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Corporate Accounting 4e
Corporate Accounting 4e
R. Palaniappan
ISBN 9789394828230
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Table of contents

Biographical note

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This book gives a clear and crisp explanation on the principle and practices of the corporate accounting. It is written to address the syllabi requirements of all UG students of Commerce.

  • Cover
  • Halftitle Page
  • Title Page
  • Copyright Page
  • Contents
  • Preface
  • Chapter 1 Share Capital: Issue, Forfeiture and Reissue of Shares
    • 1.1 Meaning and Definition
    • 1.2 Characteristics of a Company
    • 1.3 Differences between a Partnership and a Company
    • 1.4 Kinds of Companies
      • 1.4.1 On the Basis of Formation
      • 1.4.2 On the Basis of Liability
      • 1.4.3 On the Basis of Involvement of Public Money
      • 1.4.4 On the Basis of Share Holding Pattern
      • 1.4.5 Other Companies
    • 1.5 Differences between a Private Company and a Public Company
    • 1.6 Share Capital and Shares
      • 1.6.1 Types of Share Capital
    • 1.7 Shares
      • 1.7.1 Preference Shares
      • 1.7.2 Equity Shares (Section 43)
      • 1.7.3 Equity Shares with Differential Rights
    • 1.8 Stock
    • 1.9 Differences between Shares and Stocks
    • 1.10 Differences between Reserve Capital and Capital Reserve
    • 1.11 Prospectus
    • 1.12 List of Statutory Books (Section 128
    • 1.13 Mode of Applying for Shares
      • 1.13.1 ASBA - Application Supported by Blocked Amount
      • 1.13.2 Advantages of ASBA
    • 1.14 Issue of Shares
      • 1.14.1 Classification of Issue of Shares Based on Price Point of View
      • 1.14.2 Classification of Issue of Shares Based on Consideration
    • 1.15 Stages in Receiving Sharecapital Money
      • 1.15.1 Share Application Money
      • 1.15.2 Share Allotment Money
      • 1.15.3 Calls-on-Shares
      • 1.15.4 Calls-in-Arrears
      • 1.15.5 Calls-in-Advance
    • 1.16 Forfeiture of Shares
    • 1.17 Surrender of Shares
    • 1.18 Reissue of Forfeited Shares
    • 1.19 Lien on Shares
    • 1.20 Rights Issue (Section 62(1)(a))
    • 1.21 Bonus Issue (Section 63)
      • 1.21.1 Guidelines for Issue of Bonus Shares (Section 63)
      • 1.21.2 Reserves Not Available for Issue of Bonus Shares
      • 1.21.3 Mode of Bonus Issue
      • 1.21.4 Accounting Treatment
    • 1.22 Journal Entries for the Issue of
    • 1.23 Sweat Equity Shares (Section 54)
    • 1.24 Employees Stock Option Plan (ESOP) / Employees Stock Option Scheme (ESOS)
    • 1.25 Buy-back of Shares
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 2 Redemption of Preference Shares and Buy-Back of Shares
    • 2.1 Redemption of Preference Shares – Introduction
    • 2.2 Failure to Redeem Redeemable Preference Shares on the Due Date
    • 2.3 Profits Available and Not Available for Transfer to Capital Redemption Reserve
    • 2.4 Finding Minimum Fresh Issue of Shares and Minimum Capital Redemption Reserve
    • 2.5 Accounting Treatment for Redemption of Preference Shares
    • 2.6 Special Points Relating to Redemption of Preference Shares
      • 2.6.1 Treatment of Partly Paid Preference Shares
      • 2.6.2 Treatment of Calls-in-Arrears
      • 2.6.3 Treatment of Untraceable Preference Shareholders
      • 2.6.4 Issue of Partly Paid Shares for Redemption Purpose
    • 2.7 Buy-Back of Shares – Introduction
      • 2.7.1 Danger of Buy-Back
      • 2.7.2 Sources of Buy-Back
      • 2.7.3 Terms and Conditions for Buy-Back of Shares
      • 2.7.4 Accounting Treatment
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 3 Debentures – Issue and Redemption
    • 3.1 Introduction
    • 3.2 Types of Debentures
      • 3.2.1 On the Basis of Security Given
      • 3.2.2 On the Basis of Registration
      • 3.2.3 On the Basis of Conversion
      • 3.2.4 On the Basis of Priority in Payment
