Following are the Balance Sheets of .X Ltd. and y Ltd :
Balance Sheet
as on 31st March1 , 2018
| Liabilities | XLtd,Rs | YLtd.Rs | Assets | XLtd,Rs | YLtd,Rs |
| EquityShareCapital of Rs. 10 each | 75,00,000 | 45,00,000 | Building | 25,00,000 | 15,50,000 |
| Export Profit Reserves | 3,00,000 | 3,00,000 | Machinery | 32,50,000 | 17,00,000 |
| Profit & Loss Alc | 7,00,000 | 6,00,000 | Stock | 25,50,000 | 18,00,000 |
| General Reserves | 200,000 | 4,50,000. | Debtors | 9,00,000 | 10,00,000 |
| 12% Debentures of Rs.100 each | 5,00,000 | 3,00,000 | Bank | 7,00,000 | 5,50,000 |
| Preliminary | - | 1,00,000 | |||
| Sundrv Creditors | 7,00,000 | 5,50,000 | Expenses | ||
| 99,00,000 | 67,00,000 | 99,00,000 | 67,00,000 |
z Ltd. was formed to acquire all assets and liabilities of x Ltd. and y Ltd. on the following terms :
1. Z Ltd. to have an authorized share capital of Rs.5 crores divided into 5,00,000 equity shares of 100 Rs each.
2. The business of both companies were taken over for a total price of Rs. 1.2 crores to be discharged by Z Ltd. by issue of equity shares of Rs .100 each at a premium of 20%.,
3. The shareholders of X Ltd. and Y Ltd. to get shares in Z Ltd. in the ratio of net assets values of their respective shares.
4. The debe~tures of both the companies to be converted into equivalent number of 14% debentures of Rs.100 each in Z Ltd. at a discount of 10%.
5. All the tangible assets of both the co.mpanies are taken over by Z Ltd .. at book values except Following :
| Assets | XLtd. | YLtd. |
| Building | 28,00,000 | 18,20,000 |
| Machinery | 31,50,000 | 16,00,000 |
6. Sundry Creditors of X Ltd. and Y Ltd. are . taken over at Rs.6,50,000 and Rs.5,00,000 respectively.
7. Statutory reserves are to be maintained for 3 years more.
You are required to
(i)Compute Purchase Consideration of X Ltd. and Y Ltd.
(ii) Pass Journal Entries in the books of Z Ltd.
(iii) Prepare Balance Sheet after amalgamation. Apply Purchase Method.
Concept: Amalgamation
Shubha Ltd. absorbed Sushma Ltd. with effect from 1st April, 2018 when their Balance Sheets as .on 31st March, 2018 were as under :
| Liabilities |
Shubha Ltd |
Sushma Ltd |
Assets |
Shubha Ltd |
Sushma Ltd |
| Share Capital : | Fixed Assets : | ||||
| .11 % Preference Shares of' 100 each | 2,00,000 | 2,00,000 | Land and Building | 2,20,000 | 1,40,000 |
| Equity Shares.·of' Rs 100 each | 5,00,000 | 2,00,000 | Plant & Machinery | 4,20,000 | 2,60,000 |
| Reserves & Surplus : | Current Assets, Loans Advances: |
||||
| Revaluation Reserve | 20,000 | - | Stock | 2,90,000 | 1,60,000 |
| Export Profit Reserve | 40,000 | 20,000 | Sundry Debtors | 1,20,000 | 1,40,000 |
| General Reserve | 2,00,000 | 60,000 | Bills Receivable | 1,30,000 | 90,000 |
| Secured Loans : | Bank | 20,000 | 10,000 | ||
| 10% Debentures of'100 | - | 1,20,000 | |||
| 15% Debentures of'100 | 80,000 | - | |||
| Current Liabilities & Provisions | |||||
| Sundry Creditors | 1,60,000 | 2,00,000 | |||
| 12,00,000 | 8,00,000 | 12.00.000 |
8,00,000 |
Terms of Amalgamation :
1. Subha Ltd. will issue 8 equity shares for 5 equity shares in Sushma Ltd.
2. 11 % preference shareholders. of Sushma.Ltd. will be issued an equal number of equity shares in Shubha Ltd.
