Questions and Answers of Corporate Accounting

What is the difference between "Asset Backing Method" and "Yield Valuation Method" for valuing the shares.
Below is given the Balance Sheet of B Co Ltd. as on 1.4.2016 : I. EQUITY AND LIABILITIES (1) Shareholders' Funds: (a) Share Capital -30,000 Equity Shares of * 10 each fully paid (b) Reserves and
The abstract of the Balance Sheet of the AXE Ltd as at 31st March, 2016 are as follows : Liasbilities Equity share capital (100 each). 12% Preference share capital (* 100 each) 13%
For calculating purchase consideration as per AS----14,A. Only payment to equity shareholders are to be taken into considerationB. Only payment to shareholders are to be taken into considerationC.
How purchase consideration is calculated according to AS----14 ?
Under pooling of interests method, all costs associated with the amalgamation areA. CapitalisedB. Expended as incurredC. None of the above.
Distinguish between pooling of interests method and purchase method.
What are the limitations of pooling of interests method ?
The following is the Balance Sheet of B Company Ltd. as on 31st March, 2016:All the assets were independently valued at ₹13,80,000.The company earned net profits for the last five years as follows
The following is the summarised Balance Sheet of Electronics Products Ltd. as on 31st December, 2015:Net profit (before taxation) for the last three years were ₹1,38,000; ₹1,83,000; and
The following is the Balance Sheet of X Co. Ltd. as on 31.12.2015: I. EQUITY AND LIABILITIES (1) Shareholders' Funds: (a) Share Capital (b) Reserves and Surplus -- General Reserve Profit and Loss
A Ltd. is absorbed by B Ltd., the consideration being the takeover of liabilities, the payment of cost of absorption as part of purchase consideration not exceeding ₹10,000; the payment of the
Amalgamation Adjustment Account is used for recordingA. Capital reserve in the books of the transferee companyB. General reserve in the books of the transferee companyC. Statutory reserve in the
What do you mean by amalgamation ? What are the different types of amalgamation ?
Investment Allowance Reserve is aA. Capital reserveB. Statutory reserveC. None of A or B.
What are the different conditions which must be satisfied for treating an amalgamation in the nature of merger?
What is convertible debenture ? What are the advantages of issuing convertible debentures ?
On 1st January 2016, Debenture Account showed a balance of ₹1,50,000 in the books of X Ltd. A sinking fund has been created to redeem the debentures which the trustees are empowered to utilise in
X Ltd. had 1,000, 12% Debentures of ₹100 each outstanding on 1.1.2016. There is a Sinking Fund amounting to ₹40,000 represented by 9% Bombay Port Trust Bonds, of the face value of ₹50,000.
Modern Investors Ltd. issued on January 1, 2015, 20,000 5% debentures of ₹100 each redeemable at the option of the company after the second year at ₹104 upon given two months notice to the
Prospectus Ltd. issued ₹10,00,000, 6% Debentures stock at par on 1.1.2007. Interest was payable on June 30 and December 31, in each year. Under the terms of the Debenture Trust the owned stock is
A Ltd. has issued 2,000, 6% debentures of ₹100 each on 1st January, 2007. Interest was payable half-yearly on 30th June and 31st December each year. They are repayable at par on 31st December, 2014
X Limited had 4,800, 12% Convertible Debentures of ₹100 each. On 1.4.2016 the company accounting to the power of articles, made a notice for getting one of the following options to the
Calculate the managerial remuneration from the following particulars of Zen Ltd. the company has only one Managing Director. Net Profit Net Profit is calculated after considering the
The total managerial remuneration payable by a public company to its directors and manager in respect of any financial year shall not exceedA. 10%B. 11%C. 9%.
What are the legal requirements regarding the preparation of Company Final Accounts?
The following particulars are extracted from the Statement of Profit and Loss of S.S. Ltd. for the year ended 31st March, 2016: S.No. (i) (ii) (vii) (viii) Gross Profit Profit on Sale of Machinery
Corporate Dividend Tax is payable if the dividend paid out of:A. Current profit onlyB. Accumulated profit onlyC. Current profit or accumulated profit.
Explain how the net profits of company are calculated for the purpose of computing remuneration to directors, managers, etc.
Corporate Dividend Tax will be treated as:A. A charge against profitB. An appropriation of profitC. None of the above.
Following is the Profit and Loss Account of Azad Ltd. for the year ended 31st March, 2017:Additional information :Original cost of the Machinery sold was ~ 40,000. Depreciation on fixed assets as per
What are the legal provisions in India regarding over-all maximum managerial remuneration?
