Question

Kiara Ltd. purchased assets worth ₹ 12,40,000 and took over liabilities of ₹ 3,40,000 of Amrex Ltd. for a purchase consideration of ₹ 11,00,000. Kiara Ltd. paid half the amount by cheque. The balance amount was settled by issuing 9% debentures of 100 each at a premium of 10%.

Pass the necessary journal entries for the above transactions in the books of Kiara Ltd.

Answer 1

Journal Entries In the books of Kiara Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Sundry Assets A/c   ...Dr.		12,40,000
	Goodwill A/c   ...Dr.		2,00,000
	To Sundry Liabilities A/c			3,40,000
	To Amrex Ltd. (Vendor)			11,00,000
	(Being business of Amrex Ltd. taken over for a purchase consideration of ₹ 11,00,000)
2.	Amrex Ltd.   ...Dr.		5,50,000
	To Bank A/c			5,50,000
	(Being half of the purchase consideration paid via cheque)
3.	Amrex Ltd.   ...Dr.		5,50,000
	To 9% Debentures A/c			5,00,000
	To Securities Premium A/c			50,000
	(Being the balance settlement done by issuing 5,000, 9% debentures of ₹ 100 each at a premium of 10%)