Corporate Accounting

Corporate Accounting
Yelahanka, Bangalore-64
Bangalore University CBCS Syllabus
Course: B Com
Sub: Corporate Accounting
Subject Material & Work Book
Academic Year 2018-19
By,
Ms. Bhavya K R
Assistant Professor
Dr. NSAM First Grade College Page 1

Internal Assessment Table
Criteria One: Submission of Notes
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Criteria Two: Assignment Submission

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Criteria Three: Class Tests

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Contents:
Meaning – Underwriting Commission – Underwriter – functions - Advantages of Underwriting,

Types of Underwriting – Marked and Unmarked Applications – Problems

Meaning:
Underwriting: Underwriting is an agreement entered into by a company with one or more persons, called Underwriter or
underwriters, who undertake to take up the whole or a certain portion of the unsubscribed shares or debentures of a
company for a certain remuneration called underwriting commission.
Underwriters: Underwriters are those who undertake the shares or debentures issued by public companies. They may be
individuals or institutions like banks specialized financial institutions, firms & joint stock companies.
Underwriting Commission: The underwriters are entitled to some consideration for the risk they undertake in
underwriting the shares or debentures of a public company. The consideration payable to the underwriters by a public
company for underwriting the shares or debentures is called underwriting commission.
Maximum limit: Maximum of 5% on the issue price of shares & 2.5% on the debentures as per companies act.
Types of Underwriting:
On the basis of Number of

Shares or Debentures On the basis of liability of
underwritten the underwritter
Complete Underwriting Pure or Open Underwriting
Partial Undeiting Firm Underwriting
Complete Underwriting: A Complete Underwriting is one under which the whole of the issue of shares or debentures of a
company is underwritten by one or more underwriters.
Partial Underwriting: A Partial Underwriting is one under which a part of the issue of shares or debentures of a company
underwritten by one or more underwriters.
Pure Underwriting: A Pure underwriting is an arrangement under which an underwriter or Underwriters agrees to take up
shares or debentures of a company only when the shares or debentures underwritten by him or them is fully subscribed by
the public.
Firm Underwriting: A Firm Underwriting is an arrangement under which an underwriter or underwriters make definite
commitment to take up certain shares or debentured of a company, irrespective of the number of shares or debentures
subscribed by the public.
Marked Applications: The applications received by the company bearing the official stamp of the individual underwriter or
the respective underwriters are called marked applications.

Calculation of Underwriters Liability
Particulars No of Shares
Gross Liability XXX
(-) Unmarked Applications XXX
Balance XXX
(-) Marked Applications XXX
Net liability XXX
(+) Firm Underwriting XXX
Total Liability XXX
Practical Problems on Underwriting of Shares

Problem No: 01
A Company issued 10,000 shares of Rs.10 each. These shares are underwritten as follows: A- 7,000 shares B-3,000 Shares.
The Public applied for 8,000 shares which included marked applications as follows:
A-5,000 shares, B-2,000 Shares. Determine the liability of A &B.

Problem No: 02
CT Ltd incorporated on 1st April 2015 issued a prospectus inviting applications for 5,00,000 equity shares of Rs.10 each.
The whole issue was underwritten by ABC & D as follows: A-2,00,000, B-1,50,000, C-1,00,000 & D-50,000 Shares.
Applications were received for 4,50,000 shares of which marked applications were as follows: A-2,20,000 shares, B-
1,10,000 shares, C-90,000 shares & D-10,000 shares.
You are required to find out the liability of underwriters.

Problem No: 03
ABC Ltd issued equity shares of Rs.10,00,000 in Rs. 10 shares. The whole issue was fully underwritten by the following
underwriters.A-35,000, B-30,000, C-20,000 D-10,000 E-3,000 F-2,000
The application forms marked by the underwriters were:
A-10,000, B-22,500, C-20,000, D-7,500, E-5,000 & F- NIL
Applications for 20,000 shares were received on forms not marked. You are required to find out the liability of
underwriters.

Problem No: 04
XYZ company issued 18,000 equity shares of Rs.100 each. The issue was fully underwritten by AB & C equally.
Applications were received for 16,000 shares out of which marked applications were follows: A-6,000, B-4,000& C-3,000
Determine liability of AB & C & also commission payable as per law.

Problem No: 05
Akshara Ltd issued 80,000 shares of Rs.10 each at a premium of 20%. Mr A underwrite 80% of the issue. The company
receives applications for 75% of the issue of which 40,000 applications bear the rubber stamp of Mr A. underwriting
commission is 4% of the issue price. Determine the liability of Mr A & calculate the underwriters commission.

Problem No: 06
Gama Ltd issued 10,000 6% shares of Rs.100 each at a discount of 6%. 80% of the issue is underwritten by Mr.A for a
commission of 2% on the issue price of shares. Public have applied for 75,000 shares. Determine the net liability of the
underwriter.
Problem No: 07
A Company issued 1,00,000 shares of Rs. 10 each. These shares were underwritten as follows: X-30,000 shares & Y-
50,000 shares. The public applied to 70,000 shares. Determine the liability of X & Y.

Problem No: 08
NOP Ltd issued 10,000 shares of Rs.10 each. The issue was underwritten as follows: X-30%, Y-30% & Z-20%. However
the company received applications for 8,000 shares only. Determine the liability of underwriters.
Problem No: 09
Popular Ltd issued 40,000 shares of Rs.10 each for public subscription. The issue was underwritten as follows: Sriram
25%, Raghu 30% &Tilak 25%. The company received a total of 28,000 applications of which marked applications are as
follows: Sriram-8,000, Raghu- 6,000 &Tilak- 8,000
Determine the net liability of each underwriter.

Problem No: 10
A Company issued 10,000 shares of Rs.10 each. These shares were underwritten as follows: A- 5,000 shares, B-3,000
shares. The public applied for 8,000 shares which included marked applications as follows: A-1,200 shares: B- 300 shares.
Determine the liability of A & B & Company.

Problem No: 11
WYE Co Ltd issued 20,000 shares of Rs.10 each. These shares were underwritten as follows: X- 10,000 shares, Y- 6,000
shares. The public applied for 16,000 shares which included marked applications as follows: X-2,400 shares, Y-6,000
shares. Prepare a statement of underwriter’s liability.

Problem No: 12
A Company issued 40,000 shares of Rs. 10 each for public subscription
Underwriters No of Shares Underwritten Marked Applications
P 25% of issue 5,000 shares
Q 30% of issue 6,000 shares
R 40% of issue 4,000 shares
The company received applications for 30,000 shares. Determine the net liability of each of the underwriters.

