X Ltd. and Y Ltd. agree to amalgamate as from 31 December 2010 on which date their balance sheets were as follows:
|
Liabilities |
X Ltd. |
Y Ltd. |
Assets |
X Ltd. |
V Ltd. |
|
Share Capital (Rs. 1 Each) |
25,000 |
10,000 |
Fixed Assets |
26,000 |
8,750 |
|
Creditors |
2,500 |
1,000 |
Current Assets |
20,500 |
6,750 |
|
Reserves |
4,000 |
3,000 |
|||
|
12% Debentures |
15,000 |
1,500 |
|||
|
44500 |
15,500 |
46,500 |
15,500 |
Z Ltd. was formed to take over the concerns of both X Ltd. and Y Ltd. Purchase price is to be discharged as follows:
For shareholders of X Ltd., 30,000 shares of Rs.1 each in Z Ltd.
For shareholders of Y Ltd., 12,500 shares of Rs.1 each in Z Ltd.
Debenture holders are to be settled by issue of 15% debentures in Z Ltd.
You are required to close the books of X Ltd. and Y Ltd. and give journal entries and balance sheet in the books of Z Ltd. assuming the amalgamation is in the nature of purchase.