Every Balance Sheet and Statement of Profit and Loss of a company shall comply with:A. US GAAPB. Indian Accounting StandardC. International Accounting Standard.
Exchange Limited has an issued Share Capital of 650 7% Redeemable Preference Shares of ~ 100 each and 4,500 Equity Shares of ~ 50 each. The Preference Shares are redeemable at a premium of 10% on
The books of S.B. Ltd showed the following balances on 31st December, 2016:30,000 Equity Shares of ~ 10 each fully paid; 18,000 12% Redeemable Preference Shares of ~ 10 each fully paid; 4,000 10%
The Balance Sheet of Ananda Ltd as on 31st March, 2017 is given below :You are required to show:(a) Necessary Journal Entries to record the above transactions (including cash);(b) The Balance Sheet
The financial position of R Limited at 31st March, 2017 was as follows:As per the terms of issue of the Preference Shares these were redeemable at a premium of 5 per cent on 1st April, 2017 and it
What are the different methods of redemption of debentures?
Sure Ltd. made an issue of 1,000, 6% debentures of ₹1,000 each on 1.1.2014 at the issue price of ₹960. The terms of issue provided that beginning with 2016, ₹40,000 debentures should be
Name three types of companies which do not require to creaste Debenture Redemption Reserve as per the provision of the Companies Act, 2013.
On 31st March 2016, Varun Ltd’s Balance Sheet showed 10,000 12% Debentures of ₹100 each outstanding. Interest on Debentures is payable on 30th September and 31st March every year. On 1st August,
Define debenture as per Companies Act, 2013. What is the time limit for redemption of debentures?
Spotlight Ltd has issued share capital of 60,000----8% redeemable cumulative preference shares of ~ 20 each and 4,00,000 equity shares of ~ 10 each. The preference shares are redeemable at a premium
The skeleton Balance Sheet of Happy Limited as at 31st March 2017 was as under:The Board of Directors decided to redeem the preference shares both by issue of fresh capital and by utilisation of
State the conditions and limits of buy back.
The following is the summarised Balance Sheet of Cardamom Ltd as on 31st December, 2016.The preference shares were redeemed on 1st January, 2017 at a premium of 10%. A bonus issue of 1 equity share
Discuss the provisions of the Companies Act, 2013 with regard to redemption of Redeemable Preference Shares.
Under what circumstances may a company issue Redeemable Preference Shares? Discuss the different methods of redemption of preference shares.
The Balance Sheet of Producers Ltd as at 31st December, 2016 is as follows:You are required to give the journal entries, including those relating to cash to record the above transactions and draw up
Discuss the provisions of Sec 55 of the Companies Act, 2013 with regard to redemption of irredeemable preference shares.
Discuss the logic behind the creation of capital redemption reserve.
State the sources of buy back in detail.
State SEBI Guidelines for ESOS.
What do you mean by a small company as per the provisions of Companies Act, 2013?
Define a Company as per Companies Act, 2013.
Define debenture as per the Companies Act, 2013.
Show by means of Journal Entries how will you record the following issues. Also, show how they will appear in the respective Balance Sheets:(a) A Ltd. issues 10,000, 16% debentures of ₹100 each at
State the factors to be taken into consideration for the issue of debentures.
You are required to show the Journal Entries necessary to record the issue of 10,000, 12% Debentures of ₹100 each by X and Co. Ltd under the following cases separately:(i) At par and were also
What are the advantages and disadvantages of issue of debentures?
A limited company made an issue of 10,000, 14% debentures of ₹100 each at par, which was fully subscribed. The debentures were allotted on July 31, 2016, subscription being payable 10% on
What are the different types of debentures?
X Limited issued for subscription 5,000 debentures of ₹100 each at a discount of 3%. The whole of the issue offered was underwritten by Pal & Co., commission being 2.5% on nominal value. The
Give entries relating to the issue of debentures.
Journalise the transactions given below:(i) A debenture issued at ₹95 repayable at ₹100;(ii) A debenture issued at ₹95 repayable at ₹105;(iii) A debenture issued at ₹100 repayable at
What do you mean by issue of debentures as collateral security for a loan? Give its accounting treatment.
What do you mean by ‘naked debentures’? State the treatment of this debenture as per the Comapnies Act, 2013.
State two conditions for appointment of a trustee.
What do you mean by retail investor for the purpose of issue of debentures?
Why debenture redemption reserve is created?
Distinguish between Bonus Shares and Stock Split.
