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The document outlines questions and solutions related to corporate accounting for a B.Com. (Hons) course. It includes scenarios involving the acquisition of companies, journal entries for various transactions, and discussions on provisions under the Companies Act, 2013. Additionally, it covers topics such as debenture redemption, share buy-backs, and accounting treatments for share capital transactions.
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0% found this document useful (0 votes)
20 views65 pagesCA Pyqs (2021-2024) (1) - 250611 - 134121vbjjj
The document outlines questions and solutions related to corporate accounting for a B.Com. (Hons) course. It includes scenarios involving the acquisition of companies, journal entries for various transactions, and discussions on provisions under the Companies Act, 2013. Additionally, it covers topics such as debenture redemption, share buy-backs, and accounting treatments for share capital transactions.
Uploaded by
gullsonker09Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF or read online on Scribd
/ 65
2021
Name of the Paper; Corporate Accounting
Name of the Course; B.Com. (Hons) CBCS }
Maximum Marks: 199
Altempt any two questions in all. All questions carry equal marks.
Q.i/ Priya Ltd. takes over Bhushan Ltd. as at 1st April 2017. The Balancely
Sheet of Bhushan Ltd. as at that date was as follows:
Particulars Note No, ©)
(EQUITY AND LIABILITIES
Share Capital; 5,00,000 j
50,000 Equity Shares of €10 each fully paid u ial 7
General as sabe 200,000
Statutory Reserve 100,000 ;
12% Debentures (2100 each fuly paid) 00,000 an
Trade Payables png
Toul 10,00,000
Il Assets SDN ;
Property, Plant & Equipment ae
Sick n Tacs SAT 2,00,000
Trade Receivables 2,00,000
Cash at Bank Ae
Total 10,00,000
Priya Ltd. agreed to issue 30,000 Equity shares of 710 each at a premium of
%5 per share to the shareholders of Bhushan Ltd. 12% Debentures of Bhushan ~
Ltd. will be converted into equivalent number of Debentures of %100 each.
Statutory Reserve of Bhushan Ltd. is to be maintained for two or more year.
Pass acquisition entries in the books of Priya Ltd.
Sol. In the books of Priya Ltd.
JOURNAL Entries f ,
Date Particulars LE.| Dr.@) | Cr.®)
Business Purchase Alc (30,000 x #15) Dr. 4,50,000 sy
|. To Liquidator of Bhushan Ltd. 4,50,000
(Take over of Business of Bhushan Ltd) - a
Property, Plant & Equipment A/c. Dr. 5,00,000
Stock in Trade Alc Or. 2,00,000
Trade Receivables A/c 4 Dr. 2,00,000
Cash at Bank A/c Dr. 4,00,000
To Businees Purchase A/c 4,50,000
- To 12% Debentures Alc 400,000
To Trade Payables Alc 4,00,000
To General Reserve : 2,00,000,
To Statutory Reserve 4,00,000
To Capital Reserve (Balancing Figure) 50,000
(Recording of assets, liabilities and reserves of Bhushan Ltd. and 2
‘excess of Share Capital of Bhushan Ltd. over consideration for ;
and balance transferred to Capital Reserve)
PP-60 CORPORATE ACCOUNTING ~2021 PP-61
Liquidator of Bhushan Ltd. Ale
To Equly Share Capital Ale (0,000 x ¢10) Or. 4,50,000
To Securities Premium Reserve (30,000 x 35) 3,00,000
(Discharge of consideration for amalgamation) voi
- 12% Debentures A/c (Bhushan Ltd)
To 12% Debentures Ac (Priya Lid) Or, 1,00,000
('ssue of Debentures to the Debentur holders of Bhushan Ltd.) hide
. 2. From the followi : e
Q are Owing particulars as at 31st March,
stateme per AS-3 using indirect method: Asser ed
2 Particulars
[EQUITY AND LIABILITIES: 2022 @) | 2021 @%)
Equity Share Capital
10% Preference Share Capital 80,000 55,000
General Reserve pan on
Surplus, i.¢., Balace in Statement of ee
12% Debentures ace 2400 ae
Creditors 14,000 12,000
Provision for Taxation we ey
Total 5 I
Il. Assets: L209 FF 18.00
Property, Plant & Equipment
80,000 82,000
Less: alae! Es x
ess: Accumulated Depreciation (30,000) | _ (22,000)
aa 50,000 60,000
ch 70,000 60,000
Debtors ‘ 34,400 15,000
Cash 7,000 2,400
Prepaid expenses 1,000 600
Total 4,62,400 | 1,38,000
Additional Information:
(a) Provision for tax.made %9,400.
(b) Fixed assets costing 20,000 (accumulated depreciation till date of sale on
them %6,000) were sold for %10,000.
(c) Proposed dividend for the year ended 31st March 2021 and 2022 were
10,000 and %8,000 respectively.
(d) New debentures were issued on 31st March, 2022.
Sol. See Q. 6, Chapter 10 (Practical Problems). [Page tr
Q. 3. (a) Discuss the provisions regarding buy-back of shares under
Companies Act. 2013. fai
'b) Give accounting treatmen:
ce Paras Ltd. issued 40,000, 11% debentures of ands sag
Half of the debentures. were due for redemption puree it
company decided to transfer the minimum ed a ideniinad
Redemption Reserve on 31st March, 2021 an ea ol. Pass the necessary
Debenture Redemption Investments on 30th April,
journal entries for Redemption of Debentures.
debentures issued as Collateral Security.