      • 3.2.5 On the Basis of Redemption
    • 3.3 Debenture Stock
    • 3.4 Differences between Shares and Debentures
    • 3.5 Distinction between Debentures and Debenture Stock
    • 3.6 Debenture Trust Deed
      • 3.6.1 Issue of Debentures for Cash
      • 3.6.2 Debentures Issued at Par
      • 3.6.3 Debentures Issued at Premium
      • 3.6.4 Debentures Issued at Discount
    • 3.7 Issue of Debentures for Assets Purchased
    • 3.8 Debentures Issued as Collateral Security
    • 3.9 Issue of Debentures to Underwriters
    • 3.10 Accounting for Issue of Debenture
    • 3.11 Accounting Treatment of Discount or Loss on Issue of Debentures
    • 3.12 Debenture Interest
      • 3.12.1 Sources of Redemption
      • 3.12.2 Creation of Debenture Redemption Reserve
    • 3.13 Methods of Redemption
      • 3.13.1 Redemption in One Lumpsum Amount
      • 3.13.2 Types of Sinking Funds
      • 3.13.3 Redemption by Annual Instalments
      • 3.13.4 Redemption by Conversion into Shares
      • 3.13.5 Redemption by Purchase in the Open Market
      • 3.13.6 Cum-Interest and Ex-Interest Prices
      • 3.13.7 Profit on Cancellation of Debentures
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 4 Underwriting of Shares and Debentures
    • 4.1 Introduction
    • 4.2 Types of Underwriting Agreements
      • 4.2.1 Pure Underwriting
      • 4.2.2 Firm Underwriting
    • 4.3 Underwriting Commission
    • 4.4 Brokerage
    • 4.5 Fees to the Managers to the Issue
    • 4.6 Marked and Unmarked Applications
    • 4.7 Determining the Liability of Underwriters
      • 4.7.1 Complete Underwriting
      • 4.7.2 Partial Underwriting
      • 4.7.3 Firm Underwriting
    • 4.8 Statement Showing Underwriters Liability
    • 4.9 Accounting Treatment
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 5 Acquisition of Business
    • 5.1 Introduction
    • 5.2 Purchase Consideration
    • 5.3 Goodwill / Capital Reserve
    • 5.4 Accounting Treatment
      • 5.4.1 When New Set of Books are Opened
      • 5.4.2 When the Same Set of Books are Continued
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 6 Profit Prior to Incorporation
    • 6.1 Introduction
    • 6.2 Calculation of Ratios for Appropriation of Expenses
      • 6.2.1 Apportionment of Expenses
    • 6.3 Steps to Compute Pre and Post-Incorporation Profit
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 7 Final Accounts of Companies
    • 7.1 Introduction
      • 7.1.1 General Instructions
      • 7.1.2 General Instructions for Preperation of Balance Sheet
      • 7.1.3 General Instructions for Preperation of Statement of Profit and Loss
    • 7.2 Treatment of Company Specific Adjustments
      • 7.2.1 Treatment of Various Items in the Statement of Profit and Loss
      • 7.2.2 Treatment of Important Items in the Balance Sheet
    • 7.3 Other Special Items
      • 7.3.1 Interest on Debentures
      • 7.3.2 Expenses or Discount on Issue of Debentures and Shares
      • 7.3.3 Preliminary Expenses
      • 7.3.4 Provision for Taxation
      • 7.3.5 Donation to Political Parties
      • 7.3.6 Interim Dividend
      • 7.3.7 Final Dividend
      • 7.3.8 Proposed Dividend
      • 7.3.9 Dividend Received
      • 7.3.10 Unclaimed Dividend/Unpaid Dividend
    • 7.4 Divisible Profit and Payment of Dividends
      • 7.4.1 Important Points Relating to Payment of Dividends
      • 7.4.2 Sources of Payment of Dividend
      • 7.4.3 Payment of Interest Out of Capital
    • 7.5 Transfer to Reserves
      • 7.5.1 Payment of Dividend Out of Accumulated Reserves
      • 7.5.2 Interim Dividend
      • 7.5.3 Final Dividend
      • 7.5.4 Preference Dividend
      • 7.5.5 Corporate Dividend Tax / Dividend Distribution Tax
      • 7.5.6 Accounting Treatment of Dividends
    • 7.6 Managerial Remuneration (Section 197(i))
      • 7.6.1 Calculation of Profit for Managerial Remuneration
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 8 Valuation of Goodwill and Shares
