Amalgamation, Absorption Etc PDF

I.
AMALGAMATION, ABSORPTION & RECONSTRUCTION
Problem 1] Nath Ltd. sells its business to Sagar Ltd. as on 31st March, 2014 on which date
its Balance Sheet stood as follows : [20]
Balance Sheet as on 31st March, 2014
Liabilities Rs. Assets Rs.
Share Capital Goodwill 50,000
2,000 Equity shares of 2,00,000 Freehold Property 1,50,000
Rs. 100 each
6% Debentu of Rs. 100 each 1,00,000 Plant & Tools 83,000
Sundry Creditors 30,000 Stock 35,000
Reserve Fund 50,000 Bills Receivable 4,500
Profit & Loss A/c 20,000 Sundry Debtors 27,500
Cash at Bank 50,000
4,00,000 4,00,000
Sagar Ltd. agreed to take assets (exclusive of cash and goodwill), at 10% less than
the book values, to pay Rs. 75,000 for goodwill and to take over the debentures. The
purchase consideration was to be discharged by allotment to Nath Ltd. of 1,500 shares of
Rs. 100 at a premium of Rs. 10 per share and balance in cash. The cost of liquidation
amounted to Rs. 3,000.
You are required to prepare : (i) Realisation A/c, Equity Shareholder A/c, Purchasing
Company A/c, Creditors A/c, in the books of Nath Ltd. (ii) Acquisition entries in the
books of Sagar Ltd. [Mar.15 Regular]
Problem 2] Follwing was the Balance Sheet of Asha Ltd. As on 31st March 2014.
Balance Sheet of Asha Ltd.
Share Capital 1000 Shares of Rs.
100 each 1,00,000 (-) call in arrears Land & Building 70,000
1,000 99,000 Plant & Machinery 55,000
General Reserve 32,000 Stock 49,000
Profit & Loass A/c 30,000 Debtors 21,000
Bills Payable 21,200 Cash in Hand 7,200
Creditors 35,000 Advertising Suspense A/c 15,000
2,17,200 2,17,200
Asha Ltd. was absorbed by Pushpa Ltd. on the following terms.

i) Asha Ltd. agreed to write off advertising suspense account against its own reserves.
ii) Out of the unpaid calls, Asha Ltd. received Rs. 400 and remaining calls of Rs. 600 were
proved irrecoverable.
iii) Pushpa Ltd. revalued the assets of Asha ltd as under
iv) Pushpa Ltd. took over the business of Asha Ltd. and agreed to discharge the purchase
consideration into 1300 shares of Rs. 100 each at Rs. 110 per share and the balance in cash.
v) Asha Ltd. Paid its liquidation expenses of Rs. 2,000.
Prepare realization a/c. Pushpa Ltd. a/c, Cash a/c and Share holders a/c in the books of Asha
Ltd. and pass journal entries in the books of Pushpa Ltd. [Mar.15 External]
S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 1

Problem 3] The Balance Sheets of GANGA Ltd. and ROHINI Ltd. as on 31st Mar., 2014
were as follows
Balance Sheet of GANGA Ltd., as on 31.3.2014
Liabilities Amt (Rs.) Assets Amt (Rs.)
Share Capital -- 4000 Eq. Land & Buildings 2,20,000
Shares of Rs.100 each 4,00,000 Plant and Machinery 2,40,000
Profit and Loss 60,000 Debtors 70,000
6% Debentures 1,00,000 Less : R.D.D. 5,000 65,000
Bills Payable 10,000 Cash at Bank 35,000
Sundry Creditors 50,000
6,40,000 6,40,000
Balance Sheet of ROHINI Ltd., as on 31.3.2014

Liabilities Amount (Rs.) Assets Amount (Rs.)
Share Capital-- 20000 Eq. Land & Buildings 80,000
Shares of Rs.10 each 2,00,000 Furniture 15,000
Bank Overdraft 20,000 Plant & Machinery 80,000
Creditors 70,000 Vehicles 45,000
Stock 50,000
Debtors 14,000
Less : R.D.D. 4,000 10,000
Cash in hand 5.000
Profit and Loss 5,000
2,90,000 2,90,000
The above two companies amalgamated on the date of the Balance and a new company
“Shantisagar Ltd.” was formed with an Authorised capital of Rs. 10,00,000 divided into
1,00,000 Equity shares of Rs. 10 each. The malagamation was agreed on the following
condition.
(1) Shantisagar Ltd. took the business of GANGA Ltd. and agreed to give for each share
in GANGA Ltd. 10 equity share of new company of Rs. 10 each at Rs. 11 per share and a
cash payment of Rs. 25 per share og GANGA Ltd. the new company also agreed to
discharge3 the debentures of Ganga Ltd. at a premium of 5% by issuing 7% debentures of
new company of Rs. 100 each.
(2) Shantisagar Ltd. took all assets of ROHINI Ltd. except Debtors and cash. Land and
Buildings and stock were taken at 20% appreciation and other assets were taken at
book value. They also agreed to take over creditors of ROHINI Ltd.
(3) The Purchase consideration of ROHINI Ltd. was discharged as Rs. 15,000 in cash
and balance of purchase consideration was paid in Equity shares of new company of
Rs. 10 each.
(4) While recording the assets and liabilities, Shantisagar Ltd. valued Land and Building
and stock of GANGA Ltd. at Rs. 2,70,000 and Rs. 1,00,000 respectively. All other
asses and liabilities were taken over at book value
(5) ROHINI Ltgd. Realized Rs. 12,000 of debtors and paid Bank overdraft in full.
(6) Liquidation expenses of Rs. 8,000 of GANGA Ltd. Paid by new company and
liquidation expenses of Rs. 6,000 paid by ROHINI Ltd.
You are required :

(1) To prepare Realisation A/c, Shantisagar Ltd. A/c, Cash A/c , Equity Shareholders A/c
in the books of GANGA Ltd. and Rohini Ltd. and also 6% Debentureholders a/c in
the books of GANGA Ltd.
(2) Pass Journal entires in the books of Shantisagar Ltd. [Oct.14]
Problem 4] Yash Ltd. agreed to acquire the business of Jay Ltd. as on 31st March, 2014 .
The Balance Sheet of Jay Ltd. as on that date was as follows :
Liabilities Amount Assets Amount
Share Capital : Fixed Assets
Authorised Capital Goodwill 1,00,000
60,000 Equity Shares of Land & Building 3,00,000
Rs.10 each 6,00,000 Plant & Machinery 3,40,000
Issued , Subscri. & paid up Curr. Assets, Loan & Adv.
60,000 Equity share of Stock 1,68,000
Rs.10 each 6,00,000 Sundry Debtors 36,000
Reserve and Surplus Cash in hand 6,000
General Reserve 1,70,000 Cash at Bank 50,000
Profit and Loss 1,10,000
Secured Loan :
6% Debentures 1,00,000
Current Liabilities & Provi.
10,00,000 10,00,000
The Consideration payable by Yash Ltd. was agreed as follows :

i) A cash paytment of Rs. 2.50 per share in Jay Ltd.
ii) The issue of 90,000 Equity shares of Rs. 10 each in Yash Ltd. having an agreed value
of Rs. 15 per share to equity shareholders of Jay Ltd.
iii) The issue of such an amount of fully paid 8% debentures of Yash Ltd. at 96% as is
sufficient to discharge the 6% debentures of Jay ltd. at Premium of 20%.
While computing the agreed consideration, the directors of Yash Ltd. valued Land and
Building at Rs. 6,00,000 , Plant and Machinery at Rs. 6,00,000, Stock at Rs. 1,42,000 and
Debtors at their face value subject to a reserve of 5% to cover doubtful debts . The cost of
liquidation of Jay Ltd. came to Rs. 5,000.
You are required to prepare :
i) Statement of Purchase consideration
ii) Realisation A/c , Equity Shareholders a/c, Yash Ltd. A/c, 6% Debentureholders A/c,
Equity Share in Yash Ltd. A/c in the Books of Jay Ltd.
iii) Opening Journal entries and Balance Sheet in the books of Yash Ltd. [April 14]

