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    Cia Final

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    Cia Final

    Uploaded by

    kimice5490
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    CIA FINAL

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    10 views15 pages

    Cia Final

    Uploaded by

    kimice5490

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 15

    CORPARATE ACCOUNTING CIA1

    2BBA HONOURS SEC A

    SUBMITED BY

    Anubhav Anand 22211218

    Anand Rajgariha 22211211

    Swagatam Saha 22211256

    Keshav Aggarwal 22211237

    Rishi Batra 22211257


    CONTENTS
    NO TOPICS

    1 Introduction

    2 Concept of IPO

    3 Details of the INDIAMART

    4 Details of the Case - INDIAMART

    5 Accounting Treatment for IPO

    6 Journal Entries for the issue of share

    7 Balance Sheet of Hypothetical company


    after the Issue of Shares
    8 Reference
    INTRODUCTION
    An initial public offering (IPO) is the process by which
    a privately-owned company becomes publicly traded
    on a stock exchange. This process allows a company
    to raise capital by selling shares of stock to the public,
    and it typically involves hiring an investment bank to
    underwrite the offering and manage the sale of the
    shares.

    The process of going public typically begins with the


    company filing a registration statement with the
    Securities and Exchange Commission (SEC). This
    document provides information about the company,
    its financials, and the terms of the offering. The SEC
    reviews the registration statement and may ask for
    additional information or clarification. Once the
    registration statement is approved, the company can
    begin the process of selling its shares to the public.

    There are several reasons why a company may choose


    to go public. One of the primary reasons is to raise
    capital for growth and expansion. Going public also
    allows a company to access a larger pool of potential
    investors
    Concept of IPO
    An initial public offering (IPO) is the procedure of releasing
    fresh shares of stock to the general public for the first time
    in a private firm. A corporation can get equity funding from
    the general public through an IPO.

    Steps to an IPO
    1. Proposals- The proposals and valuations that the
    underwriters submit discuss the appropriate form of
    security to issue, the offering price, the number of
    shares, and the anticipated period for the market
    offers.

    2. Underwriter- Under an underwriting agreement, the


    corporation legally accepts underwriting terms and
    selects its underwriters.

    3. Team-Teams for IPOs are created, including


    underwriters, attorneys, CPAs, and Securities and
    Exchange Commission (SEC) specialists.

    4. Marketing & Updates- Marketing materials are


    prepared for the initial pre-marketing of the new stock
    issuance. To gauge demand and determine a final
    offering price, underwriters and executives advertise
    the share issue. Throughout the marketing process,
    underwriters can modify their financial analyses. This
    may entail altering the IPO price or issuance date as
    necessary. Companies take the appropriate actions to
    satisfy certain public share offering criteria. Firms must
    comply with both exchange listing standards and SEC
    rules for public companies.
    5.Board & Processes- Organize a board of directors
    and make sure there are procedures for submitting
    quarterly reports of auditable financial and accounting
    data.
    6.Shares Issued- An IPO date is when the firm offers
    its shares. Cash is obtained through the main issue of
    capital to shareholders and is reported as stockholders'
    equity on the balance sheet. Consequently, the value of
    each share on the balance sheet is entirely based on
    how much shareholders' equity there is in the firm.
    7. Post IPO- It's possible to implement some post-IPO
    provisions. After the initial public offering (IPO) date,
    underwriters could have a set length of time to
    purchase further shares. While this is happening,
    certain investors could experience quiet times.
    Details of the INDIAMART
    A firm in India called IndiaMART InterMESH Ltd. engages in
    e-commerce and offers B2C, B2B, and customer-to-
    customer sales services online. Dinesh Agarwal and Brijesh
    Agrawal established the business-to-business platform
    IndiaMART.com in 1996 to link Indian producers with a
    foreign customers, which was when the group was first
    formed. India's Uttar Pradesh state is home to the
    company's headquarters.

    In the fiscal years 2017, 2018, and 2019, respectively,


    IndiaMART received a total of 32.5 crores (325.8 million),
    55.2 crores (552.6 million), and 72.3 crores (723.5 million)
    visits, of which 20.4, 39.6, and 55 crores (550.3 million)
    visits were made via mobile devices, accounting for 63%,
    72%, and 76% of the site's overall traffic, respectively. Over
    1 crore (10 million) Android users have downloaded the
    IndiaMART app as of right now, and it currently has a 4.7
    App rating.