    • 8.1 Meaning and Definition
      • 8.1.1 Features of Goodwill
    • 8.2 Types of Goodwill
      • 8.2.1 Purchased Goodwill Vs Raised Goodwill
    • 8.3 Factors Affecting Goodwill
    • 8.4 Need for Valuation of Goodwill
    • 8.5 Factors Determining the Value of Goodwill
      • 8.5.1 Future Maintainable Profit
      • 8.5.2 Normal Rate of Return
      • 8.5.3 Capital Employed
    • 8.6 Calculation of Capital Employed
      • 8.6.1 Assets Side Approach
      • 8.6.2 Liabilities Side Approach
    • 8.7 Methods of Valuation of Goodwill
      • 8.7.1 Average Profits Method
      • 8.7.2 Super Profits Method
      • 8.7.3 Number of Years Purchase Method
      • 8.7.4 Sliding Scale Valuation Method
      • 8.7.5 Annuity Method
    • 8.8 Valuation of Shares – Introduction
    • 8.9 Circumstances for Valuation of Shares
    • 8.10 Factors Affecting the Valuation of Shares
    • 8.11 Methods of Valuation of Shares
      • 8.11.1 Net Assets Method or Intrinsic Value Method
      • 8.11.2 Yield Method / Earning Capacity Method
      • 8.11.3 Dual Method or Fair Value Method
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 9 Alteration of Share Capital and Internal Reconstruction
    • 9.1 Introduction
    • 9.2 Methods of Alterations
    • 9.3 Internal Reconstruction or Reduction of Capital – Introduction
    • 9.4 Methods of Capital Reduction
    • 9.5 Procedure for Capital Reduction (Section 66)
    • 9.6 Internal Reconstruction Vs External Reconstruction
    • 9.7 Accounting Treatment for Reduction of Capital
      • 9.7.1 Reducing or Extinguishing the Liability on Account of Uncalled Capital
      • 9.7.2 Return of Excess Capital
      • 9.7.3 Reducing the Capital (To the Extent Not Represented by Assets)
      • 9.7.4 For Reducing the Paid-Up Share Capital
      • 9.7.5 For Reduction of Claims of Debenture Holders
      • 9.7.6 For Reduction in Claims of Creditors
    • 9.8 Treatment of Arrears of Preference Dividend
    • 9.9 Surrender of Shares
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 10 Amalgamation, Absorption and External Reconstruction
    • 10.1 Introduction
    • 10.2 Forms of Integration
    • 10.3 Types of Amalgamation and Accounting Standard - 14
      • 10.3.1 Amalgamation in the Nature of Merger
      • 10.3.2 Amalgamation in the Nature of Purchase
    • 10.4 Purchase Consideration
      • 10.4.1 Methods of Calculation of Purchase Consideration
      • 10.4.2 Treatment of Fractional Shares
    • 10.5 Accounting Treatment
      • 10.5.1 Books of Transferor Company
      • 10.5.2 Books of Transferee Company
      • 10.5.3 Inter-Company Holdings
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 11 Liquidation of Companies
    • 11.1 Introduction
    • 11.2 Kinds of Winding Up
      • 11.2.1 Compulsory Winding Up by Court
      • 11.2.2 Voluntary Winding Up
      • 11.2.3 Winding Up Subject to the Supervision of the Court
    • 11.3 Statement of Affairs
    • 11.4 Liquidator’s Final Statement of Account
      • 11.4.1 Order of Payments
      • 11.4.2 Payment of Interest
      • 11.4.3 Preferential Creditors / Preferential Payments
      • 11.4.4 Overriding Preferential Payments
      • 11.4.5 Some Special Points for Preparing Liquidator Final Account
      • 11.4.6 Receiver for Debenture Holders
      • 11.4.7 List ‘B’ Contributories
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 12 Banking Company Accounts
    • 12.1 Introduction
      • 12.1.1 Functions of Commercial Banks
      • 12.1.2 Important Legal Requirements
    • 12.2 Main Books of Accounts Maintained in a Bank
      • 12.2.1 Main Features of a Bank’s Book Keeping System
      • 12.2.2 Profit and Loss Account
      • 12.2.3 Guidelines of Reserve Bank of India for Profit and Loss Account
      • 12.2.4 Balance Sheet
      • 12.2.5 Guidelines of Reserve Bank of India for Balance Sheet
    • 12.3 Classification of Assets and Income Recognition
      • 12.3.1 RBI Guidelines for Classifying an Asset as Non-Performing
