The following is the financial position of X Ltd and Y Ltd on 31-3-20012 Liabilities Equity shares of $100 each 6% debentures of 20,000 $10 each Reserve fund X Ltd ($) Y Ltd ($) X Ltd ($) Y Ltd ($) Assets Land and Building 100,000 60,000 30,000 Plant and Machinery 110,000 50,000 34,000 Stock 16,000 14,000 8000 Dividend 4000 Debtors 9000 equalization fund Employee's PF Creditors P/LA/C 3000 Cash 3000 1000 10,000 8000 2000 173,000 68,000 173,000 68,000
The following is the financial position of X Ltd and Y Ltd on 31-3-20012 Liabilities Equity shares of $100 each 6% debentures of 20,000 $10 each Reserve fund X Ltd ($) Y Ltd ($) X Ltd ($) Y Ltd ($) Assets Land and Building 100,000 60,000 30,000 Plant and Machinery 110,000 50,000 34,000 Stock 16,000 14,000 8000 Dividend 4000 Debtors 9000 equalization fund Employee's PF Creditors P/LA/C 3000 Cash 3000 1000 10,000 8000 2000 173,000 68,000 173,000 68,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The two companies agreed to amalgamate to form a new company called Z Ltd. The authorized capital of Z Ltd is 100,000 equity shares of $10 each.
The assets of X Ltd are taken over at a reduced valuation of 10% with the exemption of land and building which are accepted at bookvalue.
Both the companies to receive 5% of the valuation of their respective. Business as goodwill . The entire purchase price is to be paid by Z ltd in fully paid shares.in return for debentures in X Ltd. Debentures of the same amount and denomination are to be issued by Z ltd.
Calculate the purchase consideration.
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