No.

1 for CA/CWA & MEC/CEC MASTER MINDS

12. AMALGAMATION OF COMPANIES - I

PROBLEM NO: 1
(i) Calculation of equity shares to be issued to Neel Ltd. And Gagan Ltd.
(Amount in Rs.)
Profits of Neel Gagan
I Year 2,62,800 2,75,125
II year 2,12,200 2,49,875
Total 4,75,000 5,25,000
No. of shares to be issued = 24,000 equity shares in the proportion of the preceding 2 years
profitability.
Neel Gagan
24,000 x 475/1000 11,400 equity
shares
24,000 x 525/1000 12,600 equity
shares
Calculation of 12% Preference shares to be issued to Neel Ltd. And Gagan Ltd.
(Amount in Rs.)
Neel Gagan
Net assets ( Refer working note) 8,40,000 9,24,000
8% return on Net assets 67,200 73,920
12% Preference shares to be issued
[67,200 x 100/12] = 5,60,000 @ Rs.10 each 56,000 shares
[ 73,920 x 100/12] = 6,16,000 @ Rs.10 each 61,600 shares
(ii) Total Purchase Consideration (Amount in Rs.)
Neel Gagan
Equity shares @ of RS.25 each 2,85,000 3,15,000
12% Preference shares @ of Rs.10 each 5,60,000 6,16,000
8,45,000 9,31,000
WORKING NOTE:
Calculation of Net assets as on 31.3.2015
(Amount in Rs.)
Neel Gagan
Plant and machinery 5,25,000 6,75,000
Building 7,75,000 6,48,000
Current assets 1,63,500 1,58,600
Less: Current liabilities (6,23,500) (5,57,600)
8,40,000 9,24,000

Copyrights Reserved
To MASTER MINDS, Guntur

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PROBLEM NO: 2
a) Computation of Purchase Consideration
Amount
(Rs.)
Value of 15,000 equity shares @ Rs.80 per share = Rs.12,00,000
Shares to be issued by Y Co. Ltd. (Rs. 12,00,000/120 per share) = 10,000
Shares @ Rs.120 each) 12,00,000
11% Preference shareholders to be issued equivalent 11% Redeemable Debentures 5,00,000
by Y Co. Ltd.
Total Purchase consideration 17,00,000
b) Journal Entries in the books of Y Co. Ltd
Particulars Debit (Rs.) Credit (Rs.)
1. Business Purchase a/c Dr. 17,00,000
To Liquidator of X Co. Ltd. 17,00,000
(Being the amount payable to X Co. Ltd’s liquidator)
2. Land and Building a/c Dr 10,00,000
Plant & Machinery a/c Dr. 7,00,000
Furniture & Fittings a/c Dr. 2,00,000
Inventory in trade a/c Dr. 3,00,000
Trade receivables a/c Dr. 2,00,000
Cash & Bank a/c Dr. 1,00,000
To Trade payables a/c 2,00,000
To Capital Reserve a/c (Balancing figure) 6,00,000
To Business Purchase a/c 17,00,000
(Being the value of assets and liabilities taken over from X Co
Ltd.)
3. Liquidators of X Co. Ltd. a/c Dr. 17,00,000
To Equity Share Capital a/c 10,00,000
To Securities Premium a/c 2,00,000
To 11% Debentures a/c 5,00,000
(Being purchase consideration discharged)

PROBLEM NO: 3
The purchase consideration will be
Amount (Rs.) Form
Preference shareholders : 2,000 x ¾ x 100 1,50,000 9% Pref.
shares
Equity shareholders : 5,000 x 20 1,00,000 Cash
5,000 x 6/5 x 125 7,50,000 Equity shares
10,00,0000
According to AS 14, ‘consideration ‘ for the amalgamation means the aggregate of the shares and other
securities issued and the payment made in the form of cash or other assets by the transferee company to
the shareholders of the transferor company. Therefore, debentures issued to the debentures holders will
not be included in purchase consideration. Like trade payables. The liability in respect of debentures of S.
Ltd. Will be taken by P Ltd. Which will then be settled by issuing new 8% debentures.

