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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI 600 034
M.Com.DEGREE EXAMINATION COMMERCE
FOURTHSEMESTER APRIL 2018
CO 4808- ADVANCED CORPORATE ACCOUNTING
Date: 07-05-2018 Dept. No. Max. 100 Marks
Time: 09:00-12:00
Section: A
Answer All Questions: 10 x 2 20
State any two objectives of Accounting Standards.
What is a Level 1 enterprise?
When the proposed dividend exceeds 20% of the paid up capital the percentage of profits to be transferred to reserve is
Maximum remuneration payable to a part time director when he is not assisted by Managing Director should be not exceeding
What do you understand by Substance over form?
Board of directors approved the financial statement of year 2015 -2016 on 31st July, 2016. The following events occurred before the approval of financial accounts by Board of Directors .State how would you deal with the following situation:
A fire occurred in the godown on April 2008 damaging huge quality of stock of value Rs.10, 00,000.
What do you understand by prior period item?
Define Holding Company.
What is Purchase Consideration according to AS14?
What do you understand by Net Value Added?
10) P Ltd acquired 65% shares of Q Ltd, on 1.10.16. P&L a/c in the books of Q Ltd showed a debit balance of Rs.40, 000 on 01.04.16. On 31.03.17, the Balance Sheet of Q Ltd showed P&L a/c balance of Rs.1, 20,000. Calculate Capital Profits and Revenue Profits.
Section B
Answer any four only: 4 x 10 40
11) Distinguish between Merger method and Purchase method of Accounting for amalgamation.
12) Define "Value Added Statement"? Give a rough format of a Gross Value Added Statement for a Manufacturing Firm.
13) Explain the various methods of valuation of human resources.
14) Determine the maximum remuneration payable to the part time directors and Manager of B Ltd.of Manufacturing Company under section 309 and 387 of the Companies Act 1956 from the following particulars:
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Before charging any such remuneration the P&L A/C showed a credit balance of Rs.23, 05,000 for the year ended 31st March 2010 after taking into account the following transactions:
Profit on sale of investments Rs.2, 05,000
Subsidy received from government Rs.4, 10,000
Loss on sale of fixed assets Rs.65, 000
Ex-gratia to an employee . Rs.30, 000
Compensation paid to injured workman Rs.75, 000
Provision for taxation Rs.2, 79,000
Bonus to foreign technicians Rs.3, 12,000
Multiple shift allowance Rs.1, 00,000
Special depreciation Rs.75, 000
Capital expenditureRs. 10,000
Company is providing depreciation as per section 350 of the Companies Act 1956.
15) Balance sheet of H.Ltd, and S.Ltd as on 31.12.2010 given below:
Liabilities HLtd. S.Ltd. Assets H.Ltd. S.Ltd.
Rs. Rs. Rs.Rs.
Share Capital 10,000 5,000 Sundry Assets 17,000 10,000
(Rs.1 each)
General Reserve 5,000 4000 shares in
S.Ltd 5000
Creditors 3,000 3,200
P&L A/C 4,000 1,800
22,000 10,000 22,000 10,000
Shares were purchased by H.Ltd. in S.Ltd. on 30th June, 2010. On 1st January, 2010 the balance sheet of S.Ltd. showed loss of Rs. 000 which was written off out of the profits earned during 2010. Profits are assumed to accrue evenly throughout the year. Prepare consolidated Balance Sheet.
16) What is Contingent Liability as per AS 29?
Write the areas where AS29 is not applicable.
17) A Ltd and B Ltd have agreed upon the values of assets and liabilities as shown in the following Balance Sheets:
Liabilities
A Ltd
Rs.
B Ltd
Rs.
Assets
A Ltd
Rs.
B Ltd
Rs.
Share Capital
20,00,000
10,00,000
Sundry Assets
20,00,000
12,00,000
Reserves
2,00,000
5,00,000
10,000 shares in B Ltd
2,00,000
10,000 shares in A Ltd
3,00,000
22,00,000
15,00,000
22,00,000
15,00,000
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Ascertain the amount due to outsiders, if A Ltd and B Ltd decide to amalgamate and form C Ltd. Also show the purchase consideration payable if A Ltd absorbs the B Ltd.
