Question

Golden Ltd. bought assets for ₹ 5,50,00,000 and assumed liabilities worth ₹ 1,26,00,000 from Silver Ltd. and issued 8% Debentures of ₹ 500 each at a premium of 6%. Record necessary entries in the books of Golden Ltd.

Answer 1

In the Books of Golden Ltd.
Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Sundry Assets A/c   ...Dr.		5,50,00,000	-
	To Sundry Liabilities A/c		-	1,26,00,000
	To Silver Ltd. A/c		-	4,24,00,000
	(Assets and liabilities taken over from Silver Ltd.)
2.	Silver Ltd.   ...Dr.		4,24,00,000	-
	To 8% Debentures A/c		-	4,00,00,000
	To Securities Premium Reserve A/c		-	24,00,000
	(Issue of 8% Debentures of ₹ 500 each at 6% premium to discharge consideration)

Working Notes:

1. Purchase Consideration = ₹ 5,50,00,000 − ₹ 1,26,00,000 = ₹ 4,24,00,000
2. Issue price per debenture = ₹ 500 + 6% = ₹ 530
3. Number of debentures = ₹ 4,24,00,000 ÷ ₹ 530 = 80,000 debentures
4. Face value = 80,000 × ₹ 500 = ₹ 4,00,00,000
5. Securities Premium = 80,000 × ₹ 30 = ₹ 24,00,000