Corporate Accounting Solved Question Papers Dibrugarh UniversityCorporate Accounting Solved Paper May 2017 (New Course)COMMERCE (General/Speciality)Course: 203 (Corporate Accounting )The figures in the margin indicate full marks for the questionsFull Marks: 80Pass Marks: 24Time: 3 hours
a) Reserve capital is a part of authorised capital.
b) A company can declare and distribute dividend even if its Memorandum and Articles are silent.
c) Reduction of share capital is unlawful except when sanctioned by the court.
d) Profit of the subsidiary company made after the date of the purchase of shares by the holding company is treated as revenue profits.
(b) State the following statement whether True or False: 1x4=4
a) Bonus shares can be issued to the existing members only. True
b) Dividends cannot be declared except out of profits. True
c) Payments made to debentures holders should be considered as part of purchase consideration. False
d) In a wholly owned subsidiary, there is no minority interest because all the shares with voting rights are held be the subsidiary company. True
2. Write short notes on (any four): 4x4=16
a) Prorata Allotment.
b) Convertible Debentures.
c) Corporate Dividend Tax.
d) Purchase Consideration.
e) Minority Interest.
f) Goodwill.
Ans: a) Prorata Allotment: When the number of shares applied is more than the number of shares issued by a company, the issue of shares is said to be oversubscribed. The company cannot allot shares more than those offered for subscription. In case of over-subscription, there are three possibilities arise:
(a) Some applicants may not be allotted any shares. This is known as ‘rejection of applications’.
(b) Some applicants may be allotted less number of shares than they have applied for. This is known as partial or pro-rata allotment.
(c) Some applicants may be allotted the full number of shares they have applied for. This is known as full allotment.
In such a situation if shares are allotted in proportion of shares issued to shares applied, then such an allotment is called partial or Prorata allotment. For example, if company allots shares to the applicants of 70,000 shares. It is a pro-rata allotment in the proportion of 5:7. In such cases, excess application money is transferred to allotment.
b) Convertible Debentures: These debentures are issued with an option to debenture holders to convert them fully or partly into shares after a fixed period. Where only a part of the debenture amount is convertible into equity shares, such debentures are known as ‘partly convertible debentures’. When full amount of convertible into equity shares, such debentures are known as ‘fully convertible debentures.’
c) Corporate Dividend Tax: Corporate Dividend Tax: As per the Finance Act, 1997 dividends paid or declared were subject to corporate dividend tax @ 10% with effect from 1st June, 1997. Such corporate dividend tax is deducted from Surplus sub-head in the Balance Sheet and it is also shown under the heading current liabilities as a provision till it is paid. But as per recent Finance Act, the rate of this tax is 15% plus 10% surcharge and cess of 2%. Total percentage of corporate dividend tax with surcharge and education cess comes to 17% approximately.
d) Purchase Consideration: Purchase Consideration refers to the consideration payable by the purchasing company to the vendor company for taking over the assets and liabilities of Vendor Company.
Accounting Standard – 14 defines the term purchase consideration as the “aggregate of the shares and other securities issued and the payment made in the form of ach or other assets by the transferee company to the shareholders of the transferor company”. Although, purchase consideration refers to total payment made by purchasing company to the shareholders of Vendor Company, its calculation could be in different methods, as explained below:
a. Lump sum method
b. Net Assets method
c. Net Payment Method
e) Minority Interest: When some of the shares in the subsidiary are held by outside shareholders they will be entitled to a proportionate share in the assets and liabilities of that company. The share of the outsider in the subsidiary is called minority interest.
Amount of minority interest is calculated by adding subsidiary company’s share in pre-acquisition profit, post-acquisition profit and in share capital of the company. Preference share capital to the extent of not purchased by holding company is also added with minority interest. In the consolidated balance sheet all the assets and liabilities of the subsidiary are consolidated with assets and liabilities of the holding company and the minority interest representing the interest of the outsider in the subsidiary is shown as a liability.
f) Goodwill: In practice the holding company may pay more or less than the net worth of the subsidiary company. If the holding company feels that a company the shares of which it wants to acquire enjoys considerable reputation or exceptionary favourable factor it may pay more than the paid up value of shares or net assets.
The excess of acquisition price over net assets represents goodwill or cost of control. If on the other hand the acquisition price is less than the paid up value of shares the difference is again to the holding company & is known as capital reserve.
