Problem.No.1 Amalgamation in the nature of purchase -Net Asset Method without statutory reserve) A and B Ltd agreed to amalgamate and form a new company called C Co. Ltd. The balance sheet on the date of amalgamation has under: Liabilities shares capital 1,00,000 1,40,000 Fixed assets 1,20,000 1,80,000 Reserve creditors bank Loan A Ltd B Ltd. Assets A Ltd B Ltd. 1,70,000 1,00,000 Stock 40,000 90,000 Debtors 90,000 Cash |3,10,000 4,20,000| 60,000 1,10,000 80,000 1,30,000 50,000 3.10,000 4,20,000| The consideration was to be based on the net assets of the company but subject to an addition to compensate Rs.90,000 to A Ltd., for its super profit. The shares of C Ltd. Were to be issued to A Ltd. and B Ltd., at a premium and in proportion to the agreed Net Assets. C Itd proposed to issue 12,000 shares of Rs.10 each at a price of Rs.15 per share. a) Calculate the number of share issued to A Ltd. And B Ltd. b) Pass the journal entries in the books of A Ltd. And B Ltd. c) Prepare the amalgamated balance sheet of C Ltd. Under Amalgamation in

Problem.No.1 Amalgamation in the nature of purchase -Net Asset Method without statutory reserve) A and B Ltd agreed to amalgamate and form a new company called C Co. Ltd. The balance sheet on the date of amalgamation has under: Liabilities shares capital 1,00,000 1,40,000 Fixed assets 1,20,000 1,80,000 Reserve creditors bank Loan A Ltd B Ltd. Assets A Ltd B Ltd. 1,70,000 1,00,000 Stock 40,000 90,000 Debtors 90,000 Cash |3,10,000 4,20,000| 60,000 1,10,000 80,000 1,30,000 50,000 3.10,000 4,20,000| The consideration was to be based on the net assets of the company but subject to an addition to compensate Rs.90,000 to A Ltd., for its super profit. The shares of C Ltd. Were to be issued to A Ltd. and B Ltd., at a premium and in proportion to the agreed Net Assets. C Itd proposed to issue 12,000 shares of Rs.10 each at a price of Rs.15 per share. a) Calculate the number of share issued to A Ltd. And B Ltd. b) Pass the journal entries in the books of A Ltd. And B Ltd. c) Prepare the amalgamated balance sheet of C Ltd. Under Amalgamation in

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

Problem.No.1
Amalgamation in the nature of purchase -Net Asset Method without
statutory reserve)
A and B Ltd agreed to amalgamate and form a new company called C Co.
Ltd. The balance sheet on the date of amalgamation has under:
A Ltd B Ltd. Assets
A Ltd B Ltd.
Liabilities
shares capital 1,00,000|1,40,000 Fixed assets 1,20,000 1,80,000
Reserve
creditors
bank Loan
1,70,000 1,00,000 Stock
40,000 90,000Debtors
90,000 Cash
3,10,000 4,20,000
60,000|1,10,000
80,000|1,30,000
50,000
3,10,000 4,20,000|
The consideration was to be based on the net assets of the company but
subject to an addition to compensate Rs.90,000 to A Ltd., for its super profit.
The shares of C Ltd. Were to be issued to A Ltd. and B Ltd., at a premium
and in proportion to the agreed Net Assets. C Itd proposed to issue 12,000
shares of Rs.10 each at a price of Rs.15 per share.
a) Calculate the number of share issued to A Ltd. And B Ltd.
b) Pass the journal entries in the books of A Ltd. And B Ltd.
c) Prepare the amalgamated balance sheet of C Ltd. Under Amalgamation in
the nature of purchase.

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