Page 83 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Accounting for Companies – II

notes The company is absorbed by Beta Limited on the above date. The consideration for the
absorption is discharge of the debentures at a premium of 5%, taking over of the liability in
respect of the creditors and payment of ` 7 in cash per share and one share of ` 5 in Beta
Limited at the market value of ` 8 per share in exchange for one share in Alpha Limited.
The cost of liquidation of ` 1,500 is to be met by the purchasing company. Pass necessary
journal entries in the books of both the companies and open necessary accounts in the
books of Alpha Limited. Show how the purchase price is arrived at.

answers: self assessment

1. Realisation Account
2. Purchase Consideration 3. Agreed
4. Amalgamation 5. Par

6. True 7. False
8. True 9. False
10. False 11. (d) Goodwill
12. (b) Shareholders 13. (b) ` 9,00,000

4.6 further readings

Books Dr. Verma, J. C., Dr. Kumar, Sanjeev, Corporate Merger, Amalgamation & Takeovers.
Gaughan, Patrick A. Mergers and Acquisitions, New York: Harper Collins, 1991.

Online links http://www.caalley.com/list_as.html
http://www.wirc-icai.org/material/AS%2014%20Amalgamations%20
[Compatibility%20Mode].pdf
http://highered.mcgraw-hill.com/sites/0072922559/student_view0/chapter6/
chapter_highlights.html
http://www.scribd.com/doc/5990975/Amalgamation
“Consolidated Statements (Interco eliminations)”. FindMyBestCPA.com

78 lovely professional university