Saurastra University 2006 M.Com Commerce Corporate Financial Accounting - Question Paper

Creditors 10,000 54,000 Advertising
Accrued interst suspense A/c 44,000 —
on debentures — 3,000 Preliminary exps. — 6,000
15,70,000 11,58,000 15,70,000 11,58,000
Terms for Amalgamation :
(1) Land and Buildings to be appreciated by Rs. 2,60,000
but freehold premises tobe decreased to Rs. 6,20,000.
(2) The shareholders of Nilkanth Ltd. to receive 1 preference
share and 2 equity shares at a premium of 10%
fully paid for every 3 shares held.
(3) The shareholders of Aashutosh Ltd. to receive two
preference shares and 2 equity shares at a premium
of 10% fully paid, for every 5 shares held.
(4) The new company to discharge the debentures and
accrued interest in Aashutosh Ltd. by the problem of 7%
debentures at Rs. 103.
(5) The expenses of amalgamation, estimated at Rs. 10,000
to be borne by The new company.
Draft the journal entries necessary to provide effect to the
proposal as per Pooling of Interest method according to
Amalgamation in the nature of merger, after fixing purchase
consideration as per accounting standard - 14.
OR
3 On the basis of the above question's particulars, Draft the 20
journal entries necessary to provide effect to the proposal as per
purchase method according to amalgamation in the nature
of purchase, after fixing purchase consideration as per
Accounting standard - 14.
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4 Balance sheets of 2 companies are provided as under : 20
Balance-sheet as on 31-3-2006
Liabilities "D" Ltd. "M" Ltd. Assets "D" Ltd. "M" Ltd.
Rs. Rs. Rs. Rs.
Share capital Goodwill 1,20,000 —
Eq. shares of Fixed Assets 1,00,000 1,60,000
Rs. 100 every 1,60,000 1,20,000 Investments 40,000 80,000
General Reserve 80,000 60,000 Current Assets. 80,000 60,000
Investment
Allowance
Reserve — 80,000
Sundry Creditors 1,00,000 40,000
3,40,000 3,00,000 3,40,000 3,00,000
"M" Ltd. is merged with "D" Ltd. on the basis of the
respective shares value adjusting, wherever necessary. the
intrinsic value of share is the basis for computation of purchase
consideration. The book values of assets
and liabilities were determined on the basis of subsequent
particulars :
(1) Investment allowance reserve was in respect of additions
made to fixed assets by “M” Ltd. in the year 2004-05
on which income tax relief has been found. In tems
of the income tax act 1961 the company has to carry
forward till 2009 reserve of Rs. 40,000 for utilisation.
(2) Investments of “M” Ltd. included 200 shares in “D” Ltd.,
acquired at cost of Rs. 150 per share. The other investments
of “M” Ltd. have a market value of Rs. 38,500.
(3) The market value of investments of “D” Ltd. are to be
taken at Rs. 20,000.
(4) Goodwill of “D” Ltd. and “M” Ltd. are to be taken at Rs.
1,00,000 and Rs. 20,000 respectively.
(5) Fixed assets of “D” Ltd. and “M” Ltd. are valued at Rs.
1,20,000 and Rs. 1,30,000 respectively.
(6) Current assets of “D” Ltd. included Rs. 16,000 of stock
in trade received from “M” Ltd. at cost plus 25%.
The above scheme has been duly adopted. provide necessary
computations in the books of “D” Ltd. and prepare
balance-sheet of “D” Ltd., after taking over the business of
“M” Ltd., as per pooling of interest method.
OR
SX-5665] 15 [Contd...
4 (a) The accounting year of Rajkot Ltd. is from 1-4-2005 10
to 31-3-2006. Earning as net profit attributable to equity
shareholders is of Rs. 25,00,000. No. of equity shares as
on that date is outstanding 5,00,000. During the year
avg. fair value of 1 equity share was Rs. 80.
Potential Equity Shares were as follows :
(i) choices = 25,000 with exercise price of Rs. 60
(ii) Conventible preferecne shares = 2,00,000. Pref.
Shares entitled to cummulative dividend of Rs. 7
per share. every preference share is convertible into
2 equity shares. Corporate dividend tax = 10%.
(iii) 12% convertible Debentures = 2,50,000 debentures
every of Rs. 100. every debenture is convertible in
to four equity shares and tax on debenture interest
is of 30%.
obtain basic EPS. Prepare a statement of change in
earning attributable to equity share holders on concession
of potential equity shares, and compute Dilutive EPS.
(b) What is meant by External Reconstruction of 5
company ? provide proforma of Reconstruction Account.
5 (a) What is meant by Financial Statements and 10
Financial Analysis ? Write a note about utilities and
limitations of both.
(b) provide explanation of meaning and importance of 10
Corporate Governance, Write a note about the different
committees and details to current in it's report.
OR
5 Write short notes : (any four) 20
(1) Financial lease and operating lease
(2) Main matters of Indian Accounting Standard - 20 EPS
(3) Managerial Remuneration as per Indian companies Act
(4) Main matters of Indian Accounting Standard - 19 -
Lease Accounting
(5) Application of Accounting info and Ratios to
interpret Final Accounts by different parties
(6) Characteristics of Ideal Financial Statements
(7) Elements of Good Corporate Governance
(8) Minority Interest and cost of control
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Earning:   Approval pending.