      • 12.3.2 Income Recognition
      • 12.3.3 Interest Suspense Method
    • 12.4 Classification of Advances and Provision for Doubtful Debts
      • 12.4.1 Provisioning for Advances Covered by ECGC/DICGC Guarantee
    • 12.5 Classification of Investments and their Valuation
    • 12.6 Rebate on Bills Discounted/ Unexpired Discount
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 13 Accounts of Insurance Companies
    • 13.1 Introduction
      • 13.1.1 Basic Principles of Insurance
      • 13.1.2 Types of Insurance
      • 13.1.3 Differences between Life Insurance and General Insurance
      • 13.1.4 Book of Insurance Company
      • 13.1.5 Regulation of Insurance Business in India
    • 13.2 Financial Statements of LIFE Insurance Companies
      • 13.2.1 Schedule A – Life Insurance
      • 13.2.2 Forms of Financial Statements
    • 13.3 Financial Statement of General Insurance
      • 13.3.1 Schedule B - General Insurance Business
      • 13.3.2 Form of Financial Statements
    • 13.4 Schedule C – Auditor’s Report
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 14 Accounts of Holding Companies
    • 14.1 Introduction
    • 14.2 Definition
    • 14.3 Effect on the Financial Statements of Holding Company
      • 14.3.1 Investment in Subsidiary Companies
      • 14.3.2 Consolidation of Financial Statements
      • 14.3.3 Advantages of Consolidation
      • 14.3.4 Consolidation of Balance Sheet
      • 14.3.5 Steps Involved in Preparing Consolidated Balance Sheet
    • 14.4 Other Factors Involved in the Consolidation of Financial Statements
      • 14.4.1 Pre and Post Acquisition Reserves and Profits (Capital Profit and Revenue Profit)
      • 14.4.2 Pre-Acquisition Loss – Capital Loss
      • 14.4.3 Cost of Control or Goodwill
      • 14.4.4 Minority Interest
      • 14.4.5 Elimination of Common Transactions - Inter Company Owings (or) Mutual Owings
      • 14.4.6 Treatment of Unrealised Profit/Stock Reserve
      • 14.4.7 Preference Share Capital in Subsidiary Company
      • 14.4.8 Preference Dividend
      • 14.4.9 Debentures in Subsidiary Company
      • 14.4.10 Revaluation of Assets
      • 14.4.11 Depreciation on Revalued Assets
      • 14.4.12 Bonus Shares
      • 14.4.13 Dividend Received from Subsidiary Company
      • 14.4.14 Proposed Dividend not Given Effect
      • 14.4.15 Interim Dividend Paid by Subsidiary
      • 14.4.16 Uniform Accounting Policies
      • 14.4.17 Contingent Liability
      • 14.4.18 Consolidation of Profit and Loss Account
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 15 Double Accounts System
    • 15.1 Introduction
      • 15.1.1 Features of Double Account System
      • 15.1.2 Differences between the Single Account System and the Double Account System
      • 15.1.3 Advantages of Double Account System
      • 15.1.4 Disadvantages of Double Account System
      • 15.1.5 Double Account System and Double Entry System
      • 15.1.6 Final Accounts under the Double Account System
    • 15.2 Final Accounts of Electricity Companies
      • 15.2.1 Revenue Account
      • 15.2.2 Net Revenue Account
      • 15.2.3 Capital Account or Receipts and Expenditure on Capital Account
      • 15.2.4 General Balance Sheet
      • 15.2.5 Calculation of ‘Clear Profit’
      • 15.2.6 Disclosure Requirements of Electricity Companies
    • Illustrations
    • Review Questions
    • Exercises
  • Index
Prof. R. Palaniappan formerly Head, Department of Commerce, Government Arts College, Salem, has more than 39 years of experience in teaching Financial Accounting, Corporate Accounting and Cost and Management Accounting at undergraduate and postgraduate levels. He is a visiting faculty at Mettur and Salem Chapter of Institute of Cost Accountants of India and Salem Chapter of Institute of Company Secretaries of India. He has wide experience in coaching students for CA, ICWA and CS courses. He has co-authored two textbooks on Cost Accounting.
