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Corporate Accounting Detailed Notes Sem2

The document provides detailed notes on corporate accounting for B.Com Semester 2, covering topics such as the meaning and scope of corporate accounting, share issuance, debenture management, final accounts preparation, amalgamation, reconstruction, and valuation methods for goodwill and shares. It also outlines important accounting standards and offers exam preparation tips. Key concepts include the legal framework under the Companies Act, types of shares and debentures, and methods for internal and external reconstruction.

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684 views4 pages

Corporate Accounting Detailed Notes Sem2

The document provides detailed notes on corporate accounting for B.Com Semester 2, covering topics such as the meaning and scope of corporate accounting, share issuance, debenture management, final accounts preparation, amalgamation, reconstruction, and valuation methods for goodwill and shares. It also outlines important accounting standards and offers exam preparation tips. Key concepts include the legal framework under the Companies Act, types of shares and debentures, and methods for internal and external reconstruction.

Uploaded by

krishpersonal2
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Corporate Accounting - Detailed Notes (Semester 2 - B.

Com)

CORPORATE ACCOUNTING - SEMESTER 2 (B.COM PROGRAMME)

THEORY NOTES FOR EXAM PREPARATION

1. MEANING AND SCOPE OF CORPORATE ACCOUNTING:

Corporate Accounting deals with the accounting for companies, specifically joint stock companies. It

includes recording and analysis of financial transactions, preparation of final accounts, and

understanding the legal framework under the Companies Act, 2013.

2. ISSUE OF SHARES:

Companies raise capital by issuing shares. Shares can be issued at par, at a premium or at a

discount (as per the Companies Act).

Types of shares:

- Equity Shares: Carry voting rights and are risk-bearing.

- Preference Shares: Fixed dividend and priority over equity shares during liquidation.

3. FORFEITURE AND REISSUE OF SHARES:

When shareholders fail to pay calls, shares can be forfeited. Forfeited shares can be reissued at

par, discount (not exceeding forfeited amount), or premium.

4. ISSUE AND REDEMPTION OF DEBENTURES:

Debentures are debt instruments used to borrow funds.

Types: Redeemable, Irredeemable, Convertible, Non-convertible.

Redemption Methods: Lump sum, Installments, Purchase from market, Sinking fund method.

Accounting involves interest payment and writing off discount/loss on issue.


5. FINAL ACCOUNTS OF COMPANIES:

Preparation includes:

- Trading Account

- Profit & Loss Account

- Profit & Loss Appropriation Account

- Balance Sheet (as per Schedule III of Companies Act, 2013)

Includes adjustments like provision for tax, proposed dividend, depreciation, etc.

6. AMALGAMATION AND ABSORPTION:

- Amalgamation: Two or more companies merge to form a new company.

- Absorption: One company absorbs another.

Accounting Treatment: Pooling of interest method and Purchase method (AS-14).

7. INTERNAL RECONSTRUCTION:

A company restructures its capital internally to eliminate losses without liquidating.

Methods include:

- Reduction of share capital

- Revaluation of assets & liabilities

- Writing off accumulated losses

8. EXTERNAL RECONSTRUCTION:

This involves winding up the existing company and forming a new one to take over its business. It

helps revive financially sick companies.

9. BONUS SHARES AND RIGHT SHARES:

- Bonus Shares: Issued from free reserves to existing shareholders at no cost.

- Right Shares: Issued to existing shareholders at a fixed price to raise fresh capital.
10. VALUATION OF GOODWILL:

Goodwill is the reputation or brand value of a firm.

Methods:

- Average Profit Method

- Super Profit Method

- Capitalization Method

11. VALUATION OF SHARES:

To determine fair value of shares for buyback, amalgamation, etc.

Methods:

- Net Asset Value Method

- Earning Yield Method

- Dividend Yield Method

12. ACCOUNTS OF HOLDING COMPANIES:

Includes preparation of consolidated balance sheet of holding and subsidiary companies. It involves

elimination of inter-company transactions, unrealized profits, and calculation of minority interest.

13. IMPORTANT ACCOUNTING STANDARDS (AS):

- AS-1: Disclosure of Accounting Policies

- AS-6: Depreciation Accounting

- AS-10: Accounting for Fixed Assets

- AS-14: Accounting for Amalgamations

TIPS FOR EXAM:

- Understand journal entries for share and debenture transactions.


- Practice preparing final accounts with adjustments.

- Learn formats and legal provisions.

- Revise theory behind AS-14 and reconstruction.

- Solve past year question papers.

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