Liabilities and assets of Dreamers Ltd. as on 31st March, 2016 stood as under : $ in Lakh $ in Lakhs Assets Fixed Assets Liabilities Share Capital 10% Preference Shares of $ 100 each 130 Investments 24 30 Current Assets 20 Equity Shares of $ 10 each General Reserve 60 36 12% Debentures 28 Current Liabilities 20 174 174 Performers Ltd. signified their agreement to takeover the assets and liabilities of Dreamers Ltd. as per the following terms and conditions : (i) Fixed assets at 90% of the book value. (ii) Investments at 10% above the par value. (iii) Current assets and liabilities at book value except that stock-in-trade at cost amounting to $10 lakh was agreed to be taken over at a discount of 20%. (iv) 12% Debentures are to be discharged at a premium of 15% by issuing 12% debentures of Performers Ltd. (v) Preference shareholders are to be discharged at a premium of 15% by issuing 10% preference shares of $100 each. (vi) Equity shareholders in Dreamers Ltd. are to be issued 5 equity shares of $10 each in Performers Ltd. for every 3 shares held by them. Work out the consideration for the takeover under : Net assets method; and Net payment method.
Liabilities and assets of Dreamers Ltd. as on 31st March, 2016 stood as under : $ in Lakh $ in Lakhs Assets Fixed Assets Liabilities Share Capital 10% Preference Shares of $ 100 each 130 Investments 24 30 Current Assets 20 Equity Shares of $ 10 each General Reserve 60 36 12% Debentures 28 Current Liabilities 20 174 174 Performers Ltd. signified their agreement to takeover the assets and liabilities of Dreamers Ltd. as per the following terms and conditions : (i) Fixed assets at 90% of the book value. (ii) Investments at 10% above the par value. (iii) Current assets and liabilities at book value except that stock-in-trade at cost amounting to $10 lakh was agreed to be taken over at a discount of 20%. (iv) 12% Debentures are to be discharged at a premium of 15% by issuing 12% debentures of Performers Ltd. (v) Preference shareholders are to be discharged at a premium of 15% by issuing 10% preference shares of $100 each. (vi) Equity shareholders in Dreamers Ltd. are to be issued 5 equity shares of $10 each in Performers Ltd. for every 3 shares held by them. Work out the consideration for the takeover under : Net assets method; and Net payment method.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Liabilities and assets of Dreamers Ltd. as on 31st March, 2016 stood as under :
$ in Lakh
Assets
$ in Lakhs
Liabilities
Share Capital
10% Preference Shares
of $ 100 each
Fixed Assets
130
Investments
24
30
Current Assets
20
Equity Shares of $ 10 each
General Reserve
60
36
12% Debentures
28
Current Liabilities
20
174
174
Performers Ltd. signified their agreement to takeover the assets and liabilities of Dreamers Ltd. as per
the following terms and conditions :
(i) Fixed assets at 90% of the book value.
(ii) Investments at 10% above the par value.
(iii) Current assets and liabilities at book value except that stock-in-trade at cost amounting to $10
lakh was agreed to be taken over at a discount of 20%.
(iv) 12% Debentures are to be discharged at a premium of 15% by issuing 12% debentures of
Performers Ltd.
(v) Preference shareholders are to be discharged at a premium of 15% by issuing 10% preference
shares of $100 each.
(vi) Equity shareholders in Dreamers Ltd. are to be issued 5 equity shares of $10 each in Performers
Ltd. for every 3 shares held by them.
Work out the consideration for the takeover under :
Net assets method; and
Net payment method.
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