A Ltd. takes over the business of B Ltd. for ₹15,00,000 on 1st April, 2018 on which date the Balance Sheet of B Ltd. stands as follows: PARTICULARS ₹ I. EQUITY & LIABILITIES (1) Shareholders' Fund: (a) Share Capital

CS Executive · Company Accounts & Auditing Practices · PYQS · June 2019
A Ltd. takes over the business of B Ltd. for ₹15,00,000 on 1st April, 2018 on which date the Balance Sheet of B Ltd. stands as follows: PARTICULARS ₹ I. EQUITY & LIABILITIES (1) Shareholders' Fund: (a) Share Capital (Equity shares of ₹10 each) 18,00,000 (b) Reserves & Surplus (debit balance in Profit & Loss Statement) (1,50,000) (2) Current Liabilities 3,50,000 Total 20,00,000 II. ASSETS (1) Non-Current Assets: Fixed Assets-Tangible 12,50,000 (2) Current Assets: (a) Stock 4,80,000 (b) Bills receivables 2,10,000 (c) Cash and Cash equivalents 60,000 Total 20,00,000 The acquirer company values tangible assets at ₹11,00,000. The consideration is to be discharged by a cash payment of ₹2,00,000 and allotment of sufficient number of fully paid equity shares in A Ltd. of the face value of ₹10 each at ₹13 each. Expenses of winding up ₹20,000 are to be borne by A Ltd. You are required to prepare necessary ledger accounts and pass necessary journal entries in the books of B Ltd.

Answer & Explanation:

Realisation A/c Date Particular J.F. ₹ Date Particular J.F. ₹ 1.4.2018 To Tangible Assets 12,50,000 1.4.2018 By Current Liabilities 3,50,000 1.4.2018 To cash & cash equivalents 60,000 1.4.2018 By A Ltd. (Consideration) 15,00,000 1.4.2018 To Stock 4,80,000 1.4.2018 By Equity Shareholders A/c (Loss) 1,50,000 1.4.2018 To Bills Receivables 2,10,000 Total 20,00,000 Total 20,00,000 A Ltd. Account Date Particulars J.F. ₹ Date Particulars J.F. ₹ 1.4.2018 To Realization A/c 15,00,000 1.4.2018 By Bank 2,00,000 1.4.2018 By Shares in A Ltd. 13,00,000 Total 15,00,000 Total 15,00,000 Shares in A Ltd. A/c Date Particulars J.F. ₹ Date Particulars J.F. ₹ 1.4.2018 To A Ltd 13,00,000 1.4.2018 By Equity Shareholders A/c 13,00,000 Total 13,00,000 Total 13,00,000 Bank Account Date Particulars J.F. ₹ Date Particulars J.F. ₹ 1.4.2018 To Balance b/f 60,000 1.4.2018 By Realisation A/c 60,000 1.4.2018 To A Ltd 2,00,000 1.4.2018 By Equity Shareholders A/c 2,00,000 Total 2,60,000 Total 2,60,000 Equity Shareholders A/c Date Particulars J.F. ₹ Date Particulars J.F. ₹ 1.4.2018 To Profit and Loss A/c 1,50,000 1.4.2018 By Equity Share Capital A/c 18,00,000 1.4.2018 To Realisation A/c 1,50,000 1.4.2018 To Bank 2,00,000 1.4.2018 To Shares in A Ltd. 13,00,000 Total 18,00,000 Total 18,00,000 Journal Entries in the Books of B Ltd. Date Particulars L.F. Amount (₹) (Dr.) Amount (₹) (Cr.) 1.4.2018 Realisation A/c Dr. 20,00,000 To Tangible fixed assets A/c 12,50,000 To Cash/ Bank balance A/c 60,000 To Stock A/c 4,80,000 To bills receivables A/c 2,10,000 (Being transfer of all the assets in Realisation A/c) 1.4.2018 Current Liabilities A/c Dr. 3,50,000 To Realisation A/c 3,50,000 (Being current liabilities transferred to Realisation A/c) 1.4.2018 A Ltd. A/c Dr. 15,00,000 To Realisation A/c 15,00,000 (Being Consideration receivable from A Ltd.) 1.4.2018 Bank A/c Dr. 2,00,000 Shares in A Ltd. Dr. 13,00,000 To A Ltd. 15,00,000 (Being Cash and value of shares received from A Ltd. in discharge of the consideration) 1.4.2018 Equity Share Capital A/c Dr. 18,00,000 To Equity Shareholders A/c 18,00,000 (Being transfer of equity share capital to shareholders A/c) 1.4.2018 Equity Shareholders A/c Dr. 3,00,000 To Profit and Loss A/c 1,50,000 To Realisation A/c (loss) 1,50,000 (Being transfer of debit balance of P&L A/c and realization loss of equity shareholders A/c) 1.4.2018 Equity Shareholders A/c Dr. 15,00,000 To Bank A/c 2,00,000 To Shares in A Ltd. A/c 13,00,000 (Being distribution of cash and shares in A Ltd. among equity shareholders to satisfy their claim)

Topics: Amalgamation and Absorption

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