Page 132 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Unit 6: External Reconstruction of Companies

The company cannot raise further capital and patents are shown at the higher value. The following notes
scheme is adopted:
(a) The company to go into voluntary liquidation and a new company called New Rajubai
Limited to be formed with an authorised capital of ` 10, 00,000 to take over the assets and
liabilities.
(b) Liability to the creditors to be discharged by the new company by cash payment of 25 paise
in the rupee and 50 paise in the rupee by the issue of 6% debentures in the new company.

(c) The shareholders of the old company to be issued 60,000 shares of ` 10 each, ` 5 per share
as paid and the balance of ` 5 per share being payable on allotment.
(d) The liquidation expenses ` 8,750 to be paid by the new company as part of purchase
consideration.
Prepare: (a) Realisation account (b) Shareholders account (c) Statement of Purchase Consideration
in the books of old company.

5. On 31 March, 2011 the Balance Sheet of Hari Om Limited was as follows:
st
Liabilities ` Assets `
Share Capital: Goodwill 2, 00,000
25,000 12% cumulative Plant & Machinery 3, 50,000
Preference shares of ` 10 each fully paid 2, 50,000 Furniture & Fixture 1, 00,000
75,000 equity shares of ` 10 each fully paid 7, 50,000 Patents 75,000
10% Debentures 1, 50,000 Stock 2, 45,000
Creditors 1, 00,000 Debtors 1, 27,500
(Preference Dividend in arrear for 3 years) Bank Balance 2,500
Preliminary Exps. 4,000
Discount on issue of debentures 6,000
Profit and Loss a/c 1, 40,000
12, 50,000 12, 50,000

The following scheme of external reconstruction was agreed upon:
(a) A new company to be formed called Hari Mohan Limited with an authorised capital of
` 16, 25,000 in equity shares of ` 10 each.
(b) One equity share, ` 5 paid up, in the new company to be allotted for each equity share in
the old company.
(c) The two equity shares, ` 5 paid up, in the new company to be allotted for each preference
share in the old company.

(d) Arrears of preference dividend to be cancelled.
(e) Debenture-holders to receive 15,000 equity shares in the new company credited as fully
paid.

(f) Creditors to be taken over by the new company.
(g) The remaining unissued shares to be taken up and paid for in full by the directors.
(h) The new company to take over the old company’s assets except patents, subject to writing
down plant and machinery by ` 1, 45,000 and stock by ` 30,000.

(i) Patents were realised by Hari Om Limited for ` 5,000.

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