B.Com In Banking & Insurance (BCBI) Sem II 2018 19 Oct 2018-19 FIN.ACCOUNTING II Question Paper - Mumbai University | munotes

Questions asked in this paper

1. Q1 (A) Fill in the blanks (any 8) 8 marks
   • (1) Goodwillis asset
   • (2) Buyback of shares canbe of paid up shares
   • (3) Discount on buyback is credited to account
   • (4) Dividend equalization reserve is a profit
   • (5) Fund created to provide funds for redemption is called
   • (6) Convertible debentures can be redeemed by issue
   • (7) shares cannot be redeemed except in case of liquidation of
   • (8) The buyback of shares results in reduction of capital of a company
   • (9) Intrinsic value of shares is calculated on the basis of value of assets
   • (10) Capital Redemption Reserve can be used for issue of
   • (B) State whether following statements are true or false. (any 7)
   • (1) The debentures can be redeemed at a discount. 07
   • (2) Premium on redemption can be provided out of security premium
   • (3) The shares must be cancelled and destroyed after buyback
   • (4) Goodwill may be purchased or non-purchased
   • (5) Intrinsic value is also known as Net Assets Value
   • (6) Investments are non-trading assets
   • (7) Buyback must be as per RBI guidelines
   • (8) Preference shareholders have voting rights
   • (9). Capital Reserve is a divisible profit The debentures can be redeemed whenever company desires
2. Q2 The Balance Sheet of RK Ltd. as on March, 2017 is as follows: 10000 shares of = 10 each fully The net profits of the company after charging depreciation and taxes for the years ending 31* March were as follows: On March, 2017, assets were valued as under: 12% return on investment can be considered fair for the business You are required to find value of goodwill by: 15 marks
   • a) Five years purchase of super profits
   • b) Capitalisation of super profits Balance Sheet of AM Ltd as on 31* March, 2017 is as follows: 15
3. Q1 Realisable value of goodwill is 48,000, Plant & Machinery 4,20,000 and that of Land & Building is 4,61,000 li) The expected rate of return on capital employed is 12.5% uli) Average annual profits is 2,50,000. Tax rate is 40% You are required to find fair value of each equity share
4. Q3 The summarized Balance Sheet of FS Ltd. As on March 2017 is as follows: Equity shares of 10 each 3,00,000 | Fixed Assets 8 00,000 Preference shares of =100 each | | Long Term Investments 1,00,000 Ascertain maximum number of equity shares that FS Ltd. can buy back and maximum price per share that the company can offer Pass necessary journal entries to give effect of buyback transactions Following is the Balance Sheet of a company as on December 2015 15 8% Preference Shares of Building 3,08 000 Equity shares of 100 each 6,00,000 | Stock Profit and Loss A/c Provision for Income Tax 63,000 The profit of the company for the years 2011 to 2015, after charging all expenses, depreciation but before taxation was 2,38,000, 2,68,800, 2,52,000, 2,80,000 & On 31 December, 2015; Building and Machinery were taken as worth = 3,50,000 and respectively. Income Tax can be taken at 50% In this business, 8% is considered reasonable return on capital employed Find out value of equity share under Net Assets Method, after taking into account revised values of assets and after valuing Goodwill on the basis of Five years purchase of super 15 marks
5. Q4 Acompany issued 1,80,000, 10% redeemable preference shares at par on 1* January 2013; — redeemable at the option of the company on or after December 2014 in whole or in part The following redemptions were made out of profits: On 30" June 2015: = 60,000; on 30" June 2016: = 40,000 On 1* December 2016, the company issued equity shares of the face value = 60,000 at a premium of 2% and on December 2016, it redeemed balance of the preference shares Pass the necessary journal entries to record the above transactions 15 marks
6. Q4 On April 2013, BM Ltd. issued 4,000, 14% redeemable debentures of = 100 each at par redeemable at 10% premium after 4 years. The company decided to set up a sinking fund for the redemption setting aside necessary amount every year and investing it in investment carrying 12% interest p.a. the sinking fund factor for 4 years at 12% is 0.20964. On March 2017, the sinking fund investment were sold for = 3,15,000 You are required to show the necessary ledger accounts in the books of BM Ltd. for the financial years ending March 2014, 2015, 2016 and 2017 15 marks
7. Q5 A) What are the conditions for buyback of shares? 8 marks
   • B) Explain methods of valuation of goodwill. 07
8. Q5 Write short notes on any three : 15 marks
   • (e) Sources of Buyback

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