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SNP

SNP (student)     29 May 2011

Are there any options for the first  Question

Akash

Akash (CA Final Article Assistant)     29 May 2011

Originally posted by : SNP

Are there any options for the first  Question

a)50000

b)40000

c)200000

d)220000

CA Romil Shah

CA Romil Shah (CA )     29 May 2011

AMOUNT TO BE TRANSFER TO C.R.R=50000(200000-150000)...WHEREAS THE SECURITY PREMUIM RECIEVED FROM THE ISSUE OF EQUITY SHARES WILL BE UTILISED FOR WRITING OFF PREMIUM ON REDEMPTION OF PREFERENCE SHARES..

Agneya

Agneya (CPT)     30 May 2011

yeah answer is 50000.

shakuntala  chhangani

shakuntala chhangani (FCA Course co-ordinator WIRC coaching centre)     31 May 2011

Hi Akash, the answer for ur second question is Rs. 19,000. there is a typing error in the question. Instead of 1/6, it should be 1/5.

The question says that C purchases his share from existing partner. It means that existing partners are selling their share and c is buying it. Hence amount of capital introduced by C will be withdrawn by the existing partners. In effect, the total capital of the firm before and after admission will remain the same. Total capital of the firm before C's admission is 30,000 + 50,000 + 15,000 = 95,000

total capital after admission = 95,000

C's capital = 1/5 x 95,000 = 19,000

total amount brought by C = Rs. 25,000

C's share of goodwill = 25,000 - 19,000 = 6,000

total goodwill of the firm = 6,000 x 5 = 30,000

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shakuntala  chhangani

shakuntala chhangani (FCA Course co-ordinator WIRC coaching centre)     31 May 2011

Hi again, for ur 1st question, pref. shares can either be redeemed out of the preceeds of fresh issue or out of divisible profits. proceeds in case of shares issued at par/discount = amount received and in case of premium it is the face value of shares issued. In the given case since pref. shares are issued at premium, proceeds means face value that is Rs. 100. It means

proceeds of fresh issue is 15,000 shares x Rs. 100 = Rs. 1,50,000

for the balance, divisible profits will be used and an equivalent amount will be transferred to CRR i.e.

Nominal value of pref. shares to be redeemed = 2,000 shares x Rs. 100 = Rs. 2,00,000

proceds of fresh issue = Rs. 1,50,000

amount to be transferred to CRR = Rs. 50,000 (balance)

Regards, CA Shakuntala Chhangani

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