Problem No: 13
A Company issued 1,00,000 shares. These shares are underwritten as follows: X- 60,000 shares, Y- 25,000 shares & Z-
15,000 shares. In addition there is firm underwriting: X- 8,000 shares, Y- 3,000 shares, Z-10,000 shares. The total
subscription including the firm underwriting was 71,000 shares & the forms included the following marked forms: X-
10,000 shares, Y-20,000 Shares & Z- 5,000 shares. Determine the net liability of underwriters.

Problem No: 14
Meenu Ltd has authorized capital of Rs.50,00,000 divided into 1,00,000 equity shares of Rs.50 each. The company issued
for subscription 50,000 shares at a premium of Rs. 10 each. The entire issue was underwritten as follows:
A-30,000 shares (firm underwriting-5,000 shares)
B-15,000 shares (firm underwriting-2,000 shares)
C-5,000 shares (firm underwriting-500 shares)
Out of the total issue 45,000 shares including firm underwriting were subscribed.
The following were the marked forms:
A-16,000 shares
B-10,000 shares
C-4,000 shares, Calculate the liability of each underwriter.

Problem No: 15
X Ltd issued 4,00,000 shares of Rs.10 each. The entire issue was underwritten as follows:
A-2,00,000 shares (Firm underwriting 40,000 shares)
B-1,20,000 shares (Firm underwriting 20,000 shares)
C- 80,000 shares (Firm underwriting 20,000 shares)
Shares applied for were 3,60,000 the following being the marked forms including firm underwriting. A-1,40,000 shares, B-
56,000 shares, C-64,000 shares. Calculate the liability of each underwriting.

Problem No: 16
Embassy Ltd issued 10,000 shares of Rs.100 each at a premium of Rs.20 per share. The entire issue was underwritten by A
B & C as follows:
A-5,000 shares (Firm underwriting 1,000 shares)
B-3,000 shares (Firm underwriting 500 shares)
C-2,000 shares (Firm underwriting 500 shares)
Public applied for 9,000 shares. The following are the marked forms including firm underwriting: A- 3,500 shares, B-1,400
shares, C-1,600 shares.
Determine the liability of each underwriter.

Problem No: 17
ABC company issued 20,000 shares which were underwritten by X Y & Z as follows:
X-10,000 shares, Y-6,000 shares, Z-4,000 shares. In addition there was firm underwriting by X-1000 shares, Y-500 shares
& Z-1,500 shares. The company received applications for 15,200 shares including firm underwriting & the number of
marked forms as below: X-3,000 shares, Y-4,500 shares Z-1,700 shares. Show the allocation of liability of the underwriters
assuming that the underwriting agreement did not provide any relief for firm applications.

Problem No: 18
Bangalore House Building association Ltd issued 1,00,000 Equity shares of Rs.100 each. PQR & S underwrite the entire
issue in the proportion of 40%, 30%, 20% & 10% respectively in consideration of commission in cash at 4%. They also
apply for firm shares as follows:P-3,000 shares, Q-2,000 shares, R-2,000 shares & S-3,000 shares. Besides the firm
applications form the underwriters the public apply for 60,000 shares of which marked applications are as follows: P-
10,000 shares, Q-6,000 shares, R-8,000 shares & S- 16,000 shares.
Show the number of shares to be taken up by each underwriter& also the commission receivable in cash.


Problem No: 19
A Company issued 30,000 shares of Rs.10 each. These shares were underwritten as follows: X-18,000 shares, Y- 7,500
shares, Z-4,500 shares. In addition there was a firm underwriting as follows: X- 2,400 shares, Y-900 shares & Z-3,000
shares. Total subscription received by the company (excluding firm underwriting & marked applications were 4,500 shares.
Marked applications were X-3,000 shares, Y- 6,000 shares & Z-1,500 shares. Determine the liability of underwriters.

Problem No: 20
Chaithanya Chemicals Ltd planned to set up a unit for manufacture of bulk drugs. For the purpose of financing the unit the
Board of Directors have issued 15,00,000 equity shares of Rs.10 each. 30% of the issue was reserved for promoters & the
balance was offered to the public, Aditya, Diwan&Anoop have come forward to underwrite the public issue in the ratio of
3:1:1 & also agreed for firm undertaking of 30,000: 20,000 & 10,000 respectively. The underwriting commission was fixed
at 4%. The amount payable on application was Rs.2.50 per share. The details of subscription are:
Marked forms of Adithya 5,50,000 shares
Marked forms of Diwan 2,00,000 shares
Marked forms of Anoop 1,50,000 shares
Unmarked forms 50,000 shares
You are required to show the allocation of liability among underwriters with workings.


Problem No: 21
Able Ltd has an authorized capital of Rs. 25,00,000 divided into 50,000 equity shares of Rs.50 each. The entire issue was
underwritten as follows: X-30,000 shares (Firm Underwriting 5,000 shares), Y-15,000 shares (Firm Underwriting 2,000
shares), Z-5,000 shares (Firm Underwriting 1,000 shares). Out of the total issue 45,000 shares including firm underwriting
were subscribed. The following were the marked form: X-16,000 shares, Y-10,000 shares, Z-4,000 shares. Calculate the
liability of each underwriter.

Problem No: 22
X Ltd issued 4,00,000 shares of Rs.10 each. The entire issue was underwritten as follows:
A-2,00,000 shares (Firm Underwriting 40,000 shares)
B- 1,20,000 shares (Firm Underwriting 20,000 shares)
C-80,000 shares (Firm Underwriting 20,000 shares)
Shares applied for were 3,60,000. The following being the marked forms including firm underwriting A-1,40,000 shares,
B- 56,000 Shares C-64,000 shares. Calculate the liability of each underwriter.

Problem No: 23
A Company issued 60,000 shares of Rs.10 each. These shares were underwritten as follows: A-36,000, B- 15,000, C- 9,000
shares. In addition there was a firm underwriting as follows: A-4,800 shares, B- 1,800 shares, C- 6,000 shares:Total
Subscription received by the company (excluding firm underwriting & marked applications) were 9,000 shares. Marked
applications were A- 6,000, B- 12,000, C-3,000 shares.
Determine liability of underwriters treating firm underwriting as unmarked application.

