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Question
Green Ltd. purchased the assets of Strong Ltd. for ₹ 40,00,000 and took over liabilities of 7,00,000 at an agreed value of ₹ 32,40,000. Payment was made by issuing 10% Debentures of 100 each at a discount of 10%. Pass the necessary Journal entries in the books of Green Ltd.
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Solution
In the books of Green Ltd.
Journal
|
Date |
Particulars |
|
L.F. |
Debit |
Credit |
|
|
Sundry Assets A/c |
Dr. |
40,00,000 |
|
|
|
|
To Sundry Liabilities A/c |
|
|
7,00,000 |
|
|
|
To Strong Ltd. |
|
|
32,40,000 |
|
|
|
To Capital Reserve A/c |
|
|
60,000 |
|
|
|
(Being the purchase of business of Strong Ltd.) |
|
|
|
|
|
|
|
|
|
||
|
|
Strong Ltd. A/c |
Dr. |
32,40,000 |
|
|
|
|
Discount on Issue of Debentures A/c (36,000×10) |
Dr. |
3,60,000 |
|
|
|
|
To 10% Debentures A/c |
|
|
36,00,000 |
|
|
|
(Being 36,000, 10% debentures issued as purchase consideration) |
Working Notes:
Number of Debentures issued= (32,40,000/90) = 36,000 debentures.
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(a) Issued ₹ 28,000; 10% Debentures of ₹ 100 each at a premium of 15% redeemable at par.
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Pass the journal entry.
Office Products Ltd, issued on 1st April, 2018, 20,000, 9% Debentures of ₹ 100 each at a premium of 10% redeemable at a premium of 5% after 5 years. Issue price was payable along with application. Pass the necessary Journal entries.
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Excess value of net assets over purchase consideration at the time of purchase of business is credited to ______.
Discount on issue of debentures is a ______
Loss on issue of debentures is treated as ______.
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Pass necessary journal entries in the books of the company.
XYZ Ltd. Issued 6,000, 12% Debentures of ? 50 each on April 1, 2014. Interest on these debenture is payable annually 3151 March each year. The debentures are redeemable in four equal installments at end of third, fourth, fifth and sixth year. You are required to pan journal entries at the time of issue and redemption of debentures in the books of the company under following cases:
- Debentures are issued at par and redeemable at par.
- Debentures are issued at a premium of 10% and redeemable at par.
- Debentures are issued at a discount of 10% and redeemable at par.
- Debenture are issued at par but redeemable at a premium of 10%.
- Debentures are issued at a premium of 10% and redeemable at premium of 10%.
- Debenture are issued at a discount of 10% and redeemable at a premium of 10%.
