Dividends payable are dividends that a company’s board of directors has declared to be payable to its shareholders. Until such time as the company actually pays the shareholders, the cash amount of the dividend is recorded within a dividends payable account as a current liability.

Here dividend payable will be 5% of (4,60,000 – 7,500) = Rs. 22,625

The amount of debenture discount can be written off in two ways :

1. All debentures are to be redeemed after a fixed period. When the debentures are to be redeemed
after a fixed period, the amount of discount will be distributed equally within the number of years spreaded between the issue of debentures and their redemption. The amount of discount on issue of debentures to be written off each year is calculated as

Amount of discount to be written off annually = Total amount of Discount/Number of years

2. Debentures are redeemed in instalments Debentures may also be redeemed in instalments but over a fixed period. In that case the amount of debenture discount will be written off each year in proportion to the amount of debentures redeemed.

Here 10% Mortgage Debentures are rs. 1,00,000 (Payable after five years) and Discount allowed
on issue of debentures Rs. 2,000.

Amount of discount to be written off annually = Total amount of Discount/Number of years = 2,000/5 = Rs. 400.

A company may issue shares without cash to the promoters of the company for the services rendered by them by debiting goodwill account. Here 1,000 shares of Rs. 100 each were issued to a promoter of the company for their legal services, rendered in the formation of the company. For this, company credited Share Capital Account and debited Goodwill account by Rs. 1,00,000.

Here total called up value of the shares is 100 × (50 + 25 + 25) = Rs. 10,000. But discount account will be credited by Rs. 1,000 (100 × 10).

Discount will be 60 paise (Rs. 10 × 0.06) per debenture

When a new partner is admitted in the firm, the existing/old partners have to sacrifice, what is given to the new partner, from their future profits, the reputation they have gained in their past efforts and the side of capital they have taken before. The new partner when admitted, has to compensate for all these sacrifices made by the old ones. The compensation for such sacrifice can be termed as ‘goodwill’.

Hence, at the time of admission of the new partner, it is necessary to account the valuation of goodwill in the firm. And this goodwill will be shared by the old partners in their profit sharing ratio.

Hidden goodwill is that goodwill the amount of which is not mentioned in the deed , but the amount of which has to calculated by capitalisation method or with the help profit sharing ratio.

the combined capital of A and B = 18,000 + 12,000 = Rs. 30,000 C brings Rs. 14,000 for 1/5th share.

This total capital should be 14,000 × 5 = 70,000

Existing capital = 14,000 + 30,000

Hidden G/W = 70,000 – 44,000 = 26,000