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Description

This book gives a clear and crisp explanation on the principle and practices of the corporate accounting. It is written to address the syllabi requirements of all UG students of Commerce.

Table of contents
  • Cover
  • Halftitle Page
  • Title Page
  • Copyright Page
  • Contents
  • Preface
  • Chapter 1 Share Capital: Issue, Forfeiture and Reissue of Shares
    • 1.1 Meaning and Definition
    • 1.2 Characteristics of a Company
    • 1.3 Differences between a Partnership and a Company
    • 1.4 Kinds of Companies
      • 1.4.1 On the Basis of Formation
      • 1.4.2 On the Basis of Liability
      • 1.4.3 On the Basis of Involvement of Public Money
      • 1.4.4 On the Basis of Share Holding Pattern
      • 1.4.5 Other Companies
    • 1.5 Differences between a Private Company and a Public Company
    • 1.6 Share Capital and Shares
      • 1.6.1 Types of Share Capital
    • 1.7 Shares
      • 1.7.1 Preference Shares
      • 1.7.2 Equity Shares (Section 43)
      • 1.7.3 Equity Shares with Differential Rights
    • 1.8 Stock
    • 1.9 Differences between Shares and Stocks
    • 1.10 Differences between Reserve Capital and Capital Reserve
    • 1.11 Prospectus
    • 1.12 List of Statutory Books (Section 128
    • 1.13 Mode of Applying for Shares
      • 1.13.1 ASBA - Application Supported by Blocked Amount
      • 1.13.2 Advantages of ASBA
    • 1.14 Issue of Shares
      • 1.14.1 Classification of Issue of Shares Based on Price Point of View
      • 1.14.2 Classification of Issue of Shares Based on Consideration
    • 1.15 Stages in Receiving Sharecapital Money
      • 1.15.1 Share Application Money
      • 1.15.2 Share Allotment Money
      • 1.15.3 Calls-on-Shares
      • 1.15.4 Calls-in-Arrears
      • 1.15.5 Calls-in-Advance
    • 1.16 Forfeiture of Shares
    • 1.17 Surrender of Shares
    • 1.18 Reissue of Forfeited Shares
    • 1.19 Lien on Shares
    • 1.20 Rights Issue (Section 62(1)(a))
    • 1.21 Bonus Issue (Section 63)
      • 1.21.1 Guidelines for Issue of Bonus Shares (Section 63)
      • 1.21.2 Reserves Not Available for Issue of Bonus Shares
      • 1.21.3 Mode of Bonus Issue
      • 1.21.4 Accounting Treatment
    • 1.22 Journal Entries for the Issue of
    • 1.23 Sweat Equity Shares (Section 54)
    • 1.24 Employees Stock Option Plan (ESOP) / Employees Stock Option Scheme (ESOS)
    • 1.25 Buy-back of Shares
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 2 Redemption of Preference Shares and Buy-Back of Shares
    • 2.1 Redemption of Preference Shares – Introduction
    • 2.2 Failure to Redeem Redeemable Preference Shares on the Due Date
    • 2.3 Profits Available and Not Available for Transfer to Capital Redemption Reserve
    • 2.4 Finding Minimum Fresh Issue of Shares and Minimum Capital Redemption Reserve
    • 2.5 Accounting Treatment for Redemption of Preference Shares
    • 2.6 Special Points Relating to Redemption of Preference Shares
      • 2.6.1 Treatment of Partly Paid Preference Shares
      • 2.6.2 Treatment of Calls-in-Arrears
      • 2.6.3 Treatment of Untraceable Preference Shareholders
      • 2.6.4 Issue of Partly Paid Shares for Redemption Purpose
    • 2.7 Buy-Back of Shares – Introduction
      • 2.7.1 Danger of Buy-Back
      • 2.7.2 Sources of Buy-Back
      • 2.7.3 Terms and Conditions for Buy-Back of Shares
      • 2.7.4 Accounting Treatment
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 3 Debentures – Issue and Redemption
    • 3.1 Introduction
    • 3.2 Types of Debentures
      • 3.2.1 On the Basis of Security Given
      • 3.2.2 On the Basis of Registration
      • 3.2.3 On the Basis of Conversion
      • 3.2.4 On the Basis of Priority in Payment
      • 3.2.5 On the Basis of Redemption
    • 3.3 Debenture Stock
    • 3.4 Differences between Shares and Debentures
    • 3.5 Distinction between Debentures and Debenture Stock
