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Illustrations Amalgamation

Illustrations Amalgamation

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Published by: ajay2741 on Oct 25, 2009
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The Balance sheet as on 31
March,2003 of X Ltd and Y Ltd are as under:
Balance SheetLiabilitiesX Ltd.Rs. Y Ltd.Rs.AssetsX Ltd.Rs. Y Ltd.Rs.
Share Capital of Rs 10 each fully paid up 
Fixed Assets:
 500,000300,000Buildings250,000155,00012% Preference Share of Rs.100 each220,000170,000Machineries325,000170,000General reserve80,00055,000furnitures57,50035,000Profit and Loss A/C75,00050,000Investments70,00050,00014% Debentures50,00035,000
 Creditors75,00050,000Stock 125,00095,000Debtors90,000103,000Bank balances82,50052,000 
1,000,000660,000 1,000,000660,000
X Ltd takes over Y Ltd on 10 April 1998. The purchase consideration is discharged asfollows:(i)Issued 35,000 equity shares of Rs.10 each at par to the equity shareholdersof Y Ltd.(ii)Issued 13% preference shares of Rs.10 each at par to the equityshareholders of Y Ltd of Y Ltd at 10% premium.(iii)The debenturehoders of Y Ltd will be converted into equivalent number of debentures of X Ltd.Show the opening entries and opening balance sheet of X Ltd after amalgamation.
The summarised Balance Sheet of Sun Ltd and Moon Ltd as at are as follows:
Balance Sheet as on 31
December, 2007LiabilitiesSun LtdRs.MoonLtd. Rs.AssetsSunLtd Rs.MoonLtd. Rs.
Share Capital of Rs 10 each fullypaid up 
Fixed Assets:
 3,00,0002,50,000Plant and Machinery3,50,00004,00,00011% Preference Share of Rs.10each-1,50,000
Current Assets:
 General reserve1,20,000-Stock 1,00,00030,000Profit and Loss A/C1,00,000-Debtors1,25,00070,00012% Debentures50,0001,00,000Bank balances25,00050,000Creditors30,00050,000 
6,00,0005,50,000 6,00,0005,50,000
The above two companies agree to amalgamate and form a new company SunmoonLtd on the following conditions:
Sun Ltd.
(iv)For every 5 equity shares, 6 shares of Sunmon Ltd of Rs.10 each will beissued at par.(v)Debenture holders will be issued 12% debenture of Sunmoon Ltd of sameamount and denomination.
Moon Ltd.
(i)The holders of 11% preference shares will be allotted 4, 13% preferenceshares of Rs.10 each of Sunmoon Ltd for every 5 preference shares held.(ii)For every 5 equity shares, 6 shares of Sunmoon Ltd of Rs.10 each will beissued at par.(iii)Debenture holders will be issued 12% debentures of Sunmoon Ltd of sameamount and denomination.You are required to show :(1) the calculation of purchase consideration ; (2) journal entries in the books oSunmoon Ltd ; and (3) Opening Balance Sheet of Sunmoon Ltd.
The summarized Balance sheets of A Ltd and B Ltd as at 1.1.2002 are as
under :
LiabilitiesA. LtdB. LtdAssetsA. LtdB. LtdEquity sharesof Rs,10 each1,50,0001,00,000Plant andMachinery2,30,0001,10,00010%Debentures50,000-Stock80,00090,00012%Debentures-1,00,000Debtors30,00020,000Profit andLoss Account30,00060,000Cash andBank 60,00080,000Reserve70,000-Creditors1,00,00040,0004,00,0003,00,0004,00,0003,00,000
The above two companies agree to amalgamate and form a new company ABLtd on the following conditions :(i)An exchange of 6 shares in AB Ltd. of Rs.10 each at par for every 5shares.(ii)90% of equity shareholders will be discharged by the issue of equityshares of AB Ltd. The balance 10% will be discharged by paying cash(All assets and liabilities are taken over at book value ).
You are required to show :(i)The calculation of purchase consideration;
(ii)Ledger accounts to close the books;(iii)Journal entries in the books of AB Ltd; and(iv)Opening Balance Sheet of AB Ltd.The Balance sheet as on 31
March,2003 of X Ltd and Y Ltd are as under:
LiabilitiesBig Ltd.SmallLtdAssetsBig Ltd.SmallLtd
Share Capital of Rs 10 eachfully paid upFixed Assets:1000000.00400000.00Gudwill80000.0015000.00Security Premium100000.00-Machineries910000.00285000.00Exports Projects Reserves17000.008000.00furnitures92500.0060000.00Investment FluctuationReserve8000.003000.00Investments75000.0024000.00General Reserve250000.00100000.00Current Assets:Profit and Loss Accounts48800.0023500.00Stock 261000.00101800.00Sundry Creditors83650.0032840.00Debtors93630.0062310.00Staff Provident Fund15000.006000.00Bank balances53320.0032230.00Provision for Taxation43000.0013000.00Discount on Issueof shares 6000.00 1565450.00586340.00 1565450.00586340.00
Small Ltd merged into Big Ltd as on the abovementioned date. BigLtd allotted at par 44000 fully paid up equity shares of Rs.10 each tobe distributed among the shareholders of Small Ltd. Expenses whichamounted Rs.7,000 were born by Big Ltd. You are required toPrepare necessary accounts in the books both companies
Solution :
In the Books of Small LtdRealisation AccountsParticularsAmountParticularsAmounts
Gudwill15000.00 Staff Provident Fund6000.00Machineries285000.00Provision for Taxation13000.00furnitures60000.00 Sundry Creditors32840.00Investments24000.00
Current Assets:
Puchase Consideration440000Stock 101800.00Debtors62310.00Bank balances32230.00Loss t/f to Equity sharea/c88500 

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