Vincent Ltd. acquired the business of Stephen Ltd. on 31 March 2011, whose balance sheet as on that date was as given in the following:
|
Liabilities |
Assets |
||
|
Capital: |
Fixed Assets |
15,00,000 |
|
|
2,00,000 Shares |
20,00,000 |
Stock |
4,00,000 |
|
of Rs.10 Each |
Debtors |
2,50,000 |
|
|
Profit & Loss |
3,00,000 |
Cash at Bank |
3,50,000 |
|
Account |
|||
|
Creditors |
2,00,000 |
||
|
25,00,000 |
25,00,000 |
All the assets except the bank balances were taken over along with the trade liability. The purchase consideration was agreed at the exchange of five shares of Rs.10 each in Vincent Ltd. at an agreed price of Rs.12 per share for every 6 shares held. Vincent Ltd’s share was quoted in the market at Rs.15.
In addition, the expenses of liquidation of Rs.50,000 were agreed to be paid by Vincent Ltd. You are required to give:
- Realization A/c & shareholders’ A/c in the vendor company
- Journal entries to record the acquisition in the purchasing company