Problem 5] The balance sheet of Kavita Ltd. and Savita Ltd. as on 31.3.2011 is as follow.
A new company was formed called Godawari Ltd. for purchasing the business of the above
two companies as on that date :
Liabilities Kavita Rs. Savita Rs. Assets Kavita Rs. Savita Rs.
Share Capital : Building 10,500 6,000
1500 Share of Rs10 15,000 --- Machinery 2,500 1,500
800 Share of Rs.10 --- 8,000 Stocks 6,000 7,800
General Reserve 8,000 --- Debtors 8,200 2,100
Profit & Loss A/c 2,000 2,000 Cash 4,300 1,800
5% Debentures --- 6,000 Motor 1,000 ---
Sundry Creditors 7,500 3,200 Vehicle
32,500 19,200 32,500 19,200
The following are the terms of purchase the Business.

A] Goodwill of Kavita Ltd.& Savita Ltd. is to be valued at Rs.8000 & Rs.3000 respectively
B] All the assets and liabilities of Kavita Ltd. are to be taken over at their book values
except Motor Vehicle which is valued Rs. 3,000.
C] All assets of Savita Ltd. are taken over at their book valued except Debtors and Cash, but
not liabilities.
D] The Debentures of Savita Ltd. are to be discharged at a premium of 5% by issuing them
9% Debentures of Godawari Ltd. as part payment of purchase consideration.
E] The Balance of purchase price to Savita Ltd. and entire purchase price to Kavita Ltd. is
paid in Rs.10 each fully paid equity shares of Godawari Ltd.
Show 1) Realisation A/c, Shareholders A/c & Godawari Ltd. A/c in the books of Kavita Ltd.
2) Opening journal entries and Balance Sheet of Godawari Ltd. as on 31.3.2011.
[Apr. 2013 Mar.01/Oct.93]
Problem 6] The following are the Balance Sheets of Express Limited and Super Fast
Limited as on 31st March, 2011
Balance Sheet of Super Fast Ltd. as on 31.3.2011
Authorised Capital --
2000 Equity Shares of Goodwill 1,50,000
Rs. 100 each 20,00,000 Fixed Assets 12,00,000
Issued Capital -- Stock 2,50,000
15000 Equity Shares of Debtors 2,00,000
Rs. 100 each 15,00,000 Cash and Bank 2,00,000
Profit & Loss A/c 2,00,000
Creditors 3,00,000
20,00,000 20,00,000
Super Fast Ltd agreed to absorb Express Ltd. Upon following terms :
1) Payment of cash of Rs. 15 for every share in Express Ltd.
2) The shareholders of Express Ltd. To receive one share in Super Fast Ltd. For every two
shares held by them.
3) Payment in cash at Rs. 110 for every debenturesholder in full discharge of debentures.
4) Expenses of liquidation amounted to Rs. 10,000 which were paid by Super Fast Ltd. (not
included in purchase consideration)
You are required to :
a) Prepare Realisation A/c, Super Fast Ltd. A/c, Equity Shares in Super Fast Ltd. A/c, Cash
A/c, Equity shareholders A/c , 5% Debentureholders A/c in the books of Express Ltd.

b) Pass opening entries in the books of Super Fast Ltd. And prepare Balance Sheet of Super
Fast Ltd. After absorption. [Oct.12]
Problem 7] The following was the Balance Sheet of Poonam Ltd. as on 31.3.2011

Share Capital : Goodwill 60,000
10,000 Eq. Shares of Buildings 80,000
Rs. 20 each 2,00,000 Machinery 1,30,000
6,000 8% Cumulative Stock 50,000
Preference Shares of Sundry Debtors 30,000
Rs. 20 each fully paid 1,20,000 Cash 10,000
Debentures 80,000 Preliminary Exp. 6,000
Sundry Creditors 20,000 Profit & Loss A/c 54,000
4,20,000 4,20,000
The scheme of reconstruction was agreed as follows :

(a) A new company to be formed “Sonam Ltd.” with an authorized capital of Rs.
6,00,000 all in equity shares of Rs. 10 each.
(b) Two equity shares of Rs. 5 paid up in the new company
(c) Four equity shares of Rs. 5 paid up in the new company to be issued for every
preference share in the old company.
(d) Debentureholders to be allotted 8000 Eq. shares as fully paid up in the new company.
(e) Sundry creditors to be taken over by new company.
(f) The remaining equity shares to be issued to the public and duly collected in full.
(g) The assets of the old company to be taken over subject written down the value of
machinery by Rs. 10,000.
Show the necessary ledge accounts in the books of the old company and the opening journal
entries and Balance Sheet in the books of new company. [Mar.12, Oct.03, Oct.99]
Problem 8] The Bal. Sheet of Sagar Ltd. and Saritha Ltd. as on 31.3.11 was as follows :

Liabilities Sagar Sarit Assets Sagar Sarita
Rs. Rs. Rs. Rs.
Share Capital Goodwill 1,80,000 ---
Equity Share of Plant & Machinery 1,00,000 1,60,000
Rs. 100 each 5,40,000 4,00,000 Land & Buildings 2,60,000 1,60,000
Dividend Equalisation Furniture & Fixt. --- 30,000
Reserve 20,000 --- Vehicles --- 90,000
General Reserve 24,000 --- Stock 1,60,000 1,00,000

Profit & Loss A/c 36,000 --- Debtors 80,000 20,000
Creditors 1,60,000 1,40,000 Cash in hand 20,000 10,000
Bills Payables 10,000 40,000 Cash at Bank 80,000 ---
Provision for Taxation 90,000 --- Profit & Loss A/c --- 10,000
8,80,000 5,80,000 8,80,000 5,80,000
Sagar Ltd. and Sarita Ltd. decided to amalgamate on that date and a New Company
Mahasagar Ltd. was formed to carry on their business on the following terms :

(1) Mahasagar Ltd. took all assets of Sagar Ltd. except Debtors Cash and Bank Balances,
at 10% depreciation and agreed to pay Rs. 2,00,000 for Goodwill. It also took
creditors and Bills Payable.
(2) Tax liability for 2010-11 was paid at Rs. 76,000
(3) Mahasagar Ltd. took all assets of Sarita Ltd. except Debtors and Cash. Land &
Building and stock were taken at 20% appreciation and other assets were taken at
book values. They also agreed to take over creditors of Sarita Ltd.
(4) Sarita Ltd. paid bills payables in full.
(5) Purchase consideration was satisfied as follows : Rs. 40,000 to Sagar Ltd. and Rs.
30,000 to Sarita Ltd. The balance of purchase consideration was paid in equity
shares of Rs. 100 each.
(6) Debtors of Sagar Ltd. and Sarita Ltd. realized Rs. 76,000 and Rs. 24,000 respectively.
Prepare :
(i) Realisation A/c , Mahasagar A/c, Equity Shares in Mahasagar Ltd. A/c, Cash A/c ,
Equity Shareholders A/c & Provision for Taxation A/c in the books of Sagar Ltd.
(ii) Acquisition entries of Mahasagar Ltd. [Oct.2011]
Problem 9] The following is the Balance Sheet of Rupa Ltd. as on 31.3.2011 :

