...ACCOUNTING FOR ISSUE OF DEBENTURES Debentures Issued at par and redeemable at par (i) For receipt of debenture application money: Bank A/c To X % Debenture Application A/c Dr. (ii) For transfer of Application money to debentures a/c : X % Debenture Application A/c To X % Debenture A/c Dr. (iii) For debenture allotment money due : X % Debenture Allotment A/c To X % Debenture A/c Dr. (iv) For receipt of allotment money: Bank A/c To X % Debenture Allotment A/c Dr. (v) For debenture call money due: X % Debenture …… call A/c To X % Debentures A/c Dr. (vi) For receipt of debenture call money : Bank A/c Dr. To X % Debenture …… call A/c Debentures Issued at premium and Redeemable at par (a) When premium amount due with application money (i) For debenture application money received including premium : Bank A/c To X % Debenture Application A/c (ii) For debenture application money adjusted : Dr. X % Debenture Application A/c To X % Debentures A/c To Securities Premium A/c Dr. (b) When premium amount due with allotment/call money (i) For debenture allotment/call money due including premium : X % Debenture Allotment/call A/c...
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...SEBI guidelines pertaining to the Issue of Debentures are as follows:- * Issue of FCDs having a conversion period more than 36 months will not be permissible, unless conversion is made optional with “put” and “call” option. • Compulsory credit rating will be required if conversion is made for FCDs after 18 months. • Premium amount on conversion, the conversion period, in stages, if any, shall be pre-determined and stated in the prospectus. • The interest rate for above debentures will be freely determinable by the issuer. • Issue of debenture with maturity of 18 months or less are exempt from the requirement of appointing Debenture Trustees or creating a Debenture Redemption Reserve (DRR). • In other cases, the names of the debenture trustees must be stated in the prospectus and DRR will be created in accordance with guidelines laid down by SEBI. • The trust deed shall be executed within six months of the closure of the issue. • Any conversion in part or whole of the debenture will be optional at the hands of the debenture holder, if the conversion takes place at or after 18 months from the date of allotment, but before 36 months. • In case of NCDs/ PCDs credit rating is compulsory where maturity exceeds 18 months. • Premium amount at the time of conversion for the PCD, redemption amount, period of maturity, yield on redemption for the PCDs/NCDs shall be indicated in the prospectus. • The discount on the non-convertible portion of the PCD in case they...
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...EX-INTEREST DEBENTURES INTRODUCTION DEBENTURES The total capital of joint stock companies can be divided into owner's capital and borrowed capital. Share capital is owner's capital whereas debenture is considered as borrowed capital. The buyers of shares i.e. shareholders possess the voting right through which they own control power of the company. Debenture is a long-term loan. Companies can raise additional capital by the issue of debentures. Debenture-holders receive fixed income in the form of interest during the loan period, however, they do not possess the voting right. Debenture is a written promise for a debt by a company under its seal which contains the terms and conditions regarding the amount of loan or principal, the rate of interest, maturity date, maturity value etc. In other words, debenture is a certification of acknowledgment issued with the seal of company in favor of lender as an evidence of debt. This written document grants the holder the right to receive interest and return of principal as per the terms under which debentures are issued. Thus, debenture is a part of total capital of a company and debenture-holders are the creditors. Debenture-holders are entitled the right to receive interest on their fund invested in debenture. The rate of interest is predetermined and stated in the bond certificate. The interest is payable whether there is profit or loss. Modes Of Issue Of Debentures [pic][pic]The...
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...An update for liabilities PRBA003 CORPORATE ACCOUNTING Department Name Simon Morris 00 Month 2010 Law And Business AASB 137 defines a liability as a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits. This is the same as the definition in the AASB Framework There are three parts to a liability, There must be a present obligation (legal or constructive) It must have arisen because of a past event, and It must result in the giving up of economic resources to satisfy the claims of other parties. An update for liabilities| PRBA003 | Slide 2 Liability recognition in the balance sheet depends upon it is probable that economic benefits will flow from the entity; and the value of the liability can be reliably measured. If the entity can determine whether any a future sacrifice of economic resources should take place or not, then there appears to be no present obligation and a liability does not exist. An update for liabilities| PRBA003 | Slide 3 1 Contingent liabilities cannot be recognised by an entity on the balance sheet but will be disclosed in the notes to the accounts if the possibility of payment is not remote. A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. It is...
