b) An issue of 2,500 5% first debentures of `10 each was made and fully subscribed in cash.

c) The assets were reduced as follows:

i) Goodwill from ` 1,50,000 to `75,000.

ii) Machinery from ` 50,000 to ` 37,500.

iii) Leasehold premises from ` 75,000 to ` 62,500.

Show the journal entries to give effect to the above scheme of reconstruction. (10)

6. What do you mean by holding company? What are their advantages and disadvantages? (10)

7. Briefly describe the methods of methods of accounting for amalgamation. (10)

8. Following is the Balance Sheet of X Co. Ltd. as at 31st March, 2008:

Balance Sheet as at 31st March, 2008

Liabilities / Amount ` / Assets / Amount `
15000 Equity shares of Rs. 100 each
11% Pref. share capital
General reserve A/C
Sundry creditors / 15,00,000
5,00,000
3,00,000
2,00,000 / Land & Buildings
Plant & Machinery
Furniture
Stock
Sundry debtors
Cash in hand / 10,00,000
7,00,000
2,00,000
3,00,000
2,00,000
1,00,000
25,00,000 / 25,00,000

Y Co. Ltd. agreed to take over X Co. Ltd. on the following terms:

a)  Each equity share in X Co. Ltd. for the purpose of absorption is to be valued at `. 80.

b)  Equity shares will be issued by Y Co. Ltd. by valuing its each equity share of Rs. 100 each at Rs. 120 per share.

c)  11% Preference shareholders of X Co. Ltd. will be given 11% redeemable debentures of Y Co. Ltd. at equivalent value.

d)  All the Assets and Liabilities of X Co. Ltd. will be recorded at the same value in the books of Y Co. Ltd.

Calculate Purchase consideration and Pass Journal entries in the books of Y Co. Ltd. for absorbing X Co. Ltd. (10)

LLB. II (Second) Semester Examination 2012-13

Course Code:LBC202 Paper ID: 0932203

Corporate Accounting

Time: 3 Hours Max. Marks: 70 Max Marks: 75

Note: 1. Attempt any six questions in all. Q. No. 1 is compulsory.

2. Students have option to answer the questions in English or

Hindi.

1. Answer any five of the following (limit your answer to 50 words). (4x5=20)

a) Balance sheet of S Ltd. as on 31st March 2010 (Liabilities only).

`

Share capital 40,000 Equity shares 4,00,000

of Rs. 10/- each

Reserves and surpluses 2,50,000

Secured loan 2,50,000

Other Liabilities 1,00,000

10,00,000

On the above date H Ltd. acquired 30,000 Equity shares in S Ltd. on the above date for `7, 50,000 fixed assets of S Ltd. were appreciated by `1, 50,000. Find out cost of control / Goodwill.

b) What do you mean by consolidated profit and loss A/c?

c) Why profit of subsidiary company is divided into pre and post acquisition?

d) Calculate the Purchase Consideration of S & Bro for the following data:

Total Assets `6, 00,000, assets are taken over at 20%less than the book value. Total liabilities worth `2,00,000 out of which liabilities worth `50,000 are not taken over and Liquidation expenses of `5000 are to be borne by the purchasing company.

e) Distinguish between (i) the pooling of interests method and (ii) the purchase method of recording transactions relating to amalgamation.

f) State four important differences between absorption and external reconstruction.

g) Discuss the various modes of winding up of a company.

h) The following are the balance sheets of H Ltd. and S Ltd. as on 31st March 2012:

Liabilities / H Ltd.
` / S Ltd.
` / Assets / H Ltd.
` / S Ltd.
`
Share Capital:
Shares of `10 each fully paid
Reserves
Creditors / 5,00,000
1,00,000
80,000 / 2,00,000
60,000 / Sundry Assets
60% shares in S Ltd. / 5,60,000
1,20,000 / 2,60,000
6,80,000 / 2,60,000 / 6,80,000 / 2,60,000


Prepare consolidated balance sheet as at 31st March 2012.

2. Super Express Ltd. and Fast Express Ltd. were in competing business. They decided to form a new company named Super Fast Express Ltd. The balance sheets of both the companies were as under:

Super Express Ltd. Balance Sheet as at 31st December, 1999

Liabilities / Amount ` / Assets / Amount `
20,000 Equity shares of Rs. 100 each
Provident fund
S. creditors
Insurance reserve / 20,00,000
1,00,000
60,000
1,00,000 / Buildings
Machinery
Stock
Sundry debtors
Cash at bank
Cash in hand / 10,00,000
4,00,000
3,00,000
2,40,000
2,20,000
1,00,000
22,60,000 / 22,60,000

Fast Express Ltd. Balance Sheet as at 31st December, 1999

Liabilities / Amount ` / Assets / Amount `
10,000 Equity shares of `100 each
Employees profit sharing a/c
Sundry creditors
Reserve account
Surplus / 10,00,000
60,000
40,000
1,00,000
1,00,000 / Goodwill
Buildings
Machinery
Stock
Sundry debtors
Cash at bank
Cash in hand / 1,00,000
6,00,000
5,00,000
40,000
40,000
10,000
10,000
13,00,000 / 13,00,000

The assets and liabilities of both the companies were taken over by the new company at their book values. The companies were allotted equity shares of ` 100 each in lieu of purchase consideration.

Prepare opening balance sheet of Super Fast Express Ltd. (10)

3. Briefly explain the steps involved in Preparation of liquidator’s final statement of account. (10)

4. With a suitable example discuss the situations where internal reconstruction and external reconstruction are applicable? (10)

5. The paid-up capital of Toy Ltd. amounted to `2,50,000 consisting of 25,000 equity shares of `10 each.

Due to losses incurred by the company continuously, the directors of the company prepared a scheme for reconstruction which was duly approved by the court. The terms of reconstruction were as under:

a) In lieu of their present holdings, the shareholders are to receive:

i) Fully paid equity shares equal to 2/5th of their holding.

ii) 5% preference shares fully paid-up to the extent of 20% of the above new equity shares.

iii) 3,000 6% second debentures of ` 10 each.