Page 281 - Corporate Finance PDF Final new link

BRILLIANT’S Investment Accounting 281

1 Aà¡b 2016 H$mo Aßgam {b{‘Q>oS> Ho$ X {b{‘Q>oS> ‘| 20,000 B{³dQ>r eo¶g© Wo& eo¶g© H$s ’o$g d¡ë¶y < 10
à˶oH$ Wr {H$ÝVw CZH$s ~wH$ d¡ë¶y < 16 à{V eo¶a Wr&
1 OyZ 2016 H$mo Aßgam {b{‘Q>oS> Zo <14 à˶oH$ na X {b{‘Q>oS> ‘| Am¡a 5,000 B{³dQ>r eo¶g© IarXo&
30 OyZ 2016 H$mo X {b{‘Q>oS> Ho$ S>m¶ao³Q>g© Zo ~moZg Bí¶y H$s KmofUm H$s& ~moZg aIo J¶o à˶oH$ 5 eo¶g© Ho$ {bE
EH$ B{³dQ>r eo¶a H$s Xa na Kmo{fV {H$¶m J¶m Wm VWm ¶o eo¶g© 2 AJñV 2016 H$mo àmá {H$¶o J¶o Wo&
2 AJñV 2016 VH$ B§doñQ>‘|Q> AH$mC§Q> Xem©B¶o&
Solution: In the Books of Apsara Ltd.
Dr. Investment in Equity Shares 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
1.6.16 To Bank A/c 50,000 - 70,000
2.8.16 To Bonus
Shares A/c 50,000 - -

Important Note: NPP
1
Apsara Ltd. will receive 25,000 × = 5,000 shares of ` 10 each as Bonus Shares at no
5
cost.
(c) Rights Shares (c) amBQ²>g eo¶g©
When rights shares offered are subscribed O~ amBQ²>g eo¶g© àXmZ {H$¶o OmVo h¢ VWm CÝh|
for, the cost of the rights shares is added to the gãñH«$mB~ {H$¶m OmVm h¡ Vmo amBQ²>g eo¶g© H$s bmJV ‘yb
carrying amount of the original holding. For hmopëS>¨J Ho$ H¡$[a¨J A‘mC§Q> ‘| Omo‹S>r OmVr h¡& CXmhaU Ho$
example, X Ltd. purchased 10,000 shares of
{bE, X {b{‘Q>oS> Zo Y {b{‘Q>oS> Ho$ < 25 à{V eo¶a na
` 10 each at ` 25 per share of Y Ltd. during < 10 à{V Ho$ 10,000 eo¶g© IarXo& 2015-16 Ho$
2014-15. During 2015-16, Y Ltd. offered rights
issue at one share for every two held at a price Xm¡amZ Y {b{‘Q>oS> Zo à˶oH$ Xmo eo¶g© Ho$ {bE EH$ eo¶a na
of ` 20 per share. If X Limited subscribes to the < 20 à{V eo¶a ‘yë¶ H$m amBQ²>g Bí¶y àXmZ {H$¶m& ¶{X
rights issue, the carrying cost of the investment X {b{‘Q>oS> amBQ²>g Bí¶y H$mo gãñH«$mB~ H$aVm h¡ Vmo {Zdoe
will be as under: H$s H¡$[a¨J H$m°ñQ> {ZåZ{b{IV hmoJr…
`
Cost of original holding (10,000 × ` 25) 2,50,000
Cost of rights issue (5,000 × ` 20) 1,00,000
Carrying cost of Investments 3,50,000

If rights are not subscribed but are sold in ¶{X amBQ²>g H$mo gãñH«$mB~ Zht {H$¶m OmVm h¡
the market, the sale proceeds are credited to {H$ÝVw ~mOma ‘| ~oMm OmVm h¡ Vmo {dH«$¶ H$m¶©dmhr H$mo
the Statement of Profit and Loss. However, bm^ VWm hm{Z Ho$ ñQ>oQ>‘|Q> ‘| H«o${S>Q> {H$¶m OmVm h¡&
where the investments are acquired on cum- ¶Ú{n Ohm§ B§doñQ>‘|Q²>g H$mo H$‘-amBQ²>g AmYma na
rights basis and the market value of invest-
A{O©V {H$¶m OmVm h¡ VWm E³g-amBQ> hmoZo Ho$ VËH$mb