Question

Miraya Ltd. took over the assets of ₹ 70,00,000 and liabilities of ₹ 12,00,000 of Vishal Ltd. for a purchase consideration of ₹ 64,00,000. The payment of purchase consideration was made by the issue of 50,000, 11% debentures of ₹ 100 each at a premium of 20% to Vishal Ltd. and the balance through a cheque.

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

Answer 1

Journal Entries in the books of Miraya Ltd.
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Sundry Assets A/c   ...Dr.		70,00,000	-
	Goodwill A/c   ...Dr.		6,00,000	-
	To Sundry Liabilities A/c		-	12,00,000
	(Assets and liabilities taken over and goodwill recognised)
2.	Vishal Ltd.   ...Dr.		64,00,000	-
	To 11% Debentures A/c		-	50,00,000
	To Securities Premium A/c		-	10,00,000
	To Bank A/c		-	4,00,000
	(Purchase consideration settled by debentures at a premium and cheque)

Working note:

Net Assets Acquired = Assets − Liabilities

= 70,00,000 − 12,00,000

= 58,00,000

Goodwill Calculation = Purchase Consideration − Net Assets

= 64,00,000 − 58,00,000

= 6,00,000

Debentures Issued:

Face Value = 50,000 × 100

= 50,00,000

Premium (20%) = `50,00,000 xx 20`

= 10,00,000

Total Value of Debentures = ₹ 60,00,00

Balance Payment by Cheque = Total Purchase Consideration − Debenture Value

= 64,00,000 − 60,00,000

= 4,00,000