PROBLEM NO.4
Value of 3,000 shares of X Ltd. @ Rs. 70 = Rs. 2,10,000 (3000 X Rs.70)
Calculation of purchase consideration will be:
= Rs. 2,10,000 for equity shares + Rs. 60,000 for Liability towards preference shareholders
= Rs. 2,70,000
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Purchase consideration discharged as:
Rs. 60,000 will be payable in cash and Rs, 2,10,000 in the form of equity shares of Y Ltd., issued at Rs.
120 per share; the number of shares that will be issued = 2,10,000/120 = 1,750 equity shares.

PROBLEM NO: 5
Journal Entries in the Books of P Ltd.
Particulars Debit Credit
(Rs.) (Rs.)
Fixed Assets a/c Dr. 1,05,000
To Revaluation Reserve a/c 1,05,000
(being Revaluation of fixed assets at 15% above book value
Reserves and surplus a/c Dr. 60,000
To Equity Dividend a/c 60,000

(Being declaration of equity dividend @ 10%)

Equity Dividend a/c Dr. 60,000 60,000
To Bank a/c
(Being Payment of equity dividend)
Business Purchases a/c Dr. 4,90,000
To Liquidator of Q ltd. 4,90,000
(Being Consideration payable for the business taken over from Q Ltd.)
Fixed Assets a/c (115% of Rs.2,50,000) Dr 2,87,500
Inventory ( 95% of Rs. 3,20,000) Dr 3,04,000
Debtors a/c Dr 1,90,000
Bills Receivables a/c Dr 20,000
Investment a/c Dr 80,000
Cash at Bank a/c Dr. 10,000
(Rs.40,000 – Rs.30,000 dividend paid)
To Provision for Bad Debts a/c ( 5% of Rs. 1,90,000) 9,500
To Sundry Creditors a/c 1,25,000
To 12% Debentures in Q Ltd. a/c 1,62,000
To Bills Payable a/c 25,000
To Business Purchases a/c 4,90,000
To Capital Reserve a/c ( Balancing figure) 80,000
( Being Incorporation of various assets and liabilities taken over from Q
Ltd. At agreed values and difference of net assets and purchase
consideration being credited to capital reserve)
Liquidator of Q Ltd. a/c Dr. 4,90,000
To Equity Share Capital a/c 4,00,000
To 10% Preference Share Capital a/c 90,000
(Being Discharge of consideration for Q Ltd .’s business)

12% Debenture in Q Ltd. a/c (Rs. 1,50,000 x 108% ) Dr. 1,62,000

Discount on issue of debenture a/c Dr. 18,000
To 12% Debentures a/c 1,80,000
(being Allotment of 12% Debentures to Debentures holders of Q Ltd.
At a discount of 10%)
Sundry Creditors a/c Dr. 10,000
To Sundry Debtors a/c
(Being Cancellation of mutual owing) 10,000
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Goodwill a/c Dr. 30,000

To Bank a/c 30,000
( Being liquidation expenses reimbursed to Q Ltd.)
Capital Reserve a/c Dr. 30,000
To Goodwill a/c 30,000
( Being Goodwill set off )