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...Rs. 20 per Share. Pass necessary journal entries. 3. JCM Ltd. invited applications for issuing 20,000 equity shares of Rs. 20 each at a discount of 10%. The whole amount was payable on application. The issue was fully subscribed. Pass necessary journal entries. 4. On 31.1.2005 Janta Ltd. converted its Rs. 88,00,000, 6% debentures into equity shares of Rs. 20 each at a premium of Rs. 2 per share. Pass necessary journal entries in the books of the company for redemption of debentures. 5. Pappu and Munna are partners in a firm sharing profits in the ratio of 3 : 2. The partnership deed provided that Pappu was to be paid salary of Rs. 2,500 per month and Munna was to get a commission of Rs. 10,000 per year. Interest on capital was to be allowed @5% per annum and interest on drawings was to be changed @ 6% per annum. Interest on Pappu's drawings was Rs. 1,250 and on Munna's drawings Rs. 425. Capital of the partners were Rs. 2,00,000 and Rs. 1,50,000 respectively, and were fixed. The firm earned a profit of Rs. 90,575 for the year ended 31.3.2004. Prepare Profit and Loss Appropriation Account of the firm. 3 2 2 2 2 168 6. 7. What is meant by issue of debentures as 'Collateral Security' ? What is meant by reconstitution of a partnership firm ? Explain briefly any two occasions on which a partnership firm can be...
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...WLC 35 CHAPTER 8 – BORROWINGS & CHARGES CHAPTER 8 BORROWING POWERS OF A COMPANY BORROWING POWERS • Every trading company has an implied power to borrow, as borrowing is implied in the object for which it is incorporated. A trading company can exercise this power even if it is not included in the Memorandum. However non-trading company has no implied power to borrow and such power can be taken by it implied power to borrow and such power can be taken by it by including a clause to that effect in the Memorandum. A public company can borrow only after the receipt of Commencement Certificate. [Section 149(1)]. But a private company can borrow immediately after the incorporation The Board of Directors may borrow moneys by passing a resolution passed at the meetings of the Board. The board may delegate its borrowing powers to a Committee of Directors. Such a resolution should specifically mention the aggregate amount upto which the moneys can be borrowed by the Committee, the Managing Director, Manager or any other principal officer of the company on such conditions as it may prescribe [Section 292 (1) (c)] The moneys borrowed together with the moneys already borrowed by the company (excluding loans obtained from banks i.e. working capital) shall not exceed the aggregate of the paid up capital and the free reserves. [Section 293(1)(d)] It may be noted that a company may borrow in excess of its paid up capital and free reserves if it is so consented and authorized by the shareholders...
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...Shriram City Union Finance Limited (SCUFL) Secured NCD Issue August 11, 2011 Shriram City Union Finance Limited, one of the largest small enterprise finance companies in India, has come up with its public issue of Secured Non Convertible Debentures (NCDs) aggregating upto Rs. 375 crore with an option to retain over-subscription upto Rs. 375 crore for issuance of additional NCDs aggregating to a total of upto Rs. 750 crore. The Issue is open from August 11, 2011 to August 27, 2011 (The Company has the option of closing the issue on an earlier date, once it receives the amount it has targeted). The company will be paying an interest ranging between 11.50% and 12.10% p.a. on these bonds. Given the current scenario of rising interest rates in Indian debt markets where rates are expected to be close to their peak levels, the issue provides an opportunity to lock in attractive returns for a period of 3-5 years. This issue offers better interest rates compared to other alternatives though with slightly lower credit rating. Further, given its unique business model, decent financial history, reasonable credit rating and safety (Secured NCDs are 100% secured by assets of the company), investors comfortable with primary market offerings can participate in this issue (low to medium risk, medium - long term investment). If convinced, the investor needs to apply at the earliest as allotment is to be made on first come first serve basis. Investors can also look at NCDs of companies already...
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...sales Dividend income Interest income Total revenue and gains Costs and expenses: Cost of sales Operating expenses (including depreciation) Interest expense Income Taxes RM 7,678,000 120,000 102,000 7,900,000 4,582,000 1,479,000 260,000 520,000 Total cost, expenses and losses Net Income (6,841,000) 1,059,000 Additional information on the balances for non-current assets, non-current liabilities and equity: 31 Dec. 2007 RM 2,344,000 31 Dec. 2006 RM 1,788,000 690,000 Nil Ordinary shares of 50 sen each (Note 7) 1,400,000 1,000,000 Reserves (Note 8) 1,271,000 262,000 Nil 400,000 439,000 400,000 Property, plant and equipment (Note 6) Investment 10% Convertible Debentures (Note 7) Deferred tax Other Information: 1. 2. 3. 4. Trade receivable increased by RM111,000 whereas inventory increased by RM261,000. Trade payable decreased by RM116,000 and accrued operating expenses increased by RM50,000. Interest payable increased by RM15,000 whereas income...