Problem No: 24
Nischal Ltd issued 2,50,000 shares of Rs.10 each which was underwritten as follows:
Mr.A-75,000 shares (Firm Underwriting 8,000 shares)
Mr.B-62,500 shares (Firm Underwriting 12,000 shares)
Mr.C-62,500 shares (firm underwriting NIL)
Mr.D-50,000 shares (Firm Underwriting 30,000 shares)
The total applications excluding firm underwriting but including marked applications were for 1,80,000 shares. The
marked applications were as under:
Mr.A-40,000 shares; Mr.B-36,000 shares, Mr.C-24,000 shares & Mr.D-48,000 shares. Calculate the net liability of each
underwriter treating firm underwriting as marked & unmarked applications.


Test Questions (6 & 14 Marks Questions)

Illustration: 1
Adithya Company Ltd was incorporated on 1/4/2015 issued a prospectus inviting applications for 5,00,000 equity shares of
Rs.10 each. The whole issue was fully underwritten by A,B,C& D as follows:
A-2,20,000 Shares, B-1,50,000 Shares, C-1,00,000 Shares & D- 50,000 Shares.
Applications were received for 4,00,000 shares of which marked applications were as follows: A-2,00,000 shares, B-
90,000 Shares, C-80,000 Shares, D-10,000 Shares. You are required to find out the liability of each underwriter.

Illustration: 2
A Company issued prospectus inviting applications FOR 3,50,000 Equity shares of Rs.10 each. The whole issue was fully
underwritten by A,B,C& D as follows:
A-1,40,000, B-1,05,000, C 70,000, D-35,000 Shares Applications were received for 3,15,000 shares of which marked
applications were: A-1,54,000, B-77,000, C-63,000, D-7,000 shares respectively. calculate the liability of the underwriters.

Illustration: 3
Export Ltd incorporated on January2, 2015 issued a prospectus inviting applications for 5,00,000 equity shares of Rs.10
each. The whole issue fully underwritten by A,B,C,D as follows:
Applications were received for 4,50,000 shares of which marked applications were as follows: A-2,20,00, B-90,000, C-
1,10,000 & D-10,000 Shares respectively. You are required to find out the liability of each underwriter & commission
payable to them.

Illustration: 4
Aswini Ltd issued 50,000 equity shares of Rs.100 each which were underwritten as follows: A-20,000, B-15,000, C-
10,000, D-5,000 Shares respectively. The company received applications for 44,000 shares of which marked forms were as
under: A- 24,000, B-8,000, C-6,000, D-3,000 Shares. Determine the liability of each underwriter.

Illustration: 5
A Company issued 1,00,000 shares of Rs.10 each. The whole issue was fully underwritten by A,B,C& D as follows: A:
40,000, B:30,000, C:10,000, D:20,000. The company received applications for 90,000 shares of which marked applications
were as follows: A: 44,000, B:22,000, C:2,000, D:18,000 respectively. Determine the liability of each underwriter.

Illustration:6
Honey Moon Ltd issued 20,000 Equity shares of Rs.100 each, 80% of the issue was underwritten by star Brothers
Applications for 15,000 shares were received in all out of which applications for 10,000 shares were marked. Determine
the liability of Star Brothers.

Illustration: 7
XYZ Company Ltd issue 1,00,000 shares of Rs.10 each. 60% of the issue was underwritten by A & B in the ratio of 3:2.
Applications for 80,000 shares were received in all out of which the marked applications were: A-25,000 & B-12,000
shares. Determine the liability of the underwriters.

Illustration: 8
SatishLts issued 10,000 shares of Rs.100 each. The issue was underwritten as follows:
N-30%, V-30% & U-20%. Applications for 7,500 shares were received by the company in all. Determine the liability of
the underwriter.

Illustration: 9
Rajalakshmi Co Ltd issued 1,00,000 shares of Rs.10 each for public subscription. The issue was underwritten as follows:
A-30%, B-30% & C-20%. However the company received applications for 70,000 shares of which marked applications as
follows: A-10,000, B-20,000, C- 16,000 Shares respectively. Determine the liability of each underwriter.

Illustration: 10
Rajesh Ltd issued 20,000 shares of 10 each. These shares were underwritten as follows: X-10,000, Y-6,000 shares
respectively. The public applies for 16,000 shares which included marked applications as follows: X-2,400 & Y-600
Shares respectively. Prepare a Statement of underwriters liability.

Illustration: 11
Ranjani Ltd a new company went in for public issue of 1,00,000 shares of Rs.100 each. The entire issue was underwritten
by A,B,C as follows. A-50,000, B-30,000, C-20,000 Shares respectively. In addition there was firm underwriting as
follows: A-10,000, B-7,500 & C-7,500 Shares respectively. The total subscription including firm underwriting was 80,000
shares & the forms included the following marked Applications: A-15,000, B-20,000 & c-7,500 Shares. Prepare Statement
of Underwriters liability.

Illustration: 12
ABC Ltd issued 20,000 Equity Shares which were underwritten as follows:
X-12,000, Y-5,000, Z-3,000 Shares Respectively. The underwriters made application for firm underwriting as under: X-
1,600,Y-600 & Z-2,000 Shares Respectively. The total subscription excluding firm underwriting but including marked
applications were for 10,000 shares. The marked applications were as under. X- 2,000, Y-4,000 & Z-1,000 Shares
Respectively. You are required to show the allocation of liability of the underwrites.

Illustration: 13
A Company issued 24,000 shares of Rs.10 each. The shares were underwritten as follows: X-14,400, Y-6,000,Z-3,600
Shares respectively. Firm Underwriting was: X-1,920, Y720, Z-2,400 Shares. The total subscription received except firm
underwriting & marked applications were 3,600 shares. Marked applications were: X-2,400, Y-4,800 & Z-1,200 shares
respectively. Determine the liability if underwriters.

Illustration: 14
Arunodhya Ltd issued 2,00,000 shares of Rs.10 each. The entire issue was underwritten as follows:
A-1,00,000 Shares (Firm Underwriting 20,000 Shares)
B- 60,000 Shares (Firm Underwriting 10,000 Shares)
C- 40,000 Shares (Firm Underwriting 10,000 Shares)
Shares applied for were 1,80,000 the following being the marked forms including firm underwriting which is also regarded
as marked forms: A-70,000, B-28,000, C-32,000 Shares respectively. Calculate the liability of each underwriter.