PROBLEM NO: 6
(i) Calculation of number of shares to be allotted
Particulars Amount
(Rs)
Land and building 10,80,000
Inventory 7,70,000
Bills receivables 30,000
Total 18,80,000
Amount discharged by issue of preference shares 4,10,000
Number of preference shares to be issued ( 4,10,000/100 ) 4,100 shares
Amount discharged by issue of equity shares ( Rs.18,80,000 – Rs.4,10,000) 14,70,000
Number of equity shares to be issued ( Rs.14,70,000/8) 1,83,750
shares
(ii) Ledger Accounts in the books of Mars Limited
Realization Account.
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Land and building a/c 7,64,000 By Provision for doubtful debts a/c 8,000
To Inventory a/c 7,75,000 By Bills payable a/c 40,000
To Debtors a/c 1,60,000 By creditors a/c 2,26,000
To Bills receivables a/c 30,000 By Provision for taxation a/c 2,20,000
To Bank a/c – liquidation 3,000 By Jupiter Ltd. a/c 18,80,000
expenses (purchase consideration)
To Bank a/c – bills payable 38,000
To Bank a/c – income tax 2,22,000
To Bank a/c – creditors 2,16,000 By Bank a/c – debtors 1,50,000
To Profit ( transferred to equity
shareholders a/c ) 3,16,000

25,24,000 25,24,000

Bank Account
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Balance b/d 3,29,000 By Realisation a/c 3,000
(liquidation expenses )
To Realisation a/c 1,50,000 By Jupiter Ltd. a/c 5,000
(payment received from debtors)
To Jupiter Ltd. 5,000 By Bills payable a/c 38,000
(liquidation expenses)
By Income tax a/c 2,22,000
By creditors a/c 2,16,000
(Balancing figure)
4,84,000 4,84,000

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Equity Shareholders Account
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To 10% Preference shares in 4,10,000 By Equity shares capital a/c 10,00,000
Jupiter Limited a/c
To Equity shares in Jupiter 14,70,000 By Capital reserve a/c 42,000
Limited a/c
By Contingency reserve a/c 2,70,000
By Profit and Loss a/c 2,52,000
By Realisation a/c 3,16,000
18,80,000 18,80,000

Jupiter Limited Account

Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Realisation a/c 18,80,000 By 10% Preference shares in 4,10,000
Jupiter Limited a/c
To Bank a/c 5,000 By Bank A/c (Liquidation Exp.) 5,000
(Reimbursement exp.)
By Equity shares in Jupiter Ltd. a/c 14,70,000

18,85,000 18,85,000

PROBLEM NO.7
In the books of V Ltd.
Realisation Accounts
(Rupees in Lakhs)
Particulars Amount Particulars Amount
To Land and Building a/c 445 By 10% Secured Cumulative 600
Debentures a/c
To Plant and Machinery a/c 593
To Furniture, Fixtures & Fittings a/c 114 By Outstanding Debenture interest 30
a/c
To Inventories a/c 380 By Trade payables a/c 170
To Trade Receivables a/c 256 By P Ltd. A/c 1,150
(purchase consideration – Refer
Working note)
To Bank a/c 69
To Cash in Hand a/c 6
To equity Shareholders a/c 87
( Profit on realisation )
1,950 1,950
In the books of P Ltd.
Journal Entries
(Rupees in Lakhs)
Particulars Debit Credit
1. Business Purchases a/c Dr. 1,150
To Liquidator of V Ltd. a/c 1,150
(Being purchase consideration due )
2. Land and building a/c Dr. 445
Plant and Machinery a/c Dr. 593
Furniture, Fixtures & Fittings A/c Dr. 114