100 each on 1st April 2018. SITY SERIES
[Page T-9
. See Q. 13, Chapter 1. : ;
ian Security. Se Q. 1, Chapter 2. [Page T-12
PP-62 m@ Shiv Das DELHI UNIVER’
Ans. (a) Buy-back of Sha
(b) Debentures issued as co!
(0 JOURNAL Entries ee =a
NS ee aa -
Date x particulars ne L Dr @) | Cr) |
Dr Ne | Mt : 2,00,000
31.321 | Statement of Profit and Loss Ac (za.000 «100% 195 ) Or. i ;
To Debenture Redemption Reserve or 00,000
(Transfer of Profits to Debenture Redemption Reserve 1
Reedmable Value)* i | 2,00,000 ‘
30.4.21 | Debenture Redemption Investment Nc a 2,00,000
To Bank A/c a
(Transfer of 15% Debenture Redemption Investment) 2 opck
= I. ,00, ce
931,3.22 | Bank A’o 20000
_ To Debenture Redemption Investment A/c
(Encashment of Debenture Redemption Investment) Pee
31.3.22 | 11% Debentures Alc (20,000 x 100) Dr. oak 20,00,000
To Debentureholders ‘A/c rane
(Money due to Debentureholders) f
31.3.2 | Debentureholders Alc” Dr. 20,00,000 ,
To Bank Alc 0,00,000
(Payment made to Debentures holders) |
31,3.22 | Debenture Redemption Reserve Dr. 2,00,000
To General Reserve 200,000
(Transfer to General Reserve) ¥
Note: *According to revised Rule 18(7) of the Compa!
2014 (notified as on May 15, 2014 and August 18, 2019),
and HFCs), DRR is reduced: to 10% of the outstanding debentures.
] Q. 4. (a) Bharat Limited purchased plant and machinery for 20,00,000 from 5
nies (Share Capital and Debentures) Rules,
for Unlisted companies (other than NBFCs
Delhi Machines Limited by paying %5,00,000 by cheque and balance by issue
of 11% debentures of 7100 each at a premium of 20%. Pass necessary entries in
the books of Bharat Ltd. for the above transactions. a
* (b) Shubham Limited invited applications for 1,00,000 equity shares of 710
each at a premium of %2 per share payable as follows: On application 22.50, Ki
on allotment 74.50 (including premium), on first call 72.50 and on final call q
%2.50 per share. Applications were received for 1,50,000 shares and shares ‘
were allotted pro-rata to the applicants for 1,20,000 shares and remaining —
applications were rejected. A, who was allotted 200 shares could not pay the —
sum due on allotment. Shares held by him were forfeited on his failure to pay
_ the first call. B, holding 300 shares, could not pay the two calls. The comy
_ forfeited his shares after the final call was made. ‘ eee
Pass journal entries for forfeiture and re-issue in the books of Shubham — CORPORATE ACCOUNTING — 2021 ™@ PP-63
In the books of Bharat Limited
.@ JOURNAL Entries
ee Particulars LF. | Dr. @) | Cr ®
‘Machinery A/c Dr, 20,00,000
oe enn ; | 5,00,000
To Delhi Machines Ltd. 15,00,000
(Purchase of Machinery and payment made by cheque and
balance)
Delhi Machines Ltd. Dr. 15,00,000
To 11% Debentures A/c (12,500* x 2100) 12,50,000
To Securities Premium Reserve (12,500* x %20) 2,50,000
(|ssue of Debentures to Delhi Machines Ltd.)
%15,00,000.
Note: *No. of Debentures = %(100+20) = 12,500 Debentures:
No. of Shares Applied
eyo ,20,000
30,000__
1,50,000_
No. of Shares Alloted
1,00,000
N 2
In the Books of Shubham Limited
JOURNAL Entries
Date Particulars LE,
Dr. @)_ | Cr. @)
Asshares | Equity Share Capital Ale (200 x 27.5) Dr 1,500
forfeited. | Securities Premium.Reserve (200 x %2) Dr. 400
‘To Shares Forfeited A/c (240 x 32.50) 600 _
To Equity Share Allotment A/c 4
800
To Equity share Final Call A/c (200 x 22.5) 500
(200 shares of A forefited on non-payment of allotment and
call money) i
8s shares | Equity Share Capital Alc (300 x €10) Dr. 3,000
forfeited | To Shares Forfeited A/c (300 x %5) 1,500
To Equity Stare First Call Alc (300 x 22.5) [ 750
To Equity Share Final Call Alc (300 x 2.5) ; 750
(300 shares of B forefited on non-payment of allotment and ‘
call money) :
Note: No entry is required for re-issue of forfeited shares as the forfeited shares are not reissued
4s per information given in question.
Working Notes:
“1 Money not paid by A:
20,000
No. of shares applied = 3°99'q09 * 200 = 240 shares
Excess application money received = (240 - 200) x 22.5
= =100
Total amount due on allotment from A = (200 x %4.5) 300
Less: Excess application money received cine
Amount not paid by A — 2022
: Corporate Accounting
Name of the Paper ah
: B.Com. (Hons) cB Maximum Marks; 109
Name of the Course
1. Attempt all the Questions.
2. Working notes should form par
3. Answers to theory Questions shoul
Q. 1. (a) Choose the correct option and write tl
Answer sheet.
i) Which of the following is trie? A , ae
2 (a) Preference, Shares a be issued with Differential Voting Rights”
(DVRs). ‘
(6) A company can convert the partly paid
shares by way of bonus without asking
(c) In India unless otherwise stated, all Preference Shares are
be Non-Cumulative and Non- Participating. i a
(d) When bonus is declared i company for the equity
shareholders, the holders of Convertible Debentures are also entit
to the Bonus Shares.