Illustration: 15
A Company made a public issue of 1,25,000 Equity Shares of Rs.100 each Rs. 50 payable on application. The entire issue
was underwritten by A,B,C& D in the proportion of 31%,25%,25%&20% respectively. Under the terms agreed upon a
commission of 2% was payable on the amounts underwritten. A,B,C& D had also agreed on firm underwriting of 4,000,
6,000, NIL & 15,000 Shares respectively. The total subscription excluding firm underwriting including marked
applications were for 90,000 shares. Marked applications received were as under: A-24,000, B-20,000, C-12,000 D-
24,000shraes. Ascertain the liability of the individual underwriter.

Illustration: 16
SP Co ltd was formed with a capital of Rs.1,00,000 on Rs.10 shares, the whole amount being issued to the public. The
underwriting of these shares was as follows: M-3,500, N-3,000, O-2,000, P-1,000, Q-300, R-200 Shares respectively. All
the market application forms were to go in relief of the underwriters whose names they bore. The application forms marked
by the underwriter were: M-1,000, N-2,250, O-2,000,P-750,Q-500, R-Nil. Applications for 2,000 shares were received
unmarked forms. Draw up a statement showing the number of shares each underwriter had to take up.

Illustration: 17
Embassy Ltd issued 5,00,000 equity shares of Rs.10 each. ABC & D underwriter the entire issue in the ratio of 4:3:2:1
respectively in consideration of commission allowed by law. Applications were received for 4,50,000 shares of which
marked applications were as follows: A-2,20,000, B-1,10,000, C-90,000, D-10,000 shares respectively. You are required to
find out the liability of each underwriter & commission payable to them.

Illustration: 18
The following underwriting takes place: A-6,000, B-2,500, C-1,500 shares respectively. In addition there is firm
underwriting as follows: A:800, B-300, C-1,000 Shares. The share issue is 10,000. The subscription including firm
underwriting was 7,200 shares & the forms including the following marked applications. A-1,000, B-2,000, C-500 shares.
Show the allocation of liability to the underwriter.

Illustration:19
A company Ltd issued 20,000 shares of Rs.100 each. The entire issue was underwritten as follows:
A-10,000 Shares (Firm Underwriting 2,000 Shares)
B-6,000 Shares (Firm underwriting 1,000 Shares)
C-4,000 Shares (Firm underwriting 1,000 Shares)
Shares applied for were 18,000 Shares. Following being marked forms including firm underwriting which is also regarded
as marked forms. A-7,000, B-2,800, C-3,200 Shares. Calculate the liability of the each underwriter.

Illustration: 20
Kumari Ltd issued 5,00,000 shares of Rs.10 each which was underwritten as follows.
A-1,50,000 Shares (Firm underwriting 16,000Shares)
B-1,25,000 Shares (Firm Underwriting 24,000Shares)
C- 1,25,000 Shares (Firm underwriting NIL)
D-1,00,000 Shares (Firm underwriting 60,000 Shares)
The total applications excluding firm underwriting but including marked applications were for 3,60,000 shares. The
marked applications were as under: A-80,000, B-72,000, C-48,000, D-96,000 Shares respectively. Calculate the net
liability of each underwriter treating:
a) Firm underwriting as Marked applications
b) Firm underwriting as unmarked applications.


Illustration: 21
Ram Ltd invited applications from public for 1,00,000 shares of Rs.10 each at a premium of Rs.5 per share. The entire
issue was underwritten by underwriters P,Q,R, &Sto the extent of 30%,30%,20% &20% respectively with the provision of
firm underwriting of 3,000, 2,000,1,000 & 1,000 Shares respectively. The underwriters were entitled to the maximum
commission as per the provisions of the companies Act,1956.
The Company received applications for 70,000 shares from public, out of which applications for 19,000, 10,000, 21,000 &
8,000 were marked in favor of P,Q, R & S respectively. Calculate the liability of each underwriter treating:
&Also commission payable to them.


Illustration: 22
Manasa Ltd issued 20,000 equity shares of Rs.100 each. The issue was underwritten as follows: A-30%, B-30%, C-20%.
Applications for 15,000 shares were received by the company in all. Determine the liability of the underwriters.

Illustration: 23
Nishanth Ltd Issued 1,00,000 equity shares of Rs.100 each, P, Q, R & S underwrite the entire issue in the proportion of
40%, 30%, 20%, & 10% respectively in consideration Of Commission in Cash at 4% they also apply for firm underwriting:
P-3,000, Q-2,000, R-2,000 & S-2,000 Shares respectively. Besides the firm applications the public applied for 60,000
shares of which marked applications are as under: P-10,000, Q-6,000, R-8,000, & S-16,000 Shares respectively. Show the
number of shares to be taken up by the each underwriter treating:


Illustration: 24
Apoorva Ltd issued 5,00,000 equity shares of Rs.10 each ata a premium of 20%. The whole of the issue is underwritten By
A, B, & C
A- 2,50,000 Shares (Firm Underwriting 25,000 Shares)
B- 1,50,000 Shares (Firm Underwriting 15,000 Shares)
C- 1,00,000 Shares (Firm underwriting 10,000 Shares)
The underwriting commission is 5% on the issue price & the company agreed to treat the firm underwriting applications as
marked forms. The company received applications for 4,00,000 equity shares excluding firm underwriting of which
marked forms were as under: A- 1,15,000, B- 1,25,000, C- 1,30,000 shares respectively. Calculate the liability of each
underwriter & also commission payable to them.

Illustration: 25
Akshara Ltd issued 80,000 shares of Rs.10 each at a premium of 20%. Mr A underwrites 80% of the issue. The company
receives applications for 75% of the issue of which 40,000 applications bear the rubber stamp of Mr. A. underwriting
commission is 4% of the issue price. Determine the liability of each underwriter.

Illustration: 26
X Ltd invited applications from public for 2,50,000 shares of Rs.10 each at a premium of Rs.5 per share. The entire issue
was underwritten by underwriters P, Q, R, & S to the extent of 30%, 20%, 30% & 20% respectively with the provisions of
firm underwriting of 7,500, 2,500, 5,000 & 2,500 shares respectively. The underwriters were entitled to the maximum
commission as per the law. The company received applications for 1,75,000 shares, excluding firm underwriting. Out of
which marked applications were 47,000, 52,500, 25,000 & 20,000 respectively. Calculate the net liability of each
underwriter treating:


Contents:
Meaning – Circumstances of Valuation of Goodwill – Factors influencing the value of Goodwill –

Methods of Valuation of Goodwill: Average Profit Method, Super Profit Method, Capitalization of
average Profit Method, Capitalization of Super Profit Method, and Annuity Method - Problems.

