Dibrugarh University BCOM 2nd Sem CBCS Pattern
Corporate Accounting Solved Question paper
2022 (June/July)
COMMERCE (Core)
Paper: C-203 (Corporate Accounting)
Full Marks: 80
Pass Marks: 32
Time: 3 hours
The figures in the margin indicate full marks for the questions
1. (a) Write True or False: 1 x 3=3
(1) Right Shares can be issued only to existing shareholders.
Ans: True
(2) Capital Reserve is created out of Revenue Profit as well as Capital Profit.
Ans: False
(3) For reduction of Share Capital of company, confirmation from the court is not necessary.
Ans: False
(b) Fill in the blanks: 1 x 3=3
(1) Goodwill is the most unrealizable form of assets as it can be disposed of only in the event of the being sold as a:
Ans: Going Concern
(2) Schedule 15 of Bank Profit & Loss Account relates to Interest Expended.
Ans: Interest Expended
(3) Post-acquisition profits are treated as Capital profits.
Ans: Capital Profits
(c) Choose the most appropriate answer: 1 x 2=2
(1) Consolidated Balance Sheet is prepared as per
(a) Accounting Standard-14.
(b) Accounting Standard-21.
(c) Accounting Standard-6.
Ans: (b) Accounting Standard-21.
(2) Share Application is a
(a) Personal Account.
(b) Real Account.
(c) Nominal Account.
Ans: (a) Personal Account.
Dibrugarh University Corporate Accounting Solved Question Paper 2022
2. Write short notes on any four of the following: 4 x 4=16
(a) Sinking Fund Method for redemption of debentures.
Ans: The sinking fund method is a technique used by companies to retire their outstanding debentures or bonds over time. Under this method, the issuer sets aside a certain amount of money each year in a sinking fund, which is invested in safe and secure instruments like government bonds, to accumulate a fund sufficient to retire the debentures at their maturity date.
The sinking fund is typically managed by a trustee appointed by the issuer, who is responsible for investing the money in a way that maximizes returns while minimizing risks. The trustee is also responsible for monitoring the fund's performance and ensuring that it is sufficient to meet the debenture redemption requirements.
The sinking fund method allows companies to retire their debentures over time, without having to make a lump sum payment at the end of the debenture term. This reduces the financial burden on the company and ensures a steady cash outflow to pay off the debentures. Additionally, it provides investors with a sense of security, as they know that the company is setting aside funds to retire their debentures.
Overall, the sinking fund method is an effective way for companies to manage their debt obligations and maintain a healthy financial position.
(b) Internal Reconstruction.
Ans: Internal reconstruction is a financial technique used by companies to make necessary changes in their capital structure without liquidating the existing company or incorporating a new one. It involves a scheme of reorganization that requires all interested parties in the company's capital structure to voluntarily sacrifice a portion of their interest in the company. These interested parties include shareholders, debenture holders, and creditors. The sacrifice is made in the form of a reduction of the paid-up value of their shares, debentures, or other interests. Internal reconstruction is typically used in situations where a company is facing financial difficulties or has a complex capital structure. The purpose of internal reconstruction is to streamline the company's operations, reduce debt, and improve its financial position.
(c) Valuation of Goodwill.
Ans: Valuation of goodwill is the process of determining the worth of intangible assets such as reputation, customer loyalty, and brand image. Goodwill is a critical aspect of a business, and its valuation is crucial during mergers, acquisitions, or partnerships. There are various methods for valuing goodwill, such as the capitalization of earnings, excess earnings, and market value methods. Valuation of goodwill requires expertise in finance, accounting, and business valuation. The accurate valuation of goodwill is necessary to ensure that it is appropriately accounted for in financial statements and to make informed decisions about the business's worth..
(d) Non-banking Assets.
Ans: Non-banking assets refer to financial assets that are not held by banks or other financial institutions. These can include stocks, bonds, real estate, and other investment vehicles that are owned by individuals, companies, or government entities. Non-banking assets play a crucial role in diversifying portfolios, mitigating risks, and generating returns. Investment in non-banking assets is often considered an attractive option for those seeking to maximize returns over the long term. Non-banking assets are subject to market risks, and their value can fluctuate based on economic conditions, interest rates, and other factors. As such, investors need to carefully evaluate their investment options and seek professional advice when investing in non-banking assets.
(e) Consolidated Balance Sheet.
Ans: A consolidated balance sheet is a financial statement that presents the combined financial position of a parent company and its subsidiaries. This statement provides an overview of the assets, liabilities, and equity of the entire group, rather than just the parent company. The consolidation process involves combining the financial statements of the parent and its subsidiaries, adjusting for any intercompany transactions, and eliminating any duplicate or offsetting balances. The consolidated balance sheet provides a comprehensive view of the financial health of the entire group, allowing stakeholders to assess the group's overall performance, liquidity, and solvency. It is an important tool for investors, analysts, and regulators in evaluating the financial strength of a group of companies.
3. (a) Equity Liabilities and Assets of Sunrise Ltd. as on 31st March, 2019 are given below:
It was decided at the meeting of shareholders –
(1) to buyback 20% of equity shares @ Rs. 12 per share;
(2) to utilize general reserve for buyback of shares;
(3) to utilize securities premium reserve for premium payable on buyback of shares.
Pass necessary journal entries and draw up the Balance Sheet after the above transactions have been given effect to. 7+7=14
Ans: Try yourself.....
Or
(b) (1) Write the difference between Right Shares and Bonus Shares. 7+7
Ans: Right Shares: Right shares are offered to existing shareholders in proportion to their current shareholdings. They give shareholders the right, but not the obligation, to purchase additional shares at a predetermined price, known as the subscription price. The purpose of right shares is to raise additional capital for the company while maintaining the proportional ownership of existing shareholders.
Bonus shares: Bonus shares, on the other hand, are additional shares issued by the company to existing shareholders free of cost. They are issued out of the company's accumulated profits or reserves and do not require any payment from the shareholders. The purpose of bonus shares is to reward existing shareholders by increasing their shareholdings in the company without diluting their ownership percentage.
Difference between Bonus Shares and Right shares:
(2) State the provisions for redemption of Preference Share provided under Section 55 of the Companies Act, 2013.
Ans: Section 55 of the Companies Act, 2013 provides for the provisions for the redemption of preference shares. The key provisions are as follows:
1. A company can redeem its preference shares only if it has the authority to do so in its articles of association.
2. The redemption of preference shares can only be made out of profits of the company that are available for the purpose or out of the proceeds of a fresh issue of shares made for the purpose of redemption.
3. The company must create a "Capital Redemption Reserve Account" and transfer an amount equal to the nominal value of the shares redeemed from its profits to this account before making the redemption.
4. The redemption can only be made on the terms and conditions specified in the articles of association.
5. The company must give notice of the redemption to the preference shareholders at least 30 days before the date of redemption.
6. The redemption must be made in accordance with the provisions of the articles of association and within the time specified in the articles.
7. The preference shares can be redeemed either at par value or at a premium, as specified in the articles of association.
It is important to note that the redemption of preference shares is subject to the approval of the company's board of directors and, in some cases, the shareholders. The provisions of the Companies Act, 2013 and the articles of association of the company must be strictly adhered to when redeeming preference shares.
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