4000 Eq. Shares of Rs. 100 each 4,00,000 Buildings 1,70,000
General Reserve 50,000 Plant & Machinery 4,00,000
Profit & Loss A/c 5,600 Investments 50,600
5% Debentures 2,50,000 Debtors 1,40,500
Dividend Equalisation Fund 24,000 Stock 80,700
Creditors 1,28,700 Cash at Bank 16,500
8,58,300 8,58,300
Rupa Ltd. was absorbed by Dipa Ltd. on the above date , on the following terms &
Conditions Dipa Ltd to :
(1) Assume all liabilities and to acquire all assets except investments which were sold by
Rupa Ltd. for Rs. 45,500.
(2) Discharge the debentures at a discount of 5% by issue of 7% Debentures in Dipa Ltd.
(3) Issue two shares of Rs. 60 each in Dipa Ltd. at Rs. 65 per share and also pay Rs. 2 in
cash to the shareholders of Rupa Ltd. in exchange for one share in Rupa Ltd.
(4) Pay the cost of absorption for Rs. 1,500.
With the consent of the shareholders, the liquidator of Rupa ltd. sold off in open market on
fifth of the shares received from Dipa Ltd. at the average rate of Rs. 63 per share.
You are required to prepare : (i) Statement of Purchase consideration, (ii) Realisation A/c,
(iii) Shareholders A/c (iv) Bank A/c (v) 5% Debentureholder A/c (vi) Opening
Journal Entries in the books of Dipa Ltd. [Mar.2011, Mar 2002]

Problem 10] The following are the Balance Sheet of two companies – Akash Ltd. And
Sagar Ltd. On 31.3.2010 :
Balance Sheet of Akash Ltd. As on 31.3.2010
Equity shares of Re 1 each Building 45,000
Fully paid 1,50,000 Machinery at cost 50,000
Forfeited shares a/c 150 Less : Depreciation - 15,000 35,000
4% Debentures 35,000 Sundry Debtors 25,850
Reserve Fund 10,000 Stock 68,276
Profit & Loss A/c 16,865 Cash at Bank 33,674
2,17,800 2,17,800
Balance Sheet of Sagar Ltd. As on 31.3.2010

Equity shares of Re 1 each Building 13,000
Fully paid 39,000 Machinery at cost 11,000
5% Debentures 7,000 Sundry Debtors 10,000
Sundry Creditors 25,700 Less : R.D.D. - 500 9,500
Bank Overdraft 600 Stock 15,200
Profit & Loss A/c 13,600
72,300 72,300
The two companies decided to Amalgamated as on 31st March, 2010 and new company
„sukhsagar Ltd.‟ Was formed with an authorized capital of Rs. 2,50,000 in shares of Re. 1
each. The following terms were agreed :
(1) The consideration was :
(a) 6 Shares of Re.1 each at Rs. 1.10 fully paid in the New Company in exchange
for every 5 shares in Akash Ltd. And Rs. 1,000 in cash.
One share of Re. 1 each at Rs. 1.10 fully paid in the New company in
exchange for every 3 shares in Sagar ltd. and Rs. 500 in cash.
(b) The debentureholders were to be allotted such debentures in the New company
bearing interest at 3.5 % as would bring them the same amount of interest.
(2) Akash Ltd. To pay its own cost of winding up which amounted to Rs. 300 and the cost
of winding up of Sagar Ltd. Is to be paid by Sukhsagar Ltd. (not to include in purchase
consideration) which amounted to Rs. 200.
(3) Sukhsagar Ltd. To take over all assets and liabilities of both companies at book values.
Prepare :(i) Realisation A/c, Sukhsagar Ltd., A/c, Equity Shares in Sukhsagar Ltd. A/c,
4% Debentureholders A/c, Cash A/c Equity Shareholders A/c in the books of
Akash Ltd.
(ii) Open Journal entries in the books of Sukhsagar Ltd. [March, 2010]

Problem 11] On 31st March, 2009 the Balance Sheet of Sun Co. Ltd. was as under:

30,000 Equity shares Land and Building 10, 00, 000
Of Rs. 100 each 30, 00, 000 Plant and Machinery 9, 00, 000
General Reserve 1, 50, 000 Furniture 3, 00, 000
Bank Loan 1, 00, 000 Stock 4, 00, 000
Sundry Creditors 2, 50, 000 Debtors 3,50,000
Bills Payable 50, 000 Cash 2, 50, 000
Profit & Loss A/c 3, 50, 000
35, 50, 000 35, 50, 000
The scheme of reconstruction was agreed upon as follows:

1) The new company Moon Ltd. was to be formed with a capital of Rs 50, 00,000
divided into 50,000 equity shares of Rs 100 each
2) The moon Ltd. to take over only the assets of the Sun Ltd.
3) The Moon Ltd. will issue 40, 000 equity shares of Rs. 100 each credited at Rs. 50 paid
up and pay Rs. 4, 75, 000 in cash.
4) The Moon Ltd. made a call of Rs. 25 per share on the partly paid shares and it was
received in full.
5) The Moon Ltd. decided to write off Land and Building by Rs. 4, 25, 000 and Plant &
Machinery by Rs. 3, 00, 000.
6) The cost of reconstruction amounted to Rs. 20, 000 to be paid by the Sun Co. Ltd.
You are required to prepare Realization A/c, Moon Ltd A/c, Shares in Moon Ltd., Cash A/c,
Equity Shareholder A/c in the books of Sun Co. Ltd. and pass Journal Entries in the books of
Moon Co. Ltd. [ Oct.09]
Problem 12] Panchaganga Ltd. and Koyana Ltd. agreed to amalagamate and form a New
Company 'Krishna Ltd.' when their Balance Sheets as on 31st March, 2009 were as
follows :
Balance Sheets as on 31st March, 2009
Liabilities PGanga Koyana Assets PGanga Koyana
Equity Shares Land & Building 2,10,000 80,000
of Rs.100 each 4,00,000 2,00,000 Plant & Machine 1,60,000 60,000
General Reserve 60,000 40,000 Furniture 30,000 36,000
Profit & Loss A/c 40,000 10,000 Stock 74,000 64,000
Sundry Creditors 80,000 60,000 Debtors 84,000 50,000
Bills Payable 10,000 10,000 Cash 32,000 30,000
Total 5,90,000 3,20,000 Total 5,90,000 3,20,000
The terms of amalgamation are as follows :

(i) Krishna Ltd. agreed to take over all the assets (except cash) and liabilities of both the
companies and also agreed to pay Rs. 77,000 as Goodwill to Panchaganga Ltd. and
Rs. 30,000 as Goodwill to Koyana Ltd.
(ii) The purchase consideration was satisfied as follows :
(a) 4,500 Equity shares of Rs. 100 each at Rs. 110 per share and balance in cash to
Panchaganga Ltd.

