Advertisement Remove all ads

Following Are the Balance Sheets as on 31st March, 2018 of Nisha Ltd. and Usha Ltd: - Financial Accounting(Financial Accounting and Auditing 9)

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.

Advertisement Remove all ads

Solution 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            
             
             

 

Solution 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
Concept: Amalgamation
  Is there an error in this question or solution?
Advertisement Remove all ads
Advertisement Remove all ads
Share
Notifications

View all notifications


      Forgot password?
View in app×