DCM7201 ADVANCED CORPORATE ACCOUNTING MARCH 2025

Description

SESSION	MARCH  2025
PROGRAM	MASTER OF COMMERCE
SEMESTER	04
COURSE CODE & NAME	DCM7201 ADVANCED CORPORATE ACCOUNTING

 

 

Assignment Set – 1

 

 

Q1. Elucidate the importance of preparation of financial statements of a company. With imaginary figures provide income statement as per schedule 3 of Companies Act 2013.

Ans 1.

Importance of Preparation of Financial Statements

Legal Requirement and Statutory Compliance

Under the Companies Act, 2013, every registered company is required to prepare financial statements annually. These statements include the Balance Sheet, Profit and Loss Statement, Cash Flow Statement, and Notes to Accounts. They ensure transparency and accountability in the company’s financial dealings and act as legal documents for tax and regulatory purposes.

Facilitates Decision-Making

Financial statements serve as a critical tool for management, investors, and stakeholders.

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Q2. The following particulars relate to a company:

Total assets Rs.18,50,000

External Liabilities Rs.2,50,000

Share capital:

14% Preference shares of Rs.10 each, fully paid Rs.15,00,000

40,000 Equity shares of Rs.10 each, fully paid Rs.4,00,000

60,000 Equity shares of Rs.10 each, Rs.7.50 paid Rs.4,50,000.

Calculate the value of each category of equity shares of the company based on a deemed liquidation 10      

Ans 2.

Calculation of Value of Equity Shares Based on Deemed Liquidation

In such a case, the available assets after paying off external liabilities and preference shareholders are distributed among the equity shareholders based on their paid-up value.

Step 1: Given Data

Particulars	Amount (Rs.)
Total Assets	18,50,000
External Liabilities	2,50,000
Preference Share Capital (14%)	15,00,000
Equity Shares – Fully Paid (40,000 × Rs.10)	4,00,000
Equity Shares – Partly Paid (60,000 × Rs.7.5)	4,50,000

 

Step 2: Net Assets Available for Shareholders

 

 

Q3. Mr. Prasad purchased 500 equity shares of Rs.100 each of Mega Company Ltd. for Rs.62,500 inclusive of brokerage and stamp duty. Some years later the company resolved to capitalize its profits and to issue to the holders of equity shares, one equity bonus share for every share held by them. Prior to capitalization, the share of Mega Co. Ltd. were quoted at Rs.175 per share. After the capitalization, the shares were quoted at Rs.92.50 per share. Mr. Prasad sold the bonus shares and received Rs.90 per share. Prepare the Investment Account in the books of Mr. Prasad on Average Cost Basis.  10

Ans 3.

Investment Account of Mr. Prasad on Average Cost Basis

Step 1: Given Details

Particulars	Details
Type of Investment	Equity shares of Mega Co. Ltd.
Face Value per Share	Rs.100
No. of Shares Purchased	500
Total Cost (including brokerage/stamp duty)	Rs.62,500
Cost per Share	Rs.62,500 / 500 = Rs.125
Bonus Issue	1:1 (One bonus share for every existing share)

 

 

Assignment Set – 2

 

 

Q4. Explain the meaning of Issue of Shares and elucidate the methods of issue of shares in Listed Company as per Companies Act, 2013     2+8     

Ans 4.

Issue of Shares

The issue of shares refers to the process by which a company raises capital by offering ownership interests in the form of equity or preference shares to investors. These shares represent a portion of ownership in the company and entitle the shareholder to a share in profits, voting rights (in case of equity shares), and a claim on assets during winding up (after liabilities are paid). The Companies Act, 2013 governs the procedure and methods for issuing shares, especially for listed companies which must also comply with SEBI (Securities and Exchange Board of India) regulations. The share issue process helps companies mobilize

 

 

Q5. Pass necessary Journal Entries in the books of Ritika Ltd. for the redemption of 2,000 10% debentures of ₹100 each, issued at par, in the following cases:

1. i) Debentures redeemed at par by conversion into 9% Preference Shares of ₹100 each.
2. ii) Debentures redeemed at a premium of 10% by conversion into equity shares issued at a premium of 25% (Face value ₹100).

iii) Debentures redeemed at a premium of 15% by conversion into equity shares issued at a discount of 10% (Face value ₹100 each). 10   

Ans 5.

Journal Entries for Redemption of Debentures in the Books of Ritika Ltd.

There are three different redemption scenarios for 2,000 debentures of ₹100 each, and we need to pass the journal entries in each case.

Case i: Redemption at Par by Conversion into 9% Preference Shares (Face Value ₹100)

Given:

• 2,000 × ₹100 = ₹2,00,000 (Debentures)
• Redemption at par (no premium)

 

 

Q6. Elucidate the methods of Redemption of Debentures            10       

Ans 6.

Debenture Redemption

Debentures are long-term debt instruments issued by companies to raise funds from the public or institutions. These are repayable at a fixed future date along with interest. The process of repaying the debenture amount to the debenture holders is termed as redemption of debentures. The Companies Act, 2013 provides specific guidelines for such redemption, which must also be aligned with the terms mentioned at the time of issue. Redemption