(b) 2000 Equity shares of Rs. 100 each at Rs. 110 per share and balance in cash to
Koyana Ltd.
(iii) The cost of liquidation of Panchaganga Ltd. was Rs. 30,000 and that of Koyana Ltd.
Rs. 20,000 which was paid by the respective companies.
You are required to prepare Realisation A/c, Krishna Ltd. A/c, Eq.Shares in Krishna Ltd.
A/c, Cash A/c and Eq. Shareholders A/c in the books of Panchaganga Ltd. and Koyana Ltd.
[March, 2009]
Problem 13] The Balance Sheet of „X‟ Ltd. And „Y‟ Ltd. As on 31-03-2008 were as follows
:
Balance Sheet of ‘X’ Ltd. as on 31st March, 2008
8,100 Equity shares of Rs. 100 Goodwill 2,70,000
each 8,10,000 Land and Building 3,90,000
General Reserve 65,000 Plant and Machinery 1,50,000
Profit & Loss A/c 55,000 Stock 2,40,000
Bank overdraft 15,000 Debtors : 1,26,000
Sundry creditors 2,40,00 Less : R.D.D. – 6,000 1,20,000
Provision for Taxation 1,35,000 Cash at Bank 1,50,000
13,20,000 13,20,000
Balance Sheet of ‘Y’ Ltd. as on 31st March, 2008

6000 Equity shares of Rs. 100 Land and Building 2,40,000
each 6,00,000 Plant and Machinery 2,40,000
Bank overdraft 60,000 Furniture 45,000
Sundry creditors 2,10,000 Motor Car 1,35,000
Stock 1,50,00
Debtors : 42,000
Less : R.D.D.– 12,000 30,000
Cash at Bank 15,000
8,70,000 8,70,000
The companies amalgamated as on the date of the balance sheet and new company Z Ltd.
Was formed to carry on the business of X Ltd. And Y Ltd. On the following terms :
1. Z Ltd. Took all assets of X Ltd. Except Debtors and Cash, at 10% depreciation and
agreed to pay Rs. 3,00,000 for goodwill. It also took over creditors and bank overdraft.
2. Tax liability was realized at Rs. 1,14,000.
3. Z Ltd. Took all assets of Y Ltd. Except Debtors and Cash. Land & Building and Stock
were taken at 20% appreciation and other assets were taken at book value. Z Ltd. Also
agreed to take over the creditors of Y Ltd.
4. Y Ltd. Paid bank overdraft in full.
5. The purchase consideration was satisfied as follows : Cash of Rs. 60,000 to X Ltd. And
Rs. 45,000 to Y Ltd. The balance of purchase consideration was paid in the equity
shares of Z Ltd. Of Rs. 100 each.
6. Debtors of X Ltd. And Y Ltd. Realized Rs. 1,14,000 and Rs. 36,000 respectively.
You are required to prepare Realisation A/c, Z Ltd. A/c, Cash A/c, Equity Shareholder
A/c, Provision for Taxation A/c, Bank Overdraft A/c in the book of X Ltd. And Y. Ltd.
[Oct., 2008]
Problem 14] The following is the Balance Sheet of Rose Ltd. as on 31.3.2007 :

Balance Sheets as on 31.3.2007
Share Capital Land & Building 1,40,000
2,000 Eq. Shares of 100 Each 2,00,000 Plant & Machinery 1,10,000
Profit & Loss A/c 60,000 Debtors 42,000
Creditors 70,000 Cash in Hand 14,400
Bills Payable 42,400 Advertising suspense 32,000
4,36,400 4,36,400
Rose Ltd. absorbed Lotus Ltd. on the following terms :
(1) Rose Ltd. Agreed to write off Advertising suspense against its own reserves.
(2) Lotus Ltd. Revalued the assets of Rose Ltd. As
Land & Building Rs. 1,50,000, Plant & Machinery Rs. 1,04,000, Stock Rs. 1,20,000
and Debtors at book value.
(3) Lotus Ltd took over all assets and Liabilities of Rose Ltd. And agreed to discharge the
purchase consideration in 2600 shares of Rs. 100 each at Rs. 110 per share and
balance in cash.
(4) Rose Ltd. Paid its liquidation expenses of Rs. 4,000.
You are required to prepare : (1) Realisation A/c, (2) Lotus A/c, (3) Equity shares in
Lotus Ltd. A/c, (4) Cash A/c and Equity share holders A/c in the book of Rose Ltd. and pass
opening journal entries in the books of Lotus Ltd. [ Mar. 2008, Mar.96]
Problem 15] The following are the Balance Sheets of A Ltd. & B Ltd. as on 31st Mar. 2000.
Balance Sheet of A Ltd.
Share Capital 6000 shares of Land and Building 2,00,000
1000 6% Pref. shares of Rs.100 1,00,000 Furniture 20,000
Contingency Reserve 20,000 Stock 70,000
Sundry Creditors 70,000 Debtors 90,000
Unclaimed Dividend 5,000 Cash in Hand 15,000
Contingent Liability for bills Preliminary Expenses 20,000
Discounted Rs. 4,000 Discount on Issue of Shares 5,000
Profit and loss A/c 75,000
7,95,000 7,95,000
Balance Sheet of B Ltd.
Share Capital 7000 shares of 4,00,000
Profit and loss A/c 40,000 Debtors 1,90,000
Workmen Compensation Fund 10,000 Cash in Hand 11,000
8,40,000 8,40,000
A Ltd. and B Ltd. amalgamated as on 31st March 2000 and new company C Ltd. was formed
with an authorised capital of 20,000 Equity shares of Rs.100 each. The amalgamation was
agreed on the following terms :
1) C Ltd. took all assets of A Ltd. at book values and creditors of A Ltd. The purchase
consideration were discharged by issuing 3,000 Equity Shares of Rs.100 each at Rs.120
per share and the balance in cash.

2) C Ltd. took all assets of B Ltd. at book values except cash and also took the creditors. The
purchase consideration were discharged by issuing 6000 Equity Shares of Rs.100 each at
Rs.120 per share and the balance in cash.
3) A Ltd. paid its preference share capital back with arrears of Pref. dividend for last 2 Yrs.
4) Liability for bills discounted was settled at Rs. 2,500.
5) Out of unclaimed dividend Rs. 2,000 was paid to the rightful shareholders. The remaining
unclaimed dividend was time barred and transferred to shareholders account.
6) Liability for workmen compensation of B Ltd. amounted to Rs. 7,500.
7) The cost of liquidation of A Ltd. was Rs. 5,000 and that of B Ltd. was Rs. 6,000 which
was paid by the respective companies. You are required to prepare :
a) Necessary Ledger A/cs in the books of A Ltd.
b) Opening entries in the books of C Ltd. ( Oct., 2007, Mar.1999 )
Problem 16] The following is the Balance Sheet of Apollo Ltd. as on 31.3.2007 :

Share Capital Goodwill 17,500
1000 shares of Rs.100 each 1,00,000 Land & Buildings 42,500
Reserve Fund 10,000 Plant and Machinery 80,000
6% Debentures 50,000 Stock 27,500
Loan from Bank 20,000 Debtors 32,500
Sundry Creditors 40,000 Cash 17,000
Discount on Debentures 3,000
2,20,000 2,20,000
National Ltd. absorbed Apollo Ltd. on the following terms