3 . 10 % debenturesholders ·of .Sushma Ltd. are discharged .by Sushma Ltd. by issuing equal number of its 15% debentures of Rs.100 each.
4. All the assets and liabilities of Sushma Ltd. are taken over at book values except the following :
Fixed assets at 10% inore than book, value. Stock at ~ 1,44,000.
Debtors at 1,25,000. Bills receivables at Rs. 81,000.
You are required to :
(i) Computer Purchase Consideration.
(ii) Prepare Ledger Accounts to close the books of Account of Sushma Ltd.
Concept: Amalgamation
Following are the Balance Sheets of Rohan Ltd. & Sohan Ltd. as on 31st March, 2018.
| Liabilities |
Rohan Ltd Rs. |
Sohan Ltd Rs. |
Assets |
Rohan Ltd Rs. |
Sohan Ltd Rs. |
| Share Capital: | Fixed Assets : | ||||
| 9% Preference Shares of Rs.100 each | 6,00,000 | 9,00,000 | Goodwill | 1,50,000 | 1,50~000 |
| Equity Shares of Rs.100 each | 9,00,000 | 15,00,000 | Land & Building | 6,00,000 | 7,50,000 |
| Reserves & Surplus : | Plant & Machinery | 4,50,000 | 6,00,000 | ||
| General Reserve | 75,000 | 90,000 | Computer | 3,00,000 | 4,50,000 |
| Revaluation Reserve | 45,000 | 60,000 | Investments | 1,50,000 | 1,50,000 |
| Export Profit Reserve | 30,000 | 45,000 | Current Assets | ||
| Profit & Loss A/c : | 15,000 | 30,000 | Loans & Advances : | ||
| Secured Loans : | Stock | 3,00,000 | 4,50,000 | ||
| 12% Debentures· of Rs.100 each | 3,00,000 | 4,50,000 | Sundry Debtors | 1,50;000 | 3,00,000 |
| Unsecured Loans | Bills Receivables | 75,000 | 1,50,000 | ||
| Current Liabilities & Provisions : |
1,50,000 | 75,000 | Banks | 1,95,000 | 3,75,000 |
| Sundry Creditors | 2,25,000 | 1,80,000 | |||
| Bills Payable | 30,000 | 45,000 | |||
| 23,70,000 | 33,75.000 | 23,70.000 | 33.75.000 |
Mohan Ltd. was formed to take over the business of Rohan Ltd. and Sbhan Ltd. with an authorized share capital Rs. 30,00,000 consisting of Rs. 20;000, 13%. Preference shares of Rs.100 each and 1,00,090 Equity share of Rs.10 each.
1. 9% preference shareholders of both the companies are issued equal numbers of 13% preference shares of Mohan Ltd. at a price of Rs.125 each.
2. Mohan Ltd. will issue 4 equity shares for 3 equity shares of Rohan Ltd and 4 equity shares for 5 equity shares of Sohan Ltd. The shares are to be issue at 35 each.
3. 2o % debentureholders of both the companies are discharged by Mohan Ltd . by .issuing such number of its 15% debentures of Rs.100 each so as to maintain the same amount of interest.
4. Mohan Ltd. agree to take over all assets and all liabilities at book values except the following :
(i) Tangible fixed as.sets at 10% more than book values.
(ii) Investments and sundry debtors at 90% of their book values.
5.Export profit reserves are to be maintained for 3 more years. You are required to:
(i) Compute purchase consideration of Rohan Ltd. and Sohan Ltd.
(ii) Pass Journal Entries in the books of Mohan ltd. by applying Purchase method.
