ACA-C4-A18

ST. JOSEPH’S EVENING COLLEGE (AUTONOMOUS)

IV SEMESTER B.COM EXAMINATIONS - APRIL - 2018

ADVANCED CORPORATE ACCOUNTING

Duration: 2.5 Hours Max. Marks: 70
SECTION - A
I) Answer any EIGHT of the following questions. (8x2=16)
1. State two differences between amalgamation and absorption.
2. Write the meaning of purchase consideration.
3. What are the forms of Internal Reconstruction?
4. What is Reserve Fund?
5. Give the meaning of Minority Interest.
6. What is Environmental Accounting?
7. What is Liquidation?
8. How do you treat forfeited shares account appearing the balance sheet of the
vendor Company?
9. Give two examples for Trade Liabilities.
10. What is Realisation Account?
11. What are Contingent Liabilities?
12. What is Goodwill?

SECTION - B
II) Answer any THREE of the following questions. (3x8=24)
13. Snake Ltd agreed to acquire the business of frog Ltd as on 31-03-2017 on which
date the Balance Sheet of Frog Ltd was as follows.
Liabilities Amount Assets Amount
Capital[fully Paid Shares of 6,00,000 Goodwill 1,00,000
Rs.10each]
General Reserve 1,70,000 Land and Buildings 3,00,000
P&L Account 1,10,000 Plant 3,40,000
6% Debentures 1,00,000 Stock 1,68,000
Creditors 20,000 Debtors 36,000
Cash 5,60,000
10,00,000 10,00,000
The Consideration payable by Snake Ltd was agreed as follows:
1. A cash payment equivalent to Rs.2.50for every Rs.10 share in frog
limited
2. The issue of 90,000 Rs.10 Shares fully paid in snake Ltd having an
agreed value of Rs.15 per share
3. The issue of such an amount of fully paid 5% debentures of snake ltd at
96% as is sufficient to discharge the 6% debentures of frog ltd at a
premium of 20%
While computing the agreed purchase consideration the directors of snake ltd
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 valued the land and building and plant at Rs.12,00,000 and stock at Rs.1,42,000
and debtors at their face value. Subject to an allowance of 5% to cover doubtful
debts. The cost of liquidation of frog ltd came to Rs.5,000. Close the books of
frog Ltd and draft journal entries required in the books of snake ltd.
14. The Balance Sheet of Remtry Ltd as on 31-03-2017 was as follows:
Liabilities Amount Assets Amount
Authorised capital
6000 Shares of Rs.100 each 6,00,000 Goodwill 70,000
Issued capital Buildings 80,000
2000 Shares of Rs.100 each 2,00,000 Plant 1,50,000
fully paid
200 5% debentures of 2,00,000 Stock 50,000
Rs.1000 each
Creditors 50,000 Debtors 43,000
Bills payable 5,000 Cash 2,500
Bank Over Draft 45,000 Preliminary Expenses 4,500
Accumulated Losses 1,00,000
5,00,000 5,00,000
The following Scheme of reconstruction was adopted:
1. The paid up value of each share to be reduced to Rs.50.
2. 5% debentures to be converted into 100 7 ½ debentures of Rs.1000 each.
3. Assets were revalued as under. Buildings Rs.72000 plant Rs.140000
Stock Rs.45000 debtors subject to reserve for bad debts Rs.2500
4. Creditors agree to forgo ¼ of the amount due to them in return for
shares for the balance.
5. Goodwill and other fictitious assets to be written off entirely.
Give the necessary Journal Entries.

15. The following is the Balance sheet of Eastern Sugar Co. Ltd
Liabilities Amount Assets Amount
Share Capital 300000 Goodwill 70000
(Share of Rs.10 each)
Profit and loss A/c 50000 Stock 180000
5% Debentures 70000 Debtors 200000
Creditors 30000
450000 450000

The following is the balance sheet of Western Sugar Co. Ltd

Liabilities Amount Assets Amount
Share Capital 200000 Stock 80000
(Share of Rs.10 each)
Profit and loss A/c 42000 Debtors 220000
Creditors 58000
300000 300000
The above two companies amalgamate and form a new company called East
West Sugar Co. Ltd. The average profits of eastern and western sugar
companies have been Rs.30000 and 20000 respectively. East-west sugar co, ltd
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 agrees to take over both the companies for a sum of Rs.600000 and in addition
to discharge all liabilities. The purchase consideration will be paid Rs.100000
cash and balance in shares at face value.
Debtors of the two companies to be written off by 10%. The profit on
conversion to be divided between the shareholders of two companies in the
same proportion the profits previously earned by them. Prepare ledger
accounts to close the books of eastern sugar company and pass opening entries
in the books of east-west sugar co, ltd
16. Explain the need for Environmental Accounting.
17. Luckless Ltd went into voluntary liquidation on 31-03-2017 when the state of
affairs was as below:
Unsecured creditors was Rs.4,00,000 including Rs.50,000 preferential claim.
Secured creditors secured on plant and machinery stood at Rs.2,00,000. Cash
in hand was Rs. 10,000. The liquidator realized plant and machinery for
Rs.1,50,000 and the other assets realized Rs.1,00,000. The liquidation expenses
came to Rs.10,000 and the liquidators remuneration was fixed at 4% of the
amount realized including cash balance and 2% of the amount distributed to
unsecured creditors including preferential creditors.
Prepare liquidators final statement of account showing the distribution of cash