(ii) The Securities Premium Account may be applied by such class of
companies, as may be prescribed and whose financial statements comply with —
the Accounting Standards prescribed for such class of companies u/s 133;
(a) To write off Premium Payable .on redemption of Pref. Shares
Debentures issued on 1st April, 2014 by a listed company.
(b) To write off Expenses and Commission on issu
Debentures issued on 1st April, 2014 by a listed company.
(Q To issue partly paid Bonus Shares to members.
(d) None of these. :
(iii) Which of the following is not true? 5 i
(a) “Stock Options Outstanding Account” appears
“Reserves & Surplus” of Balance Sheet of a Company
(b) 10% of the value of Outstanding Debentures is
transferred to Debentures Redemption Reserve
company (other than NBFCs regd. with RBI and
National Housing Bank). x
(0) 15% of amount of Debentures maturing ¢
‘March of the next year is required to be
on or before 30th April in each year.
(a) 25% of the value of Outstanding
transferred to Debentures Redemption
(b) Answer the following with very brief re
(# Can Shares be issued at a discount w
Companies Act, 2013? ‘
(ii) Can Securities Premium be considered as ;
provisions of The Companies Act, 2013?
PP-64
+ of the answers.
Id be brief and to the point.
hat correct option in full in the
(1x3=3) CORPORATE ACCOUNTING ~2022 @ PP-65
“ULSI Ltd, (Listed) decides to redeem 13,000, 15% Redeemable
A&T af 100 each at a premium of 10%, It has a General Reserve
iS ice ee & Loss A/c balance of %7,10,000, a Securities Premium of
000, Fr tance of €6,30,000 and Investments [Face value %10,00,000] of
of ooo, BANK investments are sold at 150%, It is decided to issue 880, 15%
77,000 40% 7100 each at par and 100, 12% Preference Shares of 71100 each
eae tes ¢ of 20% for the purpose of redemption of Preference Shares. The
pe premium ie maintain a minimum balance of %5,00,000 in Bank Account
ae pany To in the Profit & Loss Account,
. + ¢5,00, alculate the minimum number of equity shares of %10 each to be
» Req 5% premium for the purpose of redemption of Preference Shares, 5
jase at VERA and TULSI Ltd, (Listed) decided to issue 12,50,000 Equity
(i ee ¢10 each at a premium of %10 payable %6 (including %3 premium)
Bical ion and %4 (including %2 premium) on allotment and the balance
on ot Out of which 20% were issued to the Promoters and the balance were
4 to the public. 90% of the public issue was underwritten by X, Y, and
0 00 shares (Firm underwriting 20,000 shares)
k y-2,70,000 shares (Firm underwriting 30,000 shares)
180,000 shares (Firm underwriting 50,000 shares)
Applications were received for 6,20,000 shares, of which marked applications
xcluding firm underwriting) were as follows:
58,000 Shares, Z 1,76,000 Shares, Y 1,86,000 Shares
he benefit of firm underwriting is to be given to an individual underwriter
the basis of his individual firm underwriting.
ired: Calculate the Total Liability (in terms of number of shares) of each
iter. 5
(a) (@) (b) Section 123 of the Companies Act, 2013: A company can convert
__ the partly paid equity shares into fully paid shares by way of bonus
,, _, Without asking them to pay anything. -
(if) (4) None of these.
i) (d) 25% of the value of Outstanding Debentures is required to be -
_ transferred to Debentures Redemption Reserve by a listed company.
|| Note: As per Rule 18(7) the Companies Act 2013, a listed-company is not required to
sransfer adequate amount out of profits every year to Debenture Redemption Reserve.
i) Section 53(1) of the Companies Act 2013 lays down a general rule that
company shall not issue shares at discount. Section 53(2) provides
that any share issued by a company at a discount shall be void.
ion (Section 54): Except the issue of Sweat-Equity Shares, a
Ga omPany shall not issue shares at a discount.
(1) As per Section 68 of Companies Act 2013 Security Premium Reserve can
Considered as free reserve for the purpose of buyback of equity shares.
Calculation of Profit/Loss on Sale of Investment
| z
sold (40% of ®20,00,000) 8,00,000
40% Investments (40% of %10,00,000 x 150%) ; 6,00,000
of Investments 4 2,00,000 PP-66 @ Shiv Das DELHI UNIVERSITY SERIES
Calculation of Free Reserves/Profits z
Profit & Loss Account balance (®7, 10,000 ~ €2,00,000 - %5,00,000) : ity
Add: Gemeral Reserve nee :
==
Resource test for redemption of Preference Shares g Ti
14300007
Cash required for redemption of preference shares %(13,00,000 + 1,30,000)
Avalable CashfBank (86,30,000 ~ %5,00,000) ae
Proceeds from Fresh Issue of 15% Debentures (880 x 100) es Oar
Proceeds from Fresh Issue of 12% Preference Shares (100 x €1,100)1,10,000
Securities Premium on 12% Preference Shares (20%) 22,000] 132,000
Proceeds from Sale of Investments {__ 6,00,000 | (60,000
Shortage of Cash/Bank 480,000
ae
To fulfill the gap for the purpose of redemption of Preference Shares the
company must raise cash (resource) of 4,80,000 by issuing (eae) = 3,840
equity shares at 25% Premium.