Concept: Amalgamation
Following are the Balance Sheets as on 31st March, 2018 of Nisha Ltd. and Usha Ltd:
| Liabilities | Nisha Ltd Rs. |
Usha Ltd Rs. |
Assets | Nisha Ltd Rs. | Usha Ltd Rs. |
| Equity Share Capital : (Rs.100 per share) | 2,00,000 | 1,20,000 | Land & Building | 70,000 | _ |
| 15% Debentures | 40,000 | _ | Plant & Machinery | 2,20,000 | 1,00,000 |
| Reserve Fund | 76,000 | 5,000 | Stock | 35,000 | 18,000 |
| Employee's Provident Fund | 6,000 | Debtors | 25,000 | 16.000 | |
| Sundry Creditors | 30,000 | 16;000 | Bank | 6,000 | 2,000 |
| Profit & Loss A/c | 4,000 |
Misc. Expenses not written off Advertisement Expenses |
_ | 5,000 | |
| 3,56,000 | 1,41.000 | 3,56.000 | 1,41,000 |
The two companies agree to amalgamate and form a new company Mis. Ujala Ltd. which takes over the assets and liabilities of both the companies. The authorized capital of Ujala Ltd. is Rs. 20,00,000 consisting of 2,00,000 equity Shares of Rs 10 each. The assets of Nisha Ltd. are taken over at 90% of the book value with the exception of land and buildi.ng which are accepted at book vatue. Both the companies are to receive 10% of the net valuation of their respective business as Goodw .The purchase consideration is to be satisfied by Ujala Ltd. in its fully paid shares at 10% premium. In return of debentures of Nisha Ltd.debentures of the same . amount and denomination are to be issued by Ujala Ltd.
Close the books of Nisha Ltd. and Usha Ltd. and show the Opening Balance Sheet of Ujala Ltd. under Purchase Method.
Concept: Amalgamation
Fill in the blanks
One liquidation of a company and one formation of a company is called _______________
Concept: Amalgamation
Fill in the blanks
Net asset means _____________
Concept: Amalgamation
Fill in the blanks
One liquidation of a company and one formation of a company is known as ____________and two liqidations companies of and one formation of a company is known as____________
Concept: Amalgamation
Fill in the blanks
In case of Amalgamation, if the value of net assets taken over is more than the payment made, the difference is tenμed as________and if the value of net assets taken is less than the payment made, the difference is termed as______
Concept: Amalgamation
State whether the fol/owing statements are True or False:
Only the assets and liabilities taken over by the purchasing company should be transferred to Realisation A/c.
Concept: Amalgamation
State whether the fol/owing statements are True or False:
Under amalgamation, cash and bank balance is not transferred to Realisation A/c when it has been taken over by the purchasing company.
Concept: Amalgamation
Multiple Choice Questions
__________takes place when existing company takes over the business of another existing company.
Concept: Amalgamation
Multiple Choice Questions
Amalgamation of companies is governed by_____________
Concept: Amalgamation
Multiple Choice Questions :
Under 'Purchase Method' excess of purchase consideration over the net assets taken over is accounted as __________
Concept: Amalgamation
Match the pairs:
| Column A | Column B | ||
| (1) | No-new company is formed. | (a) | Purchase Method |
| (2) | 'Goodwill or Capital Reserv | (b) | Transferred to Realisation A/c |
| (3) | Scheme of Amalgamation | (c) | Absorption |
| (4) | Transferer Company | (d) | Reqires approval of High Court |
| (5) | Profit on Realisation | (e) | To be liquidated |
Concept: Amalgamation
Fill In the blanks :
................. is the mean of exchange rate in force during a period.
Concept: Accounting of Transactions of Foreign Currency
Fill In the blanks :
................ currency is the currency used in presenting the financial
statements.
Concept: Accounting of Transactions of Foreign Currency
State whether the following statements are True or False :
An enterprise should disclose the, amount of exchange differences included in the net profit or loss of the period.
Concept: Accounting of Transactions of Foreign Currency
State whether the following statements are True or False :
Inventories is a monetary item.
Concept: Accounting of Transactions of Foreign Currency
State whether the following statements are True or False :
A foreign currency transaction arises when an enterprise buys or sells goods or services whose price is denominated in the reporting currency.
Concept: Accounting of Transactions of Foreign Currency
State whether the following statements are True or False :
Exchange rate is the ratio for exchange of two currencies.
Concept: Accounting of Transactions of Foreign Currency
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