QcAccounting Standard 12 - Government Grants
4 marks medium
Explain in brief the treatment of Refund of Government Grants in line with AS 12 in the following three situations: (i) When Government Grant is related to revenue, (ii) When Government Grant is related to specific fixed assets, (iii) When Government Grant is in the nature of Promoter's contribution.
QdEarnings Per Share (EPS) calculation with rights issue
5 marks medium
Discounted rates for the first 5 years are as below:
At 10%: 0.909, 0.836, 0.751, 0.683, 0.621
At 14%: 0.877, 0.769, 0.675, 0.592, 0.519
The following information is available for ABL Ltd. for the accounting year 2012-13 and 2013-14:
Net profit for 2012-13: ₹22,00,000
Net profit for 2013-14: ₹30,00,000
No of shares outstanding prior to right issue: 10,00,000 shares
Right issue: One new share for each five shares outstanding (i.e. 2,00,000 shares)
Right issue price: ₹25
Last date to exercise right: 31st July, 2013
Fair value of one equity share immediately prior to exercise of rights on 31.07.2013 is ₹32.
You are required to compute:
QdPartnership - Premium and Refund
4 marks medium
W paid a premium to other partners of the firm at the time of his admission to the firm, with a condition that the firm will not be dissolved before expiry of five years. The firm is dissolved after three years. W claims refund of premium.
QeCompanies Act - Share Buyback
4 marks medium
Give four conditions to be fulfilled by a Joint Stock Company to buy back its equity Shares.
Q1Advanced Accounting - Provisions, Debentures and Interest, L
20 marks very hard
Answer the following questions:
Q2Partnership liquidation and cash distribution to partners
16 marks very hard
Case: Partnership liquidation with monthly cash distributions
The partners P, Q & R have called you to assist them in winding up the affairs of their partnership on 31.12.2013. Their balance sheet as on that date is given below:
Liabilities: Capital Accounts (P: ₹65,000, Q: ₹50,500, R: ₹32,000), Sundry Creditors: ₹16,000, Total: ₹1,63,500
Assets: Land & Building: ₹50,000, Plant & Machinery: ₹46,000, Furniture & Fixture: ₹10,000, Stock: ₹14,500, Debtors: ₹14,000, Cash at Bank: ₹9,000, Loan P: ₹13,000, Loan Q: ₹7,000, Total: ₹1,63,500
Conditions:
(a) The partners share profits and losses in the ratio of 4:3:2.
(b) Cash is distributed to the partners at the end of each month.
(c) A summary of liquidation transactions are as follows in January 2014:
- ₹9,000 collected from debtors; balance is uncollectible.
- ₹8,000 received from the sale of some furniture.
- ₹1,000 Liquidation expenses paid.
Q2Partnership liquidation and cash distribution
0 marks easy
Case: February 2014: ₹1,000 - Liquidation expenses paid. As part payment of his capital, R accepted a machinery for ₹9,000 (book value ₹3,500). ₹2,000 – Cash retained in the business at the end of month. March 2014: ₹38,000 – received on the sale of remaining plant and machinery. ₹10,000 – received from the sale of entire stock. ₹1,700 – Liquidation expenses paid. ₹41,000 – Received on sale of land & building. No Cash is retained in the business.
You are required to prepare a schedule of cash payments amongst the partners by 'Higher Relative Capital Method'.
Q3(a)Debenture redemption and sinking fund accounts
8 marks hard
Case: ZED Ltd. had 25,000 10% Debentures of ₹100 each outstanding as on 1st April 2013, redeemable on 31st March 2014. On 1st April 2013, Sinking Fund was ₹24 lakhs represented by 3,000 own Debentures purchased at the average price of ₹98 and 8% Stocks of face value of ₹22 lakhs. The annual instalment towards Sinking Fund was ₹90,000. On 31st March 2014, the investments were realized at ₹97 and the Debentures were redeemed.
Draw the following Accounts for the year ended 31st March, 2014: (i) 10% Debenture Account, (ii) Debenture Redemption Sinking Fund Account, (iii) Show the necessary working notes
Q3(b)Share underwriting and liability calculation
8 marks hard
Case: A company made a public issue of 2,00,000 equity shares of ₹10 each for which an undertaking of ₹2 per share. The entire issue was underwritten by the underwriters L, M, N and O in the ratio of 4:3:2:1 respectively with firm underwriting of 5,000, 4,000, 4,200 and 8,000 shares marked in favour of L, M, N and O respectively. The company received applications for 1,50,000 shares (excluding firm underwriting) from the public, out of which applications for 5,500, 4,000, 4,200 and 8,000 shares were marked in favour of L, M, N and O respectively.
Calculate the liability of each underwriter as regards the number of shares to be taken up assuming that the benefit of firm underwriting is not given to the individual underwriter.
Q4Amalgamation of companies
16 marks very hard
Case: P Ltd. and Q Ltd. were carrying on the business of manufacturing auto components. Both the companies decided to amalgamate and a new company PQ Ltd. is to be formed with an Authorized Capital of ₹10,00,000 divided into 1,00,000 equity shares of ₹10 each. The Balance Sheet of the companies as on 31.03.2014 were as under:
P Ltd. and Q Ltd. were carrying on the business of manufacturing auto components. Both the companies decided to amalgamate and a new company PQ Ltd. is to be formed with an Authorized Capital of ₹10,00,000 divided into 1,00,000 equity shares of ₹10 each. [Question truncated at page boundary]
Q5Fixed Assets and Insurance Accounting
0 marks hard
Jay Electricity Company keeps accounts under the Double Account System. It decides to replace its old Plant with a New Plant. The cost of the new plant is ₹ 250 Lakhs. In addition, goods worth ₹ 38 lakhs have been used in the construction of the new Plant. The old Plant was sold as scrap for ₹ 15 lakhs.
Q6Branch Accounting - Journal Entries and Rectification
8 marks hard
Pass necessary Journal entries in the books of an Independent Branch of a Company, wherever required, to rectify or adjust the following:
Q7Bank provisioning, Balance Sheet classification under Schedu
16 marks very hard
Answer any four of the following:
Q9Accounting for Amalgamation/Merger
0 marks hard
The assets and liabilities of the existing companies are to be transferred at book value with the exception of some items detailed below:
(i) Goodwill of P Ltd. was worth ₹ 50,000 and of Q Ltd. was worth ₹ 1,50,000.
(ii) Furniture & Fixture of Q Ltd. was valued at ₹ 35,000.
(iii) The debtors of P Ltd. are realized fully and bank balance of P Ltd. are to be retained by the liquidator and the sundry creditors are to be paid out of the proceeds thereof.
(iv) The debentures of P Ltd. are to be discharged by issue of 8% debentures of PQ Ltd. at a premium of 10%.
You are required to:
(i) Compute the basis on which shares in PQ Ltd. will be issued as per to the shareholders of the existing companies.
(ii) Draw up a Balance Sheet of PQ Ltd. as at 1st April, 2014, the date of completion of amalgamation.
(iii) Write up journal entries including bank entries for closing the books of P Ltd.