(a) Computation of Liability of Underwriters
Particulars X@) Y@)
Gross Liability (No. of shares) i 4,50,000 | 2,70,000
Less: Marked Applications (excluding firm Underwritting) (58,000) | _(1,86,000)
Less: Unmarked Applications 3,92,000 84,000
(6,20,000 — 58,000 — 1,86,000 - 1,76,000 = 2,00,000 in. 5
the ratio of 5: 3: 2) A
‘Surplus of Z transferred to'X and Y (5 : 3)
Net Liability
Less: Firm Underwriting
Surplus of Y and Z transferred to X
Net Liability
f: Firm Underwriting
Total Liabiity of Underwriters
(a) On 3ist March, 2022, the paid up capit
consisting of 60,000 Equity Shares of 710 eacl
Shares of 710 each, 7.50 per share paid up. 17
Partly Convertible Debentures of %100
convertible into equity shares of 710 ea
1st April, 2022, the Company made final
the same on 30th April, 2022. On 1st May,
bonus shares to equity shareholders at
held. : Sal
Required: Calculate the Total amount of
(b) On 3ist March, 2022, GILOY &
of 210 each fully paid 7330 Crore, 10%
each fully paid 770 Crore, Securit CORPORATE ACCOUNTING —2022 @ PP-67
d Loss A/c °20 Crore, Capital Redemption Reserve %50 Crore,
ne. The company has offered buyback price of 730 per equity
a; Calculate the Maximum permissible number of Equity Shares ore
sires k.
pou NEEM & TULSI Ltd, (Listed) grants 100 options to each of its
pe ness at %60 when the market price is 8200, The vesting date is 31st
sy and the exercise date is 31st March, 2022, On 3ist March, 2019, the
Brasil that 100 employees had left, Fair Value of a share issued under
y 393, On 31st March, 2020, the company found that 80 employees
P et Value of a share issued under ESOP was 2104, On 31st March,
duet company found that 192 employees had left. Fair Value of a share
ier ESOP was %80. Only 1700 employees exercised their options on
arch, 2022. The face value of equity share is 10 per share,
‘4 wired: Calculate the compensation expose to be recognised during each
pr year and value of options forfeited. 6
sol. (a)
z
Issue of Bons shares to Equity shareholders (60,000 + 40,000) x F ¥ 310) 19 "4 op 000
[sue of Bonus shares tothe debenturcholders afer Conversion (4,000 x 710] 40,000
Total Amount of Bonus Issue 440,000
Working Notes:
__ Number of Equity Shares on Conversion = 21,5000 x 121. — 19.909 shares
10,
‘Number of Bonus Shares on Conversion = 10000, 2 = 4,000 shares
| Note: As per SEBI
guidelines, No company shall a make a bonus issue of. ‘equity shares if it
hhas outstanding
fully or partly convertible debt instruments (ie, debentures), At the time
of making the bonus issue, unless it has made reservation for equity shares ofthe same
class in favour ofthe holders of such outstanding debt instruments (i.e, debentureholders).
Determination of quantum for buyback as per Section 68 of Companies
Act, 2013,
The maximum number of equity shares to be bought-back will be the
. Teast number of shares arrived by performing the following tests:
~ {9 Shares Outstanding Test
Maximum permisible limit = 25% of Outstanding shares
Total number of shares Outstanding = 33 crore
Maximum permisible limit © =-(33 x 25%) Crore = 8.25 Crore
Resource Test
Maximum Permissible limit = 25% of Paid up capital plus Free Reserves
No. of equity shares = 25%af Total Pidup Coitl + Free Reserves
BuyBack Price Per Share
25% of &(330+70+90 + 240 +20) crore
230
= eee = 6.25 crore shares PP-68 @ Shiv Das DELHI UNIVERSITY SERIES
(iii) Debt-Equity Ratio Test
Equity to be maintained after buy-back
= Fof total debts, that is, 1 of £1,200 crore = 2600 crore
Existing Equity = %750 crore
Maximum Possible dilution in equity = 750 - 600 = %150 crore
Maximum shares that can be bought back @ %30 per share
= crore = 5 crore
Conclusion: The least of above (i), (ii) and (iii) is 5 crore equity shares, —
Hence, Maximum number of shares that can be bought-back by the
companies is 5 crore, F
(c) Statement showing the Expense to be Recognised in Each year
Particulars Year 1 Year 2 Year 3
‘A. No. Employees entitled to Options (2100 = 100) = 2000] (2000 - 80) = 1920] (1920 - 192) = 172,
B.No. of Options Per Employee 700 100 100 7
C. Fair value of option per Share
~ Fair value of share exercise = Exercise Price] 93 g0) = 33| (104-60) = %44| %(60-60) = 29
D. Total Fair value of Options [AB * C] 66, 00,000 %84,48,000 %34,56,000
E Total Expense til date = Total Fair Value %66,00,000 * 9733] €84,48,000 * 21 x 33}
* No. of months expired/vesting period = 718,00,000} = %53,76,000| = 734,56,000 4
F aoe already recognized during previous fl (@18,00,000) (5376009)
G. Expensas to be recognized (reversed) [EF] | %16,00,000 %35,76,000 (19,20,000) {
Value of options forfeited = [(1,728 - 1,700) x 100 = 20] = 56,000 3
Total Vesting Period = 15 July 2018 to 31st March 2021 = 33 months 4
Q. 2. (a) Choose the correct option and write that correct option in full in _
answer sheet. : (15-5)
(i) Which of the following is not true? 4
(a) Financial Statements of a company include a Balance Sheet, a Profit
and Loss Account, Cash Flow Statement, a Statement of Changes in
Equity and an explanatory note(s).
