Accounting and Auditing (Financial Accounting) - III Notes | B.Com. (Accountancy) Semester 5 | Mumbai University | munotes

Contents

Module I Internal Reconstruction

1. What a Reconstruction Is, and Why a Company Needs One 1
2. Internal and External Reconstruction: the Distinction That Decides Everything 4
3. Where These Powers Live in the Companies Act 2013 6
4. Alteration of Share Capital: Section 61 9
5. Sub-division of Shares, Worked 12
6. Consolidation of Shares, Worked 14
7. Conversion of Shares into Stock and Back 16
8. Cancellation of Unissued Capital 18
9. Notice to the Registrar: Section 64 20
10. Variation of Shareholders' Rights 22
11. Reduction of Share Capital: Section 66 25
12. Reading a Reconstruction Question: Finding the Scheme in the Prose 28
13. Surrender of Shares, Re-issue and Cancellation 30
14. The Capital Reduction Account: Opening It, Using It, Closing It 32
15. The Full Set of Entries for a Scheme of Internal Reconstruction 35
16. A Complete Worked Scheme: Old Balance Sheet to New 37
17. Practice Questions: Internal Reconstruction 43

Module II AS – 14 - Amalgamation, Absorption & External Reconstruction (excluding intercompany holdings)

1. Why Amalgamation Needs a Standard 46
2. The Scope of AS 14, and What It Excludes 48
3. The Definitions AS 14 Sets 50
4. Amalgamation in the Nature of Merger: the Five Conditions 52
5. Amalgamation in the Nature of Purchase 55
6. Transferor and Transferee: Reading the Question Correctly 57
7. Purchase Consideration: What AS 14 Actually Means By It 59
8. Computing Purchase Consideration: Net Assets Method, Worked 62
9. Computing Purchase Consideration: Net Payments Method, Worked 64
10. The Pooling of Interests Method: Principles 66
11. Pooling of Interests, Worked 68
12. The Purchase Method: Principles 70
13. The Purchase Method, Worked in the Transferee's Books 72
14. Treatment of Reserves, and the Amalgamation Adjustment Account 75
15. Goodwill Arising on Amalgamation and Its Amortisation 78
16. Disclosure under AS 14, and Amalgamation after the Balance Sheet Date 80
17. Practice Questions: Amalgamation under AS 14 83

Module III Investment Accounting (w.r.t. Accounting Standard- 13)

1. What an Investment Is, and Why It Is Accounted For Separately 86
2. The Scope of AS 13, and What It Does Not Deal With 88
3. The Definitions AS 13 Sets 90
4. Forms of Investments 92
5. Classification: Current and Long-term 94
6. The Cost of an Investment 96
7. Acquisition by Issue of Shares or in Exchange, Worked 98
8. Interest, Dividends and Rentals: Pre- and Post-acquisition 100
9. Right Shares and Their Cost 103
10. Carrying Amount: Current Investments 106
11. Carrying Amount: Long-term Investments 108
12. Investment Properties 111
13. The Investment Account, Worked 113
14. Disposal of Investments 117
15. Reclassification of Investments 119
16. Disclosure Requirements under AS 13 121
17. Practice Questions: Investment Accounting 124

Module IV Buy Back of Shares

1. What Buy-Back Is, and Why a Company Does It 127
2. The General Prohibition: Section 67 129
3. The Power to Buy Back: Section 68 131
4. The Three Permitted Sources, and What They Are Not 133
5. The Conditions in Section 68(2) 135
6. The Two Twenty-Five Per Cent Limits, Worked 138
7. The Debt-Equity Ratio Condition, Worked 140
8. Finding the Maximum Number of Shares That May Be Bought Back 142
9. Procedure and Time Limits under Section 68 144
10. Transfer to the Capital Redemption Reserve: Section 69 147
11. Prohibition for Buy-Back in Certain Circumstances: Section 70 150
12. The Accounting Entries for a Buy-Back 153
13. Buy-Back at a Premium, Worked 155
14. Buy-Back Out of the Proceeds of a Fresh Issue, Worked 157
15. Cancellation of Shares Bought Back 159
16. A Complete Worked Buy-Back: Tests, Entries and the New Balance Sheet 161
17. Practice Questions: Buy Back of Shares 164