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Inventory a/c Dr. 380

Trade Receivables a/c Dr. 256
Bank a/c Dr. 69
Cash in Hand a/c Dr. 6
Profit and Loss a/c Dr. 87
To 10% Debentures a/c 600
To Outstanding Debenture interest a/c 30
To Trade payable a/c 170
To Business Purchase a/c 1,150
( Being assets and liabilities taken over from V Ltd. Under the scheme of
amalgamation in the nature of merger)
3. Liquidators of V Ltd. a/c Dr. 1,150
To Equity Share Capital a/c 640
To 13% Cumulative Preference shares a/c 350
To Securities premium a/c 160
( Being discharge of consideration, by allotment of 64 Lakhs of equity shares
of Rs.10 each at a premium of Rs.2.50Per share and 35 Lakhs 13%
cumulative preference shares of Rs. 10 each at par)
4. 10% Secured Cumulative Debentures a/c Dr. 600
To 10.5% Secured Cumulative Debentures a/c 600
(Being 10% Secured Cumulative Debentures of V Ltd. Convert into 10.5%
Secured Cumulative Debentures of P Ltd)
5. Outstanding Debentures Interest a/c Dr. 30
To Bank a/c 30
(Being outstanding debentures interest paid in cash by p Ltd)
6. Profit and Loss a/c Dr. 2
To Bank a/c 2
(Being amalgamation expenses met by P Ltd.)
7. Trade Payable a/c Dr. 7
To Trade Receivables a/c 7
(Being settlement of mutual liability)
8. Profit and Loss a/c Dr. 1
To Inventory a/c (5 x 20%) 1
(Being unrealized profit on inventory eliminated from the Inventories of P
Ltd.)
WORKING NOTES:
Calculation of Purchase Consideration payable by P Ltd.
(Rupees in Lakhs)
Particulars Amount
Payment to preference shareholders:
13% Cumulative Preference Shares of Rs.10 each (35 Lakhs shares x Rs.10) 350
Payment To Equity shareholders: 640
( 80 Lakhs shares x 4/5 ) = 64 Lakhs equity shares @ 10 each 160
Securities Premium (64 Lakhs equity shares @ Rs.2.5)
1,150
Total Purchase consideration

PROBLEM NO: 8
Balance Sheet of C Ltd. As at 1st April, 2012
(Rupees in Lakhs)
Particulars Note No. Amount
I. Equity and Liabilities:
(1) Shareholder’s Funds

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(a) Share Capital 1 1,200
(b) Reserves and Surplus 2 1,750
(2) Non-Current Liabilities 3 60
Long-term borrowings
(3) Current Liabilities
Trade Payables 4 610
Total 3,620
II. Assets:
(1) Non-Current assets
(a) Fixed assets
(i) Tangible assets 5 1,550
(ii) Intangible assets 6 20
(b) Non-current investments 7 200
(c) Other non-current assets 8 100
(2) Current assets
(a) Inventory 600
(b) Trade receivables 9 650
(c) Cash and cash equivalents 500
Total 3,620
NOTE TO ACCOUNTS:
Particulars Amount Amount
(Rs. in ( Rs. In
Lakhs) Lakhs)
1. Share Capital
Equity share capital
70 Lakhs Equity shares of Rs.10 each 700
5 Lakhs Preference shares of Rs.100 each 500 1,200
(all the above shares are allotted as fully paid-up pursuant to
contracts without payment being received in cash)
2. Reserves and surplus
Securities Premium Account
On equity shares – 70 Lakhs shares x Rs.20 = 1,400
On preference shares - 5 Lakhs shares x Rs.50 = 250 1650
Investment Allowance Reserve 100 1,750
3. Long – term borrowings
15% Debentures 60
4. Trade payables
Sundry creditors 390
Bills payables 220 610
5. Tangible assets
Land and Buildings 950
Plant and Machinery 600 1,550
6. Intangible assets
Goodwill [ W.N.2] (110 – 90) 20

7. Non – current Investments

Investments 200
8. Other non – current assets
Amalgamation Adjustment Account 100
9. Trade receivables
Sundry Debtors 550
Bills receivables 100 650