Problem No: 01
Mr. Amar has been doing the business, intends to sell his business on 1/3/2015. From the following particulars ascertain
the amount of Goodwill based on 3 years purchase of average profits of last 4 years. The profits during 4 years were as
follows: 2011-12 Rs.2,00,000, 2012-13 Rs2,40,000, 2013-14 Rs.3,00,000, 2014-15 Rs.3,60,000. At the time of acquisition
of business, the buyer was employed as a member of similar business on a salary of Rs.6,000 per month. The profits of
2014-15 include income from investment of Rs.20,000. The profits of 2012-13 were reduced by Rs.60,000 being loss on
speculation. Similarly in 2013-14 profits were reduced by Rs.1,00,000 due to loss from betting.

Problem No: 02
Ramesh Purchased a business from suresh from 1/4/2015. Profit earned by Suresh for the preceding years were: 2012-13
Rs. 5,00,000, 2013-14 Rs.6,00,000, 2014-15 Rs.5,40,000. It was found that the profits for the year 2012-13 included a non-
recurring income of Rs.20,000 & profits for the year 2014-15 was reduced by Rs.30,000 due to abnormal loss on account
of a Small fire in the shop. The properties of the business were not insured in the past, but it was thought prudent to insure
the property in future at premium of Rs.5,000 P a. Ramesh at the time of purchase of business was employee as manager of
an identical business concern at a monthly salary of Rs.10,000. He intends to replace the manger of business who is
drawing a salary of Rs.7,500 pm. The goodwill is estimated at 2 years purchase of average profits. Calculate Goodwill.
Problem No: 03
Ganesh & Co decided to purchase a business. Its profits for the last 4 years were: 2011-12 Rs.40,000, 2012-13 Rs.50,000,
2013-14 Rs.48,000, 2014-15 Rs.46,000. The business was looked after by the management. Remuneration from alternative

employment if not engaged in the business comes to Rs.6,000 pa. find out the amount of goodwill, if it is valued on the
basis of 3 years purchase of the average net profit for the last 4 years.
Problem No: 04
The following particulars are available in respect of the business carried on by Mr. Madhu. Profits earned 2012-13
Rs.50,000. 2013-14 Rs.48,000. 2014-15 Rs.52,000. Profits of 2013-14 is reduced by Rs.5,000 due to stock destroyed by
fire & profits of 2012-13 included a no recurring income of Rs.3,000. Profits of 2014-15 include Rs.2,000 income from

investment. The stock is not insured & it is thought prudent to insure the stock in future. The insurance premium is
estimated at Rs.500 pa. fair remuneration to the proprietor (not taken in the calculation of profits) is Rs.10,000 Pa. you are
required to compute the value of goodwill on the basis of 2 years purchase of average profits of the last 3 years.
Problem No: 05
The profits disclosed by Chaitra Ltd. For the past 5 years were as follows:
2010-11 Rs.40,000 (including abnormal Profit Rs. 5,000)
2011-12 Rs.50,000 (after charging abnormal loss Rs.10,000)
2012-13 Rs.45,000 (excluding Rs.5,000 insurance Premium)
2013-14 Rs.60,000
2014-15 Rs.80,000 (including profit on sale of building Rs.20,000)

You are required to calculate the value of goodwill at 2 years purchase of average profit.
Problem No: 06
Giri Ltd proposed to purchase the business carried on by Mr. Srinivas. Goodwill for this purpose is agreed to be valued at 3
years purchase of the weighted average profits of the past 4 years, the appropriate weights to be used are: 2011-12 1, 2012-
13 2, 2013-14 3, 2014-15 4. The profits for these years are : 2011-12 Rs.1,01,000, 2012-13 Rs.1,24,000, 2013-14
Rs.1,00,000, 2014-15 Rs.1,50,000. On a scrutiny of the following matters are revealed: on 1st April, 2013 a major repair
was made in respect of the Plant incurring Rs.30,000 which amount was charged to revenue. The said sum is agreed to be
capitalized for goodwill. The closing Stock for the year 2012-13 was over valued by Rs.12,000. To cover management cost

annual charge of Rs.24,000 should be made for the purpose of goodwill valuation. Compute the value of goodwill of the
firm.

Problem No: 07
ABC Ltd. Purchased the business of XYZ ltd. Calculate Goodwill on the basis of 3 years purchase of weighted average for
4 years. The appropriate weights are: 2011-12 1, 2012-13 2.5, 2013-14 3.8, 2014-15 4.2
The profits for the current years were Rs.40,500, Rs.46,500, Rs.60,000 & Rs.75,000 respectively. On scrutiny of accounts
the following aspects were revealed:
1. The company purchased new furniture on 30th September 2013 which was entered in purchases day book. The
value of furniture was Rs.10,000. For the purpose of Goodwill the error has to be rectified & depreciation should
be provided at 10% under written down value method.
2. The opening Stock of the year 2013-14 was under valued by Rs.2,500.
3. Anticipated additional expenses in administration is Rs.5,000 per annum.

Problem No: 08
Grey Ltd. Proposed to purchase the business carried on by Success. Goodwill for those purpose was agreed to be valued at
3 years purchase of the weighted average profits of the past 4 years. The appropriate weights to be used are: 2011-12-1,
2012-13-2,2013-14-3,2014-15-4. The profits for these years were: 81,000, 95,000, 1,20,000,1,50,000. On the scrutiny of
the accounts, the following were revealed:
1. On 30/9/2013,a major repair was made in respect of Machinery incurring Rs.20,000 which amount was charged to
revenue. The said sum is agreed to be capitalized for goodwill calculation subject to adjustment of depreciation of
10% per annum by the reducing balance method.
2. The closing stock for the year 2012-13 was undervalued by Rs.5,000.
3. To cover management expenses an annual charge of Rs.10,000 should be made for the purpose of goodwill
valuation. Compute the value of goodwill of the firm.

Problem No: 09
The net profits of a company for the past 5 years are 2010-11 Rs.40,000, 2011-12 Rs.45,000, 2012-13 Rs.47,000, 2013-14
Rs.40,000, 2014-15 Rs.48,000. The capital employed in the business is Rs.4,00,000. On which a reasonable rat of return of
10% is expected. Calculate the amount of goodwill of the company under the capitalization of the average profit method.