(1) National Ltd. to take over all the assets except cash. The assets to be valued at their
book values less 10% except goodwill which was to be valued Rs.25,000.
(2) The National Ltd. to take over sundry creditors which were subject to discount of 5%.
(3) The purchase consideration was to be discharged in cash to the extent of Rs. 75,000 and
the balance in fully paid equity shares of Rs. 10 each.
(4) The expenses of liquidation amounted to Rs. 2,000.
Show Ledger A/c in the book of Apollo Ltd. and opening entries in the books of National
Ltd. (Mar. 2007 )
Problem 17] The Balance Sheets of X Ltd. and Y Ltd. as on 31st Mar., 2006 were as follows
Balance Sheet of X Ltd., as on 31.3.2006

Liabilities Amt (Rs.) Assets Amt (Rs.)
Share Capital -- 2700 Eq. Goodwill 90,000
Shares of Rs.100 each 2,70,000 Land & Buildings 1,30,000
Dividend Equiali. Reserve 10,000 Plant and Machinery 50,000
Profit and Loss 18,000 Debtors 42,000
Creditors 80,000 Less : R.D.D. 2,000 40,000
Bills Payable 5,000 Cash in hand 10,000
Provision for Taxation 45,000 Cash at Bank 40,000
4,40,000 4,40,000

Balance Sheet of Y Ltd., as on 31.3.2006
Share Capital -- 2000 Eq. Land & Buildings 80,000
Shares of Rs.100 each 2,00,000 Furniture 15,000
Creditors 70,000 Plant & Machinery 80,000
Bills Payable 20,000 Vehicles 45,000
Stock 50,000
Debtors 14,000
Less : R.D.D. 4,000 10,000
Cash in hand 5.000
Profit and Loss 5,000
2,90,000 2,90,000
X Ltd. and Y Ltd. decided to amalgamate on that date and a new company XY Ltd. was
formed to carry on their business on the following terms :
(1) XY Ltd. took all assets of X Ltd. except debtors, cash and Bank balances, at 10%
depreciation and agreed to pay Rs. 1,00,000 for Goodwill. It also took over creditors
and bills payable.
(2) Tax liability for 2005-06 was paid at Rs. 38,000.
(3) XY Ltd. took all assets of Y Ltd. except Debtors and cash. Land and Buildings and
stock were taken at 20% appreciation and other assets were taken at book value. They
also agreed to take over creditors of Y Ltd.
(4) Y Ltd. paid Bills Payable in full.
(5) Purchase consideration was satisfied as follows :
Rs. 20,000 to X Ltd. and Rs. 15,000 to Y Ltd. The balance of purchase consideration
was paid in equity shares of Rs. 100 each.
(6) Debtors of X Ltd. and Y Ltd. realized Rs. 38,000 and Rs. 12,000 respectively.
prepare : (1) Necessary Ledger Accounts of X Ltd. and
(2) Acquisition entires in the books of XY Ltd. [ Oct., 06]
Problem 18] The following is the Balance Sheet of King Ltd. as on 31.3.05 :
Balance Sheets
Share Capital Premises 2,20,000
6,000 Eq. Shares of 100 Each 6,00,000 Machinery 1,80,000
General Reserve 80,000 Stock 1,80,000
Loans 1,00,000 Debtors 1,60,000
Creditors 40,000 Cash 44,000
Preliminary Exp. 36,000
8,20,000 8,20,000
Queen Ltd. absorbed King Ltd. on the following terms :

(1) The purchasing Co. took over-all the assets and outside liabilities of the vendor C
(2) Purchasing company agreed to keep with King Ltd. Rs. 32,000 to provide for the cost
of liquidation and payment to any dissentient shareholders.
(3) The cost of liquidation amounted to Rs. 11,000 and the dissentient shareholders of
200 shares were paid out of Rs. 105 per share.
(4) Queen Ltd. valued machinery at Rs. 1,60,000, Premises at Rs. 2,80,000. All other
assets and liabilities were taken at book value.
(5) The purchase consideration was discharged by issuing 6,000 equity shares of Rs. 100,
Rs. 80 paid up at a market value of Rs. 110 per share.

You are required to prepare : (1) Realisation A/c, (2) Cash A/c, (3) Queen Ltd. A/c,
(4) Equity shareholders A/c in the book of King Ltd. and opening journal entries in the books
of Queen Ltd. (Oct., 2005)
Problem 19] The following are balance Sheets of P Ltd. and Q Ltd. as on 31st March, 2005. :
Balance Sheet as on 31-3-2005
Liabilities : P Ltd. Q Ltd.
Share Capital
Eq. Share of Rs. 100 each 12,00,000 14,00,000
6% preference shares of Rs. 100 each 2,00,000 --
General Reserve 40,000 1,16,000
Creditors 1,40,000 1,44,000
Unclaimed Dividend 10,000 ---
Workmen‟s Compensation Fund --- 20,000
Total 15,90,000 16,80,000
Assets : P Ltd. Q Ltd.

Freehold Premises 4,00,000 8,00,000
Plant & Machinery 6,00,000 4,20,000
Furniture 40,000 ----
Stock 1,40,000 58,000
Debtors 1,80,000 3,80,000
Cash at Bank 30,000 22,000
Preliminary Expenses 50,000 ----
Profit & Loss A/c 1,50,000 ----
Total 15,90,000 16,80,000
P Ltd. and Q Ltd., amalgamated as on 31.3.2005 and a new company R Ltd., was formed
with an authorised capital of Rs. 40,00,000. The amalgamation was agreed on the
following conditions.
1) R Ltd. took all assets of P Ltd. at book values and creditors of P Ltd., The purchase
consideration was discharged by issuing 6000 equity shares of Rs.100 each at Rs.120
each and the balance in cash.
2) R Ltd., took all assets of Q Ltd. at book values except cash and also took the
creditors. The purchase consideration was discharged by issuing 12,000 equity
shares of Rs. 100 each at Rs. 120 per share and the balance in cash.
3) P Ltd. paid its Preference capital back with arrears of Preference dividend for the last
two years.
4) Out of unclaimed dividend Rs. 4,000 was paid to the rightful shareholders. The
remaining unclaimed dividend was time barred and transferred to shareholders
account.
5) Liability for workman‟s compensation of Q Ltd. amounted to Rs. 14,000.
6) The cost of liquidation of P Ltd. was Rs. 6,000 and that of Q Ltd. was Rs. 8,000
which was paid by the respective companies.
You are required to prepare :
a) Realisation A/c, R Ltd., A/c, Unclaimed Dividend A/c, Preference Shareholders A/c,
Equity Shareholders A/c and Bank A/c in the book of P Ltd.,
b) Realisation A/c, R Ltd. A/c, Workmen‟s Compensation Fund A/c, Equity
Shareholders A/c, and Bank A/c in the books of Q Ltd. (April, 2005)

Problem 20] The following is the Balance Sheet of X Ltd. as on 31st March, 2003.

