Question

Delight Ltd. purchased assets worth ₹ 4,00,000 and took over the liabilities of ₹ 70,000 of Marvel Ltd. for a purchase consideration of ₹ 3,60,000. Delight Ltd. paid the purchase consideration by issuing 11% debentures of ₹ 100 each at a premium of 20%.

Pass the necessary journal entries in the books of Delight Ltd.

Answer 1

In the Books of Delight Ltd. Journal Entry
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
i.	Sundry Assets A/c   ...Dr.		4,00,000	−
	Goodwill A/c   ...Dr.		30,000	−
	To Liabilities A/c		−	70,000
	To Marvel Ltd.		−	3,60,000
	(Being the purchase of assets and liabilities of Marvel Ltd.)
ii.	Marvel Ltd.   ...Dr.		3,60,000	−
	To 11% Debentures A/c		−	3,00,000
	To Securities Premium A/c		−	60,000
	(Being purchase consideration discharged by issue of 3,000, 11% debentures of ₹ 100 each at 20% premium)

Working Notes:

Number of debentures issued = `(3,60,000)/(100 + 20)`

= 3,000