Section C
Answer any two only: 2 x 20 40
18) The following is the trial balance of B Ltd., as on 31st March, 2008:
Particulars
Rs.
Particulars
Rs.
Stock as on 01.04.2007
Purchases
Wages
Carriage
Furniture
Salaries
Rent
Sundry trade expenses
Dividend paid
Debtors
Plant and Machinery
Cash at bank
Patents
Bills Receivable
75,000
45, 000
30, 000
950
17, 000
7,500
4000
7,050
9,000
27, 500
29, 000
46, 200
800
000
Purchase Returns
Sales
Discount
Profit and loss a/c
Share Capital
Creditors
General Reserve
Bills Payable
10, 000
40, 000
000
15, 000
00, 000
17, 500
15, 500
000
08, 000
08, 000
Prepare the profit and loss account for the year ended 31st March, 2008 and a balance sheet as on that date after considering the following adjustments:
Stock as on 31st March, 2008 Rs. 88,000
Provide for income tax at 50%
Depreciate plant and machinery at Furniture at and patents at 5%.
On 31st March, 2008 outstanding rent amounted to Rs.800 and salaries Rs.900
The board of directors recommended payment of a dividend per annum
Provide Rs.510 for doubtful debts
Provide for managerial remuneration at 10% on profit before tax.
19) The Balance Sheet of X Ltd., and its subsidiary Y Ltd as on 31st March, 2009 are given below:
Liabilities X Ltd. Y Ltd. Assets X Ltd. Y Ltd.
Rs. Rs. Rs. Rs.
Equity Shares of 00, 000 00, 000 Buildings 4,12,000 1,20,000
Rs.100 each
General Reserve 80, 000 000 Machinery 1,00,000 96,000
Profit&Loss a/c 20, 000 1,44,000 Furniture 20,000 12, 400
Creditors 60,000 64,000 Stock 1,36,000 80,800
Investments 4,48,000
Debtors 1,12,000 63,200
Cash 1,32,000 44,000
13,60,000 4,16,400 13,60,000 4,16,400
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You are required to prepare consolidated Balance Sheet of X Ltd. And its subsidiary Y Ltd as on 31st March, 2009 together with the working notes after giving effect to the following relevant information:
X Ltd acquired 80% equity shares in Y Ltd. On 1st July, 2008 at a cost price of Rs.4, 48,000.
In the profit and loss account of X Ltd, interim dividend declared by Y Ltd. On 1st July, 2008 at the rate of 10% p.a is included
Creditors of X Ltd. include an amount of Rs.24,000 in respect of purchase from Y Ltd. and stock of X Ltd, .also includes stock at cost price of Rs.12000 purchased from Y Ltd. which sells the goods by adding 25% profit on the cost price.
On 1st April, 2008 in the books of Y Ltd., Profit and loss account credit balance was Rs.1,12,000 from which the company declared 10% interim dividend. During the year 2008 -2009 profit of the company was constant.
20) B Ltd is to absorb S Ltd. the purchase consideration is the issue of 5 shares of Rs.10 each at 10% premium for every 4 shares held in S Ltd. The Balance sheets on the date of Absorption were as under:
Liabilities B Ltd S Ltd Assets B Ltd S Ltd
Rs. Rs. Rs. Rs.
Share Capital 20,00,000 12,00,000 Fixed Assets 16,00,000 8,00,000
(Rs.10 each)
Reserves 2,00,000 1,60,000 24000shres in
S Ltd 3,20,000
Creditors 4,00,000 2,40,000 20000shres in
B Ltd 2,40,000
Current Assets 6,80,000 5,60,000
26,00,000 16,00,000 26,00,000 16,00,000
Prepare ledger accounts in the books of S Ltd and journal entries in the books of B Ltd along with Balance sheet after the absorption.
21) When do you recognize revenue in the following cases as per
Sales of Goods; Rendering of services.