(6) Cash Flow Statement is not required to be prepared by One Person
Company, Small Company and Dormant Company.
(0) 2% of Average Net Profits of the company made during 3 immediately —
preceding financial years is required to be spent on Corporate Social
Responsibility activities. ‘ 3
(@) The financial year of X Ltd incorporated on 1st January 2022 will end
on 31st March, 2022. ‘
(ii) Which of the following is not true? s
(a) An item of Income on Expenditure is to be disclosed separately in
Statement of Profit/Loss of a Company if it exceeds 1% of the Revenue
from Operations or %1,00,000, whichever is higher. 5
(6) The figures appearing in the Financial Statements are compulsorily
required to be rounded off to the nearest crores if TOTAL INCOME is
%100 crore or more. " i ~2022 m pp-6g
led and disel
ompany, losed while
be shown unde
sn Ratios are required to be calculat
ee ring Financial Statements of a G
aring ny
sd Dividend’ is required to
sed
. CORPORATE Ace ‘OUNTINC
c) BI
prep? h
( ProPe"Term Provisions” of Balance Sheet of a Company. ue-head
ier the following is not true? rey
rte name of 3rd main Ttem in Statement of Profit/Loss is TOTAL
er NICOME
ra Maturities of Long-Term Boy
hex Short-Term aoc of peace Sheet of a Company,
security Deposits’ appear under the Sub-head bs
(~ Seas of Bulante Sheet of a Company. pune Ron Current
D Building appears under the
. Sheet of a Company.
which of the following is not true?
(a) A Company can not pay dividend on calls-in-advance,
re) ompany can declare and distribute Final Dividend in the event of
in any financial year.
(9 While preparing Balance Sheet of OM TAT SAT Ltd (of which
operating cycle is 14 months) as at 31st March, 2022, %60 lakh due
from Y, a customer on 30th April, 2023 will be classified as Current
Asset.
(@) While preparing Balance Sheet of ‘a Company Trade Receivables/
Payables Ageing Schedule are not required to be prepared,
{e) Which of the following is not true? a:
(a) In the event of inadequacy or absence of Profit in any financial year,
if dividend is declared bya company for that year out of Surplus,
then 4 conditions as per The Companies (Declaration and Payment of
Dividend out of Reserves) Rules, 2014 need not be fulfilled. B
(b) Amalgamation Adjustment Account is disclosed as a negative figure
item under the head “Reserves & Surplus” of Balance Sheet of a
Company.. ~
(c) Expenditure on Corporate Social Responsibility (CSR) is disclosed as
a separate item under the head “Other Expenses” in the Statement of
Profit/Loss of a Company.
(@) ‘Uncalled Liability on partly paid Debentures held as Investments’
appears under the head “Current Liabilities” of Balance Sheet of a
Company.
Pare a format of Statement of Changes in Equity of a Company. (3)
Profit of HONEY & TULSI Ltd for the year ended 31st March, 2022
» Equity Share Capital (Shares of %10 each) fully paid up 400 lakh, Ba
Share Capital (Shares of 210 each) %7.50 called up & paid up %75 lakh,
Pref. Share’ Capital (Shares of 7100 each) fully paid up 400 lakh, As on
fa)
*) rrowings’ “
0
Sub-head “Tangible Assets” of Balance
ie)
0-2021. On 31.03.2022, dividends (including Equity Dividend @
Were paid for which no accounting effect has yet been given.
ved: Calculate the Basic Earnings per Share (Basic EPS). (7)
ia spayidends on Preference Shares were in arrears for 2 years for 2019-
im PP-70 @ Shiv Das DELHI UNIVERSITY SERIES
Sol. (a) (i) (a) The financial year of X Ltd. incorporated on 1* January 2022 wip
end on 318t March 2022.
Note: As per Section 2(41) of the Compani
company or body corporate, means the period |
year, and where it has been incorporated on or after the Ist day of January of yer Of
period ending on 31st day of March of the following year ines of whereof Pinang
tatement of the Company or Body incorporate is prepared. ¥
mples: ber 2022, will
(@) The Financial year of X Ltd. corporated on 31st December ~ will end on 3i¢4
Mareh, 2023, " )
(b) ‘The financial year of X Ltd. incorporated on 1st January 2022 will end on 31s¢ March
2023. ~
() (@ ‘Proposed Dividend’ is required to be shown under the Subhaa
“Short-Term Provisions” of Balance Sheet of a Company.
Note: Proposed Dividend should be disclosed in the Notes to Accounts to be Balance)
Sheet. ;
(i) (d) Building appears under the Sub-head “Tangible Assets” of Balance
Sheet of a Company. ; :
Note: ‘Building’ appears under the major. Head: Non-current Asset and Sub-heag
Property, Plant and Equipment and intangible assets — Property, Plant and Equipment. |
(i) (d) While preparing Balance Sheet of a Company Trade Receivab 7
Payables Ageing Schedule are not required to be prepared. A
(2) {d) “Uncalled liability on partly paid debentures held as investment
appears under the head ‘Current liabilities’ of Balance Sheet of a
ies Act 2013, Financial Year in relation to,
ending on the 31st day of March 2*4Y)_
company
(b) Statement of changes in Equity
A. Equity Share Capital
Balance at the Changes in| Restated Balance | Change in
beginning of the | Equity Share | at the beginning | Equity Share
current reporting | Capital due | of the Current | Capital during
period to prior er-| reporting period | the Current
rors year.
