A Ltd. absorbs B Ltd. by issue of 6 shares of Rs.10 each at a premium of 10% for every 5 shares of B Ltd. For the purpose of absorption, it was agreed that trade investment held by B Ltd. will realize their book value and goodwill of B Ltd. will be Rs.1,00,000.
The balance sheets of the two companies were as follows:
|
Liabilities |
A Ltd. |
B Ltd. |
Assets |
A Ltd. |
B Ltd. |
|
Share Capital: |
Investments: |
||||
|
Equity Shares of Rs. 10 Each |
20,00,000 |
15,00,000 |
Trade |
1,50,000 |
1,00,000 |
|
Reserves |
12,00,000 |
7,50,000 |
Share at A Ltd. at Cost |
— |
3,00,000 |
|
Trade Creditors |
2,00,000 |
1,50,000 |
Other Assets |
32,50,000 |
20,00,000 |
|
34,00,000 |
24,00,000 |
34,00,000 |
24,00,000 |
Prepare the balance sheet of A Ltd. after absorption of B Ltd.