The Balance Sheets of A Ltd. and B Ltd. as at 31st March, 2019 are as under: Balance Sheets as at 31st March, 2019 Particulars | A Ltd. (₹) | B Ltd. (₹) I. EQUITY AND LIABILITIES (1) Shareholders' Funds (a) Share Capital

CS Executive · Company Accounts & Auditing Practices · PYQS · December 2020
The Balance Sheets of A Ltd. and B Ltd. as at 31st March, 2019 are as under: Balance Sheets as at 31st March, 2019 Particulars | A Ltd. (₹) | B Ltd. (₹) I. EQUITY AND LIABILITIES (1) Shareholders' Funds (a) Share Capital Authorised: Equity shares of ₹10 each | 6,00,000 | 4,00,000 Issued and Subscribed : Equity shares of ₹10 each fully paid-up | 6,00,000 | 4,00,000 (b) Reserves and Surplus General Reserve | 2,80,000 | — Statement of Profit & Loss | 1,20,000 | 2,40,000 (2) Non-Current Liabilities 10% Debentures | 2,00,000 | — 12% Debentures | — | 4,00,000 (3) Current Liabilities Trade payables | 4,00,000 | 1,60,000 Total | 16,00,000 | 12,00,000 II. ASSETS (1) Non-Current Assets Plant & Machinery | 9,20,000 | 4,40,000 (2) Current Assets Stock | 3,20,000 | 3,60,000 Trade Receivables | 1,20,000 | 80,000 Cash at Bank | 2,40,000 | 3,20,000 Total | 16,00,000 | 12,00,000 The above two companies agree to amalgamate on 31st March, 2019 and for this purpose a new company AB Ltd. incorporate on the following terms: (i) Agreed share exchange ratio is six fully paid-up equity share of ₹10 each at par in AB Ltd. for every five equity shares of A Ltd. and three equity shares of B Ltd. (ii) All assets and liabilities are taken over at their book-values. (iii) The debentureholders of two transferor companies will be satisfied by allotment of such amount of 8% Debentures in AB Ltd. as would have the same amount of interest to them as was earned in A Ltd. and B Ltd. respectively. You are required to show: (i) Calculation of purchase consideration. (ii) Necessary journal entries in the books of AB Ltd.

Answer & Explanation:

Calculation of Purchase Consideration For Shareholders of A Ltd. Equity shares = 60000 Shares * 6/5 * 10 = 720000 For Shareholders of B Ltd. Equity shares = 40000 share * 6/3*10 = 8,00,000 Journal Entries in the books of AB Ltd. Date Particulars L.F. Debit (₹ in Lakhs) Credit (₹ in Lakhs) 31.03.19 Plant and Machinery A/c Dr 9,20,000 Stock A/c Dr 3,20,000 Receivable A/c Dr 1,20,000 Cash and Bank A/c Dr 2,40,000 To Debenture holders in A ltd. 2,50,000 To Trade Payable A/c 4,00,000 To liquidator of A ltd. A/c 7,20,000 To Capital Reserve A/c (Balancing figure) 2,30,000 (Being Assets and liabilities of A Ltd. Takeover) 31.03.19 Liquidator of A ltd. Dr 7,20,000 To Equity Share Capital A/c 7,20,000 (Issue of share to discharge purchase consideration) 31.03.19 Goodwill A/c (Balance figure) Dr 3,60,000 Plant and Machinery A/c Dr 4,40,000 Stock A/c Dr 3,60,000 Trade Receivable A/c Dr 80,000 Cash and bank A/c Dr 3,20,000 To Debenture holders in B Ltd. A/c 6,00,000 To Trade Payables A/c 1,60,000 To Liquidator of B Ltd. 8,00,000 (Being Assets & liability of B Itd. takeover) 31.03.19 Liquidator of B ltd. Dr 800000 To Equity Share Capital A/c 800000 (Issue of share to discharge purchase consideration) 31.03.19 Capital Reserve A/c Dr 230000 To Goodwill A/c 2,30,000 (Being capital Reserve written off against goodwill) 31.03.19 Debenture holders of A Ltd. A/c Dr 250000 Debenture holders & B Ltd A/c Dr 600000 To 8% Debenture A/c 8,50,000 (Amount of debenture holders of A Ltd. and B Ltd. Satisfied by allotment of requisite number of debenture)

Topics: Company Accounts

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