LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION – COMMERCE
SUPPLEMENTARY EXAMINATION – JUNE 2008
CO 6606 - ADV. CORPORATE ACCOUNTS
Date : 28-06-08
Time : 9.00 – 12.00
Dept. No.
Max. : 100 Marks
PART A
Answer ALL questions
10 x 2 = 20 marks
Explain the following:
1. Holding Company
2. Valuation Balance Sheet
3. Rebate on bills discounted
4. Reserve for unexpired risk
5. Standard assets
6. Pooling of interest
7. Commission on reinsurance accepted and ceded.
8. Non performing assets
9. Minority interest
10. Reasonable return
PART B
Answer ANY FIVE questions
5 x 8 = 40 marks
11. Distinguish between ‘amalgamation’ in the nature of purchase and merger.
12. What is ‘double account system’? How does it differ from Single account system
13. H Ltd acquired 8000 shares in S Ltd at a cost of Rs.1,40,000. On that date S Ltd had Rs.30,000 in General
Reserve. S Ltd earned a profit of Rs.40,000 after the purchase of shares. S Ltd decided to issue bonus
shares out of the post acquisition profit, in the ratio of 2 shares for every 5 held. Calculate the cost of
control before the issue of bonus shares and after the issue of bonus shares.
14. On 31st March 2008, Bharat Bank Ltd finds its advances classified as follows:
Rs.
Standard assets
14,91,300
Sub standard assets
92,800
Doubtful assets secured:
Less than 1 year
25,660
1 year to 3 years
15,640
More than 3 years
6,580
Doubtful assets unsecured
8,000
Loss assets
10,350
Calculate the amount of provision to be made by the bank against the above mentioned advances.
15. X Electricity Company decided to replace one of its generating plants with a modern one with a larger
capacity. The original Plant was installed in 1950 at a cost of Rs.20,00,000. The components of material,
labor and overheads being in the ratio of 5:3:2.
It is ascertained that the cost of material and labor have gone up by 40% and 80% resp.
The proportion of overheads to total costs is expected to remain the same as before.
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The new Plant cost Rs.65,00,000. Materials recovered from the old Plant of the value of Rs.1,00,000 was
used in the new construction and included in the cost given above. Materials from the old Plant were sold
for Rs.50,000.
Show how the cost will be apportioned between capital and revenue expenditure.
Also pass the Journal entries to record the above.
16. From the following data, prepare a Profit and Loss A/c of ABC Bank Ltd., for the year ended
31st March 2008:
Rs.
Interest on loan
2,59,000
Interest on Fixed deposits
2,75,000
Commission
8,200
Salaries
54,000
Discount on Bills discounted
1,95,000
Interest on cash credits
2,33,000
Interest on savings accounts
1,10,000
Rent and taxes
18,000
Interest on overdraft
1,54,000
Directors’ fees
4,200
Printing and stationery
4,300
Sundry charges
1,700
Profit and loss balance on 1st April 2007
1,20,000
Adjustments:
a) Provide Rs.40,000 for Bad Debts and Rs.49,000 for rebate on Bills Discounted.
b) Directors recommend Rs.20,000 as dividend.
c) Provision for tax to be made at 50%
17. The books of XY Insurance Co. contains the following information in respect of fire insurance as on
31/3/2008:
Rs.
Provision for unexpired risk (1/4/2007)
80,000
Outstanding claims on 1/4/2007
10,000
Outstanding claims on 31/3/2008
15,000
Claims paid
71,000
Reinsurance premium
14,500
Reinsurance recoveries
1,500
Premiums
1,90,000
Commission on direct business
25,000
Commission on reinsurance ceded
3,000
Commission on reinsurance accepted
1,000
Management expenses
55,000
Interest and dividend
8,600
Legal expenses regarding claims
1,500
Profit on sale of investment
1,750
Additional reserve on 31/3/2007
60,000
Additional reserve is to be increased by 10% of net premium.
Prepare Fire Revenue account.
18. Life insurance Co. got its valuation made once in every two years. Its Life Assurance Fund on 31/12/2006
amounted to Rs.40,00,000, before providing Rs.40,000 for Shareholders dividend for the year 2006. Its
actuarial valuation disclosed a net liability of Rs.38,00,000. An Interim bonus of Rs.50,000 was paid to
Policy Holders during the valuation period.
Prepare a statement showing the amount now available as bonus to policy hodlers.
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PART C
Answer ANY TWO questions
2 x 20 = 40 marks
19. From the following Balance sheets on 31/12/2007 relating to H Ltd
Balance sheet:
H Ltd
S Ltd
(Rs.)
(Rs.)
Share capital (Rs.10) 10,00,000 2,00,000
Fixed Assets
P/L
4,00,000 1,20,000
Stock
Reserves
1,00,000
60,000
Debtors
Creditors
2,00,000 1,20,000
Bills Receivable
Bills Payable
30,000
15,000 shares in S
_______
______
Ltd
17,00,000 5,30,000
and S Ltd prepare the consolidate
H Ltd (Rs.)
8,00,000
6,10,000
1,30,000
10,000
1,50,000
_______
17,00,000
S Ltd
(Rs.)
1,20,000
2,40,000
1,70,000
______
5,30,000
a) All profits of S ltd have been earned after the shares were acquired by S Ltd., but there was already a
reserve of Rs.60,000 on that date.
b) All the Bills Payable of S Ltd were accepted in favour of H Ltd.
c) Stock of H Ltd included Rs.50,000 purchased from S Ltd., which company had made a profit
of 25% on cost.
20. Balance sheets of X Ltd and Y Ltd on 31st March 2008 are as follows:
Share capital (Rs.10)
Reserves
9%Debentures(Rs.100)
Creditors
Loan from X Ltd
X Ltd
(Rs.)
2,00,000
40,000
1,00,000
50,000
_______
3,90,000
Y Ltd
(Rs.)
4,00,000
1,00,000
50,000
70,000
30,000
______
6,50,000
X Ltd (Rs.)
Fixed Assets
Loan to Y Ltd
Current Assets
5,000 shares in S
Ltd
2,00,000
30,000
1,10,000
50,000
_______
3,90,000
Y Ltd
Rs.)
4,00,000
2,50,000
______
6.50,000
X Ltd agrees to take over Y Ltd. on the following terms:
a) X Ltd. will issue one share of Rs.10 each (market price Rs.15) and Rs.8 in cash for every two shares in Y
Ltd.
b) Debenture holders of Y Ltd are to be discharged at a premium of 10% by the issue of 9% debentures in X
Ltd.
c) Expenses of amalgamation Rs.5,000 is to be paid by X Ltd.
Show the calculation of purchase consideration.
Pass entries for the take over in the books of X Ltd and prepare the Balance Sheet of X Ltd
after the take over.
21. City Electricity Co earned a profit of Rs.8,45,000 during the year ended 31st March, 2006. From the
following data show the disposal of profits:
Original cost of Fixed Assets Rs.100,00,000.
Preliminary expenses Rs.5,00,000
Monthly average of current assets Rs.25,00,000
4% Govt. securities Rs.10,00,000
Contingency Reserve fund investments Rs.2,50,000
Loan from Electricity Board Rs.15,00,000
Total depreciation written off to date Rs.20,00,000
Tariff and Dividend control reserve Rs.50,000
Security deposits received from customers Rs.2,00,000
7.5% debentures Rs.2,50,000
Assume Bank rate to be 6%
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