IV Semester B.

com (NEP) Exam September/October 2023

Advance Corporate Accounting (48121/D0210)
Section –A
1. Answer any Five of the Following
a) What is Redemption of preference shares?
Redemption of Preference shares means Repayment of Preference
share capital to preference shareholders.
b) What is Amalgamation of Company?
When two or more companies combine to form a completely new
entity.
c) What is Reconstruction of Company?
Reconstruction is a process of the company's reorganization,
concerning legal, operational, ownership and other structures, by
revaluing assets and reassessing the liabilities.
d) What is liquidation of Company?
Liquidation is the process of selling off assets and using the proceeds
to pay off creditors and shareholders.
e) Name the types of winding up.
1) Voluntary 2) Compulsory
f) Write the types of amalgamation.
1) Amalgamation is in the nature of merger
2) Amalgamation is in the nature of Purchase
g) Who is a liquidator
A liquidator is a person with the legal authority to act on behalf of a
company to sell the company's assets before the company closes in
order to generate cash for a variety of reasons including debt
repayment.
Section –B
2. Difference between Merger and Purchase
Sl Merger Purchase
no
1 Forms a new entity. Involves acquiring assets and
liabilities.
2 Loss of separate identities. Acquired entity may continue or
dissolve.
3 Uses pooling of interests. Uses the purchase method.
4 Carrying amounts are Fair values are recognized.
combined.
5 Merging companies have Acquiring company has a more
more equal standing dominant role.

Prof.Siddarood B.Kumbar (Darbar Degree College,Vijayapur)

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3. What are the conditions and methods of redemption of preference
shares?
Sl Conditions Methods
no
1 Legal authorization is required. Redemption out of Divisible
profit
2 Provisions in the articles of Redemption out of fresh issue
association must be considered. of shares
3 Sufficient distributable profits or Partly out of divisible profit
legally available funds are and partly out of fresh issue of
necessary. shares
4 Shareholder approval may be
required, often through a special
resolution.
5 The redemption process must
comply with applicable laws and
regulations.
4. Amount Payable to Preference Shareholders
Share Capital 200000
+ 10% Premium (200000X10%/100) 20000 220000
Journal Entries
Sl Particulars L Dr. Cr.
no F
1 Bank A/c______________________________________Dr 120000 --
To Equity Share Capital A/c (5000X20) -- 100000
To Share Premium A/c (5000X4) -- 20000
(Being Shares are issued)
2 Share Premium A/c__________________________Dr 20000 --
To Premium on Redemption A/c___________ -- 20000
(Being Premium Payable)
3 General Reserve A/c ________________________Dr 80000 --
Profit and Loss A/c __________________________Dr 50000 --
Bank A/c______________________________________Dr 90000 --
(220000-80000-50000=90000 Bal.)
To Capital Redemption Reserve A/c -- 220000
(Being Profit and Reserve Transferred)
4 Redeemable Preference Share Capital A/c Dr 200000 --
Premium on Redemption A/c_______________Dr 20000 --
To Redeemable Pref.Shareholders A/c -- 220000
(Being amount Transferred to Shareholders)
5 Redeemable Pref.Shareholders A/c _______Dr 220000 --
To Bank A/c -- 220000
(Being Redemption of Preference Shares)

Prof.Siddarood B.Kumbar (Darbar Degree College,Vijayapur)

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5. When do you recommend internal reconstruction of a company
 Severe financial distress or insolvency.
 Inefficient or outdated operations.
 Change in business focus, products, or market strategies.
 Mismatched or unsustainable capital structure.
 Merger or demerger of business units.
 Regulatory compliance issues or legal challenges.
 Change in ownership or management.
 Technological advancements or changes in industry standards.
6. Who is liquidator. What the modes of winding up?
Liquidator: A liquidator is a person with the legal authority to act on
behalf of a company to sell the company's assets before the company
closes in order to generate cash for a variety of reasons including
debt repayment.
Modes of Winding up:
A. Voluntary Winding Up:
Members' Voluntary Winding Up: Initiated by the shareholders
when the company is solvent and able to pay its debts. A
liquidator is appointed to distribute assets to shareholders.
Creditors' Voluntary Winding Up: Initiated by the shareholders,
but the company is insolvent. The liquidator pays off debts in a
prescribed order and distributes remaining assets to
shareholders.
B. Compulsory Winding Up:
Initiated by a court order due to various reasons such as
insolvency, inability to pay debts, or failure to commence business
within a specified time. The court appoints a liquidator to oversee
the process.
Section -C
Answer Any Two
7. Recent Development in Accounting
1. Technology Integration:
 Increased use of AI, machine learning, and automation in
accounting processes.
 Adoption of blockchain for secure transactions and robotic
process automation (RPA) for efficiency.
2. Cloud Accounting: Growing adoption of cloud-based accounting
systems for real-time collaboration and accessibility.

