Page 279 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Accounting for Companies – II

Notes Alternatively the net assets of the company will be divided in the four.

Types of shares’ in the ratio of paid up capital. Paid up capital ratio will be 3,50,000 : 5,25,000:
5,60,000 : 3,15,000 or 70 : 105 : 112 : 63

Net Assets for (i) type of shares = 19,20,0000 ×70 = ` 3,84,000
350

Net Assets for (ii) type of shares = 19,20,0000 ×105 = ` 5,76,000
350

Net Assets for (iii) type of shares = 19,20,0000 ×112 = ` 6,14,400
350

Net assets for (iv) type of shares = 19,20,0000 ×63 = ` 3,45,600
350

Value of Shares

3,84,000
(i) Value per share of ` 10 fully paid = = ` 10.97
3,50,000

5,76,000
(ii) Value per share of ` 5 paid up fully paid up = = ` 5.485
1,05,000

6,14, 400
(iii) Value per share of ` 8 paid up = = ` 8.77
70,000
3, 45,600
(iv) Value per share of ` 3 paid up = = ` 3.291
1,05,000
Illustration 5 (valuation of the Shares of the Holding Company)
The Balance Sheet of Big Ltd. and Small Ltd. as on 31 December, 2010 is given below:
st
Liabilities Big Ltd. Small Ltd. Assets Big Ltd. Small Ltd.
` ` ` `
Equity Share Capital
(shares of ` 10 each) 9,00,000 3,00,000 Fixed Assets 9,00,000 4,00,000
General Reserve 5,00,000 30,000 Investments (75%
Profit and Loss Account 6,00,000 2,00,000 shares of Small Ltd.) 3,00,000 –
Sundry Creditors 1,00,000 1,70,000 Sundry Debtors 3,60,000 90,000
Inventory 3,10,000 1,20,000
Cash and Bank Balance 2,30,000 90,000
21,00,000 7,00,000 21,00,000 7,00,000
Fixed assets of Big Ltd. and Small Ltd. were valued at ` 9,50,000 and ` 4,20,000 respectively and
the goodwill of Small Ltd. was ascertained at ` 30,000.
Calculate the value of shares of each company by Assets Method.

274 LOVELY PROFESSIONAL UNIVERSITY