    • 3.6 Debenture Trust Deed
      • 3.6.1 Issue of Debentures for Cash
      • 3.6.2 Debentures Issued at Par
      • 3.6.3 Debentures Issued at Premium
      • 3.6.4 Debentures Issued at Discount
    • 3.7 Issue of Debentures for Assets Purchased
    • 3.8 Debentures Issued as Collateral Security
    • 3.9 Issue of Debentures to Underwriters
    • 3.10 Accounting for Issue of Debenture
    • 3.11 Accounting Treatment of Discount or Loss on Issue of Debentures
    • 3.12 Debenture Interest
      • 3.12.1 Sources of Redemption
      • 3.12.2 Creation of Debenture Redemption Reserve
    • 3.13 Methods of Redemption
      • 3.13.1 Redemption in One Lumpsum Amount
      • 3.13.2 Types of Sinking Funds
      • 3.13.3 Redemption by Annual Instalments
      • 3.13.4 Redemption by Conversion into Shares
      • 3.13.5 Redemption by Purchase in the Open Market
      • 3.13.6 Cum-Interest and Ex-Interest Prices
      • 3.13.7 Profit on Cancellation of Debentures
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 4 Underwriting of Shares and Debentures
    • 4.1 Introduction
    • 4.2 Types of Underwriting Agreements
      • 4.2.1 Pure Underwriting
      • 4.2.2 Firm Underwriting
    • 4.3 Underwriting Commission
    • 4.4 Brokerage
    • 4.5 Fees to the Managers to the Issue
    • 4.6 Marked and Unmarked Applications
    • 4.7 Determining the Liability of Underwriters
      • 4.7.1 Complete Underwriting
      • 4.7.2 Partial Underwriting
      • 4.7.3 Firm Underwriting
    • 4.8 Statement Showing Underwriters Liability
    • 4.9 Accounting Treatment
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 5 Acquisition of Business
    • 5.1 Introduction
    • 5.2 Purchase Consideration
    • 5.3 Goodwill / Capital Reserve
    • 5.4 Accounting Treatment
      • 5.4.1 When New Set of Books are Opened
      • 5.4.2 When the Same Set of Books are Continued
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 6 Profit Prior to Incorporation
    • 6.1 Introduction
    • 6.2 Calculation of Ratios for Appropriation of Expenses
      • 6.2.1 Apportionment of Expenses
    • 6.3 Steps to Compute Pre and Post-Incorporation Profit
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 7 Final Accounts of Companies
    • 7.1 Introduction
      • 7.1.1 General Instructions
      • 7.1.2 General Instructions for Preperation of Balance Sheet
      • 7.1.3 General Instructions for Preperation of Statement of Profit and Loss
    • 7.2 Treatment of Company Specific Adjustments
      • 7.2.1 Treatment of Various Items in the Statement of Profit and Loss
      • 7.2.2 Treatment of Important Items in the Balance Sheet
    • 7.3 Other Special Items
      • 7.3.1 Interest on Debentures
      • 7.3.2 Expenses or Discount on Issue of Debentures and Shares
      • 7.3.3 Preliminary Expenses
      • 7.3.4 Provision for Taxation
      • 7.3.5 Donation to Political Parties
      • 7.3.6 Interim Dividend
      • 7.3.7 Final Dividend
      • 7.3.8 Proposed Dividend
      • 7.3.9 Dividend Received
      • 7.3.10 Unclaimed Dividend/Unpaid Dividend
    • 7.4 Divisible Profit and Payment of Dividends
      • 7.4.1 Important Points Relating to Payment of Dividends
      • 7.4.2 Sources of Payment of Dividend
      • 7.4.3 Payment of Interest Out of Capital
    • 7.5 Transfer to Reserves
      • 7.5.1 Payment of Dividend Out of Accumulated Reserves
      • 7.5.2 Interim Dividend
      • 7.5.3 Final Dividend
      • 7.5.4 Preference Dividend
      • 7.5.5 Corporate Dividend Tax / Dividend Distribution Tax
      • 7.5.6 Accounting Treatment of Dividends
    • 7.6 Managerial Remuneration (Section 197(i))
      • 7.6.1 Calculation of Profit for Managerial Remuneration
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 8 Valuation of Goodwill and Shares
    • 8.1 Meaning and Definition
      • 8.1.1 Features of Goodwill
    • 8.2 Types of Goodwill
      • 8.2.1 Purchased Goodwill Vs Raised Goodwill
