1 The directors of Origami plc. have decided to merge another company, Technova plc.

And form
a new company. The new company is to be called Origatech plc. and is to have an Authorized
Share Capital of 1 million ordinary shares of £1 each. The new company was formed on 1
October 2015

The statement of financial position of the two existing companies as at 30 September 2015 were
as follows

Origami plc. Techno Plc.

£ £ £ £
ASSETS
Non-current Assets
Property Plant and equipment 580 000 484 000

Current Assets
Inventories 136 510 158 220
Trade receivables 121 400 94 070
Cash and Cash equivalent 13 200 11 200
271 110 263 490

Total Assets 851 110 747 490

EQUITY AND LIABILITIES

Equity
Ordinary shares of 1 each 350 000 400 000
Share premium 150 000 200 000
Retained earnings 46 700 (10 000)
546 700 590 000
Non-current Liabilities
6% Debentures 250 000 100 000

Current liabilities
Trade payables 54 410 57 490
54 410 57 490
Total Equity and Liabilities 851 110 747 490
Additional information:

(i) Origatech Plc. is to settle the purchase consideration by issuing to the shareholders of
Techno plc. and Origami plc., ordinary shares of £1 in Origatech plc., valued at £1.25 each
(ii) Origatech plc is to take over all the assets and liabilities with the following exceptions:

• Property plant and equipment were revalued at:

Techno plc. . £400 000

Origami plc. £500 000

• Inventories at net realizable value was

Techno plc. . £150 000

Origami plc. £135 000

• Trade receivable of £320 of Techno plc. were written off as bad debts
• Goodwill was valued at £52 540 for Techno plc.
Goodwill was valued at £84 810 for Origami plc.

• The purchase price of Techno plc. was £550 000

Required:

(a) Calculate the purchase price of Origami plc.

(8)
(b) Prepare the sundry shareholders account in the books of Techno plc.

(4)

(c) Prepare the statement of financial position of Origatech plc. as at 1 October 2015.
(12)

Baikal was a shareholder in Techno plc.

(d) As Baikal’s accountant, evaluate the merger on his behalf

(8)
2 The directors of Strawberry plc. have decided to merge with another company Pineapple plc and
form a new company StrawPine Ltd. The new company was formed on 01 January 2015 with an
authorized share capital of 500 million ordinary shares of 50 pence each.
The Statement of financial position of Strawberry plc and Pineapple plc as at 31 December 2014
were as follows:
Strawberry plc Pineapple plc
£000 000 (m) £000 000 (m)
ASSETS
Non-current assets
Property plant and equipment 27 19

Current assets
Inventories 4 3
Trade receivables 32 27
Cash and cash equivalents 6 3
42 33
Total Assets 69 52

EQUITY AND LIABILITIES

Equity
Ordinary Shares of 50p each 45 40
Share premium 16 10
Retained earnings 1 (4)
62 46
Non-current liabilities
Bank loan 5 3

Current liabilities
Trade payables 2 3
Total Equity and Liabilities 69 52
Additional information:
(iii) StrawPine Ltd. is to settle the purchase consideration by issuing to the shareholders of
Strawberry plc. and Pineapple plc., ordinary shares of 50 pence in StrawPine Ltd., valued
at £1 each
(iv) StrawPine Ltd is to take over all the assets and liabilities with the following exceptions:

• Property plant and equipment were revalued at:

Strawberry plc . £30 million

Pineapple plc. £20 million

• Inventories at net realizable value was

Strawberry plc. . £3.5 million

Pineapple plc. £2.9 million

• Trade receivable of £500 000 of Strawberry plc. were written off as bad debts
• Goodwill was valued at £27 million for Strawberry plc.
Goodwill was valued at £12.1 million for Pineapple plc.

• The purchase price of Pineapple plc. was £59 millions

Required:
(a) (i) Calculate the purchase price of Strawberry Plc.
(10)
(ii)Calculate the number of shares received by the shareholders of Strawberry plc.
(4)
(b) In the books of Pineapple plc, prepare.
(i) The realisation account
(ii) Sundry shareholders account
(10)
(c) Prepare the Statement of financial position of Strawberry plc at 01 January 2015, after
taker over took place.
(19)

Ying was a shareholder in Strawberry plc.

(d) As Ying’s accountant, evaluate the takeover on her behalf.
(12)