Prof.Siddarood B.Kumbar (Darbar Degree College,Vijayapur)

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 3. Data Analytics: Rising use of big data for financial insights and
informed decision-making.
4. Sustainability Reporting: Emphasis on disclosing sustainability efforts
and ESG impacts in financial statements.
5. Cybersecurity Concerns: Heightened focus on protecting financial data
from cyber threats.

List of Accounting Standards

1. Ind AS 1: Presentation of Financial Statements

2. Ind AS 2: Inventories
3. Ind AS 7: Statement of Cash Flows
4. Ind AS 8: Accounting Policies, Changes in Accounting Estimates, and Errors
5. Ind AS 10: Events after the Reporting Period
6. Ind AS 11: Construction Contracts
7. Ind AS 12: Income Taxes
8. Ind AS 16: Property, Plant, and Equipment
9. Ind AS 17: Leases
10. Ind AS 18: Revenue
11. Ind AS 19: Employee Benefits
12. Ind AS 20: Accounting for Government Grants and Disclosure of
Government Assistance
13. Ind AS 21: The Effects of Changes in Foreign Exchange Rates
14. Ind AS 23: Borrowing Costs
15. Ind AS 24: Related Party Disclosures
16. Ind AS 27: Separate Financial Statements
17. Ind AS 28: Investments in Associates and Joint Ventures
18. Ind AS 29: Financial Reporting in Hyperinflationary Economies
19. Ind AS 32: Financial Instruments: Presentation
20. Ind AS 33: Earnings per Share
21. Ind AS 34: Interim Financial Reporting
22. Ind AS 36: Impairment of Assets
23. Ind AS 37: Provisions, Contingent Liabilities, and Contingent Assets
24. Ind AS 38: Intangible Assets
25. Ind AS 40: Investment Property
26. Ind AS 41: Agriculture

Prof.Siddarood B.Kumbar (Darbar Degree College,Vijayapur)

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8. Calculation of Purchase Consideration
Particulars X Ltd Y Ltd
A. Assets Taken over
Building 60000 90000
Machinery 80000 80000
Goodwill -- 50000
Stock 70000 40000
Debtors 30000 70000
Cash 10000 20000
250000 350000
B. Less: Outside Liabilities
Sundry Creditors 30000 50000
Bills Payable 20000 -- 50000 50000
Purchase Consideration 200000 300000
Adjustment of Reserve and Surplus
Particulars X Ltd Particulars Y Ltd
Purchase Consideration 200000 Purchase Consideration 300000
Less: Share Capital 250000 Less: Share Capital 250000
Profit 50000 Loss -50000
Less: General Re. 40000
Less: Loss 50000 Profit 10000 +50000
Nil Nil
Notes to Amalgamated Balance Sheet
Note -1 Share Capital
5000 Shares of Rs.100 Each fully Paid (200000+300000) 500000
Share Capital 500000
Note -2 Trade Payable
Sundry Creditors (30000+50000) 80000
Bills Payable (Xltd Only) 20000
Trade Payable 100000
Note -3 Tangible Assets
Building (60000+90000) 150000
Machinery (80000+80000) 160000
Tangible Assets 310000
Note -4 Intangible Assets
Goodwill (Only Y Ltd) 50000
Intangible Asset 50000
Note -5 Inventories
Stock (70000+40000) 110000
Inventories 110000

Prof.Siddarood B.Kumbar (Darbar Degree College,Vijayapur)

