Module                        : ACT 205: Corporate Accounting

           Programme                 : B.Com

Credit Value              : 12

Prerequisite               : ACT 101: Accounting Principles

General Objectives:

• To acquaint students with different aspects of corporate accounting principles with special emphasis to Bhutanese corporate accounting and practices
• To help students developing skills in application of concepts and principles of corporate accounting

Learning Outcomes:

Upon successful completion of this module, student should be able to:

·         develop special skills to solve numerical problems and to interpret and analyze the same using various decisions making tools like ratio and trend analysis etc

·         demonstrate the knowledge of trading of shares, debentures etc. both theoretically and practically

·         develop Fund Flow and Cash Flow statement with special emphasis as a decision making tool

·         apply the knowledge of amalgamation of firms and also to analyze the different financial statements by using appropriate tools for decision making

CONTENT

Unit -I: Accounting for Shares and Debentures                                                         (12 Hours)

Overview of issue of shares and debentures. Pro-rata allotment; Forfeiture and re-issue of shares: issued at par, premium and at discount. Sweat equity shares, Employees Stock Option Scheme (ESOS) and Buy back of shares. Underwriting of shares.

Sources of redemption of debentures. Accounting treatment of redemption of debentures – Sinking Fund Method and Insurance Policy Method.

Unit -II: Final Accounts of Companies                                                                        (14 Hours)

Preparation of Fund Flow statement – treatment of proposed dividend and provision of tax as current and non-current liability. Preparation of Cash flow Statement as per Revised AS - 3. Using Cash Flow Statement as a tool of decision making for managers.

Procedure and legal requirements relating to preparation and presentation of final A/c of companies. Treatment of tax liability, bonus and dividend to shareholders, managerial remuneration, contingent liability and transfer of reserve in preparation of final A/c of companies.  CONTENTs of statutory report.

Unit -III: Analysis of Financial Statements                                                                   (6 Hours)

Overview of financial statements Analysis. Tools of financial analysis – comparative financial statements and common size statements. Ratio analysis – solvency, liquidity, turnover and profitability analysis. Limitation of financial statements analysis.

Unit IV: Accounting for Amalgamation, Absorption and External Reconstruction

                                                                                                                                         (18 Hours)

Amalgamation in the nature of merger and purchase as per AS – 14, calculation of purchase consideration. Accounting treatment in the books of transferor and transferee company – pooling of interest method and purchase method. Dissenting shareholders. Accounting treatment for absorption and external reconstruction.

Unit IV: Liquidation of companies                                                                              (10 Hours)

Order of payment; preferential payments; workmen’s dues and overriding preferential payments; preparation of statement of affairs; deficiency account; liquidator’s final statement of affairs.

Note: Indian Accounting Standards or IFRS equivalent standards as adopted in India will be used in the preparation and presentation of any information related to the units covered in this module until AASBB issues Bhutanese GAAP)

Teaching strategies

·                                 Lecture method

·                                 Case study

·                                 Demonstration

·                                 Group Studies

Assessment

·                                 Assignment                             30%

·                                 Mid-Semester Exam               30%                            

·                                 End-Semester Exam               40%

                                                           Total   100%

Essential Texts

1.      Sehgal, A. and Sehgal, D. Corporate Accounting, 6^th edition, Taxmann’s publication, New Delhi

2.      Warren Reeve and Fees, Corporate Financial Accounting, south- west Publishing, Thompson Learning.

References

1.      W.B Meigs and R.F. Meigs, accounting: The basis of business decisions, McGraw     Hill.

2.                                    Shukla, M.C., Grewal, T.S., and Gupta, S.C., “Advance Accounts’, Vol. – II, S. Chand & Co., new Delhi.

3. Gupta, Nirmal, “Corporate Accounting”, Sahitya Bhawan, Agra.