B. Other equity (application column only is being shown)
Reserves and Surplus
Capital |Securities|Other | Retained
Reserve |Premium | Reserves | Earnings
(General
Reserve)
Balance at the beginning of the Reporting
period
Changes in accounting, policy or prior
iod errors
Restated balance at the beginning of the
Reporting period
Total comprehensive Income for the year
Dividend :
Transfer from/to Retained Earnings
Balance at the end of the reporting ING—2022 @ PP-71
CORPORATE ACCOUN
pS 2 re ek ee
it) Basic © Weighted Average no. of Equity Shares Outstanding
ited Average number of Equity Shares Outstanding
weig)
12 75,,12)]
_. |( 40,00,000 = |+| 1,00,000% <= » —
( ia) ( “0 "i2)|
= 40,00,000 + 7,50,000 = 47,50,000 shares
Net Profit Available to Equity shareholders @ in lakh)
Net Profit for the year 300
Less: Preference dividend [10% of %400 lakhs] (40)
Only for current year 260
; %2,60,00,000
EPS (Basic) = 47,50,00 00 Shares ~ 25,47 per share
Or
“"(@) ATMA Ltd provides you the following information :
2 | 2 (in lakhs)
9,000, 9% Participating Pref. Shares of %100 each 50
4,00,000, 10% Preference Shares of 7100 each 100
4,50,000, 11% Non-Cumulative Preference Shares of 2400 each 150
20,00,000, Equity Shares of 710 each, %7 per share called up & paid up 140
Calls in advance on 1,00,000 shares @ 24 per share 4
DVRs (entiled to 5% more dividend than that on Equity Share)
144
10
454
ted fo £345 lakhs. Participating Pref.
te to the extent of 20% of Surplus Profits
id on any share due to absence
Equity Shares
ft Year's Tax @ 25% amou'
sholders are entitled to participa’
per Articles. Last year no dividend could be pai
profits. The Company decided to declare and pay dividend on
20%.
d:; Calculate the Total Amount of Dividend to be paid by the company.
(}) PARAM ATMA Ltd. provides you the following information as at
March 2021:
z = (in lakhs)
100
Equity Share Capital (Shares of €10 Each) Tully paid up
‘Share Capital (Shares of £100 each) fully paid up 20
Revaluation Reserves of <5 lakh) 35
for the year ending: 31.3.2021 2 lakh, 31.3.2022 @1 lakh. Rates of Equity
AL. 15% in 2018-2019, 10% in 2019-2020, 8% in 2020-2021. PARAM
idend @ 10% for the loss year 2021-2022.
Ltd. do so. State giving reason as per The
desires to declare divi
ATMA
let Profits of JIV AATMA Ltd. for the years 2021-2022, 2020-2021,
), 2018-2019, 2017-2018 are %25 crore, %20 crore, %15 crore, 710 crore and
21-2022, the company incurred only %7,00,000
spectively. During 20:
000 on free education and medical treatment of the employees of the
y and their families respectively under CSR projects. PP-72 @ Shiv Das DELHI UNIVERSITY SERIES
Required: Calculate the Amount of Short Fall of Expenditure on Corporate
Social Responsibility during 2021- 2022 as per The Companies Act, 2013,
Sol. (a)
(© in lakh) | (@ in lakh)
Net Profit Before Tax (NPBT) | 34.5 w 1138.00
Loss; Current Year's Tax @ 25%
Less: Preference Dividend:
@ 9% on %50 Lakhs (for two years)
@ 10% on 2100 Lakhs (for two years)
@ 11% on 8150 Lakhs (Non-Cumulative)
Profit available for Distribution to Equity Shareholder
Less: Equity Shares Dividend:
@ 20% on %140 Lakhs
@ (20% + 5%) on 810 Lakhs (DVR)
Surplus Profit
Less: 20% for Participating Preference Shareholders
103.50
Total Amount of Dividend Paid = %81.50 Lakh Fab
(b) As per the Companies (Declaration and payment of Dividend) Rule, 2014,
In the event of inadequacy or absence of profits in any year, a Company may
declare dividend out of its Free Reserves subject to fulfilment of the following
conditions: i § ee
(i) The rate of dividend declared shall not exceed the average of the rates
at which dividends were declared by it in the three years immediately
proceeding that year. : ‘
(ii) The total amount to be drawn from such accumulated profits shall not
exceed 10% of the sum of its paid-up Capital Plus Free Reserves appearing
in the Balance Sheet.