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WORKING NOTES:
( Rupees in Lakhs)
A Ltd. B Ltd.
1. Computation of Purchase consideration
(a)Preference shareholders:
[3,00,00,000/100] i.e. 3,00,000 shares x Rs. 150 each 450
[ 2,00,00,000/100] i.e. 2,00,000 shares x Rs. 150 each 300
(b)Equity shareholders:
[ 8,00,00,000 x 5/100] i.e. 40,00,000 shares x Rs. 30 each 1200
[ 7,50,00,000 x 4/100] i.e. 30,00,000 shares x Rs. 30 each 900
Amount of Purchase Consideration 1,650 1,200
2. Net Assets Taken Over
Assets taken over:
Land and Building 550 400
Plant and Machinery 350 250
Investments 150 50
Inventories 350 250
Sundry Debtors 250 300
Bills receivables 50 50
Cash and bank 300 200
Less: Liabilities taken over:
Debentures (40) (20)
Sundry Creditors (270) (120)
Bills payable (150) (70)
Net assets taken over 1,540 1,290
Purchase consideration 1,650 1,200
Goodwill 110
Capital reserve 90

PROBLEM NO.9
Calculation of Purchase Consideration
(Amount in rupees)
Ram Ltd. Shyam Ltd.
Purchase Consideration (Rs.) (Rs.)
Goodwill 1,60,000 60,000
Freehold property 2,10,000 1,20,000
Plant and machinery 50,000 30,000
Motor vehicles 60,000 --
Inventory 1,20,000 1,56,000
Trade receivables 1,64,000 --
Cash at Bank 86,000 --
Less: Liabilities: 8,50,000 3,66,000
6% Debentures (1,20,000 x 105%) -- (1,26,000)
Trade payables (1,50,000) --
Net Assets taken over 7,00,000 2,40,000
To be satisfied by issue of shares of Ram and Shyam Ltd. @ Rs.10 each 70,000 24,000
Balance Sheet of Ram and Shyam Ltd. As at 1 st April, 2015
Particulars Note No. Amount
(Rs.)
Equity and Liabilities
1 Shareholder’s funds
a) Share capital 1 9,40,000
b) Reserve and Surplus 2 6,000
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2 Non - Current Liabilities
a) Long-term borrowings 3 1,20,000
3 Current Liabilities
a) Trade payables 1,50,000
Total 12,16,000
Assets

1 Non – current assets

a) Fixed assets
i) Tangible assets 4 4,70,000
ii) Intangible assets 5 2,20,000
2 Current assets
a) Inventories (1,20,000 + 1,56,0000 2,76,000
b) Trade receivables 1,64,000
c) Cash and cash equivalents 86,000
12,16,000
Total
NOTE TO ACCOUNTS:
Particulars Amount
(Rs.)
1. Share Capital
Equity share capital ( 94,000 shares of Rs. 10 each) 9,40,000
2.Reserves and Surplus
Securities Premium (W.N.1) 6,000
3. Long Term borrowings
Secured 6% debentures (assumed to be secured) 1,20,000
4. Tangible assets
Free hold property ( 2,10,000 + 1,20,000) 3,30,000
Plant & Machinery 80,000
Motor vehicle 60,000
Total 4,70,000
5. Intangible assets
Goodwill (1,60,000 + 60,000) 2,20,000
In the books of Shyam Ltd.
Journal Entries
(Amount in Rupees)
Particulars Debit Credit
1. Realisation a/c Dr. 3,48,000
To Freehold Property a/c 1,20,000
To Plant and Machinery a/c 30,000
To Inventory a/c 1,56,000
To Trade Receivables a/c 42,000
(Being all assets except cash transferred to
Realisation Account)

2. 6% Debentures a/c Dr. 1,20,000

Trade payables a/c Dr. 64,000
To realisation a/c
(Being all liabilities transferred to Realisation Account) 1,84,000
3 Equity Share Capital a/c Dr. 1,60,000
Profit and loss a/c Dr. 40,000
To Equity share holders a/c 2,00,000
(Being equity transferred to equity shareholders accounts)
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4. Ram and Shyam Ltd. a/c Dr. 2,40,000

