Page 73 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Accounting for Companies – II

Notes Net Assets of Dong Ltd. 3,27,600

-Purchase Consideration (` 2,10,000 + ` 66,000) 2,76,000
Capital Reserve 51,600
Balance Sheet of Ding Ltd.
as on 31 March, 2011
st
Liabilities ` Assets `
Share capital: Fixed Assets: 9,43,800
Equity Capital (shares of ` 10 each) 6,90,000 Investments -
12% Preference Capital
(Shares of ` 100 each) 66,000 Current Assets 3,58,200
Reserve & Surplus:
Capital Reserve 51,600 Amalgamation Adjustment
General Reserve 2,76,600 Account 7,500
Statutory Reserve 30,900

Profit & Loss A/c 33,780
Secured Loans:
13% Debentures 15,000
Current Liabilities & Provision:
Current Liabilities 1,45,620
13,09,500 13,09,500
Illustration 6 (Purchase and Net Payment Method)
st
The summarised Balance Sheet of Ashutosh Ltd. as on 31 March, 2011 was as follows:
Liabilities ` Assets `
Share Capital: Fixed Assets:
Shares of ` 10 each fully Paid 21,00,000 Goodwill 3,50,000
General Reserve 5,95,000 Land & Buildings 22,40,000
Profit and Loss A/c 3,85,000 Current Assets
10% Debentures 3,50,000 Stock 5,88,000
Creditors 70,000 Debtors 1,26,000
Cash 1, 96,000

35,00,000 35,00,000
Kamal Jeet Ltd. agreed to absorb the business of Ashutosh Ltd. with effect from 1st April, 2011.
The purchase consideration payable by Kamal Jeet Ltd. was agreed as follows:
(i) A cash payment equivalent to ` 2.50 for every ` 10 per share in Ashutosh Ltd.
(ii) The issue of 3,15,000 Equity shares of ` 10 each fully paid in Kamal Jeet Ltd. having an
agreed value of ` 15 per share.
(iii) The issue of such an amount of fully paid 8% Debentures in Kamal Jeet Ltd. at 96% as is
sufficient to discharge 10% Debentures in Ashutosh Ltd. at a premium of 20%.

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