(iii) The total amount so drawn shall first be utilised to set-off the losses. ‘
iv) The Balance of Reserves after such withdrawal shall not fall below 15% of —
__ its Paid-up Capital appearing in the latest Balance Sheet.
as per the above discussion the Company is not in a position to de
dividend. aet w
ery Company having
) Net worth of %500 crore or more, or
| Turnover of %1,000 crore or more, or
) Net Profit of 5 crore or more CORPORATE ACCOUNTING —2022 @ PP-73
45 crore
profit aa)
ount to be spent on CSR = 2% of Average Profit
= 15,00,00,000 x 2/100 = %30,00,000
fA Ltd has an obligation to spend %30 lakh on CSR activities but the
AAT i spending on free education and medical treatment of employees is
company © venditure. As per Section 135 of CSR Amendment Rule 2021, excludes
s benefiting employees of the company. Therefore, 730 lakh is to be
i Shortfall of expenditure’ on CSR activities.
ve (a) From the following relevant extracts of the Balance Sheets of HALDI
2 LSI Ltd., Calculate Cash Flow from Operating Activities to be disclosed
the Cash Flow Statement as per AS-3 issued by ICAL
= %15 crore
averse
ni am
Particulars 31.03.2022 (%)_| 31.03.2021 (@)
General Reserve 1,40,000 4,40,000
Profit and Loss A/c 6,52,000 (13,000)
Capital Grant 2,00,000 Nil
Current Liabilities : ; :
Trade Payables 1,65,000 40,000
Unclaimed Dividend on Equity Shares 20,000] -
Outstanding Interest on Short-term Borrowings 10,000
Outstanding Underwriting Commission 5,000
Provision for Tax 40,000 20,000
Current Assets:
Interest Accrued on Current investments 2,000
8% Fixed Deposit (Date of FD 1st March, 2022 2,84,000
maturing on 31st May, 2022) FD carries payment
of interest on monthly basis.
Inventories 1,69,000 54,000
Trade Receivables 6,13,000 6,43,000
: Provision for Doubtful Debts (1,90,000) (1,50,000)
Cash at Bank 1,33,000 1,00,000
litional Information:
() During the year Depreciation provided %1,40,000, Interest paid on Short-
term Borrowings 714,850, Dividend paid on Equity Shares %1,90,000,
Underwriting Commission paid %3,750, Interest received on Current
Investments %9,500. Tax provided %32,250 (including tax @ 15% on short-
term capital gain). Tax paid includes tax @ 15% on short-term capital gain
on Current Investments. Short-term capital gain on Current Investments
215,000. Capital Grant received %5,00,000. Compensation received in a
Suit filed by the company %90,000. Debtors of %2,30,000 were written off
(ia) E*iSt the Provision for Doubtful Debts A/c. F
*) On 31.03.2022, the Bussiness of Y Ltd. was purchased fot 60,000 payable
in fully. paid equity shares of %10 each at 20% premium. The assets
included Inventories %15,000. Trade Receivables %10,000 and Machine
%50,000, Trade Payables of %15,000 were also taken over. PP-74 @ Shiv Das DELHI UNIVERSITY SERIES
(iii) It was decided to value Inventories at cost whereas Previously tijips
practice was to value Inventories at cost less 10%. However, the:Closin
Inventories on 31.03.2022 was correctly valued at cost.
(b) Not in Current Syllabus.
(©) Not in Current Syllabus.
Sol. (a) Cash Flow from Operating Activities
Particulars 2) @
Cash Flow from Operating Activities: 4
A. Net Profit before tax *; 6,07,250
B. Adjustments for Non-Cash and Non-Operating Items
Depreciation 1,40,000
24,850
Interest on Short-term Borrowings [14,850 + 10,000}
Interest Income on Current Investment (9,500 + 2,000) (11,500)
Short-term Capital gain on sale of Current Investments (15,000)
Underwriting Commission [3,250 + 5,000] 8,250
Less: Undervaluation of Opening Stock [54,000 « 10/90] (6,000)
Less: Compensation received (90,000)
Less: Grant amortised (3,00,000)
Operating Profit Before Working Capital Changes
Changes in Current Assets & Current Liabilities:
Increase in Inventories [(1,69,000 715,000) — (64,000 + %6,000)] (94,000)
Deorease in Trade Receivables [(%6, 131000 - %10,000) - (6.43,000)] 40,000
Increase in Trade Payables [(21,65,000 - 15,000) ~ %40,000] 4,10,000
Increase in Provision for doubtful debts (%1,90,000 - %1,50,000) 40,000
Operating Profit before extraordinary items.
Add: Compensation Received
Net Cash Flow from Operating Activities before tax
Less: Tax paid [12,250* — (15% of 215,000)]
Net Cash Inflow form Operating Activities after Tax
Working notes: *; Calculation of Net Profit before tax
Particulars
Closing Balance of P&L A/c
‘Add: Opening Balance of P&L A/c (Debit Balance)
Less; Transfer From Reserves
‘Add: Dividend on Equity Shares seg
[€1,90,000 (Dividend paid) + £20,000 (Dividend unclaimed)
Add: "Provision for Tax | aay
Net Profit before Tax
*, Dr.
Particulars
Banik A/e (Tax paid ~ Bal. ig)
Balance ¢/d
Debtors written off against Provision for |
‘adjustment in Cash Flow Statement.
(b) Not in Current Syllabus.
(c) Not in Current Syllabus.
aa CORPORATE ACCOUNTING — 2022 @ PP-75
the following relevant extracts of the Balance Sheets of LEMON &
@ Po Calculate Cash Flow from Financing Activities to be disclosed in
u
quit Flow Statement as per AS-3 issued by ICAL.
he cas Parti iculars 7 022 @) 131.03.2021 @)
fare Capital (Shares of €10 each) 70,55,000 600,000
Gully Share Capital (Shares of €100 each) 200,000 Lipa
py Reserve “pee soe
Generic Loss A/C 642,000, aon
Pro ities Premium Brea eS
secur Redemption Reserve y Pa
Capita rent Liabilities (12% Debentures) Pore eg
Nofent Liabilities:
Serr snaing Interest on Debentures 10,000
Outstanding Underwriting Commission 5,000 fs
ncaimed Dividend on Equity Shares Pat a
Non-Current Assets (Machines) 30,000 2
Additional Information: : .
