Question

Following are the Balance Sheets as on 31st March, 2018 of Nisha Ltd. and Usha Ltd:

Liabilities	Nisha Ltd Rs.	Usha Ltd Rs.	Assets	Nisha Ltd Rs.	Usha Ltd Rs.
Equity Share Capital : (Rs.100 per share)	2,00,000	1,20,000	Land & Building	70,000	_
15% Debentures	40,000	_	Plant & Machinery	2,20,000	1,00,000
Reserve Fund	76,000	5,000	Stock	35,000	18,000
Employee's Provident Fund	6,000		Debtors	25,000	16.000
Sundry Creditors	30,000	16;000	Bank	6,000	2,000
Profit & Loss A/c	4,000		Misc. Expenses not written off Advertisement Expenses	_	5,000
	3,56,000	1,41.000		3,56.000	1,41,000

The two companies agree to amalgamate and form a new company Mis. Ujala Ltd. which takes over the assets and liabilities of both the companies. The authorized capital of Ujala Ltd. is Rs. 20,00,000 consisting of 2,00,000 equity Shares of Rs 10 each. The assets of Nisha Ltd. are taken over at 90% of the book value with the exception of land and buildi.ng which are accepted at book vatue. Both the companies are to receive 10% of the net valuation of their respective business as Goodw .The purchase consideration is to be satisfied by Ujala Ltd. in its fully paid shares at 10% premium. In return of debentures of Nisha Ltd.debentures of the same . amount and denomination are to be issued by Ujala Ltd.

Close the books of Nisha Ltd.  and Usha Ltd. and show the Opening Balance Sheet of Ujala Ltd. under Purchase Method.

Answer 1

Computation of Purchase Consideration 

	Nisha Ltd.		Usha Ltd.		Total
	Rs.	Rs.	Rs.	Rs.	Rs.	Rs.
Assets Taken over :
Land & Building	70,000				70,000..
Plant & Machinery	1,98,000		1,00,000
stock	31,500		18,000
Debtors	·22,soo		16,000
Bank	6,000	3,28,000	2,000	1,36,000
Less : Li&bilities
15% Debentures	40,000
Sundry Creditors	30,000
Employees Provident Fund	6,000	76,000
Net Assets Before Goodwill			2,52,000
Add : Goodwill (10 % of Net Assets)			25,200
Purchase Consideration			2,77,200
P.C. Satisfied as under:
25,200 Equity Shares of Ujala Ltd. at Rs. 11 each
12,000 Equity Shares of Ujala Ltd. at Rs11 each

 

Answer 2

Computation of Purchase Consideration 

	Nisha Ltd.		Usha Ltd.		Total
	Rs.	Rs.	Rs.	Rs.	Rs.	Rs.
Assets Taken over :
Land & Building	70,000				70,000..
Plant & Machinery	1,98,000		1,00,000		2,98,000
stock	31,500		18,000		49,500
Debtors	·22,soo		16,000		49,500
Bank	6,000	3,28,000	2,000	1,36,000	8,000	4,64,000
Less : Li&bilities
15% Debentures	40,000				40,000
Sundry Creditors	30,000				46,000
Employees Provident Fund	6,000	76,000		16,000	6,000	92,000
Net Assets Before Goodwill			2,52,000		1,20,000	3,72,000
Add : Goodwill (10 % of Net Assets)			25,200		12,000	37,200
Purchase Consideration		2,77,200		l,32,000		4,09,200
P.C. Satisfied as under:					Nisha Ltd.	Usha Ltd.
25,200 Equity Shares of Ujala Ltd. at Rs. 11 each 12,000 Equity Shares of Ujala Ltd. at Rs11 each					2,77,200
						1,32,000

In the Books of Nisha Ltd. and Usha Ltd.
Realisation A/c

Particulars	Nisha Ltd. Rs.	Usha Ltd.	Assets	Nisha Ltd	Usha Ltd
To Sundry Assets :			By Sundry Liabilities :
Land & Building	70,000	_	15% Debentures	40,000
Plant & Machinery	2,20,000	1,00,000	Sundry Creditors	30,000	16,000
Stock	35,000	18,000	Employee's
Debtors	25,000	16,000	Provident Fund	6,000
Bank	6,000	2,000	By Ujala Ltd. (P.C.)	2,77,200	1,32,000
To Equity shareholders	_	12,000	By Equity Shareholders (Realisation Loss)	2,800
	3,56,000	1,48,000		3,56.000	1,48,000

Ujala Ltd .A/c

	Nisha  Ltd Rs.	Usha Ltd. Rs.	Assets	Nisha Ltd	Usha Ltd
To Realisation A/c	2,77,200		By Equity Shares in Ujala Ltd.	2,77,200	1,32,000
(P.C.)
	2,77,200	1.32,000		2,77,200	1,32,000

Equity Shareholders A/c 

	Nisha  Ltd Rs.	Usha Ltd. Rs.	Assets	Nisha Ltd	Usha Ltd
To Advertisement Expenses	_	5,000	By Equity Share Capital	2,00,000	1,20,000
To Realisation A/c (Loss)	2,800	_	By Reserve Fund	76,000	5,000
To Equity Shares in Ujala ltd.	2,77,200	1,32,000	By Profit & Loss A/c	4,000	_
			By, Realisation A/c (Profit)	_	12,000
	2,80,000	1,37,000		2,80,000	1,37.000

Ujala Ltd.
Balance Sheet as on 31st March2018

	Particulars	Notes No	Rs.	Rs.
1.	Equity and Liabilities :
1	Shareholders Funds
	(a) Share Capital	1	3,72,000
	(b) Reserves and Surplus	2	37,200	4,09,200
2	Non-current Liabilities
	Long Term Borrowings	3
3	Current Liabilities
	(a) Trade Payable	4
	(b) Short-term Provisions	5
	Total
2.	Assets:
1	Non-Current Assets
	(a) Fixed Assets
	(i) Tangible Asset	6	3,68,000
	(ii) Intangible Assets	7	37,200	4,05,200
2	Current Assets
	(a) Inventories	8	49,500
	(b) Trade Receivables	9	38,500
	(c) Cash and Cash Equivalent	10	8,000	96,000
	(d) Short Term Loans and Advances		_
	(e) Other Current Assets		_
	Total			5,01,200

Notes to Accounts.

	Particulars	Rs.
1.	Share Capital
	Authorised 2,00,000 Equity Shares of Rs.10 each	20,00,000
	Issued, Subscribed  and paid up 37,200 Equity Shares of Rs. 10 each	3,72,000
2.	Reserves and Surplus
	Security Premium	37,200
3.	Long Term Borrowings·
	15% Debentures	40,000
4.	Trade Payable
	Sundry Creditors	46,000
5.	Short Term Provisions
	Employees Provident Fund	6,ooo
6.	Tangible Assets
	Land & Building	70,000
	Plant and Machinery	2,98,000
		3,68,000
7.	Intangible Assets
	Goodwill	37,200
8.	Inventories
	Stock	49,500
9.	Trade Receivables
	Debtors	38,500
10.	Cash and Cash Equivalent
	Bank	8,000