Share Capital Goodwill; 4,00,000
20,000 Equity Shares of Land & Buildings 15,60,000
Rs. 100 each fully paid 20,00,000 Plant & Machinery 14,00,000
Reserve Fund 5,00,000 Patent Rights 3,50,000
Sinking Fund 1,00,000 Stock 2,00,000
Staff Provident Fund 3,00,000 Sundry Debtors 4,00,000
Sundry Creditors 1,40,000 Sinking Fund
„A‟ Debentures 4,00,000 Investments 1,00,000
B‟ Debentures 10,00,000 Cash at Bank 30,000
44,40,000 44,40,000
Y Ltd. absorbed X Ltd. on the date of its above Balance Sheet, the consideration being.:
(i) The taking over of the liabilities and all assets.
(ii) The payment of cost of absorption (as part of purchase consideration ) Rs. 8,000.
(iii) The repayment of the „B‟ Debentures at a premium of 5% in cash.
(iv) The discharge of „A‟ Debentures at a premium of 10% by the issue of 6% Debentures in
Y Ltd. at par.
(v) Payment of Rs. 15 per share in cash.
(vi) Allotment of one 7% preference share of Rs. 100 each fully paid and five equity shares
of Rs. 100 each fully paid for every four equity shares in X Ltd.
(vii) The actual cost of absorption came to Rs. 10,000.
Prepare Realisation A/c, Equity Shareholders A/c, Cash A/c, in the books of X Ltd. and
give journal entries in the books of Y Ltd. (April, 2004)
Problem 21] The following is the Balance Sheet of B Ltd. as on 31.3.2003 :

Share Capital Goodwill; 35,000
20,00 Equity Shares of Land & Buildings 85,000
Rs. 100 each fully paid 2,00,000 Plant & Machinery 1,60,000
Reserve Fund 20,000 Stock 55,000
5% Debentures 1,00,000 Cash at Bank 34,000
Loan from Bank 40,000 Discount on Debentures 6,000
Sundry Creditors 80,000 Debtors 65,000
4,40,000 4,40,000
The business of the company is taken over by A Ltd. as on that date on the following terms
(1) The A Ltd. to take over all the assets except cash, the assets to be valued at their book
values less 10% except goodwill which was to be valued at 4 year‟s purchase of the
excess of average (5 years) profit over 8% of the combined amount of share capital and
reserve.
(2) The A Ltd. to take over sundry creditors which were subject to discount of 5%.
(3) The purchase consideration was to be discharged in cash to the extent of Rs. 1,50,000
and the balance in fully paid equity shares of Rs. 10 each valued at Rs. 12.50 per share.
(4) The average of five years‟ profit was Rs. 30,100.
(5) The expenses of liquidation amounted to Rs. 4,000.

Prepare Realisation A/c, Equity Shareholders A/c, Bank A/c in the books of B Ltd. and
journal entries in the books of A Ltd. (October,2004)
Problem 22] On 1sr April 2002, the Balance Sheet of Manish Ltd. was as follows :

5,000 6% Preference Shares of Goodwill 55,000
Rs. 10 each. 50,000 Sundry Assets 1,64,500
15,000 Equity Shares of Rs. Cash 500
10 each 1,50,000 Profit and loss A/c 30,000
5% Debenture 30,000
2,50,000 2,50,000
A scheme of reconstruction was agreed upon as follows :
1) A new company to be form called Niranjan Ltd. with athorised capital of 32,500
equity shares of Rs. 10 each
2) One equity share of Rs. 5 paid in the new company to be issued for each equity share
in the old company.
3) Two equity shares of Rs. 5 paid in the new company to be issued for each preference
share in the old company
4) Debenture holder to receive 3,000 equity shares in the new company fully paid
5) Creditors to be taken over by the new company
6) The remaining unissued shares to be taken up and paid for in full by the directors.
7) The new company revalued sundry assets at Rs. 1,29,500 and adjusting goodwill as
required.
Prepare Realisation A/c, Equity Shareholder A/c Preference Shareholders A/c Niranjan Ltd.
A/c and cash A/c in the books of Manish Ltd. and prepare opening Balance Sheet of Niranjan
Ltd. [ March 2003 ]
Problem 23] Green Ltd. went into voluntary liquidation for its reconstruction on 31st March
2000 when its Balance sheet was as follows :

Share Capital 7000 shares of Freehold Property 4,15,000
3000 6% Preference shares of 3,00,000 Vehicles 40,000
Rs.100 Stock 1,75,000
Share Premium 10,000 Debtors 50,000
Unsecured loans 50,000 Less : R.D.D. - 5000 45,000
Sundry Creditors 70,000 Bills Receivable 10,000
Bills Payables 30,000 Cash in Hand 4,000
Profit and loss A/c 2,56,000
11,60,000 11,60,000
New Co. White Ltd. was formed to take over the following Assets & Liabilities of the Green
Ltd.
Freehold Prop.at Rs.3,60,000; Plant & Mach. at Rs.2,00,000; Vehicles at Rs.45,000;
Stock at Rs.1,50,000; White Ltd. also tookover unsecured loans and Creditors at book value.

The purchase consideration was satisfied in 2350 7% Preference Shares of Rs. 100
each and 10000 Equity Shares of Rs. 100 each, Rs. 40 paid up. There was a contingent
liability for a Repair Bill amounting to Rs. 1,700 for which White Ltd. issued 11 Equity
Shares of Rs. 100 each fully paid in full satisfaction of the claim.
The preference shareholders of Green Ltd. accepted Preference Shares of White Ltd.
in full satisfaction of their claims and Partly Paid Equity Shares of White Ltd. were allotted to
the Equity Shareholders of Green Ltd.
The Debtors and B/R of Green Ltd. realised Rs. 48,000 and Rs. 8,000 respectively.
Bills Payable were fully paid. The winding up expenses were Rs. 4,500.
White Ltd. immediately made a call of Rs.60 on partly paid Eq.Shares to pay the unsecured
loans and creditors. The call money were fully received out of which liabilities were paid.
Preliminary Expenses of White Ltd. amounted to Rs.10,000 which were paid immediately.
Close the Books of Green Ltd. by preparing the necessary Ledger A/c and pass journal entries
in the books of White Ltd. ( October 1998 )
Problem 24] These are the Balance Sheet of Anita Ltd. & Babita Ltd. as on 31st Mar., 2000.
Balance Sheet of Anita Ltd.
Share Capital 3000 shares of Furniture 10,000
Rs.100 each 3,00,000 Land & Building 1,00,000
500 Debentures of Rs.100 each 50,000 Plant & Machinery 1,50,000
Contingency Reserve 10,000 Sundry Debtors 45,000
Unclaimed Dividend 2,500 Cash at Bank 7,500
Contingency Liabilities for Bills Preliminary Expenses 10,000
discounted Rs. 2,000 Discount on issue of Shares 2,500
3,97,500 3,97,500
Balance Sheet of Babita Ltd.
Share Capital 3500 shares of Freehold Premises 2,00,000
6% 200Debentures of Rs.1000 each Stock 15,000
Sundry Creditors 36,000 Sundry Debtors 95,000
Reserve Fund 9,000 Cash at Bank 5,000
Workmen‟s Compensation Fund 5,000
4,20,000 4,20,000
Anita & Babita Ltd. amalgamated as on 31st March 2000 and a new company Sunita Ltd. was
formed with an Authorised capital of 10,000 Equity Shares of Rs.100 each. The
amalgamation was agreed on the following terms
1) Sunita Ltd. took all assets of Anita Ltd. at book valued and Creditors of Anita Ltd. The
purchase consideration was discharged by issuing 1,500 Equity shares of Rs.100 each, at
Rs. 120 per share and the balance in cash.
2) Sunita Ltd. took all assets of Babita Ltd. at book values except cash and also took the
creditors. The purchase consideration were discharged by issuing 3000 equity shares of
Rs. 100 each, at Rs. 120 per share and the balance in cash.

