|1.|| The following are the summarised Balance Sheets of PD co. Ltd. and SD co. Ltd. as on 31.3.2004 : |
| Liabilities || PD Co. Ltd.|
| SD Co. Ltd.|
| Shares Capital:|
Issued and Subscribed Capital
Equity shares of Rs. 10 each fully paid
Profit and Loss Account
| Assets || PD Co. Ltd.|
| SD Co. Ltd.|
| Land and Buildings|
Plant and Machinery
PD Ltd. acquired 80% shares of SD Ltd. on 30.9.2003 at a cost of Rs. 18,10,000. On 1.10.03 SD Ltd. declared and paid dividend on Equity shares. PD Ltd. appropriately adjust its share of dividend in Investment Account.
On 1.4.03, the Capital Reserve and Profit and Loss Account stood in the books of SD Ltd. at Rs. 50,000 and Rs. 2,75,000 respectively.
Land and Buildings standing in the books of SD Ltd. at Rs. 16,00,000 on 1.4.03, revalued at Rs. 20,00,000 on 1.10.93, Furniture, which stood in the books at Rs. 2,00,000 on 1.4.03 revalued at Rs. 1,50,000 on 1.10.03. In both the cases the effects have not yet been given in the books.
SD Ltd. bought an item of machinery from PD Ltd. on hire–purchase basis. The following are the balances in respect of this machinery in the books on 31.03.04 :
| Rs. |
| Instalment due|
Instalment not due
Hire–purchase stock reserve
The above items stood included under appropriate heads in Balance Sheet.
Prepare a Consolidated Balance Sheet of PD Ltd. and its subsidiary SD Ltd. as at 31.03.2004, complying with the requirements of AS—21.
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|3.|| The Capital Structure of M/s XYZ Ltd., on 31st March, 2003 was as follows : |
| Equity Capital 18,000 Shares of Rs. 100 each|
12% Preference Capital 5,000 Shares of Rs. 100 each
12% Secured Debentures
Profit earned before Interest and Taxes during the year
Generally the return on equity shares of this type of Industry is 15%.
Subjected to :
| The profit after tax covers Fixed Interest and Fixed Dividends at least 4 times;|
The Debt Equity ratio is at least2;
Yield on shares is calculated at 60% of distributed Profits and 10% of undistributed Profits;
The Company has been paying regularly an Equity dividend of 15%.
The risk premium for Dividends is generally assumed at 1%.
Find out the value of Equity shares of the Company.
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