Model: Inter-company holdings—when purchasing company holds shares in vendor company The following are the balance sheets of A Ltd. and B Ltd. as on 31 March 2011:
|
Liabilities |
A Ltd. |
B Ltd. |
Assets |
A Ltd. |
B Ltd. |
|
Share Capital Rs. 100 Each |
30,00,000 |
7,50,000 |
Land & Buildings |
22,50,000 |
3,00,000 |
|
Profit & Loss A/c |
22,50,000 |
3,75,000 |
Investments |
3,75,000 |
— |
|
Current Liabilities |
22,50,000 |
2,25,000 |
Current Assets |
48,75,000 |
10,50,000 |
|
75,00,000 |
13,50,000 |
75,00,000 |
13,50,000 |
A Ltd. agrees to absorb B Ltd. on the following terms:
- It is assessed that net assets of B Ltd. may be taken at Rs.10,87,500 which is to be satisfied by the issue of fully paid shares of Rs.100 each by A Ltd. at par.
- A Ltd’s Investments include 20% of the shares in B Ltd. at a cost of Rs.1,80,000.
Close the books of B Ltd. and give journal and balance sheet in the books of A Ltd.