Page 280 - Corporate Finance PDF Final new link

280 Corporate Finance BRILLIANT’S

{S>{dS>|S> Kmo{fV {H$¶m {Ogo Aßgam {b{‘Q>oS> Zo 20 {gV§~a 2016 H$mo àmá {H$¶m& 20 {gV§~a 2016 VH$ B§doñQ>‘|Q>
AH$mC§Q> Xem©B¶o&
Solution:
In the Books of Apsara Ltd.
Dr. Investment in Equity Share of X Ltd. Account Cr.
Date Particulars Nominal Divi- Cost Date Particulars Nominal Divi- Cost
Value dend (`) Value dend (`)
1.4.16 To Bal. b/d 2,00,000 - 3,20,000 20.9.16 By Bank A/c
1.6.16 To Bank A/c 50,000 - 70,000 (Note 1) - 30,000 7,500
Important Note:
Apsara Ltd. was holding 20,000 Equity Shares of X Ltd. on 1st April, 2016. Any divi-
dend in respect of these shares will be treated as dividend from post-acquisition profit. He
acquired 5,000 Equity Shares of X Ltd. on 1st June, 2016. The dividend in respect of these
shares will be treated as dividend from pre-acquisition profit. Therefore, ` 30,000

 15  NPP
 ` 2,00,000  dividend will be credited to Income Account and ` 7,500
 100 
 15 
 ` 50,000  dividend will be credited to Investment Account (cost column).
 100 
(b) Bonus Shares (b) ~moZg eo¶g©
Bonus shares are issued by capitalizing ~moZg eo¶g© H¡${nQ>bmBqOJ ’«$s [aOìg© Ûmam Omar
free reserves. A business receives bonus shares
{H$¶m OmVm h¡& EH$ {~OZog {~Zm {H$gr bmJV na {dÚ‘mZ
on the basis of existing holding, at no cost. hmopëS>¨J Ho$ AmYma na ~moZg eo¶g© àmá H$aVm h¡& AV…
Therefore, only the nominal value column of B§doñQ>‘|Q> AH$mC§Q> Ho$ Ho$db Zm°{‘Zb d¡ë¶y H$m°b‘ H$mo
the Investment Account needs amendment.
The total nominal value of shares received as g§emo{YV H$aZm Amdí¶H$ hmoVm h¡& ~moZg Ho$ ê$n ‘| àmá
bonus will appear in nominal value column eo¶g© H$s Hw$b Zm°{‘Zb d¡ë¶y Ho$db Zm°{‘Zb d¡ë¶y H$m°b‘ ‘|
only and nothing is recorded in the cost col- {XImB© XoJr VWm bmJV H$m°b‘ ‘| Hw$N> ^r [aH$m°S>© Zht {H$¶m
umn. In effect, the average cost of the existing Om¶oJm& dmñVd ‘| {dÚ‘mZ eo¶g© H$s Am¡gV bmJV KQ>m¶r
shares are reduced. OmVr h¡&
Illustration 3.3.6
On April 1, 2016, Apsara Ltd. had 20,000 Equity Shares in X Ltd. Face value of the shares was
` 10 each but their book value was ` 16 per share.
On June 1, 2016 Apsara Ltd. purchased 5,000 Equity Shares in X Ltd. more @ ` 14 each.
On June 30, 2016 the directors of X Ltd. announced a bonus issue. Bonus was declared at the
rate of one Equity Share for every five shares held and these shares were received on August 2,
2016.
Show Investment Account upto August 2, 2016.