On 31st March, 2019 A Ltd. was acquired by X Ltd., which paid ₹14,00,000 in all ₹12,00,000 in fully paid ₹10 shares and the balance in cash. There was a contingent liability in respect of a claim for compensation under t

Journal Entries in the Books of A Ltd. Particular Dr. (₹) Cr. (₹) Realisation A/c 13,82,000 To Land and Building A/c 2,00,000 To Plant and Machinery A/c 4,00,000 To Furniture and Fitting A/c 40,000 To Goodwill A/c 1,90,000 To Patents and Trade Marks A/c 30,000 To Inventories A/c 2,10,000 To Trade Receivables A/c 1,80,000 To Bank A/c 1,32,000 (Transfer of the various assets to realisation account on sale of business to X Ltd) Trade Payables A/c 1,60,000 Provision for Bad Debts A/c 12,000 To Realisation A/c 1,72,000 (Transfer of trade payables and provision for Bad Debts A/c to realisation) X Ltd. A/c 14,00,000 To Realisation A/c 14,00,000 (Amount receivable from X Ltd. for the business sold to it) Shares in X Ltd. A/c 12,00,000 Bank A/c 2,00,000 To X Ltd A/c 14,00,000 (Receipt of 1,20,000 Shares of ₹10 each and ₹2,00,000 in cash from X Ltd. in full settlement of the consideration for the business sold to it) Realisation A/c 10,000 To Bank A/c 10,000 (Expenses of Liquidation) Workmen's Accident Compensation Reserve A/c 20,000 To Bank A/c 20,000 (The claim for compensation for accident paid and debited to workmen's accident compensation reserve) Equity Share Capital A/c 10,00,000 To Equity Shareholder A/c 10,00,000 (Transfer to equity share capital A/c to equity shareholder A/C) General Reserve A/c 90,000 Workmen's Accident Compensation Reserve A/c 30,000 Profit and Loss A/c 70,000 To Equity Shareholders A/c 1,90,000 (Transfer of General Reserve, Profit and Loss Account and the balance remaining in workmen's accident compensation reserve after meeting claim for accident to equity shareholders A/c) Realisation A/c 1,80,000 To Equity Shareholders A/c 1,80,000 (Profit on realisation transferred to equity shareholders a/c) Equity Shareholders A/c 13,70,000 To Equity Share in X Ltd. A/c 12,00,000 To Bank A/c 1,70,000 (Distribution of equity shares in X Ltd. and cash to settle final claim of equity shareholders) Journal Entries in the Books of X Ltd. Particular Dr. (₹) Cr. (₹) Business Purchase A/c 14,00,000 To Liquidator of A Ltd. A/c 14,00,000 (Consideration payable for business purchased from A Ltd.) Land and Buildings A/c 2,00,000 Plant and Machinery A/c 4,00,000 Furniture and Fittings A/c 40,000 Patents and Trademarks A/c 30,000 Inventories A/c 2,10,000 Trade Receivables A/c 1,80,000 Bank A/c 1,32,000 Goodwill A/c (1,90,000+1,90,000) 3,80,000 To Sundry Creditors A/c 1,60,000 To Provision for Bad Debts A/c 12,000 To Business Purchase A/c 14,00,000 (Assets and Liabilities taken over, goodwill being the excess of the cost of acquisition over the value of net assets other than goodwill) Liquidator of A Ltd. A/c 14,00,000 To Equity Share Capital A/c 12,00,000 To Bank A/c 2,00,000 (Allotment of equity shares and payment of cash in satisfaction of purchase consideration of business)