The following are the balance sheet of X Ltd. And Y Ltd., as on 31 st march 2005 Liabilities Rs. Rs. Assets Rs. Rs. Share capital Equity shares of Rs.10 14 % preference shares of Rs.100 General reserve Export profit Reserve (required under Income Tax Act) Investment Allowance Reserve (statutory) P & L A/c 13% debentures of Rs.100 Trade creditors Other current liabilities 50,00,000 22,00,000 5,00,000 3,00,000 -- 7,50,000 5,00,000 4,00,000 2,00,000 30,00,000 17,00,000 -- 2,50,000 2,00,000 1,00,000 5,00,000 3,50,000 1,50,000 Land & building Plant& machinery Furniture & fittings Investments Stock Sundry debtors Cash and Bank 25,00,000 32,50,000 5,75,000 7,00,000 12,50,000 9,00,000 7,25,000 15,50,000 17,00,000 3,50,000 5,00,000 9,50,000 10,30,000 5,20,000 99,00,000 66,00,000 99,00,000 66,00,000 XY Ltd., is formed to take over X Ltd. and Y Ltd., for the following consideration. X Ltd. Issue of 4,80,000 equity shares of Rs.10 each of XY Ltd. At Par to the equity shareholders. Issue of 15% preference shares of Rs.100 each of XY Ltd. To discharge the preference shareholders of X Ltd. At 10% premium. Y Ltd. Issue of 3,50,000 equity shares of Rs.10 each of XY Ltd. At Par to the equity shareholders. Issue of 15% preference shares of Rs.100 each of XY Ltd. To discharge the preference shareholders of Y Ltd. At 10% premium. The debentures of X Ltd., and Y Ltd., Will be converted into equivalent number of debentures of XY Ltd. The statutory reserves are to be maintained for two more years. Close the books of X Ltd. And Y Ltd. And show the opening entries and balance sheet of XY ltd. On the assumption that the amalgamation is in the nature of merger.

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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The following are the balance sheet of X Ltd. And Y Ltd., as on 31 st march 2005

Liabilities

Rs.

Assets

Rs.

Share capital

Equity shares of Rs.10

14 % preference shares of Rs.100

General reserve

Export profit Reserve

(required under

Income Tax Act)

Investment Allowance Reserve (statutory)

P & L A/c

13% debentures of Rs.100

Trade creditors

Other current liabilities

50,00,000

22,00,000

5,00,000

3,00,000

7,50,000

5,00,000

4,00,000

2,00,000

30,00,000

17,00,000

2,50,000

2,00,000

1,00,000

5,00,000

3,50,000

1,50,000

Land & building

Plant& machinery

Furniture & fittings

Investments

Stock

Sundry debtors

Cash and Bank

25,00,000

32,50,000

5,75,000

7,00,000

12,50,000

9,00,000

7,25,000

15,50,000

17,00,000

3,50,000

5,00,000

9,50,000

10,30,000

5,20,000

99,00,000

66,00,000

99,00,000

66,00,000

XY Ltd., is formed to take over X Ltd. and Y Ltd., for the following consideration.

X Ltd.

Issue of 4,80,000 equity shares of Rs.10 each of XY Ltd. At Par to the equity shareholders.
Issue of 15% preference shares of Rs.100 each of XY Ltd. To discharge the preference shareholders of X Ltd. At 10% premium.

Y Ltd.

Issue of 3,50,000 equity shares of Rs.10 each of XY Ltd. At Par to the equity shareholders.
Issue of 15% preference shares of Rs.100 each of XY Ltd. To discharge the preference shareholders of Y Ltd. At 10% premium.

The debentures of X Ltd., and Y Ltd., Will be converted into equivalent number of debentures of XY Ltd. The statutory reserves are to be maintained for two more years.

Close the books of X Ltd. And Y Ltd. And show the opening entries and balance sheet of XY ltd. On the assumption that the amalgamation is in the nature of merger.

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