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Problem:

A Ltd. Obtains B Ltd.for the consideration of Rs.38,00,000 to be satisfied in form of fully paid equity shares of Rs.10 each. The balance sheets of two companies on 31st Dec.2005,the date of acquisition,were as follows:

Balance Sheet as on 31st Dec.,2005

Liabilities

Rs.

Rs.

Assets

Rs.

Rs.

Share capital:

Equity shares of Rs.10 each

40,00,000

25,00,000

Sundry assets

96,00,000

58,00,000

General reserve

15,00,000

30,000

 

 

 

Development rebate reserve

3,00,000

1,00,000

 

 

 

Export profit reserve

6,00,000

4,00,000

 

 

 

Profit & loss A/c

12,00,000

9,00,000

 

 

 

Sundry liabilities

20,00,000

16,00,000

 

 

 

 

96,00,000

58,00,000

 

96,00,000

58,00,000

Required:

You’re required to pass the essential journal entries in books of A Ltd.(transferee company)when combination is by way of (i) merger.Also prepare the resultant Balance Sheet supposing that the Development Rebate Reserve and Export Profit Reserve are needed to be continued.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M910230

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