Model: Net assets method The following is the balance sheet of Maa Ltd. as on 31 March 2011:
|
Liabilities |
Assets |
||
|
5,000 Equity Shares of :100 Each Fully |
5,00,000 |
Fixed Assets |
10,00,000 |
|
Paid |
Investments |
2,00,000 |
|
|
General Reserve |
7,00,000 |
Current Assets |
3,00,000 |
|
Profit & Loss Account |
1,50,000 |
Preliminary Expenses |
1,80,000 |
|
Trade Creditors |
2,00,000 |
Share Issue Expenses |
1,20,000 |
|
Provision for Taxation |
1,50,000 |
||
|
Proposed Dividends |
1,00,000 |
||
|
18,00,000 |
18,00,000 |
On the date of balance sheet, the company was taken over by Pappa Ltd. on the following terms:
- Fixed assets are revalued at Rs.12,00,000
- Investments have a market value of Rs.1,50,000
- Current assets are agreed at Rs.3,50,000 for the purpose of absorption
- Pappa Ltd. has agreed to pay the tax liability, which is estimated at Rs.1,75,000
- Dividends are to be paid before absorption by Maa Ltd.
Compute the purchase consideration.