3) Anita Ltd. paid its preference capital back with arrears of preference dividend for last
2 years.
4) Liability for bills discounted was settled at Rs. 1250
5) Out of the unclaimed dividend Rs.1,000 was paid to the rightful shareholders. The
remaining unclaimed dividend was time barred and thus transferred to shareholders
account.
6) Liability for workmen‟s compensation of Babita Ltd. amounted to Rs. 3,750.
The cost of liquidation of Anita Ltd. was Rs. 2,500 and that of Babita Ltd. was Rs. 3,000
which was paid by the respective companies.
You are required to Prepare Realisation A/c, Sunita Ltd. A/c, Cash A/c &
Shareholders A/c in the books of Anita Ltd. & Babita Ltd. ( April 1998 / 95 )
Problem 25] Following was the Balance Sheet of Minal Ltd. as on 31st March 2000.

Share Capital 675 shares of Goodwill 22,500
Rs.100 each 67,500 Land & Building 32,500
General Reserve 3,000 Plant & Machinery 12,500
Dividend Equalisation Reserve 2,500 Stock 20,000
Sundry Creditors 20,000 Less : R.D.D. - 500 10,000
Outstanding Expenses 1,250 Cash in Hand 2,500
Provision for Taxation 11,250 Cash at Bank 10,000
1,10,000 1,10,000
Balance Sheet of Indapur Ltd. as on 30st March 97

Share Capital 500 shares of Land & Building 20,000
Rs.100 each 50,000 Plant & Machinery 20,000
Bank Overdraft 5,000 Furniture & Fittings 3,750
Sundry Creditors 17,500 Vehicles 11,250
Stock 12,000
Sundry Debtors 3,500
Less : R.D.D. – 500 3,000
Cash at Bank 1,250
72,500 72,500
The companies amalgamated as on the date of above Balance Sheet and new company Satara
Ltd. was formed to carry on the business of Pune Ltd. & Indapur Ltd. on the following terms.
1) Satara Ltd. took all Assets of Pune Ltd. except debtors, cash and bank balances at 10%
depreciation and agreed to pay Rs. 25,000 for goodwill. It also took over creditors and
outstanding expenses.
2) Tax liability for 1997 was realised at Rs. 9,500.
3) Satara Ltd. took all assets of Indapur Ltd. except cash and Debtors. Land and Building
and stock were taken at 20% appreciated and other assets were taken at book value.
Satara Ltd. also agreed to take over the creditors of Indapur Ltd.

4) Indapur Ltd. paid overdraft in full.
5) The purchase consideration was satisfied as follows : Cash of Rs. 5,000 to Pune Ltd. and
Rs. 3,750 to Indapur Ltd. The Balance of purchase consideration was paid in the Equity
shares of Satara Ltd. of Rs.100 each.
6) Debtors of Pune Ltd. and Indapur Ltd. realised Rs. 9,500 and Rs. 3,000 respectively.
Close the books of both the Companies. ( October 1997 )
Problem 26] Following was the Balance Sheet of Minal Ltd. as on 31st March 2000.
Share Capital 6000 shares of Land & Building 2,10,000
6% Debentures 20,000 Vehicles 1,00,000
Outstanding Expenses 4,000 Sundry Debtors 60,000
Cash at Bank 64,000
Underwriting commission 10,000
6,84,000 6,84,000
Nikita Ltd. absorbed Minal Ltd. on the following terms:
1) Nikita Ltd. acquired only the assets of Minal Ltd. except cash balance.
2) The Purchase Consideration was fixed as 5 equity shares of Rs.100 each at Rs.140 per
share for 7 equity shares of Minal Ltd. and 700 6% preference shares of Rs.100 each.
3) Realisation expenses amounted to Rs.12,000 and were paid by Minal Ltd.
4) The liquidator of Minal Ltd. transferred the preference shares to creditors in full
satisfaction their claims.
5) Debentures were paid at a premium of 10%.
6) Outstanding expenses were paid, in full and in addition Minal Ltd. had to pay Rs. 4,200
as compensation to the worker.
7) Nikita Ltd. valued Land & Building, Plant & Machinery at 10% appreciation, vehicles at
10% depreciation, Stock was reduced to its market value which was Rs. 64,000. Debtors
were taken subject to 5% R.D.D.
Prepare the necessary ledger accounts in the books of Minal Ltd. Pass the opening entries in
the book of Nikita Ltd. ( April 1997 )
Problem 27] The following are the Balance Sheet of Dinesh Ltd. as on 31st March 2000
Share Capital 25000 shares of Land & Building 65,000
Rs. 50 each 1,25,000 Plant & Machinery 42,500
Profits prior to incorporation 500 Furniture 2,500
Loans 33,250 Patents 10,000
Cash at Bank 1,750
P & L A/c 30,000
1,78,750 1,78,750
Dinesh Ltd. adopted a scheme of reconstruction, as working capital was badly needed. The
new company Lotus Ltd. was formed to take over the business of Dinesh Ltd. on the
following terms:

1. Out of creditors Rs.500 were preferential creditors and they were paid fully by the new
company. The remaining creditors were given the following option.
a) 50% of their claim will be paid in cash immediately as full settlement or
b) 5% debenture in the new company will be issued to them equivalent to their claim in
the old co. Half of the creditors opted for cash payment.
2 One Eq.Share of Rs.100 each Rs.75 paid up will be issued for every four shares of old Co
3 Lotus Ltd. made a final call of Rs.25 on equity shares which was fully received.
4 The amount made available under the reconstruction scheme was to be utilised to write
off. Stock 25%, Furniture by 50%, and Plant & Machinery by 10%. The new company
write off patents completely. Debtors were valued at Rs.10,000 keeping Rs.2,000 as a
R.D.D. The vale of Land & Building being adjusted to the extent required.
5 Formation expenses of the new company were Rs. 6,250.
Pass the necessary Journal entries in the books of Dinesh Ltd. and Lotus Ltd. also show
the calculation of Purchase Consideration. ( October 1995 )
Problem 28] The following is the B/S of Anita Ltd. & Sunita Ltd.on 31st Mar.2000
Liabilities Anita Sunita Assets Anita Sunita

Ltd. Ltd. Ltd. Ltd.
Equity Share Capital Building 80,000 ---
( Rs. 10 ) 1,20,000 40,000 Machinery 46,000 42,000
8% Debentures 20,000 --- Stock 80,000 10,000
General Reserve 30,000 --- Debtors 40,000 12,000
Div. Equ. Reserve 42,000 --- Cash 20,000 6,000
Emp. Pro. Fund 4,000 ---
Creditors 50,000 30,000
2,66,000 70,000 2,66,000 70,000
The above Companies are agreed to amalgamate and new company Vanita Ltd. is formed.
Vanita Ltd. takes over the assets & Liabilities of both the companies on the following terms.
a) Building of Anita Ltd. is accepted at book values and Machinery of Rs. 40,000. The other
assets are taken over at 10 % depreciation.
b) All assets and liabilities of both Sunita Ltd. are taken over at book values.
c) Both the companies to receive 10 % of net valuation of their respective business as
Goodwill.
d) The entire purchase price of both the Companies are paid in Equity Shares of Rs. 10 each.
Close the books of Anita & Sunita Ltd. Give opening entries in the books of Vanita Ltd.
( Oct. 94 )
Problem 29] The Lecmic Engineering Ltd. sells its business to the Scientific Engineering
Ltd. on 31st March, 2000 on which date its Balance Sheet was as follows
Balance Sheet
Share Capital 4000 shares of Goodwill 1,00,000
Rs.100 each 4,00,000 Freehold Property 3,00,000
6% 200 Debentures of Rs1000 each 2,00,000 Plant & Machinery 1,66,000
Reserve Fund 1,00,000 Bills Receivables 9,000
Cash at Bank 1,00,000
8,00,000 8,00,000