() On 1st April, 2021, Dividends (including an Interim Dividend @ 35% on
equity shares) were paid. :
(ii) On Ist May, 2021, 20,000 Equity Shares of 710 each were issued to public
@ 215 to redeem Pref. Shares at 5% premium,
(ii) On 1st Oct., 2021, 1,000 Pref. Shares of 7100 each were issued to public @
2150 to buy back 15,000 equity shares @ 715. On the same date, 50% of
Debentures were redeemed at 10% premium by converting into Equity
Shares of 710 each @ %15 each and some New Debentures of %100 each
were issued to public.
(iv) Underwriters were entitled to Commission on all public issues of securities
at maximum rate as per The Companies Act, 2013. a 5
(2) On 31st March, 2022, a Machine costing %30,000 was purchased by issue
of Equity Shares of %10 each at a premium of 20%.
(b) List any two differences between AS 3 and Ind AS 7.
(©) Not in Current Syllabus.
Sol. (a) Calculation of Net Cash Flow From Financing Activities
as per AS-3 (Revised)
Particulars [ Amt. ®)
'ssue of Equity Shares for Cash [@2,00,000 + ®1,00,000 (Premium) 3,00,000
i ick of Equity Shares [%1,50,000 + £75,000 (Premium) (2,25,000)
ssu® Of Pref. Shares [1 00,000 + 850,000 (Premium)] 41,50,000
lion of Pref. Shares [%3,00,000 + $15,000 (Premium)] (3,15,000)
Ine 01 Debentures 2,00,000
in on Debentures Paid: vy 4
Deg * 6/100) + (®2,75,000 x 6/100) - 10,000 (Outstanding)} (15,500),
Didone SU Shares [26,00,000 x 35/100 - 20,000 (Unclaimed) (1,90,000)
Unde" Pref. Shares (®4,00,000 x 5/100) * . (20,000)
3.09, ae Commission Paid * ’
Y0 + 81,50,000) x 6/100 + (®2,00,000 x 2.5%) ~ %5,000 (Outstanding)} PP-76 @ Shiv Das DELHI UNIVERSITY SERIES
Note: Maximum Rate of Commission: The commission paid or agreed to be paid must not exceed in
case of shares, 5% of the price at which shares are issued or the amount or rule authorised by
the articles, whichever is less and in case of debentures 2.5% of the price at which debentures
are issued or the amount or rate by the articles, whichever is less.
(b) Difference between Ind AS 7 and AS 3
Under AS 3, Bank overdraft is considered as a financing activity whereas under
Ind AS 7, bank overdraft is included as Cash and Cash equivalents if they form
part of an entity’s cash management.
Under AS 3, cash flows from extraordinary items are disclosed separately and
it can be from operating, investing or financing activities whereas under Ind AS
7, the concept of extraordinary does not exist. The cash flow statement does not
reflect any items of cash flow as extraordinary.
Under AS 3, there is no specific guidance available for Cash flows related to
changes in ownership interest whereas, under Ind AS 7 cash flows related to
changes in ownership interest without loss of control is classified as a financing
activity.
(c) Not in Current Syllabus.
Q. 4. (a) TUSHAR & TASHIKA Ltd. provides you the following information
as at March 31, 2022:
Particulars (in lakhs)
Equity Share Capital (Shares of €10 each) , ~ 1,000
6% Cum Pref. Share Capital (Shares of 7100 each) 200
Profit & Loss A/c (Dr) 5
10% First Debentures 120
10% Second Debentures 200”
Debentures Interest outstanding 32
‘Trade Creditors 330
Property, Plant, Equipment 900 ©
P & Copy Rights ie
[Face Value 740 lakh] 70
) Debtors 900
eenend on Preference Shares are in arrears for three years.
pocheme of internal reconstruction was approved by NCLT
“equity shares be converted into the same number of equity
s of %5 each, 72.50 paid up.
ence shares are converted from 6% to 15% but revalued in 5
which the total return on them remains unaffected. Four
of 5 each, %2.50 paid up to be issued for each 7100 of —
e dividend. qaiag
bentures for %80 lakh and 10% second debentures | CORPORATE ACCOUNTING - 2022 @ PP-77
itors (other than X and Y) are given the option of either to
di , shares of €5, 82.50 paid up each, for the amount due to
, aXe ent 80% of the amount due in cash, 40% Creditors accepted |
full settlement,
of :
" were or tO fe whereas the balance accepted cash in
meaty ee are considered as Bad and 20% of the balance Debtors
ae ol pe red as Doubtful. 20% of Property, Plant, Equipment are
+ dervalued by 20% of market value and 80% of the remaining
oe overvalued by 80% of market value, Of the Investments
re de and the balance non-trade, All trade Investments are to
ed at 25% below cost. Any surplus after writing off the various
ould be utilized in writing down the value of Property, Plant,
nt further. ;
red: Prepare the Reconstruction Account,
gure”
three differences between AS 14 and Ind AS 103,
gpuiite any
sal () Reconstruction Account Cr.
— in lakhs) Particulars in lakhs)
— Particulars -