Question

On 1^st April, 2020, Venus Ltd. acquired fixed assets of the value of ₹ 7,50,000 and current liabilities of ₹ 90,000 from Jupiter Ltd., for a purchase consideration of ₹ 6,40,000.

Venus Ltd. met the purchase consideration due to Jupiter Ltd., by issuing to it, 10% Debentures of ₹ 100 each at a discount of 5%.

These 10% Debentures were redeemable at par on 31^st March, 2025.

Note: Venus Ltd. writes off its capital losses in the year in which they occur.

You are required to pass the necessary journal entries in the books of Venus Ltd. for the year 2020-21. (Ignore interest on debentures).

Answer 1

In the Books of Venus Ltd. Journal Entries
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
2020
April 1	Assets A/c   ...Dr.		7,50,000
	To Liabilities A/c			90,000
	To Vendor A/c			6,40,000
	To Capital Reserve A/c			20,000
	(Being the assets and liabilities taken over)
April 1	Vendor A/c   ...Dr.		6,40,000
	Discount on Issue of Debentures A/c   ...Dr.		33,684
	To 10% Debenture A/c			6,73,684
	(Being 10% Debentures issued at discount to vendor)
2021
March 31	Statement of P/L A/c   ...Dr.		33,684
	To Discount on Debenture A/c			33684
	(Being discount on debentures written off)

Working Note:

No. of Debentures Issued = `"Amount to be paid"/("Face value" - "Discount")`

= `(6,40,000)/(100 - 5) = (6,40,000)/95`

= 6736.84 debentures