Page 306 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Unit 12: Divisible Profits and Managerial Remuneration

Remuneration to part-time directors 10,811 Notes
Total managerial remuneration 1,29,730

Task The manager of Shanti Ltd., is entitled to annual salary of 35,000 and also a
commission of 5% on the profits available for dividend. Their profit and loss account for
the year ended 31st march, 2006 is as under:

Particulars Particulars
To salaries & wages 2,80,000 By gross profit b/d 15,40,000
To general exps. 1,92,500
To director’s fees 17,500
To manager’s salary 35,000
To depreciation (including 1,75,000
development Rebate 35,000)
To interest on debentures 70,000
To general reserve 2,10,000
To taxation 3,15,000
To balance c/d 2,45,000
15,40,000 15,40,000

Assuming that general expenses are all admissible for tax purpose, income tax and super

tax are to be taken at 50% of the company profits (except capital gains of 30%). Calculate
the manager’s remuneration.

Self Assessment

State whether the following statements are “true” or “false”:
16. Maximum amount of director's fees can be 2,000 per head as per notification of central
government dated 27-8-1993.
17. Director's fees is a part of managerial remuneration.
Select the right alternative:
18. Which section of the Companies Act contains the provisions regarding overall managerial
remuneration?
(a) Section 349
(b) Section 198

(c) Section 387
(d) Section 79.
19. Which section of the Companies Act contains the provision regarding part-time director?
(a) Section 198

(b) Section 387
(c) Section 309(3)
(d) Section 309(4)

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