To Realisation a/c 2,40,000
(Being Purchase consideration)
5. Bank a/c Dr. 42,000
To Realisation a/c 42,000
(Being cash realised from trade receivables in full)
6. Realisation a/c Dr. 64,000
To Bank a/c 64,000
( Being payment made to trade payables)
7. Shares in Ram and Shyam Ltd. Dr. 2,40,000
To Ram and Shyam Ltd. 2,40,000
(Being purchase consideration received in the form of shares of Ram
and Shyam Ltd.)
8. Realisation a/c Dr. 54,000
To Equity shareholders a/c 54,000
(Being profit on realisation account transferred to shareholders
account)
9. Equity shareholders a/c Dr. 2,54,000
To Shares in Ram and Shyam a/c 2,40,000
To Bank a/c 14,000
( Being final payment made to shareholders)
WORKING NOTE:
Calculation of Securities Premium balance
Debentures issued by Ram and Shyam Ltd. to Shyam Ltd. at 5% Premium
Therefore, securities premium account will be credited with (Rs.1,20,000 x 5% ) Rs.6,000.

PROBLEM NO.10
Balance Sheet of Super Fast Express Ltd as at 1st Jan., 2015
Particulars Note No. Amount
(Rs.)
Equity and Liabilities
1 Shareholder’s funds
a) Share capital 1 30,00,000
b) Reserve and Surplus 2 3,60,000
2 Non-Current Liabilities
a) Long-term borrowings 3 1,00,000
3 current Liabilities
a) Trade payables 1,00,000
Total 35,60,000
Assets
4 Non – current assets
b) Fixed assets
i) Tangible assets 4 25,00,000
ii) Intangible assets 5 1,00,000
5 Current assets
a) Inventories 3,40,000
b) Trade receivables 2,80,000
c) Cash and cash equivalents 6 3,40,000
Total 35,60,000

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NOTES TO ACCOUNTS:
Particulars Amount
Rs.
1. Share Capital
Equity share capital
Issued, subscribed and paid up
30,000 Equity shares of Rs.100 each 30,00,000
Total 30,00,000
2.Reserves and Surplus
Reserves account 1,00,000
Surplus 1,00,000
Insurance reserve 1,00,000
Employee profit sharing account 60,000
Total 3,60,000
3. Long Term Provisions
Provident fund 1,00,000
Total 1,00,000
4. Tangible assets
Buildings 16,00,000
Machinery 9,00,000
Total 25,00,000
5. Intangible assets
Goodwill 1,00,000
Total 1,00,000
6. Cash and cash equivalents
Balance with bank 2,30,000
Cash on hand 1,10,000
Total 3,40,000
The above solution based on pooling of interest method.
PROBLEM NO.11
Calculation of Purchase Consideration
One share of B Ltd. will be Issued in exchange of every share of A Ltd. 20,000 Shares
(i.e. 20,000 equity shares of B Ltd. will be issued against 20,000 equity shares of
A Ltd.)
Journal Entries in the books of B Ltd.
(Rupees in thousands)
S.no Particulars Debit Credit
1. Loan from bank a/c Dr. 60
To Capital reduction a/c 60
(Being Loan from bank waived off to the extent of Rs. 60 thousand)

2. Equity Share capital a/c (Rs. 100) Dr. 1,000

To Equity share capital a/c (Rs. 10) 100
To Capital Reduction a/c 900
(Being equity shares of Rs.100 each reduced to Rs.10 Each)
3. Equity share capital a/c (Rs.10) Dr. 100
To Equity share capital a/c (Rs. 100) 100
(Being 10 equity shares of Rs.10 each consolidated to one share of
Rs.100 each)
4. Capital reduction a/c Dr. 960
To Profit and Loss a/c 800
To Capital reserve a/c 160
( Being accumulated Losses set Off against reconstruction a/c and
balance transferred to capital reserve account)
5. Business purchase a/c Dr. 2,000
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To Liquidator of A Ltd. 2,000