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...DESIGN OF QUESTION PAPER ACCOUNTANCY Class - XII Time Allowed - 3 Hrs. Max. Marks - 80 The weightage to marks over different dimensions of the question paper shall be as under : A. Weightage to Content/ Subject units Content Unit Marks S. No. Part A : Accounting for Not for Profit Organizations, Partnership Firms and Companies 1. Accounting for not for profit organizations 2. 3. 4. Accounting for Partnership Firms Reconstitution of Partnership Accounting for Share Capital and Debentures TOTAL Part B : Financial Statement Analysis 5. 6. Analysis of Financial Statements Cash flow Statement Total OR Part C : Computerized Accounting 5 6. 7 Overview of computerized Accounting system Accounting using Database Management System(DBMS) Accounting Applications of Electronic Spread sheet TOTAL Grand Total (A+B)/(A+C) 10 5 20 25 60 12 8 20 5 8 7 20 80 68 B. Weightage to forms of Questions S. No. 1. 2. 3. 4. 5. Forms of Questions Very short answer type (VSA) Short answer type (SAI) Short answer type (SAII) Long answer type (LAI) Long answer type (LAII) Total Marks for each question 1 3 4 6 8 No. of questions 8 4 5 4 2 23 Total Marks 8 12 20 24 16 80 C. No. of Sections The question paper will have three sections A, B and C. The students will have choice between sections B and C. D. Scheme of Options There will be no overall choice. However, there is an internal choice in the questions of 8 marks. E. Weightage of difficulty level of questions S. No 1....
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...E10-6 Debit Payroll Taxes Expense $352.16 Credit FICA Taxes Payable $198.40 Credit Federal Unemployment Tax Payable $19.84 Credit State Unemployment Tax Payable $133.92 E10-8 1.True 2.True 3.False - there is no tax effect subsequent from the issuance of mutual stock. Protected bonds have detailed assets of the issuer assured as guarantee for the bonds. 4. True 5. False - debenture bonds are not protected by exact property. In the occurrence that the issuer is settled, the holder of a debenture becomes a overall creditor and as a result is less probable than the protected creditors to improve in full. Because of their high possibility factor, debentures pay higher charges of interest than protected debt of the same issuer. 6. False (Serial Bonds mature in segments) A adaptation feature may be added to bonds to make them more attractive to bond buyers. 7. True 8. True 9. True 10. True E10-18 (a) 1/1/08 Cash $562,613 (dr) Discount $37,387 (dr) Bond Payable $600,000 (cr) (b) 7/1/08 Interest expense $28,131 ($562,613 x 10% / 2) (dr) Amortization of discount $1,131 (cr) Cash $27,000 (cr)(600,000 x 9% / 2) At this point, the new netcarrying amount of the bonds is $563,744 ($562,613 + $1,131) (c) 12/31/08 Interest expense $28,189 ($563,777 x 10% / 2) (dr) Amortization of discount $1,189 (cr) accrued interest $27,000 (cr)(600,000 x 9% / 2) 10-3A May 1, 2011 Dr. Cash $600,000 Cr. Bonds Payable $600,000 ...
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... | | |Decrease in working capital if any | | |Total –A | | | | | |Application of fund : | | |Funds lost in operations | | |Redemption of preference share capital | |...
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...To: Lois McGonagle Re: Proposed Capital Investment and Capital Structure of Madison Products Ltd. Date: 09/01/2013 I was asked to draft you a short report detailing the proposed capital investment and review the current capital structure of the firm. I will start out by looking at the proposed new product line of luggage and travel goods, I will then go on to study the Capital Structure of the firm and give any suggestions to you that I might have to help improve it. (1) Proposed Capital Investment The capital investment I was asked to evaluate was the proposed investment into a new product by the company. To help make this decision I used both the NPV and IRR methods which are used in capital budgeting to analyse the profitability of an investment. The NPV gave me a positive Net Present Value of €1,037,312 (Appendix 1) after using a discount rate of the WACC calculated of 12.79% for companies in this industry. Since this project gives us a very high NPV this project should be accepted under this method. I also calculated the Internal Rate of return for this product to confirm what the NPV has told us, to accept the project. IRR would generally be used when comparing different projects against each other with the highest being the most desirable. However in this case since there is just one project we will just want to see a high IRR rate as possible. The IRR calculated for this investment is 31.56% (Appendix 1). This is to be considered as a very high IRR and so if...