3. (a) What is bonus share? What are the circumstances that warrant the issue of bonus shares? State the SEBI guidelines for issue of bonus shares. 2+5+7=14
Concept of Bonus Shares
The undistributed profits, after the necessary provisions for taxation, are the property of the equity shareholders and the same may be used by the company for distribution as dividends to them. But the sound financial policy demands that some of the profits at least must be ploughed back into the business. Thus when a company has accumulated substantial amount of past profits as might be found in the credit of capital reserves, revenue or general reserve of profit and loss account; it is desirable to bring the amount of issued share capital closer to the actual capital employed as represented by the net assets (Assets – Liabilities) of the company. This would reflect the true amount of capital invested by the shareholders in the company.
For example, the capital, which the shareholders have contributed for shares, is clearly visible since this was contributed in cash. But the capital, which they have contributed in the form of accumulated profits, remains unknown because this was not a direct contribution in cash.
In order to rectify these, accumulated profits in full or in part are capitalized, that is, accumulated profits are converted into shares. Shares are distributed free of charge and therefore are known as Bonus Shares, which are given to existing shareholders pro rata to their holdings. It may be added the bonus shares may be issued to make up the existing partly paid shares as fully paid.
The following circumstances warrant the issue of bonus shares:
(1) When a company has accumulated huge profits and reserves and it desires to capitalise these profits so as use them on permanent basis in the business.
(2) When the company is not able to declare higher rate of dividend on its capital, in spite of sufficient profits, due to restrictions imposed by the Government in regard to payment of dividend.
(3) When higher rate of dividend is not advisable for the reason that the shareholder may expect the same higher rate of dividend in future also.
(4) When the company cannot declare a cash bonus because of unsatisfactory cash position and its adverse effects on the working capital of the company.
(5) When there is a large difference in the nominal value and market value of the shares of the company.
SEBI GUIDELINES on the issue of bonus shares
There are no guidelines for issuing bonus shares by the private companies or unlisted public companies have been issued by the SEBI. However, the listed public companies for issuing bonus shares to the shareholders must comply with the guidelines issued by the SEBI. The requirements of the guidelines of SEBI are given below:-
a) Right of FCD/PCD holders: No company shall pending the conversion of FCDs/PCDs issue any shares by way of bonus unless similar benefit is extended to the holders of FCDs/PCDs, through reservation of shares in proportion to such convertible part of FCDs/PCDs. The shares so reserved may be issued at the time of conversion of such debentures on the same terms on which the rights or bonus issues were made.
b) Out of free reserves: the bonus issue shall be made out of free reserves built out of genuine profits or share premium collected in cash only.
c) Revaluation of fixed assets: reserves created by revaluation of fixed assets should not be capitalised. If assets are subsequently sold and the profits are realized, such profits could be utilised for capitalization.
d) Bonus issue not to be in lieu of dividend: The declaration of bonus issue, in lieu of dividend, should not be permitted.
e) Fully paid shares: Bonus issue shall not be made, unless the partly paid shares, if any, existing are made fully paid up.
f) No default in respect of deposit/debentures: the company should not have defaulted in payment of any interest or principal in respect its fixed deposits and interest on debentures or redemption of debentures.
g) Statutory dues of the employees: the company should not be defaulted in payment of its statutory dues to the employees such as contribution to PF, gratuity, bonus, minimum wages, workmen’s compensation, retrenchment, payment to contract labour etc.
h) Implementation of proposal: the bonus issue shall be implemented within a period of 15 days after the date of approval of the BoD; it does not require the shareholders’ approval for capitalization of profits or reserves for making bonus issue as per the AoA of the company.
However, if the company is required to get the shareholders’ approval as per AoA of the company for capitalization of profits or reserves, the bonus issue shall be implemented within 2 months from the date of the meeting of the BoD.
i) Provision in the AoA: the AoA of the company should provide the provision for the capitalization profits, i.e. it must authorize the bonus issue, if not, and steps should be taken to alter the AoA suitably.
j) Authorised capital: consequent upon bonus issue if the subscribed or paid up capital of the company exceed the authorised capital, then a resolution shall be passed by the company at its GM for increasing its authorised capital to that extent.
k) Certificate: A certificate duly signed by the issuer company and countersigned by the statutory auditor or the company secretary in practice to the effect that the provisions of the guidelines has been complied with shall be forwarded to the SEBI.