( Being purchase of business of A Ltd.)
6. Fixed assets a/c Dr. 2,700
Investment a/c Dr. 700
Trade receivables a/c Dr. 400
Cash at Bank a/c Dr. 250
To Trade payables a/c 300
To Proposed dividend a/c 200
To Loans From bank a/c 250
To 10% Debentures a/c 500
To Business purchase a/c 2,000
To Reserves a/c 800
(Being assets, liabilities and reserves taken over under pooling of
interest method)
7. Liquidation of A Ltd. a/c Dr. 2,000
To Equity share capital a/c 2,000
(Being payment made to liquidators of A Ltd. by allotment of
20,000 new equity shares)
8. Trade payables a/c Dr. 100
To Trade receivables a/c 100
(Being mutual owing cancelled)
9. Proposed dividend a/c Dr. 200
To Bank a/c 200
(Being dividend paid off)
Balance Sheet of B Ltd. after merger as on 31.03.2014
Particulars Note No. Rs. In ‘000
Equity and Liabilities
1 Shareholder’s funds
a) Share capital 1 2,100
b) Reserve and Surplus 2 960
2 Non-Current Liabilities
a) Long-term borrowings 3 1,140
3 Current Liabilities
a) Trade payables 500
b) short term borrowings 4 50
Total 4,750
Assets
1 Non – current assets
a) Fixed assets
Tangible assets 3,550
b) Non-current investments 700
2 Current assets
a) Trade receivables 450
b) Cash and cash equivalents 50
Total 4,750
NOTES TO ACCOUNTS:
Rs. In ‘000
1. Share Capital
21,000 Equity shares of Rs.100 each fully paid
(out of the above , 20,000 shares have been issued for consideration other than cash) 2,100
2.Reserves and Surplus
Capital reserve 160

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General reserve 800 960
3. Long Term Provisions
10% Debentures 500
Loan from Bank (250 + 450 – 60) 640 1140
4. Short term borrowings
Bank overdraft 50

PROBLEM NO. 12
In the books of R Ltd.
Sl.
Particulars Debit (Rs.) Credit (Rs.)
No
1. Business Purchases A/c Dr. 3,00,00,000
To Liquidator of P Ltd A/c 3,00,00,000
(Being business of P Ltd acquired)
2. Liquidator of P Ltd A/c Dr. 3,00,00,000
To Equity share capital A/c 2,50,00,000
To Securities Premium A/c 5,00,000
(Being purchase consideration due to P Ltd discharged)
3. Patents A/c Dr. 20,00,000
Land & Buildings A/c Dr. 60,00,000
Plant and machinery A/c Dr. 1,55,00,000
Inventories A/c Dr. 35,00,000
Trade Receivables A/c Dr. 8,00,000
Bank A/c Dr. 4,50,000
Good will A/c (Bal. Fig) Dr. 22,50,000
To Trade payables A/c 5,00,000
To Business purchase A/c 3,00,00,000
(Being assets & liabilities of P Ltd incorporated in books of accounts
of R Ltd.)
4. Business purchases A/c Dr. 48,00,000
To Liquidator of Q Ltd 48,00,000
(Being business of Q Ltd Acquired)
5. Liquidator of Q Ltd A/c Dr. 48,00,000
To Equity share capital A/c 40,00,000
To Securities Premium A/c 8,00,000
(Being purchase consideration due to Q Ltd discharged
6. Motor vehicles A/c Dr. 6,00,000
Furniture A/c Dr. 3,50,000
Inventories A/c Dr. 27,90,000
Trade Receivables A/c Dr. 6,20,000
Bank A/c Dr. 1,70,000
Good will A/c (Bal. Fig) Dr. 4,80,000
To Trade Payables A/c 2,10,000
To Business purchase A/c 48,00,000
(Being assets & liabilities of Q Ltd incorporated in books of accounts
of R Ltd.)

Copyrights Reserved
To MASTER MINDS, Guntur

THE END

IPCC_37e_Accounts_ Group.I_Amalgamation - I_Assignment Solutions_12.13