    • 8.3 Factors Affecting Goodwill
    • 8.4 Need for Valuation of Goodwill
    • 8.5 Factors Determining the Value of Goodwill
      • 8.5.1 Future Maintainable Profit
      • 8.5.2 Normal Rate of Return
      • 8.5.3 Capital Employed
    • 8.6 Calculation of Capital Employed
      • 8.6.1 Assets Side Approach
      • 8.6.2 Liabilities Side Approach
    • 8.7 Methods of Valuation of Goodwill
      • 8.7.1 Average Profits Method
      • 8.7.2 Super Profits Method
      • 8.7.3 Number of Years Purchase Method
      • 8.7.4 Sliding Scale Valuation Method
      • 8.7.5 Annuity Method
    • 8.8 Valuation of Shares – Introduction
    • 8.9 Circumstances for Valuation of Shares
    • 8.10 Factors Affecting the Valuation of Shares
    • 8.11 Methods of Valuation of Shares
      • 8.11.1 Net Assets Method or Intrinsic Value Method
      • 8.11.2 Yield Method / Earning Capacity Method
      • 8.11.3 Dual Method or Fair Value Method
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 9 Alteration of Share Capital and Internal Reconstruction
    • 9.1 Introduction
    • 9.2 Methods of Alterations
    • 9.3 Internal Reconstruction or Reduction of Capital – Introduction
    • 9.4 Methods of Capital Reduction
    • 9.5 Procedure for Capital Reduction (Section 66)
    • 9.6 Internal Reconstruction Vs External Reconstruction
    • 9.7 Accounting Treatment for Reduction of Capital
      • 9.7.1 Reducing or Extinguishing the Liability on Account of Uncalled Capital
      • 9.7.2 Return of Excess Capital
      • 9.7.3 Reducing the Capital (To the Extent Not Represented by Assets)
      • 9.7.4 For Reducing the Paid-Up Share Capital
      • 9.7.5 For Reduction of Claims of Debenture Holders
      • 9.7.6 For Reduction in Claims of Creditors
    • 9.8 Treatment of Arrears of Preference Dividend
    • 9.9 Surrender of Shares
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 10 Amalgamation, Absorption and External Reconstruction
    • 10.1 Introduction
    • 10.2 Forms of Integration
    • 10.3 Types of Amalgamation and Accounting Standard - 14
      • 10.3.1 Amalgamation in the Nature of Merger
      • 10.3.2 Amalgamation in the Nature of Purchase
    • 10.4 Purchase Consideration
      • 10.4.1 Methods of Calculation of Purchase Consideration
      • 10.4.2 Treatment of Fractional Shares
    • 10.5 Accounting Treatment
      • 10.5.1 Books of Transferor Company
      • 10.5.2 Books of Transferee Company
      • 10.5.3 Inter-Company Holdings
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 11 Liquidation of Companies
    • 11.1 Introduction
    • 11.2 Kinds of Winding Up
      • 11.2.1 Compulsory Winding Up by Court
      • 11.2.2 Voluntary Winding Up
      • 11.2.3 Winding Up Subject to the Supervision of the Court
    • 11.3 Statement of Affairs
    • 11.4 Liquidator’s Final Statement of Account
      • 11.4.1 Order of Payments
      • 11.4.2 Payment of Interest
      • 11.4.3 Preferential Creditors / Preferential Payments
      • 11.4.4 Overriding Preferential Payments
      • 11.4.5 Some Special Points for Preparing Liquidator Final Account
      • 11.4.6 Receiver for Debenture Holders
      • 11.4.7 List ‘B’ Contributories
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 12 Banking Company Accounts
    • 12.1 Introduction
      • 12.1.1 Functions of Commercial Banks
      • 12.1.2 Important Legal Requirements
    • 12.2 Main Books of Accounts Maintained in a Bank
      • 12.2.1 Main Features of a Bank’s Book Keeping System
      • 12.2.2 Profit and Loss Account
      • 12.2.3 Guidelines of Reserve Bank of India for Profit and Loss Account
      • 12.2.4 Balance Sheet
      • 12.2.5 Guidelines of Reserve Bank of India for Balance Sheet
    • 12.3 Classification of Assets and Income Recognition
      • 12.3.1 RBI Guidelines for Classifying an Asset as Non-Performing
      • 12.3.2 Income Recognition
      • 12.3.3 Interest Suspense Method
