000
Cash 30,000 20,000
Others :
1) Br of Om Co. Ltd. include Rs. 10,000/- accepted by Sam Co.
2) Trade receivables of Om Ltd. include Rs. 50,000/- due from Sam. Co.
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3) Inventories of Sam Co. include goods purchased from A Ltd. which were invoiced at
50% o n cost, 3/5 of the same were in stock as unsold.
4) The land and Buildings of Sam Co. were overvalued by 20% decided to bring down the
value. Prepare a consolidated B/s.
10. The following are the B/S of A and B companies as on 31-3-2018, both decided to amalgate
each other and to form AB Co. Ltd.
Particulars Notes Amount (Rs’ 000)
A B
I. Equity and Liabilities
Share capital 1 37,500 5,000
Reserves and Surplus 2 23,150 1,670
Long term borrowings 3 5,000 –
Trade Payables – 1,450 830
II. Assets
Tangible Assets 4 47,630 750
Intangible Assets 5 100 250
Inventories – 12,800 5,010
Trade Receivables 6 4,340 1,270
Cash and equivalents 7 2,270 220
Notes :
1) Share capital
13% Pref. shares Rs. 100 each 7,500 –
Equity shares Rs. 10 each 30,000 5,000
2) Reserves and Surplus
Capital Reserves 9,600 –
Gen. Reserve 12,400 1,450
P & L A/c (Credit) 1,150 220
3) 12% Debentures 5,000 –
4) Tangible Assets
Freehold premises 12,000 –
Machinery 34,510 –
Furniture and Figures 1,120 750
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5) Intangible Assets
Goodwill – 250
Trade marks 100 –
6) List of Credit customers 4,340 1,170
BR – 100
7) Cash and Balance 2,230 220
The terms of Amalgamation were
1) AB Co. allotted to A Co. a 75,000, 14% preference shares (fully paid up) of Rs. 100/-
each and 45 lakh equity shares (fully paid up) of Rs. 10/- each to satisfy their claims.
It is also agreed to convert 13% debentures in 11% debentures.
2) The new Co. allotted 5,50,000 equity shares (fully paid) of Rs. 10/- each to be distributed
to ‘B’ co. Ltd.
3) The new co. borned the entire expenses of Rs. 10,000/- In addition to this the preliminary
expenses of Rs. 88,000/-
you are requested to
1) Perform the liquidation process of both A and B companies and
2) Open the amalgamated B/s of AB Co. Ltd.
11. The following is the B/s of unfortunate Co. Ltd. as on 31-12-2017
Liabilities Rs. Assets Rs.
12% preference shares 4,00,000 Land and Buildings 58,00,000
(40,000 × Rs. 10) Plant 40,000
Equity shares Patents 20,000
(20,000 × Rs. 10(Rs. 8 paid) 1,60,000 Stock 90,000
Equity shares S/Drs 1,80,000
(20,000 × Rs. 10 (Rs. 6 paid) 1,20,000 Cash at Bank 60,000
10% Debentures 2,00,000 Investments 80,000
(Floating charge) P & L A/c 1,40,000
O/S interest on Debentures 6,000
Sundry Creditors 1,66,000
Loan (Hypothecation on Stock) 80,000
O/S Salary and Wages 30,000
O/S workmen’s Compensation 4,000
O/S Govt. charges 5,000
Taxes O/S 20,000
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Additional Information :
1) The co. went into voluntary liquidation on 1st Jan. 2018 and a liquidator was appointed
with a remuneration of 2% on assets realised including cash and 3% of the amount
distributed among unsecured creditors.
2) The dividend on preference shares was o/s for the last 3 years
3) The stock realised Rs. 10,000/ - less than their value
4) Other assets excluding cash realised Rs. 8,00,000/-
All assets were realised but, the payment was made on 30th June, 2018. The liquidation expenses
were Rs. 4,450/- with equal amount towards legal-charges

Prepare the liquidators final statement of accounts with necessary notes.
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