    According to a note from Angel Broking, IndiaMart posted a


    net profit of 20 crores in FY19 while its sales increased by
    29% CAGR over the course of the fiscal year 2014 to 19 to
    507 crores. The company has a big cash balance and no
    debt. At the end of the third quarter of 2019, the firm has
    8.27 billion (82.70 million) registered buyers and 55.5 lakhs
    (5.55 million) supplier storefronts in India. It anticipates
    continuing its 29 percent compound annual growth rate for
    the following two years.
    Objects of the Issue:
    The objects of the Offer are:
    1. to achieve the benefit of listing the equity
    share on stock exchanges.
    2. In connection with the selling shareholders'
    sale of a total of up to 4,288,801 equity
    shares.

    Case Study of IndiaMart.


    (Hypothetical):
    Indiamart Issued 40,000 shares of Rs. 10
    each, payable Rs. 2 on Application, Rs. 3 on
    Allotment, Rs 2 on First Call, and Rs 3 on Final
    Call. Pass Journal entries assuming that the
    amounts due were received. Also, show share
    capital in the Balance Sheet of the company.
    Journal entries-

    Date Particulars L.F Dr Cr


    .
    1. Bank A/c Dr 80,000
    To Equity Share Application 80,000
    A/C
    (Being Application money
    received on 40,000 Shares @2
    per Share)
    2. Equity share Application A/C Dr 80,000
    To Equity Share Capital A/C 80,000
    (Being Transfer of share
    application money to share
    capital)
    3. Equity shares Allotment A/C Dr 1,20,000
    To Equity share capital A/C 1,20,000
    (Being Share allotment money
    due on 40,000 @3 per Share)
    4. Bank A/C 1,20,000
    Dr 1,20,000
    To Equity share Allotment
    A/C (Being Allotment money
    received)
    5. Equity shares first call A/C 80,000
    Dr 80,000
    To Equity Share Capital A/C
    (Being money on Share First
    call due on 40,000 @2 per
    Share)
    6. Bank A/C 80,000
    Dr 80,000
    To Equity Share first call A/C
    (Being Share first Call money
    received)
    7. Equity Share Final Call A/C 1,20,000
    Dr 1,20,000
    To Equity Share Capital A/C
    (Being money on Share final
    call due on 40,000 @3 per
    Share)
    8. Bank A/C 1,20,000
    Dr 1,20,000
    To Equity Share final call A/C
    (Being Share final call money
    received)
    Accounting Treatment
    for excessive Shares-
    Share Application Money received- 40,000 x
    2 = 80,000
    Share Allotment Money received- 40,000 x 3
    = 1,20,000
    Share First Call Money received- 40,000 x 2 =
    80,000
    Share Final Call Money received- 40,000 x 3 =
    1,20,000

    IndiaMART Becomes First IndianB2B E-


    commerce Marketplace to Go Public.
    Balance Sheet of IndiaMart
    PARTICULARS NOTE NO. AMOUNT
    Equity & Liabilities
    Share Capital 1 40,000
    NOTES TO ACCOUNTS
    1. Share Capital Amount

    Authorized capital
    Equity shares of 10 rupees ……

    Issued capital
    40,000 Equity shares of 10 rupees 4,00,000
    each
    Subscribed capital ….
    Subscribed Capital
    Subscribed and fully paid up
    40,000 equity shares of 10 rupees 4,00,000
    each
    The accounting process for the issuance and
    redemption of shares involves several
    journal entries to reflect the changes in the
    company's equity and cash accounts.
    When issuing shares, the company will
    typically receive cash from the sale of the
    shares, which will be recorded as a debit to
    the cash account and a credit to the
    proceeds from the sale of stock account.
    Additionally, the company will increase its
    number of shares outstanding, which is
    recorded as a debit to the common stock
    account and a credit to the proceeds from
    the sale of stock account.
    When redeeming shares, the company will
    typically use cash to buy back shares from
    shareholders, which is recorded as a debit to
    the cash account and a credit to the treasury
    stock account. The company will also
    decrease its number of shares outstanding,
    which is recorded as a debit to the treasury
    stock account and a credit to the common
    stock account.
    REFERENCE

    https://learn.financestrategists.com/
    finance-terms/ipo/?
    gclid=Cj0KCQiAiJSeBhCCARIsAHnAzT82
    Xx5MEW8aRLvTgZ5Y32m0pVf3t7F8BA
    3DI4gCsdYRmqxuVaEIkvIaApo5EALw_w
    cB

    https://en.wikipedia.org/wiki/
    IndiaMART

    https://corporate.indiamart.com/
    about-us/

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