CORPORATE ACCOUNTING SOLVED QUESTION PAPERS (2010 Till Date)
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Or
(b) Ledger balances of Kaveri Ltd. as at 31st March, 2016 were as follows:
Credit Balances | Rs. | Debit Balances | Rs. |
Share Capital: Equity Shares of Rs. 100 each, fully paid 7% Redeemable Preference Security Premium Reserve Capital Reserve Revenue Reserve 6% Debentures Creditors | 5,00,000 3,00,000 50,000 1,00,000 2,00,000 3,00,000 1,50,000 | Fixed Assets Investments Cash Other Current Assets | 8,00,000 1,00,000 2,00,000 5,00,000 |
16,00,000 | 16,00,000 |
Both the redeemable preference shares and debentures were due for redemption on 1st April, 2016. Kaveri Ltd. took the following steps in this respect:
a) It issued 2000 Equity shares of Rs. 100 each at a premium of 10%, the shares were fully subscribed and paid for.
b) It sold the investments for Rs. 90,000.
c) It arranged a bank loan to the extent necessary.
The redemption was fully carried out. Give Journal Entries to record the above and prepare the Balance Sheet of the company immediately afterwards. 8+6=14
Solution:
Journal Entries
In the books of Kaveri Ltd.
Particulars | L/F | Amount Dr. | Amount Cr. |
Bank A/c Dr. Revenue Reserve A/c Dr. To Investment A/c (Being the investments sold and loss debited to revenue reserve account) | 90,000 10,000 | 1,00,000 | |
7% Redeemable Preference Share Capital A/c Dr. To Preference Shareholders A/c (Being the amount payable on redemption of preference share capital transferred to preference shareholders account) | 3,00,000 | 3,00,000 | |
6% Debenture holders A/c Dr. To Debenture holders A/c (Being the amount payable on redemption of debentures transferred to debenture holders account) | 3,00,000 | 3,00,000 | |
Bank A/c Dr. To Equity Share Capital A/c To Securities Premium A/c (Being the 2,000 equity shares of Rs. 100 each issued at a premium of 10% for the purpose of redemption) | 2,20,000 | 2,00,000 20,000 | |
Revenue reserve A/c Dr. To Capital Redemption Reserve A/c (Being the amount transferred out of profits to CRR equal to nominal value of shares redeemed otherwise than out of proceeds of fresh issue) | 1,00,000 | 1,00,000 | |
Bank A/c Dr. To Bank Loan A/c (Being the loan raised from Bank for redemption.) | 90,000 | 90,000 | |
Preference Shareholders A/c Dr. Debenture holders A/c Dr. To Bank A/c (Being the final payment made to the preference shareholders and debenture holders) | 3,00,000 3,00,000 | 6,00,000 |
Balance Sheet of KAVERI Ltd
Particulars | Amount (Rs.) |
I. Equity & Liabilities: A) Shareholder’s Fund 1) Share Capital : 7,000 Equity shares of Rs.100 each 2) Reserve & Surplus: Capital Reserve Revenue Reserve (2,00,000 – 1,00,000 – 10,000) Capital Redemption reserve Securities Premium Reserve B) Non-Current Liabilities Long Term Borrowings (Bank Loan) C) Current Liabilities: Trade Payable (Creditors) | 7,00,000 1,00,000 90,000 1,00,000 70,000 90,000 1,50,000 |
Total (A+B+C) | 13,00,000 |
II. Assets: A) Non-Current Assets Fixed Assets: Tangible Investment B) Current Assets: Cash and cash equivalents (Refer working note) Other Current Assets | 8,00,000 Nil Nil 5,00,000 |
Total (A+B) | 13,00,000 |
Cash A/c
Particulars | Amount | Particulars | Amount |
To Balance b/d To Equity Share Capital To Securities Premium To Investment A/c To Bank Loan A/c | 2,00,000 2,00,000 20,000 90,000 90,000 | By Preference Shareholders By Debenture Holders A/c | 3,00,000 3,00,000 |
6,00,000 | 6,00,000 |
4. (a) Give a specimen form of Balance Sheet and Profit & Loss statement of a company according to the Companies Act, 2013 taking imaginary figures. 7+7=14
Proforma of Statement of Profit and Loss
Name of the Company …………………………………….
Profit and Loss for the year ended on ……………………………………..
Particulars | Note No. | Amount (Current Year) |
I. Incomes: i. Revenue form operations ii. Other income | 10,00,000 50,000 | |
Total | 10,50,000 | |
II. Expenses: i. Cost of material consumed ii. Purchase of stock-in-trade iii. Change in inventories of finished goods, work-in-progress and stock-in-trade iv. Employees Benefit expenses v. Finance Cost vi. Depreciation and amortization expenses vii. Other expenses | 2,00,000 2,50,000 (1,00,000) 1,00,000 1,00,000 1,00,000 1,00,000 | |
Total | 7,50,000 | |
III. Net Surplus before tax (I – II) IV. Less: Provision for tax @ 50% | 3,00,000 1,50,000 | |
V. Net Surplus after tax (III – V) | 1,50,000 |
Name of the Company …………………………………….