SECTION – C
III) Answer any TWO of the following questions. (2x15=30)
18. The assets of Going Co. Ltd were purchased by the surviving co, ltd. The
purchase consideration was as follows:
1. A payment in cash at Rs.40 for every share in the going co, ltd
2. A further payment in cash of Rs.110 for every debenture in the going
co, ltd.
3. An exchange of 4 shares in the surviving co, ltd of Rs.50 each of the
market value of Rs.80 for every share in the going co, ltd.
The balance sheet of the Going Co. Ltd stood as follows:
Liabilities Amount Assets Amount
Capital 1000 shares of Rs.200 each 2,00,000 Buildings 75000
1000 debentures of Rs.100 each 1,00,000 Machinery 1,50,000
Creditors 30,000 Stock 90,000
Reserve 65.000 Debtors 80,000
Workmens savings bank 10,000 Bank 35,000
Profit and loss A/c 25,000
4,30,000 4,30,000
Give the journal entries in the books of both the companies

19. The balance sheet of Improving Ltd as at 31-03-2017 was as follows.

Liabilities Amount Assets Amount
2000 5% Common preference 2,00,000 Goodwill at cost 15,000
share of Rs.100/- each
4000 Equity shares of Rs.100 4,00,000 Free hold premises 2,00,000
each
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 5 ½ % mortgage debentures 1,00,000 Plant and machinery 3,50,000
Bank over draft 50,000 Debtors 40,000
Creditors 1,00,000 Profit and loss A/c 2,40,000
Cash 5000
8,50,000 8,50,000
The company got the following scheme of capital reduction approved by the
court.
1. The preference shares are to be reduced to Rs.75 per share fully paid up
and equity shares to Rs.40 fully paid up.
2. The debenture holders took over book debts in full satisfaction of the
amount due to them.
3. The goodwill amount is to be eliminated.
4. The value of free hold premises is to be depreciated by 33 1/3 %.
5. Expenses of reconstruction amounted to Rs.3000.
Give the journal entries for the above and prepare the revised balance sheet.

20. Prakash Processors Ltd went into voluntary liquidation on 31-03-2016 when
their balance sheet was as follows
Liabilities
Issued and subscribed capital
5000 10% preference shares of Rs.100 fully paid 5,00,000
2500 equity shares of Rs.100 each 75 paid 1,87,500
7500 equity share of Rs.100 each Rs.60 paid 4,50,000
15% debentures secured by a floating charge 2,50,000
Interest outstanding on debentures 37,500
Creditors 3,18,750
17,43,750
Assets
Land and building 2,50,000
Machinery and Plant 6,25,000
Patents 1,00,000
Stock 1,37,500
Debtors 2,75,000
Cash at Bank 75,000
Profit and Loss A/c 2,81,250
17,43,750
Preference dividends were in arrears for 2 years and the Creditors included
preference creditors Rs.38,000.
The assets realized as follows
Land and building Rs.3,00,000, Machinery and Plant Rs.5,00,000, Patents
Rs.75,000, Stock Rs.1,50,000 and debtors Rs.2,00,000
The expenses of liquidation amounted to Rs.27,250. The Liquidator is allowed
to a commission of 3% on assets realized except cash.
Assuming the final payment including those on debentures is made on 30th
June 2017, show the liquidators final statement of account.

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21. H ltd acquired 8000 shares of Rs.10 each in S ltd. On 31-03-2016 the
summarized balance sheet of H ltd an S ltd were as follows
Liabilities H ltd S ltd Assets H ltd S ltd
Share capital 2,00,000 1,00,000 Machinery 60,000 45,000
Shares of Rs.10
each
Reserves 10,000 15,000 Furniture 2000 4000
P&L A/c 5,000 4,500 Investments
Shares of S Ltd 98,000 -
Bank Loan - 12,000 Stock 42,000 65,000
Creditors 40,000 20,000 Debtors 18,000 27,000
Bills Payable 2,000 1,000 Bills Receivable 1,000 1,500
Cash 36,000 10,000
2,57,000 1,52,500 2,57,000 1,52,500
On the date of acquisition of share by H ltd the ‘S’ ltd had undistributed
profits of Rs.1,500 and reserves of Rs.5,000. Prepare a consolidated balance
sheet as on 31st March 2016.

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