Accounts -1997-Set I

Q1) Give any three points of distinction between revaluation account and realisation account. (Marks 3)
Ans1) Revaluation and Realisation account :
(i) Revaluation is prepared at the time of admission, retirement and death of a partner. Realisation is prepared at the time of dissolution of the firm.
(ii) Revaluation is prepared record the effect of revaluation of assets and liabilities. Realisation records the realisation of various assets and liabilities.
(iii) As a result of revaluation, assets and liabilities are revalued and not closed down. Whereas as a result of realisation, the assets and liabilities accounts are closed.

Q2) Can forfeited shares be issued at a discount? If so, to what extent? (Marks 3)
Ans2) The forfeited shares can be reissued at a discount. However, the discount on the reissue of such shares cannot exceed the amount earlier forfeited on such shares, i.e. amount received on re-issue plus the amount already received on forfeited shares should not be less than the paid up value of shares.

Q3) Ashoka Ltd. purchased machinery costing Rs. 1,35,000. It was agreed that the purchase consideration be paid by issuing 12% debentures of Rs. 100 each. Assume debentures have been issued (i) at par and (ii) at a discount of 10%. Give necessary journal entries. (Marks 3)
Ans3) Working Notes :
No. of debentures = 135000/90
= 1500

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