Balance Sheet as at……………………………………..
Particulars | Note No. | Amount (Current Year) |
I. EQUITY AND LIABILITIES (1) Shareholders’ Funds (a) Share capital (b) Reserves and surplus (2) Non – current liabilities (a) Long term borrowings (b) Deferred tax liabilities (net) (c) Other long term liabilities (d) Long term provisions (4) Current liabilities (a) Short term borrowings (b) Trade payables (c) Other current liabilities (d) Short term provisions | 5,00,000 3,00,000 1,00,000 Nil Nil Nil 1,00,000 1,00,000 1,00,000 1,00,000 | |
Total | 13,00,000 | |
II ASSETS (1) Non-Current Assets (a) Fixed assets (i) Tangible assets (ii) Intangible assets (iii) Capital work in progress (iv) Intangible assets under development (b) Non-current investments (c) Deferred tax assets (net) (d) Long term loans and advances (e) Other non-current assets (2) Current Assets (a) Current investments (b) Inventories (c) Trade receivables (d) Cash and cash equivalents (e) Short term loans and advances (f) Other current assets | 5,00,000 1,00,000 Nil Nil Nil Nil 1,00,000 Nil 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 | |
Total | 13,00,000 |
Or
(b) The Trial balance of a company as on 31st March, 2016 shows the following items:
Particulars | Dr. Rs. | Cr. Rs. |
Provision for Income Tax A/c Advance Payment of Tax A/c | - 1,55,000 | 70,000 - |
You are also given the following information:
a) Advance payment of tax includes Rs. 65,000 for 2015 – 16.
b) Actual tax liability for 2015 – 16 amounted to Rs. 68,000 and no effect for the same has been given so far in the accounts.
c) Provision for Income Tax to be made for 2016 – 17 is Rs. 80,000.
Prepare the various Ledger A/c involved and also show how relevant items will appear in the Balance Sheet of the company. 10+4=14
PROVISION FOR INCOME TAX ACCOUNT
2016 Mar. 31 2016 Mar. 31 | To Income Tax Account To Balance c/d | Rs. 70,000 80,000 | 2015 April 1 2016 Mar. 31 | By Balance b/d By Profit & Loss A/c | Rs. 70,000 80,000 |
1,50,000 | 1,50,000 | ||||
2016 April 1 | By Balance b/d | 80,000 |
ADVANCE INCOME TAX ACCOUNT
2015 April 1 | To Balance b/d | Rs. 1,55,000 | 2016 Mar. 31 2016 Mar. 31 | By Income Tax A/c By Balance c/d | Rs. 65,000 90,000 |
1,55,000 | 1,55,000 | ||||
2016 April. 1 | To Balance b/d | 90,000 |
INCOME TAX ACCOUNT
2016 Mar. 31 ? | To Advance Income Tax A/c To Bank – as per Demand Notice | Rs. 65,000 5,000 | 2016 Mar. 31 | By Provision for Income Tax A/c | Rs. 70,000 |
70,000 | 70,00 |
For Solutions Click Here:
Treatment of Provision for Tax and Advance payment of tax in Balance sheet:
Provision for tax is show under the short terms provisions of current liabilities and balance of advance payment of tax is shown as a deduction from provision for tax.