L&T Ltd. grants 5,000 options on 1st April, 2013 at ₹240 when the market price was ₹300 and the face value was ₹10. The vesting period was three years. The maximum exercise period was one
A Limited company issued 10,000 shares of ₹ 10 each payable as ₹ 2 on application; ₹ 3 on allotment; and ₹ 5 on final call. The public applied for 9,000 shares, which
What are the different kinds of shares which a company can issue as per the Companies Act, 2013 ?
A limited company has its issued capital comprising of 20,000 equity shares of ₹ 10 each payable as : ₹ 2 on application; ₹ 3 on allotment (including premium); ₹ 3 on first call; and ₹ 3 on
Can shares be issued at a discount? If so, what are the provisions of the Companies Act, 2013 in this regard ?
On April 1, 2017, the directors of ABC Ltd issued 1,00,000 equity shares of ₹ 10 each at ₹ 12 per share payable at ₹ 5 on application, ₹ 4 on allotment including premium and the balance on
State the purposes for which securities premium can be utilised.
Bijon Trading Co. Ltd was registered on 2nd January, 2017, with 10,000 equity shares of ₹ 10 each. The Company offered 8,000 shares for subscription to public. The condition was that ₹ 3 per
M. Khaitan Ltd was formed with an authorised capital of 20,000 equity shares of ₹ 10 each to purchase the business of M. Khaitan for ₹ 1,00,000 by the allotment of fully paid shares. On July 1,
What do you mean by ‘Calls-in-Arrear’ and ‘Calls-in-Advance’? What are the provisions of Companies Act, 2013 in this regard?
How can the profit on re-issue of forfeited shares be treated in accounts ?
East Coast Ltd made an issue of 30,000 shares of ₹ 10 each payable as ₹ 3 on application; ₹ 5 on allotment; and ₹ 2 on call. 93,200 shares were applied for and owing to this heavy
What is one man company ? What are the characteristics of this type of company ?
A Ltd issued 1,00,000 shares of ₹ 10 each payable as follows : ₹ 3 on application, ₹ 2 on allotment, ₹ 3 on first call and ₹ 2 on final call. Applications were received for 1,60,000 shares
Alfa Trading Co Ltd offered 10,000 equity shares of ₹ 10 each for subscription at a premium of ₹ 2 per share payable as :On Application ₹ 3, on Allotment ₹ 4 (including premium), on First and
What are the advantages of issuing preference shares ?
A limited company invited applications for 10,000 shares of ₹ 10 each at a premium of ₹ 5 per share payable as : On application ₹ 3 per share, on allotment ₹ 6 per share including premium and
What do you mean by(i) Authorised Capital;(ii) Issued Capital;(iii) Subscribed Capital;(iv) Paid-up Share Capital
New Company Ltd issued 50,000 equity shares of ~ 10 each at a premium of ₹ 2 per share payable as: On Application---- ₹ 3 per share; on Allotment ---- ₹ 5 per share (Including Premium); on
What do you mean by Further Issue of Shares (FPO) ? State the conditions for Further Issue of Shares.
A. Ltd invited applications for 1,00,000 of its Equity Shares of ₹ 10 each on the following terms:(i) Payable on application on 31st January, 2017 ₹ 5 per share including premium.(ii) Payable on
What is depository system ? What are the advantages and limitations of depository system ?
Analysts Limited had issued 1,00,000 equity shares of ₹ 10 each to the public at a premium of ₹ 2 per share. The amount was payable as follows : On application ₹ 3; on allotment ₹ 5
What do you mean by ‘book building’ method of issuing shares ?
Hindustan Limited invited applications for 1,00,000 shares of ₹ 10 each at a price of ₹ 11 payable ₹ 4 on application (including premium), ~ 4.50 on allotment and balance on first and final
Applications were invited by the directors of Grobigg Ltd for 15,000 of its equity shares at ₹ 115 per share payable as follows:(a) On application on 1st April, 2017 (including premium of ₹ 15
What is ‘Sweat Equity’ Shares ? State four important rules as per the Companies (Share Capital and Debentures) Rules, 2014 in this respect.
Ronak Ltdwasregisteredwithanominalcapitalof ₹ 2,00,000 in equity shares of ₹ 10 each and 10,000 of these shares were issued to the public at a premium of 20%. The amount payable was as follows :
M/s Blue Chips Ltd issued 5,000 Equity Shares of ₹ 100 each at a premium of ₹ 25 per share. On 1st January, 2017 the company received 12,000 applications of which 2,000 applications were totally

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