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 Note -6 Trade Receivables
Debtors (30000+70000) 100000
Trade Receivables 100000
Note -7 Cash and Cash Equivalent
Cash (10000+20000) 30000
Cash and Cash Equivalent 30000
Amalgamated Balance sheet of X Ltd and Y Ltd
As on 31-3-2023
Particulars Note A
no ltd
I. Equity and liabilities
1) Shareholders fund
Share capital 1 500000
Reserve and surplus - -
2) Current liabilities
Trade payable 2 100000
Total equity and liabilities 600000
II. Assets
1) Noncurrent assets
Fixed assets
Tangible assets 3 310000
Intangible Assets 4 50000
2) Current assets
Inventories 5 110000
Trade receivable 6 100000
Cash and cash equivalents 7 30000
Total assets 600000
9. Calculation of Capital Reduction Amount
Goodwill (120000-70000) 50000
Machinery (130000-90000) 40000
Building 10000
Capital Reduction 100000
Journal Entries
N L. Debit Credit
Particulars
o F. [Rs.] [Rs.]
Reduction of Capital
1 Old Share Capital A/c_____________Dr 250000 --
To New Equity Share Capital A/c -- 100000
(250000 X 2/5)
To Preference Share Capital A/c -- 40000
(100000 X 2/5)
To Debenture A/c -- 10000
To Capital Reduction (250000-15000) -- 100000

Prof.Siddarood B.Kumbar (Darbar Degree College,Vijayapur)

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 Writing off Fictitious assets / Losses
Capital Reduction A/c________________Dr 100000
To Goodwill A/c -- 50000
2
To Machinery A/c -- 40000
To Building A/c -- 10000

10. If Shares are redeemed at Par

Journal Entries
N L. Debit Credit
Particulars
o F. [Rs.] [Rs.]
Payable to Shareholders
1 Preference share Capital A/c _____Dr 150000 --
To Preference shareholders A/c -- 150000
Transfer of Profit
Profit and Loss A/c__________________Dr 150000
2
To Capital Redemption Reserve A/c -- 150000
Redemption to Shares
8% Redeemable Preference Share A/c Dr 150000 --
3
To Bank _____ -- 150000
If Shares are redeemed at 10% Premium
Journal Entries
N L. Debit Credit
Particulars
o F. [Rs.] [Rs.]
Transfer of Profit
Profit and Loss A/c__________________Dr 150000 --
To Capital Redemption Reserve A/c -- 150000
1
To Premium on Redemption -- 15000
(15000 X 10/100)
Redemption to Shares
8% Redeemable Preference Share A/c Dr 150000 --
2 Premium on Redemption A/c__________Dr 15000 --
To Bank _____ -- 150000
11. Calculation on the basis of total deficiency
Total receipts (310000+10000) 320000
Less: Total liabilities
Expenses 9100
Remuneration (4%of 310000) 12400
Remuneration (2.5% of 60000) 1500
Calls in Advance (5000+20000) 25000
Debentures 20000
Interest on Debenture 2000
Unsecured Creditors (Including Pref Crs) 60000 130000
Balance amount available to equity shareholders 190000

Prof.Siddarood B.Kumbar (Darbar Degree College,Vijayapur)

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 On the basis of total deficiency
1. 1000 Equity shares of Rs.100 each Rs.70 paid Rs.70000
2. 2000 Equity shares of Rs.100 each Rs.90 paid Rs.180000
Rs.250000
Less: Balance amount available to equity shareholders Rs.190000
Deficiency for 3000 equity shares Rs.60000

60000
Deficiency per share =
3000 𝑠ℎ𝑎𝑟𝑒𝑠

Deficiency per share = 20

Particulars For 1000 shares For 2000 shares

Deficiency per share 20 20
Less: Already paid 70 90
Return to shareholders 50 70

Liquidator’s final statement of account

Receipts Rs Payments Rs
To Assets Realised 310000 By liquidation expenses 9100
To Calls unpaid 10000 By liquidators remuneration
(4% on 310000) 12400
(2.5% on 60000) 1500
By Calls in Advance
(5000+20000) 25000
By Debenture
(20000+2000) 22000
By preferential creditors 5000
By unsecured creditors 55000
By Equity shareholders
1000 @ Rs.50 = 50000
2000@ Rs.70 = 140000 190000
320000 320000

Prof.Siddarood B.Kumbar (Darbar Degree College,Vijayapur)

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