Page 122 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Unit 6: External Reconstruction of Companies

Creditors 3,00,000 Current Assets 4,00,000 notes
Profit and Loss A/c 7,00,000
23,00,000 23,00,000
Abhijeet (2011) Ltd. is formed to take over buildings at ` 6,00,000. Plant & Machinery ` 2,80,000
and Stock ` 1,20,000. Preference shareholders are to be settled in full by allotment of the new
preference shares.
Purchase consideration is to be satisfied by 11% preference shares (` 100) and equity shares (` 10)
of Abhijeet (2011) Ltd. in the ratio of 3:2 sundry debtors realised. ` 3,00,000 and ` 2,20,000 was
paid to creditors in full settlement. There is no other current asset except stock and debtors. The
cost of winding up amounted to ` 20,000.
Show ledger accounts in the books of Abhijeet Ltd. and journal entries in the books of Abhijeet
(2011) Ltd. Also, draft Balance Sheet of Abhijeet (2011) Ltd.

Solution

calculation of purchase consideration
`
(A) Payment for Assets-
Buildings 6,00,000
Plant & Machinery 2,80,000
Stock 1,20,000

Total Assets taken 10,00,000
Purchase consideration will be discharged
by the issue of Preference shares and
equity shares in the ratio of 3:2
11% Preference shares 6,00,000
Equity shares 4,00,000
(B) Payment of Preference shares in Abhijeet
Ltd. by the issue of new Preference shares 8,00,000
Total Purchase Consideration 18,00,000

ledger of abhijeet ltd.
realisation a/c
particulars ` particulars `
To Buildings 8,00,000 By Creditors 3,00,000
To Plant & Machinery 4,00,000 By Bank (Debtors Realised) 3,00,000
To Current Assets 4,00,000
To Bank (Payment to creditors) 2,20,000 By Abhijeet (2011) Ltd.
(purchase consideration) 18,00,000
To Bank A/c (payment of liquidation expenses) 20,000
To Equity Shareholders’ A/c 5,60,000
24,00,000 24,00,000

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