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...Debenture 1 Debenture A debenture is a document that either creates a debt or acknowledges it, and it is a debt without collateral. In corporate finance, the term is used for a medium- to long-term debt instrument used by large companies to borrow money. In some countries the term is used interchangeably with bond, loan stock or note. A debenture is thus like a certificate of loan or a loan bond evidencing the fact that the company is liable to pay a specified amount with interest and although the money raised by the debentures becomes a part of the company's capital structure, it does not become share capital.[1] Senior debentures get paid before subordinate debentures, and there are varying rates of risk and payoff for these categories. Debentures are generally freely transferable by the debenture holder. Debenture holders have no rights to vote in the company's general meetings of shareholders, but they may have separate meetings or votes e.g. on changes to the rights attached to the debentures. The interest paid to them is a charge against profit in the company's financial statements. Attributes • A movable property. • Issued by the company in the form of a certificate of indebtedness. • It generally specifies the date of redemption, repayment of principal and interest on specified dates. • May or may not create a charge on the assets of the company.[2] • Corporations often issue bonds of around $1000, while government bonds are more likely to be $5000. ...
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...MODULE - 6A Analysis of Financial Statements Cash Flow Statement Notes 30 CASH FLOW STATEMENT In the previous lesson, you have learnt various types of analysis of financial statements and its tools such as comparative statements, common size statement and trend analysis, etc. You have also learnt various kinds of accounting ratios such as liquidity, activity, profitability, solvency, etc. You have learnt that accounts are mainly maintained on accrual basis but cash also plays significant role. Cash is mainly generated for operating activities which is buying assets and discharging liabilities. Cash is also raised from the issue of shares and debentures or loans but adequate cash should be available for use in time and no cash should remain idle. For this another tool of analysis is used which is cash flow statement.. In this lesson, you will learn about cash flow statement and its methods of preparation. OBJECTIVES After studying this lesson, you will be able to : state the meaning of cash flow statement; explain objectives of cash flow statement; explain the method of preparing cash flow statement as per format; state the limitations of cash flow statement. 30.1 MEANING AND OBJECTIVES Cash plays a very important role in the economic life of a business. A firm needs cash to make payment to its suppliers, to incur day-to-day expenses and to pay salaries, wages, interest and dividends etc. In fact, what blood is to a human body, cash is to a business enterprise...
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...Part A Question 2.12 A) Total cash outlay = 500 000 x $6.10 + 4 300 = $3 104 300 Pimento Ltd General Journal Contingencies Reserve 700 000 Retained Earnings 1 000 000 Share Capital 1 404 300 Cash at bank 3 104 300 (Buy back of 500 000 ordinary shares at $6.20 per share and buy back costs of $4 300) B) Total cash outlay = 500 000 x $1.50 + 4 300 = $754 300 Pimento Ltd General Journal Retained Earnings 70 000 Share Capital 684 300 Cash at bank 754 300 (Buy back of 500 000 ordinary shares at $1.50 per share and buy back costs of $4 300) Question 2.14 Basil Ltd General Journal 2010 Nov 30 Cash at bank 46 800 B ordinary shares 46 800 (Issue of 18 000 shares at $2.60 under the rights issue) 2011 Jan 16 Call 180 000 A ordinary shares 180 000 (Call of $1.50 on 120 000 A ordinary shares x $1.50) Jan 31 Cash at bank 165 000 Call 165 000 (Cash received, 110 000 A ordinary shares x $1.50) Feb 5 A Ordinary Shares 30 000 Call 15 000 Forfeited shares liability 15 000 (Forfeiture of 10 000 A ordinary shares called to $3.00, paid to $1.50) Mar 31 Cash at bank 24 500 Share options (expiring 31/12/12) 24 500 (Issue of 35 000 options at $0.70) Dec 31 Cash at bank 75 600 Share options 75 600 (Exercise of 27 000 options into A ordinary shares at exercise...
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