    • 12.4 Classification of Advances and Provision for Doubtful Debts
      • 12.4.1 Provisioning for Advances Covered by ECGC/DICGC Guarantee
    • 12.5 Classification of Investments and their Valuation
    • 12.6 Rebate on Bills Discounted/ Unexpired Discount
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 13 Accounts of Insurance Companies
    • 13.1 Introduction
      • 13.1.1 Basic Principles of Insurance
      • 13.1.2 Types of Insurance
      • 13.1.3 Differences between Life Insurance and General Insurance
      • 13.1.4 Book of Insurance Company
      • 13.1.5 Regulation of Insurance Business in India
    • 13.2 Financial Statements of LIFE Insurance Companies
      • 13.2.1 Schedule A – Life Insurance
      • 13.2.2 Forms of Financial Statements
    • 13.3 Financial Statement of General Insurance
      • 13.3.1 Schedule B - General Insurance Business
      • 13.3.2 Form of Financial Statements
    • 13.4 Schedule C – Auditor’s Report
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 14 Accounts of Holding Companies
    • 14.1 Introduction
    • 14.2 Definition
    • 14.3 Effect on the Financial Statements of Holding Company
      • 14.3.1 Investment in Subsidiary Companies
      • 14.3.2 Consolidation of Financial Statements
      • 14.3.3 Advantages of Consolidation
      • 14.3.4 Consolidation of Balance Sheet
      • 14.3.5 Steps Involved in Preparing Consolidated Balance Sheet
    • 14.4 Other Factors Involved in the Consolidation of Financial Statements
      • 14.4.1 Pre and Post Acquisition Reserves and Profits (Capital Profit and Revenue Profit)
      • 14.4.2 Pre-Acquisition Loss – Capital Loss
      • 14.4.3 Cost of Control or Goodwill
      • 14.4.4 Minority Interest
      • 14.4.5 Elimination of Common Transactions - Inter Company Owings (or) Mutual Owings
      • 14.4.6 Treatment of Unrealised Profit/Stock Reserve
      • 14.4.7 Preference Share Capital in Subsidiary Company
      • 14.4.8 Preference Dividend
      • 14.4.9 Debentures in Subsidiary Company
      • 14.4.10 Revaluation of Assets
      • 14.4.11 Depreciation on Revalued Assets
      • 14.4.12 Bonus Shares
      • 14.4.13 Dividend Received from Subsidiary Company
      • 14.4.14 Proposed Dividend not Given Effect
      • 14.4.15 Interim Dividend Paid by Subsidiary
      • 14.4.16 Uniform Accounting Policies
      • 14.4.17 Contingent Liability
      • 14.4.18 Consolidation of Profit and Loss Account
    • Illustrations
    • Review Questions
    • Exercises
  • Chapter 15 Double Accounts System
    • 15.1 Introduction
      • 15.1.1 Features of Double Account System
      • 15.1.2 Differences between the Single Account System and the Double Account System
      • 15.1.3 Advantages of Double Account System
      • 15.1.4 Disadvantages of Double Account System
      • 15.1.5 Double Account System and Double Entry System
      • 15.1.6 Final Accounts under the Double Account System
    • 15.2 Final Accounts of Electricity Companies
      • 15.2.1 Revenue Account
      • 15.2.2 Net Revenue Account
      • 15.2.3 Capital Account or Receipts and Expenditure on Capital Account
      • 15.2.4 General Balance Sheet
      • 15.2.5 Calculation of ‘Clear Profit’
      • 15.2.6 Disclosure Requirements of Electricity Companies
    • Illustrations
    • Review Questions
    • Exercises
  • Index
Biographical note
Prof. R. Palaniappan formerly Head, Department of Commerce, Government Arts College, Salem, has more than 39 years of experience in teaching Financial Accounting, Corporate Accounting and Cost and Management Accounting at undergraduate and postgraduate levels. He is a visiting faculty at Mettur and Salem Chapter of Institute of Cost Accountants of India and Salem Chapter of Institute of Company Secretaries of India. He has wide experience in coaching students for CA, ICWA and CS courses. He has co-authored two textbooks on Cost Accounting.
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