ACCOUNTANT STUDENTS

New Zealand Times, Volume XLIX, Issue 11247, 27 June 1922, Page 9

ACCOUNTANT STUDENTS

MEETING OF SOCIETY INTERESTING LECTURE ON EXECUTORSHIP ACCOUNTS. THE ANNUAL DEBATE. A meeting of the Wellington Accountant Students’ Society was held on Wednesday night in the Accountants' Chambers, when (in the unavoidable absence of the president, Mr Ernest W. Hunt), Mr C. M. Bowden presided over an attendance of about eighty members. The chairman announced that the annual debate with the Christchurch Accountants’ Students’ Society would be held in Wellington on Friday. July 28th, on the subject: “That the establishment of a State Bank would be in the best interests of the Dominion.” The business of the evening was a lecture by Mr E. L. Enting, Commercial Director of the Technical College, on the important subject of executorship accounts. The lecturer, after outlining the books of account used to record the transactions, stated that the cash received was apportioned through a columnar cash book, and that the principal difficulty in executorship accounts arose in the apportionment of income and capital as between the life tenant and remainderman. He further stated that apportionment was necessary for the correct assessment of estate duty as well as the adjustment of losses between the interested parties. APPORTIONMENTS. Mr Enting stressed that an apportionment was necessary in every case of a life tenant except where the will directed that no apportionment, was to take place, and even Ihen it was necessary, to apply the principles of apportionment for estate duty purposes. He emphasised that in England, and Australia investments were quoted cum dividend, although this was not so in the Dominion, where debentures and Government stocks were always quoted ex dividend, so that no apportionments were necessary here in these investments. Where two quotations were given it was customary to take the lowest quotation, plus a quarter of the difference between the two prices. The speaker went on to say that no apportionment was made at the date of death in connection with profits in a partnership, the profits of a single ship venture or rent payable in advance, whereas profits of a business were only apportioned as between capital and income when actual accounts were made up at the date of death of the testator. In respect to companies, Mr Enting pointed out that interim dividends received during the lifetime of a testator were not apportionable, and cited the leading case, Retailers’ Trust, Taylor v. Matheson, to emphasise that the period covered by the profit and loss accounts out of which arrears of cumulative preference dividends were paid, was the deciding factor in regard to their apportionment. He dwelt at length with the principle that the security of a mortgage was a protection both for capital and income, and that the loss on a sale of a mortgagee security had to be apportioned weoqrdingly. REVERSIONARY ASSETS. The lecturer enunciated the principles covering reversionary assets, and stated that a wasting asset such as a lease must be converted into cash unless there was a power to postpone- it in the will. Ho pointed out that there was no necessity to make an apportionment on the charge of an investment, and that in regard to bonus shares, the matter as to whether they were capital' or income was entirely in the hands of the company, although bonus shares issued for the payment of calls were always treated as an accretion of capital. Mr Enting further stressed that, on the death of a life tenant, an apportionment always took place, and -Chat, in any case of doubt, in any matter affecting the trust property, the executor should always go to the court for instructions in accordance with section 75 of the Trustee Act. Tho lecture was considerably en hanced both by the specimen accounts distributed to members and the many leading cases the lecturer cited to illustrate the principles he enunciated. Mr Enting answered numerous questions, and was accorded a hearty vote of thanks, on the motion of Mr E. R. Norman, for his interesting lecture.