Model: Surrender of shares A company’s position on 31 December 2010 was as follows:
|
60,000 Equity Shares of Rs.100 Each |
60,00,000 |
|
30,000 8% Debenture of Rs.100 Each |
30,00,000 |
|
Interest outstanding of Debentures |
3,60,000 |
|
Creditors |
15,00,000 |
|
Assets on that date were as follows: |
|
|
Fixed Assets |
60,00,000 |
|
Current Assets |
19,50,000 |
Fixed assets were revalued at Rs.28,80,000 and current assets at Rs.14,40,000. The reconstruction scheme approved by the Court was as follows:
- The shares were sub-divided into shares of Rs.5 each and 90% of the shares were surrendered
- Claims of debenture holders were reduced to Rs.14,70,000 for which Rs.7,50,000 equity shares were allotted
- Creditors agreed to reduce their claims to Rs.9,00,000, one-third of which was satisfied by issue of equity shares out of those surrendered Draft journal entries.