Page 295 - Corporate Finance PDF Final new link

BRILLIANT’S Investment Accounting 295

Dr. Investment in Equity Shares of X Ltd. Account Cr.
Date Particulars No. of Divi- Cost Date Particulars No. of Divi- Cost
Shares dend (`) Shares dend (`)
12.4.16 To Bank A/c 1,00,00 - 40,00,000 15.5.16 By Bank A/c 1,25,000 - 25,00,000
15.5.16 To Bonus 1.12.16 By Bank A/c - 2,25,000 -
Issue A/c 1,50,000 - - 31.3.17 By Bal. c/d 1,25,000 - 20,00,000
15.5.16 To Statement
P/L (WN5) - - 5,00,000
31.3.17 To Stat. of P/L - 2,25,000 -
2,50,000 2,25,000 45,00,000 2,50,000 2,25,000 45,00,000

Dr. Investment in Equity Shares of C Ltd. Account Cr.
Date Particulars No. of Divi- Cost Date Particulars No. of Divi- Cost
Shares dend (`) Shares dend (`)
1.7.16 To Bank A/c 50,000 - 3,87,500 1.3.17 By Bank A/c
31.3.17 To State- (Div.) - 62,500 -
ment of P/L NPP - 31.3.17 By Bal. c/d 50,000 - 3,87,500
- 62,500
50,000 62,500 3,87,500 50,000 62,500 3,87,500

Important Note:
 50,000 
Amount received ` 56,250   1 ` 2.25  by selling rights entitlement will be
 2 
credited to Profit and Loss Account/Statement of Profit and Loss
Working Notes:
1. On 1st April, 2016, 12,000, 8% bonds were purchased @ ` 80.50 cum-interest. Total amount
paid 12,000 × ` 80.50 = ` 9,66,000 which includes accrued interest for 5 months, i.e.
1st November, 2014 to 1st April, 2016. Accrued interest will be :
8 5
` 12,00,000 ×  = ` 40,000. Therefore, cost = ` 9,66,000 - ` 40,000 = ` 9,26,000
100 12
2. On 1st October, 2016, 3,000 bonds were sold @ ` 81 ex-interest. Total amount received =
 8 5 
3,000 × 81 + accrued interest for 5 months = ` 2,43,000 + 3,00,000   ` 10,000 

 100 12 
Profit on Sale of Bonds on 1.10.2016 `
Sale Proceeds 2,43,000
9,26,000
Less: Average Cost: × ` 3,00,000 2,31,500
12,00,000
Profit on Sale 11,500
3. On 1st November, 2016, interest will be received for 9,000 bonds @ 8% for 6 months, i.e.
8 1
` 9,00,000 ×  = ` 36,000
100 2