The Scientific Engineering Ltd. agreed to take over the assets except cash and Goodwill, at
10% less than the book values, to pay Rs.1,50,000 for Goodwill and to take over the
debentures.
The purchase consideration was to be discharged by the allotment to the Lecmic Engineering
Ltd. of 3000 shares of Rs.100 each at premium of Rs.10 per share and the Balance in cash.
The cost of liquidation Rs.6,000 paid by the Lecmic Engineering Ltd.
You are required to prepare necessary ledger accounts in the books of Lecmic Engineering
Ltd. and opening journal entries in the books of Scientific Engineering Ltd. ( April 1994 )
Problem 30] The Nira Company Ltd. sells its Business to Baramati company Ltd. as on 31st
Dec. 1999 on which date its Balance sheet stood as follows :

Share Capital 2000 shares of Goodwill 50,000
Rs.100 each 2,00,000 Freehold Property 1,50,000
6% Debentures of Rs.100 each 1,00,000 Plant & Machinery 83,000
Reserve Fund 50,000 Bills Receivables 4,500
Cash at Bank 50,000
4,00,000 4,00,000
The Baramati Co. Ltd. agreed to take the assets ( exclusive of cash & Goodwill ) at 10% less
than the Book Values, to pay Rs. 75,000 for goodwill and to take over the debentures.
The Purchase consideration was to be discharged by allotment to Nira Company Ltd. of 1500
shares of Rs.100 at premium of Rs.10 per share and balance in cash.
The cost of liquidation amounted to Rs. 3,000.
You are required to prepare (1) Realisation Account, Cash A/c, Shareholders Account,
Purchasing Co.‟s A/c, Creditors A/c in the books of Nira Co. Ltd. ( April 1993 )
Problem 31] Given below are the Balance Sheet of two Companies A Ltd. & B Ltd.
Balance Sheet of A Ltd.

50,000 8% Preference Shares of Land and Building 6,00,000
Rs. 10 each. 5,00,000 Plant and Machinery 15,50,000
1,50,000 Equity Shares of Rs. Patent Rights 2,00,000
10 each 15,00,000 Stock 3,50,000
General Reserve 8,00,000 Sundry Debtors 80,000
Profit & Loss A/c 90,000 Cash & Bank Balance 1,60,000
29,40,000 29,40,000

Balance Sheet of B Ltd.
40,000 Shares of Rs.10 each 4,00,000 Goodwill 70,000
Profit and Loss A/c 32,000 Motor Vehicles 40,000
Sundry Creditors 21,000 Furniture 25,000
Stock 2,39,000
Cash and Bank Balance 17,000
4,53,000 4,53,000
It has been agreed that both these companies should be wind up and new company C Ltd.,
should be formed to acquire the assets of both companies on the following terms :
( a ) C Ltd., is to have an authorised capital of Rs. 30,00,000 divided into 50,000 9%
cumulative Pref. Shares of Rs.10 each & 2,50,000 Equity Shares of Rs.10 each.
( b ) C Ltd is to purchase the whole of the assets of A Ltd.(except cash & bank balance) for
Rs.27,95,000 to be settled as to Rs.5,45,000 in cash and as to the balance by the issue of
1,80,000 Eq. Shares, credited as fully paid, to be treated as valued at Rs.12.50 each.
( c ) C Ltd. is to purchase the whole of the assets of B Ltd. (except cash and bank balance)
for Rs. 3,81,000 to be settled as to Rs. 6,000 in cash and as to the balance by the issue
of 30,000 Eq. Shares credited as fully paid, to be treated as valued of Rs.12.50 each.
( d ) C Ltd. is to make a public issue of 50,000 5% Cumulative Preference Shares at par and
30,000 Equity Shares at the issue price of Rs.12.50 per share, all payable in full on
application.
( e ) A Ltd. and B Ltd. are both to be wind up, the two liquidator‟s distributing the shares in
C Ltd. in kind among the equity shareholders of the respective companies.
( f ) The liquidator of A Ltd., is to pay the preference shareholders Rs.10 in cash for every
share held in full satisfaction of their claims.
It is estimated that the cost of liquidation (including the liquidator‟s remuneration) will
be Rs. 5,000 in the case of A Ltd., and Rs. 2,000 in the case of B Ltd., that the preliminary
expenses of C Ltd. will amount to Rs. 18,000 exclusive of the under-writing commission of
Rs. 23,750 payable on the public issue. The scheme has been sanctioned and carried through
in its entirety. You are required to pass J.E. in the books of C Ltd., on the basis that all assets
other than goodwill are taken at book values.
*****

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I.

AMALGAMATION, ABSORPTION & RECONSTRUCTION

Asha Ltd. was absorbed by Pushpa Ltd. on the following terms.

S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 1

Balance Sheet of ROHINI Ltd., as on 31.3.2014

S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 2

The Consideration payable by Yash Ltd. was agreed as follows :

S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 3

The following are the terms of purchase the Business.

S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 4

Balance Sheet as on 31st March, 2011

The scheme of reconstruction was agreed as follows :

Balance Sheet as on 31st March, 2011

General Reserve 24,000 --- Stock 1,60,000 1,00,000

S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 5

Problem 9] The following is the Balance Sheet of Rupa Ltd. as on 31.3.2011 :

Liabilities Rs. Assets Rs.

S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 6

Balance Sheet of Sagar Ltd. As on 31.3.2010

S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 7

Balance Sheet as on 31st March, 2009

The scheme of reconstruction was agreed upon as follows:

The terms of amalgamation are as follows :

S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 8

Balance Sheet of ‘Y’ Ltd. as on 31st March, 2008

S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 9

S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 10

Liabilities Amount Assets Amount

National Ltd. absorbed Apollo Ltd. on the following terms

Balance Sheet of X Ltd., as on 31.3.2006

S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 11

Queen Ltd. absorbed King Ltd. on the following terms :

S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 12

Assets : P Ltd. Q Ltd.

S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 13

Liabilities Rs. Assets Rs.

Problem 21] The following is the Balance Sheet of B Ltd. as on 31.3.2003 :

Liabilities Rs. Assets Rs.

S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 14

Liabilities Rs. Assets Rs.

Liabilities Amount Assets Amount

S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 15

S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 16

Liabilities Amount Assets Amount

Balance Sheet of Indapur Ltd. as on 30st March 97

Liabilities Amount Assets Amount

S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 17

S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 18

Liabilities Anita Sunita Assets Anita Sunita

S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 19

Liabilities Amount Assets Amount

Balance Sheet of A Ltd.

Liabilities Rs. Assets Rs.

S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 20

S.Y.B.Com. Corporate Accounting Notes/ Compiled by Dr. Yashodhan Mithare Page 21

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