5. (a) X Ltd. and Y Ltd. decided to amalgamate and a new company XY Ltd. is formed to take over both the companies as on 31st March, 2016. The following are the Ledger balances of the companies as on that date:
Credit Balances | X Ltd. | Y Ltd. | Debit Balances | X Ltd. | Y Ltd. |
Share Capital of Rs. 10 fully paid up Surplus A/c Dividend Equalization Fund Workmen Compensation Fund Bank Overdraft Sundry Creditors Bills Payable | 5,00,000 2,30,000 - 20,000 - 90,000 50,000 | 3,00,000 2,00,000 1,00,000 - 50,000 1,10,000 30,000 | Goodwill Land & Building Plant & Machinery Patents & Trade Marks Sundry Debtors Stock Bills Receivable Cash at Bank | 1,00,000 2,50,000 2,00,000 - 90,000 2,00,000 - 50,000 | 80,000 1,90,000 2,55,000 52,500 40,000 1,50,000 20,000 2,500 |
8,90,000 | 7,90,000 | 8,90,000 | 7,90,000 |
Show how the amount payable to each company is arrived at and prepare the Amalgamated Balance Sheet of XY Ltd. assuming amalgamation is done in the nature of purchase. 6+8=14
Solution: Refer Question No. 4 of 2014 Semester Exam
Or
(b) Explain the various provisions of alternation of share capital as given in the Companies Act, 2013 with examples. 14
Ans: Alteration of Share Capital: Memorandum of Association contains capital clause of a company. Under Section 61 of the Companies Act 2013, a company, limited by shares, can alter this capital clause, if is permitted by (i) the Articles of Association of the company; and (ii) if a resolution to this effect is passed by the company in the general meeting. A company can alter share capital in any of the following ways:
(a) The company may increase its capital by issuing new shares.
(b) It may consolidate the whole or any part of its share capital into shares of larger amount.
(c) It may convert shares into stock or vice versa.
(d) It may sub-divide the whole or any part of its share capital into shares of smaller amount.
(e) It may cancel those shares which have not been taken up and reduce its capital accordingly.
To alter capital by any of the above modes require a resolution at a general meeting, but does not require confirmation by the National Company Law Tribunal. The company is required to give a notice to the Registrar within thirty days of alteration.
The accounting treatment of the above five types of capital alteration is discussed below.
(a) If the company has issued all of its authorised capital, then, for the purpose of raising fund by the issue of fresh shares, it will have to increase its authorised capital first. For increasing the authorised capital, the Capital clause of Memorandum of Association of the company is required to be altered and permission of S.E.B.I. is also required to be obtained. No accounting entry is necessary for increasing authorised share capital. The company will have to observe the formalities prescribed under the Companies Act, 2013.
(b) The company may decide to change the shares of smaller denomination into larger denomination. This process is called consolidation of shares. On account of consolidation, the total amount of capital of the company will not change but the number of shares will decrease.
(c) A company, in order to alter its share capital, may convert all or any of its fully paid up shares into Stock or Stock into fully paid up shares. In case, shares are converted into Stock, the members get a part of Stock Capital in place of shares. By converting Shares into Stock, any amount of Stock Capital can be transferred to any other person.
(d) When the shares of a company are sub-divided in shares of small value, it is known as sub-division of shares. In sub-division of shares, the face value of a share is converted into smaller denomination from larger denomination. The total capital of the company remains unaffected by sub-division but the total number of shares increase.
(e) Cancellation of capital may take the following form:
(i) Cancellation of unissued capital; and
(ii) Cancellation of uncalled capital.
(i) Cancellation of unissued capital: Cancellation of unissued capital means cancellation of unissued shares by a company. It means that the part of the authorised capital which has not yet been issued to the public may be cancelled by the company.
(ii) Cancellation of uncalled capital: Cancellation of uncalled capital means cancellation of that part of the face value of the share which has not yet been called by the company.
6. (a) The following are the Ledger balances of H. Ltd. and its subsidiary company S Ltd, as on 31st March, 2016:
Credit Balances | H Ltd. Rs. | S Ltd. Rs. | Debit Balances | H Ltd. Rs. | S Ltd. Rs. |
Share Capital: Shares of Rs. 10 each fully paid General Reserve Profit & Loss A/c Creditors Bills Payable | 6,00,000 1,50,000 70,000 90,000 20,000 | 2,00,000 70,000 50,000 60,000 10,000 | Machinery Furniture Investment: 70% of shares in S Ltd. at cost Stock Debtors Bills Receivable Cash at Bank Preliminary Expenses | 3,00,000 70,000 2,60,000 1,75,000 55,000 20,000 50,000 - | 1,00,000 45,000 - 1,89,000 30,000 10,000 10,000 6,000 |
9,30,000 | 3,90,000 | 9,30,000 | 3,90,000 |
H Ltd. acquired the shares of S Ltd. on 30th June, 2015. On 1st April, 2015, S Ltd. General Reserve and Profit & Loss a/c stood at Rs. 60,000 and Rs. 20,000 respectively. Bills receivable of S Ltd. include bills for Rs. 8,000 accepted by H. Ltd. and creditors of S Ltd. include Rs. 20,000 due to H. Ltd. No part of preliminary expenses was written off during the year ended on 31st March, 2016. You are required to prepare the Consolidated Balance Sheet as on 31st March, 2016 showing therein how your figures are arrived at. 14
Solution: Refer question no. 6 of 2014 semester exam
Or
(b) Give in detail the particulars which shall be disclosed in the Balance Sheet of holding company regarding its subsidiaries and also state what documents shall be attached to the Balance Sheet of holding company regarding its subsidiaries. 8+6=14
Ans: Particulars of Balance Sheet of a Holding Company in regard of its Subsidiaries
Section 212 of the Companies Act stipulates the conditions regarding the manner in which the Balance Sheet of the holding Company should be prepared. The provisions of the Section are given below:
(1) There shall be attached to the Balance Sheet of a holding company having a subsidiary or subsidiaries at the end of the financial year as at which the holding company’s Balance Sheet is made out, the following documents in respect of such subsidiary or of each such subsidiary, as the case may be:
(a) A copy of the Balance Sheet of the subsidiary;
(b) A copy of its Profit and Loss Account;
(c) A copy of the Report of its Board of Directors;
(d) A copy of the Report of its Auditors;
(e) A statement of holding company’s interest in the subsidiary;
(f) The statement referred to in sub-section (5) if any; and
(g) The report referred to in sub-section (6), if any.
