FYUG Even Semester Exam, 2025
COMMERCE (2nd Semester)
Corporate Accounting (COMDSC-151)
Subject: Commerce
Paper Code: COMDSC-151
Full Marks: 70 | Pass Marks: 28
Time Duration: 3 Hours
UNIT - I
Question 1 (Answer any two) 2 x 2 = 4
(a) What are superprofits?
Solution:
Super profit is the excess of actual average profits earned by a business over the normal profits expected from the capital invested in similar businesses.
(b) State any two factors which influence the valuation of shares.
Solution:
- Nature of Business: The risk and stability associated with the industry.
- Profitability: The earning capacity and past performance of the company.
(c) Write the formula of yield value of share.
Solution:
Yield Value per Share = (Expected Rate of Return / Normal Rate of Return) x Paid-up value per share
Question 2 (Answer any one) 10
(a) Calculate the value of Equity Shares as per intrinsic value method.
Working Steps:
- Calculation of Net Assets:
- Expected profit before tax: 22,00,000
- Less: Tax @ 50%: (11,00,000)
- Profit after tax: 11,00,000
- Less: Transfer to General Reserve @ 20%: (2,20,000)
- Profit available for shareholders: 8,80,000
- Total Assets available for Equity Shareholders:
- Share Capital + Reserves - Fictitious Assets - External Liabilities
- (Note: Intrinsic value usually calculates total assets minus external liabilities and preference claims).
- Total value = (10,000 shares x 8) + (10,000 pref x 10) + 2,50,000 (Reserves) - 20,000 (Fictitious) - 75,000 (External Liabilities)
- Total value = 80,000 + 1,00,000 + 2,50,000 - 20,000 - 75,000 = 3,35,000
- Intrinsic Value = Net Assets available for Equity / Number of Equity Shares
- Value per share = 2,35,000 / 10,000 = 23.50
(OR) (b) Briefly discuss the different methods for valuation of goodwill.
Solution:
- Average Profit Method: Goodwill is calculated as a number of years' purchase of average profits.
- Super Profit Method: Calculated by multiplying super profit by a fixed number of years.
- Capitalization Method: Goodwill is the difference between capitalized value of business and net assets.
- Annuity Method: Considers the present value of future super profits.
UNIT - II
Question 3 (Answer any two) 2 x 2 = 4
(a) Differentiate between Capital Reserve and Reserve Capital.
| Basis |
Capital Reserve |
Reserve Capital |
| Origin |
Created out of capital profits. |
Part of uncalled share capital. |
| Utilization |
Used to write off capital losses. |
Used only at the time of winding up. |
(b) Explain the meaning of Contingent Liability with examples.
Solution:
A contingent liability is a potential liability that may or may not occur, depending on the outcome of an uncertain future event.
- Example 1: Pending lawsuits against the company.
- Example 2: Guarantees given for loans of others.
(c) What is position statement?
Solution:
A position statement, commonly known as a Balance Sheet, is a financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time.
Question 4 (Prepare Profit & Loss A/c) 10
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Solution Note: To prepare the P&L Account for Swift Ltd., we aggregate income and subtract expenses after adjustments.
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- Gross Profit: Sales (12,70,000) - Net Purchases (7,23,000 - 9,850) - Opening Inventory (1,24,000) + Closing Inventory (87,500) - Carriage (6,410) = 5,04,240
[span_16](start_span)- Operating Expenses: Audit Fees (14,600), Salaries (48,350 + 6,500), Insurance (6,400 - 1,200), Depreciation (18,000), Bad Debt Provision (7,000).
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UNIT - III
Question 5 (Answer any two) 2 x 2 = 4
(a) What is meant by amalgamation of companies?
Solution:
Amalgamation is a legal process where two or more companies join to form a new entity or one company absorbs another to gain operational efficiency.
(b) Distinguish between Internal Reconstruction and External Reconstruction.
- Internal: No new company is formed; only the capital structure is reorganized.
- External: The existing company is liquidated, and a new company is formed to take over its business.
Question 6 (Journal Entries for Reconstruction) 10
Key Entries:
[span_21](start_span)- Equity Share Capital (Old) Dr. 2,50,000
To Equity Share Capital (New) 1,00,000 (2/5th)
To Capital Reduction A/c 1,50,000 [span_21](end_span)
- Capital Reduction A/c Dr. 1,50,000
To Goodwill 75,000
To Machinery 12,500
To Leasehold Premises 12,500
UNIT - IV
Question 7 (Answer any two) 2 x 2 = 4
(a) Find out liquidator's remuneration.
Calculation:
Amount for unsecured creditors = 7,41,540.
Remuneration = (7,41,540 x 2) / 102 = 14,540.
Question 8 (Liquidator's Final Statement) 10
Structure: Receipts (Assets realized 3,08,000 + Surplus from securities 8,000 + Calls realized) vs. Payments (Liquidation expenses 3,000, Debentures 1,00,000, Preferential creditors 8,000).
UNIT - V
Question 9 (Answer any two) 2 x 2 = 4
(c) What is Corporate Social Responsibility (CSR) Report?
Solution: A CSR report is a document published by a company about its environmental, social, and governance (ESG) activities to demonstrate accountability to stakeholders.
Question 10 (Answer any one) 10
(a) What is integrated reporting?
Solution: Integrated reporting (IR) is a process founded on integrated thinking that results in a periodic integrated report by an organization about value creation over time.