Problem No: 10
A company desirous of selling its business to another company has earned an average past profit of Rs.1,60,000 per annum
& the same amount of profit is likely to be earned in the future also except that:
1. Director’s fees of Rs.12,000 per annum charged against such profits will not be payable by the purchasing
company whose existing board can manage the new business also.
2. Rent of Rs.28,000 per annum which had been paid by the vendor company will not be incurred in the future since
the purchasing company owns its own premises & the necessary accommodation can be provided.
The net assets other than goodwill, were Rs.18,00,000 & it was considered that was reasonable return on investment in this
type of business would be 10%.

Problem No: 11
From the following particulars relating to the business of Ashwini. Compute the value of goodwill on the basis of 3 years
purchase of super profits taking average of last 4 years
Fixed Assets Rs.8,00,000. Current Assets Rs.80,000. Current Liabilities Rs.1,60,000. Normal Rate of return 15%. Manager
remuneration 10,000 P a Profits for the last 4 years were 1,20,000, 1,40,000,1,30,000 & 1,50,000 respectively.

Problem No: 19
The following is the Balance Sheet of Excellent Ltd as on 31st March 2015:
Liabilities Amount Assets Amount
Creditors 76,080 Fixed Assets 1,80,000
Capital 3,28,000 Current Assets 2,44,080
Reserves 80,000 Investments 60,000
4,84,080 4,84,080
The following net profits were earned which included a fixed income from investment of Rs.4,000 P.a. 2012 Rs.64,000,
2013 Rs.72,000, 2014 Rs.86,000 2015 Rs.90,000. Standard rate of return on capital employed in such type of business is
8%. Compute the amount of goodwill of the above business at 3 years purchase of the average super profit for 4 years
assuming that each year’s profit was immediately withdrawn in full by the proprietor.

Problem No: 20
Balance Sheet of Standard Ltd as on 31st March 2006:
10,000 Equity Shares 10,00,000 Fixed Assets 10,00,000
6,000 15% Pref Shares 6,00,000 Stock 3,50,000
General Reserve 80,000 Debtors 4,50,000
P&L A/c 1,60,000 Cash & Bank 2,00,000
Creditors 1,60,000
20,00,000 20,00,000
The profits of the company (before providing for taxation at 38.5%) & the rate of dividend declared in respect of the past 5
financial years are as under:
2010-11 2,70,000 8%
2011-12 3,10,000 10%
2012-13 3,40,000 12%
2013-14 3,30,000 15%
2014-15 3,60,000 15%
You are required to find out the value of goodwill at 5 years purchase of the super profits of the company.

Problem No: 21
The net profits of a company after providing for taxation for the past 5 years are: 40,000, 42,000, 45,000, 46,000, 47,000.
The capital employed in the business is Rs.4,00,000 on which a reasonable rate of return of 10% is expected. It is expected
that the company will be able to maintain its super profits for the next 5 years. Calculate the value of goodwill on the basis
of annuity of super profits taking the present value of an annuity of one rupee for 5 years at 10% interest is Rs3.78.
capitalization of super profit method. 5 years purchase of super profit.

Problem No: 22
The net profits of a business after providing for taxation for the past 5 years are: Rs.80,000, Rs.85,000, Rs.92,000,
Rs.1,05,000 & Rs.1,18,000. The capital employed in the business is Rs.8,00,000. The normal rate of return expected in this
type of business is 10%. It is expected that the company will be able to maintain its super profit for the next 5 years.
Calculate the value of goodwill on the basis of 5 years purchase of super profit method. Annuity method taking the present
value of annutity of Re.1 for the 5 years at 10% as 3.78 & capitalization of super profit method.

Problem No: 23
The following information is given: Capital employed is Rs.1,50,000. NRR 10%, Present value of annuity of Re 1 for 5
years at 10% 3.78. Net profits for 5 years 14,400, 15,400, 17,400 16,900 17,900. The profits included non recurring profits
on an average basis of Rs.1,000 out of which it was declined that even non recurring profits had a tendency of appearing at
the rate of Rs.600 per annum. You are required to value goodwill under annuity method. 5 years purchase of super profit
method. Capitalization of super profit method.


Unit: 4

The term valuation Shares refers to the process of ascertaining the intrinsic value or the market value or fair value of the
shares of a company.
Methods of Valuation of Shares:
1. Net Asset Method / Intrinsic Value Method.

2. Yield Method.
3. Earning Capacity Method.
Net Asset Method / Intrinsic Value Method:
Under this method, the value of shares is determined by adding the market values of all assets including unrecorded assets.
Calculation of Intrinsic value
Market Value of Assets

Less: Liabilities
Net Value of Assets
Less: Amount payable to preference Shareholders
Net value of assets Available for Equity Shareholders
Intrinsic Value= Net Value of assets available for equity shareholders
Number of Equity Shares

Problem No: 01
Following is the Balance Sheet of Max Co Ltd as on 31/3/2015.

1,000, 8% Preference Shares of Rs.100 each 1,00,000 Fixed assets 4,00,000
30,000 Equity Shares of Rs.10 each 3,00,000 Current Assets 2,50,000
Debenture Redemption Fund 50,000 Preliminary Expenses 20,000
6% Debentures 1,00,000 Discount on Issue of Debentures 5,000
Debenture Fund 1,00,000 P&L A/c 45,000
Sundry Creditors 70,000
7,20,000 7,20,000
Calculate the Value of the Equity Share under net asset method after considering the following information.
1. Debenture interest is due for 1 year.

2. Current Assets include Book Debts of which Rs.12,000 which were doubtful for which no provision has been
made.
Problem N0: 02

Following is the Balance Sheet of Fast Grow Ltd as on 31st March 2015:

3,000 Shares of Rs.100 each 3,00,000 Land & Building 1,50,000
General Reserve 50,000 Machinery 1,00,000
P&L A/c 25,000 Investments (Market Value Rs.40,000) 45,000
Creditors 40,000 Debtors 1,00,000
Provision for Taxation 20,000 Stock 40,000
Provident Fund 10,000 Cash 10,000
4,45,000 4,45,000
Additional Information:
a) Goodwill is taken at Rs.50,000.

b) Dep Machinery @10% & increase Land & Building to Rs.1,80,000.
c) Provide 8% towards bad debts.
d) 20% is the normal rate of dividend declared by similar type of business on their paid up capital, however the
company could declare only 18% dividend for the current year.

