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Unit 4: Amalgamation: Accounting Treatment

Issued & Subscribed Capital Current Assets: notes
(97,500 shares of ` 10 each out of which
37,500 issued for other than cash) 9, 75,000 Others 11, 70,000

reserve & surplus: Cash Balance
(1, 50,000–1, 12,500) 37,500

General Reserve 6,00,000
Share Premium 3, 75,000
Secured Loans 3, 75,000
Unsecured Loans 1, 50,000
Current Liabilities & Provisions
Sundry Creditors 5,02,500
29, 77,500 29, 77,500

self assessment

Choose the correct answer from the following options:
11. Excess of purchase consideration over net assets is called-
(a) Revenue loss
(b) Capital reserve

(c) Capital profit
(d) Goodwill
12. As per AS-14, purchase consideration is payable to–
(a) Debenture-holders

(b) Shareholders
(c) Creditors
(d) Shareholders, Debenture-holders and Creditors.
13. X Limited takes over the business of Y Limited and agrees to issue two shares of ` 10
each, ` 8 paid up and market value of ` 15 per share for every three shares in Y limited. If
Y limited has 90,000 shares of ` 10 each, ` 7 paid up and market value ` 9 per share, the
amount of purchase consideration is -

(a) ` 4,80,000
(b) ` 9,00,000
(c) ` 4,20,000
(d) None of these.

Task When credit side is greater than debit side then on an account of purchase of
consideration what journal entries should be made?

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