Accounting Aspects of Mergers and Acquisition: Numericals
1. Vimal Ltd and Vishal Ltd were amalgamated on and from 1
st April 2003 and Mayur Co. Ltd was formed. The Balane !heets of "oth the Companies as on 31#3# 2003 are gi$en "elow% Balane !heets Lia"ilities Vimal &s. Vishal &s. Assets Vimal &s. Vishal &s. Share Capital 'i(ed Assets 3)00000 3000000 *+uity !hares of &s. 10 *ah 2)00000 2,00000 -n$estments )20000 220000 .eneral &eser$e /00000 ,00000 !to0 100000 1100000 2rofit 3 Loss Aount )00000 200000 4e"tors 500000 1110000 -n$estment Allowane &eser$e 200000 )0000 Bills &eei$a"le 20000 10000 *(port 2rofit &eser$e 20000 )0000 Cash# Ban0 1,0000 1/0000 1)6 4e"entures 1200000 1/00000 Creditors 300000 )00000 Bills 2aya"le 100000 200000 5220000 6080000 5220000 6080000 The new ompany issued e+uity shares to ma0e the payment to the e+uity shareholders of "oth the ompanies. Calulate the purhase onsideration as per 7i8 2ooling of -nterest Method and prepare the new Balane !heet of Mayur Ltd. 2. A Ltd and B Ltd. deided to amalgamate on 31#3#20039 for whih A Ltd ta0es o$er the "usiness of B Ltd. their "alane sheets on that date were as follows% Balance Sheets as on !""200 Lia"ilities A Ltd &s. B Ltd &s. Assets A Ltd &s. B Ltd &s. Share Capital Land and Building 100000 310000 *+uity !hares of &s. 10 *ah 1000000 /00000 2lant and Mahinery /10000 3)0000 126 2referene !hares of &s. 10 eah ))0000 3)0000 'urniture 111000 50000 .eneral &eser$e 100000 10000 -n$estments 1)0000 100000 2rofit 3 Loss Aount 110000 100000 !to0 210000 1:0000 -n$estment Allowane &eser$e # 20000 4e"tors 1,0000 20/000 *(port 2rofit &eser$e /0000 )0000 Cash and Ban0 1)1000 10)000 1)6 4e"entures 100000 50000 Creditors :0000 50000 ;ther Current Lia"ilities )0000 30000 !#80000 !20000 !#80000 !20000 A Ltd too0 o$er the "usiness of B Ltd as on 1#)#2003. A Ltd paid the purhase prie as follows% 50000 e+uity shares of &s. 10 eah fully paid to the e+uity shareholders of B Ltd. Accounting Aspects of Mergers and Acquisition: Numericals 1)6 preferene shares of &s. 100 eah to ma0e the payment to the preferene share holders of B Ltd at a premium of 106. 4e"entures of B Ltd were on$erted into e+ual num"er of de"entures of A Ltd. The statutory reser$es of B Ltd are still to "e retained for two more years. 2repare the Balane !heet of A Ltd. in following two ases. 1. -f the amalgamation is in nature of Merger. 2. -f the amalgamation is in nature of 2urhase. 3. 'ollowing are the partiulars of two ompanies9 A Ltd and T Ltd% 2artiulars A Ltd T Ltd *arnings after Ta( 200000 /0000 <o. of *+uity !hares ;utstanding ,000 )000 *2! 21 11 2=* &atio , 1 Mar0et 2rie 110 51 Calulate% 1. *(hange &atio 7!wap &atio8 "ased on *2! and Mar0et 2rie. 2. Value of the 'irm.