Problem No: 03
The following is the Balance Sheet of Sunmate Ltd as on 31/3/2015:

2,000, 6% Preference Shares of Rs.10 each 20,000 Building 55,000
8,000 Equity Shares of Rs.10 each 80,000 Machinery 65,000
Reserve Fund 50,000 Patents 10,000
P&L A/c 16,000 Stock 28,000
Women’s Saving A/c 15,000 Sundry Debtors 40,000
Sundry Creditors 49,000 Cash 26,000
Preliminary Exp 6,000
2,30,000 2,30,000
1. It was discovered that Machinery was under depreciated by Rs.5,000.
2. Value of Buildings is Rs.1,30,000 & Goodwill is Rs.20,000.
3. Rs.6,000 worth of debts are bad.
4. The preference shares have priority in capital repayment.
Find out the intrinsic value of both types of shares.

Problem No: 4
On 31/3/2015 the Balance Sheet of X Ltd was as follows:
5,000 Equity Shares of Rs.100 each 5,00,000 Land & Buildings 2,20,000
P&L A/c 1,03,000 Plant & Machinery 95,000
Bank Overdraft 20,000 Stock 3,50,000
Creditors 77,000 Sundry Debtors 1,55,000
Provision for Taxation 45,000
Proposed Dividend 75,000
8,20,000 8,20,000
The net profits of the company after deducting all working charges & providing for depreciation & taxation were as under:
2010-11 85,000
2011-12 96,000
2012-13 90,000
2013-14 1,00,000
2014-15 95,000
On 31st March 2015 Land & Buildings were valued at Rs.2,50,000 & Plant & Machinery at Rs.1,50,000.
In view of the nature of the business, it is considered that 10% is a reasonable return on the tangible capital. For the
purpose of valuation of shares, goodwill is calculated at 5 years purchase of the super profits based on the average profits
of the last 5 years. Calculate the intrinsic value.


Problem No: 05
The following is the Balance Sheet of Bangalore Trading Company Ltd.

2,000, 6% Preference Shares of Rs.100 each 2,00,000 Fixed assets 3,00,000
30,000, Equity Shares of Rs. 10 each 3,00,000 Current Assets 3,00,000
Liabilities 1,00,000
6,00,000 6,00,000
The Market Value of fixed assets is 10% more than book value. The market value of current assets is 5% less than the book
value. There is an unrecorded liability of Rs.5,000. Assume preference shares have no priority either as to repayment of
capital or dividend. You are required to value the equity shares.

Problem No: 06
The following figures were extracted from the books of M/s Prosperous Ltd:
9% Preference Share Capital 3,00,000

1,000 Equity Shares of Rs.100 each Rs.50 called up 50,000
1,000 Equity Shares of Rs.100 each Rs.25 called up 25,000
1,000 Equity Shares of Rs.100 each fully paid 1,00,000
4,75,000
Reserves & Surplus
General Reserves 2,00,000
P&L A/c 50,000 2,50,000
7,25,000
On a fair valuation of all the assets of the company, it is found that they have an appreciation of Rs,75,000.

The articles of association provided that in case of liquidation, the preference shares holders will have a further claim to the
extent of 10% of the surplus assets. Ascertain the value of each preference & equity shares assuming liquidation ignore
expenses of winding up.

Problem No: 07
Following is the Balance Sheet of M/s Sukh Chain Ltd as on 31st March, 2015.

30,000 Equity Shares of Rs.20 each fully paid 6,00,000 Goodwill 25,000
25,000 Equity Shraes of Rs.20 each Rs. 8 paid 2,00,000 Buildings 6,00,000
15,000 Equity Shares of Rs.10 each fully paid 1,50,000 Machinery 3,75,000
10,000 Equity Shares of Rs.10 each Rs.5 paid 50,000 Investment 50,000
General Reserve 4,50,000 Stock 3,00,000
P&L A/c 50,000 Debtors 1,50,000
Creditors 2,00,000 B/R 50,000
Bank 1,30,000
Discount on issue of Shares 20,000
17,00,000 17,00,000
This goodwill is valued at Rs.15,000 Buildings at Rs. 12,00,000 Machinery at Rs.3,00,000 Investments at Rs.35,000 Stock
at Rs. 2,50,000 Debtors at Rs. 1,40,000. There was a contingent liability of Rs.20,000. Determine the value of different
shares.

Problem No: 08
Balance Sheet of Week Ltd as on March 31,2015

Share Capital: Assets 5,10,000
10.000, 6% Preference Shares of Rs.10 each 1,00,000 Discount om debentures 10,000
30,000 Ordinary Shares of Rs.10 each 3,00,000 Preliminary Expenses 30,000
Debenture Redemption Reserve 30,000 P&L A/c 60,000
7% Debentures 50,000
Depreciation fund 30,000
Creditors 1,00,000
6,10,000 6,10,000
The Sundry Assets are worth Rs. 525,000. One years interest is owing on debentures & the dividends on preference shares
are in arrears for two years. You are required to value the shares on the Net Assets Method , if:
a) Preference Shares have priority both as to payment of Capital & arrears of dividend in the event of liquidation.
b) Preference shares have no priority as to capital or arrears of dividend.
c) Preference Shares have priority as to the payment of capital only.
d) Preference shares have priority as to the payment of arrears of dividend only.

Problem No: 09
From the following information, calculate the value of an equity share under yield method.
1) The paid up share capital of a company consists of 1000, 15% Preference shares of Rs.100 each & 20,000 equity
shares of Rs.10 each.
2) The average annual profit of the company, after providing for depreciation &taxation amounted to Rs.75,000. It is
considered necessary to transfer Rs. 10,000 to General Reserve before declaring dividend.
3) The normal return expected by investors on equity shares from this type of business carried on by the company is
10%.

Problem No: 10
Following information relates to Deepika Ltd.
4,000 10% Preference shares of Rs.100 each 4,00,000

5,000 equity Shares of Rs.100 each 5,00,000
Average profits before tax 3,22,580
Rate of tax 38%
Transfer to be made to reserve 20%
Normal rate of return 15%
Ascertain the value of each equity share under yield method.

Problem No: 11
Following are the particulars of XYZ Ltd:
Equity Shares of Rs.10 each 4,00,000

5% Debentures 1,00,000
Current Liabilities 1,30,000
Current Assets 2,00,000
Fixed Assets 5,50,000
Goodwill 50,000
The profits for the last 3 years were Rs.51,600, 52,000 & 51,650 respectively. 20% is transferred to reserve. Normal rate of
return is 10%. Compute the value of shares under Net Asset method & Yield Method.