(2) The Balance Sheet, profit and loss accounts and the reports of the board of directors and the auditors shall be made out in accordance with the requirements of this Act.
(i) As the end of the financial year of the subsidiary, where such financial year coincides with the financial year of the holding company;
(ii) As at the end of the financial year of the subsidiary last before that of the holding where the financial year of the subsidiary does not coincide with that of the holding company.
Where the financial year of a subsidiary is shorter in duration than that of its holding company, then financials statements of subsidiary company shall be construed for two more financial years of the subsidiary company the duration of which, in the aggregate, in not less than the duration of holding company’s financial year.
(3) The statement holding company’s interest in subsidiary company shall specify.
(a) The extent of the holding company’s interest in the subsidiary at the end of the financial year or of the last of the financial year of the subsidiary;
(b) the net aggregate amount, so far as it concerns members of the holding company and is not dealt with in the company’s accounts, of the subsidiary’s profit after deducting its losses or vice versa.
(i) For the financial year or years of the subsidiary aforesaid; and
(ii) For the previous financial years of the subsidiary since it became the holding company’s subsidiary;
(c) The net aggregate amount of the profits of the subsidiary after deducting its losses or vice versa.
(i) For the financial year of years of the subsidiary aforesaid; and
(ii) For the previous financial years of the subsidiary since it became the holding company’s subsidiary;
(4) Clauses (b) and (c) of sub-section (3) shall apply only to profits and Losses of the subsidiary which may properly be treated in the holding company’s accounts as revenue profits or losses, and the profits or losses attributable to any shares in a subsidiary for the time being held by the holding company or any other of its subsidiaries shall not (for that on any other propose) be treated as aforesaid so far as they are profits or losses for the period before the date on or as from which the shares were acquired by the company or any of its subsidiaries.
(5) Whether the financial year or years of a subsidiary do not coincide with the financial year of the holding company, a statement containing information on the following matters shall also be attached to the Balance Sheet of the holding Company:
(a) Whether there has been any, and if so, what change in the holding company’s interest in the subsidiary between the end of the financial year or of the last of the financial years of the subsidiary and the end of the holding company’s financial year;
(b) Details on any material changes which have occurred between the end of the financial year or of the last of the financial years of the subsidiary and the end of the holding company’s financial year in respect of
(i) The subsidiary’s fixed assets ;
(ii) Its investments ;
(iii) The money lent by it ;
(iv) The money borrowed by it for any purpose other than that of meeting current liabilities.
(6) If, for any reason, the Board of Directors of the holding company is unable to obtain information on any of the matter required to be specified by sub-section (4), a report in writing to that effect shall be attached to the Balance Sheet of the holding company.
(7) The documents referred to in clauses (c), (f) and (g) of sub-section (1) shall be signed by the persons by whom the Balance Sheet of the holding company is required to be signed.
(8) The Central Government may, on the application or with the consent of the Board of Directors of the company, direct that in relation to any subsidiary, the provisions of this section shall not apply or shall apply only to such extent as may be specified in the direction.
(9)If the board of directors of the holding company fails to take all reasonable steps to comply with the provisions of this Section, he shall, in respect of each offence, be punishable with imprisonment for a term which may extent to six months, or with a fine which may extend to one thousand rupees, or with both: Provided that no person shall be sentenced to imprisonment for any such offence unless it was committed willfully.
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