Problem No: 12
The following particulars are available in relation to X Ltd:
a) Capital, 450, 6% preference Shares of Rs.100 each fully paid & 4,500 equity shares of Rs.10 each fully paid.
b) External liabilities Rs.7,500.
c) Reserves & Surplus Rs.3,500.
d) The average expected profit (after taxation) earned by the company Rs.18,500.
e) The normal profit earned on the market value of Equity Shares (fully paid) of the same type of companies is 9%.
f) 10% of the profits after tax each year is transferred to reserve.

Calculate the intrinsic value per equity share & the value per equity share according to yield basis. Assume that out of total
assets, assets worth Rs.350 are fictitious.
Problem No: 13
Compute the value of shares by the: Net asset method & yield method, from the following Balance sheet of a ltd company
as on 31/3/2015:

80,000 Shares of Rs.10 each 8,00,000 Goodwill 50,000

Reserve Fund 1,00,000 Fixed Assets 10,00,000
P&L A/c 50,000 Current Assets 4,00,000
Creditors 3,00,000
Provision for tax 1,00,000
14,50,000 14,50,000
On 31/3/2013 fixed assets were valued at Rs.12,00,000 & Goodwill at Rs.75,000. The nets for the last 3 years Rs.75,000,
78,000, 87,000 of which 20% was placed to reserve. The rate of return is 10%.
Problem No: 14

From the information given below & the Balance Sheet of A Ltd on 31st march 2015 find the value of its equity shares by
intrinsic value method & yield method.
a) Company’s prospects for 2015-16 are good:

b) Buildings are now worth Rs.3,50,000:
c) Profits for the last 3 years have shown an annual increase of Rs.50,000. The amount transferred to reserve is 25%
of the net profit:
d) Preferential shares have preference as to capital & dividend:
e) Normal rate of return expected is 15%.
1,000, 8% Preference Shares of Rs.100 each 1,00,000 Buildings 70,000
4,000 equity shares of Rs.100 each 4,00,000 Furniture 3,000
Reserves 1,50,000 Stock (Market value) 4,50,000
P&L A/c: Investment at cost 3,35,000
(Face value Rs.4,00,000)
Balance on 1/4/2014 80,000 Debtors 2,80,000
+ profit for 2015-15 4,30,000 Bank 60,000
Creditors 48,000 Preliminary Exp 10,000
12,08,000 12,08,000

Problem No: 15
Following is the Balance Sheet of Surya Ltd as on 31/3/2015:

Equity Share Capital (10 each) 16,00,000 Goodwill 2,00,000
Reserve & surplus 3,00,000 Other fixed assets 24,00,000
10% Debentures 4,00,000 Current assets 4,00,000
Creditors 4,00,000
Provision for Tax 3,00,000
30,00,000 30,00,000
On the above date, an independent valuation of goodwill & other fixed assets was made at Rs.3,00,000 & Rs.30,00,000
respectively. Current assets include Debtors of Rs.2,00,000 out of which 15% is bad. The net profits of the company for the
past 3 years were Rs.2,40,000, Rs.2,80,000 & Rs.3,05,000 of which 20% was placed to reserve. The normal rate of return
is 10%. Calculate the value of share by net asset method & yield method.

Problem No: 16
Following is the summarized Balance Sheet of X Ltd as on 31/3/2015:

40,000 shares of Rs.10 each 4,00,000 Goodwill 1,00,000
Reserve Fund 1,00,000 Fixed Assets 4,50,000
P&L A/c 35,000 Current Assets 1,90,000
9% Debentures 1,00,000 Preliminary Expenses 25,000
7,65,000 7,65,000
For the purpose of valuation of shares, fixed assets were valued at Rs.5,00,000 & Goodwill at Rs.1,50,000. There is a
necessity of RBD at 10% on debtors of Rs.75,000. It is found that stock was over valued by Rs.9,000. The net profit for the
3 years 69,000,71,800 & 90,200 respectively after taxation out of this profit 20% was placed to reserve, the proportion
being considered reasonable in the industry in which the company is engaged & where the normal rate of return is 10%.
Compute the value of each equity share by net asset method & yield method & also calculate the fair value of shares.

Problem No: 17
Balance Sheet of diamond Ltd as on 31/12/2015

Issued & Subscribed Capital (2000 2,00,000 Land & Buildings 1,10,000
shares of 100 each)
General Reserve 40,000 Plant & Machinery 1,30,000
P&L A/c 32,000 Patents 20,000
Sundry Creditors 1,28,000 Stock 48,000
Income Tax reserve 60,000 Debtors 88,000
Bank 52,000
Preliminary Expenses 12,000
4,60,000 4,60,000
The expert valuer valued the land & buildings at Rs. 2,40,000, Goodwill Rs,1,60,000 & Plant & Machinery at Rs.1,20,000.
Out of the total debtors, it is found that debtors of Rs.8,000 are bad. The profits of the company have been as follows: 202-
13 Rs.90,000, 2013-14 Rs, 80,000, 2014-15 Rs, 1,06,000. The company follows the practice of transferring 25% of profits
to general reserve. Similar type of companies each at 10% of the value of their shares, ascertain the value of shares of the
company under: Intrinsic Value Method, Yield Method, Fair Value method.

Problem No: 18
On March 31, 2015, the balance sheet of a limited company reveals the following position:

Issued Capital in Rs. 10 each 4,00,000 Fixed Assets 5,00,000
Reserves 90,000 Current Assets 2,00,000
P&L A/c 20,000 Goodwill 40,000
7,40,000 7,40,000
On March 31,2015, the fixed assets were independently valued at Rs.3,50,000 & the goodwill at Rs.50,000. The net profits
for the 3 years were 51,600, 52,000, 51,650 of which 20% was placed under reserve, this proportion being considered
reasonable in the industry in which the company in engaged & where a fair investment return may be taken at 10%.
Compute the value of the company’s shares by net asset method yield method & earning capacity method.



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Academic Year 2018-19

Dr. NSAM First Grade College Page 1

Criteria Two: Assignment Submission

Criteria Three: Class Tests

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Meaning – Underwriting Commission – Underwriter – functions - Advantages of Underwriting,

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On the basis of Number of

Complete Underwriting Pure or Open Underwriting

Partial Undeiting Firm Underwriting

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Practical Problems on Underwriting of Shares

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Test Questions (6 & 14 Marks Questions)

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