Model: Absorption—by way of merger The following were the balance sheets of X Ltd. and Y Ltd. as on 31 March 2011:
|
Liabilities |
X Ltd. : |
Y Ltd. : |
Assets |
X Ltd.Rs. |
Y Ltd.Rs. |
|
2,25,000 10% Preference |
22,500 |
Goodwill |
– |
750 |
|
|
Shares of Rs. 100 Each |
Freehold Premises |
36,000 |
– |
||
|
90,00,000 Equity Shares of |
90,000 |
– |
Machinery |
1,03,530 |
– |
|
Rs.10 Each |
Furniture & Fittings |
3,360 |
2,250 |
||
|
15,00,000 Equity Shares of |
– |
15,000 |
Trademarks |
300 |
– |
|
Z 10 Each |
Stock |
38,400 |
15,030 |
||
|
Capital Reserve |
28,800 |
– |
Debtors |
13,020 |
3,510 |
|
General Reserve |
37,200 |
4,350 |
Bills Receivable |
– |
300 |
|
Profit & Loss A/c |
3,450 |
660 |
Bank |
6,690 |
660 |
|
10% Debentures |
15,000 |
– |
|||
|
Creditors |
4,350 |
2,490 |
|||
|
2,01,300 |
22,500 |
2,01,300 |
22,500 |
On the above-mentioned date, X Ltd. merged with Y Ltd. The absorption by way of merger took place on the following conditions:
(i) Y Ltd. allotted to X Ltd. 2,25,000 15% fully paid preference shares of Rs.100 each and 84,00,000 equity shares of Rs.10 each to satisfy the claims of X Ltd’s preference shareholders and equity shareholders respectively. Y Ltd. also agreed to convert 10% debentures of X Ltd. into 12% debentures at a discount of 10%.
(ii) Expenses of liquidation of X Ltd.—Rs. 45,000—were borne by Y Ltd. You are required to:
- Prepare necessary ledger accounts with respect to X Ltd.
- Pass journal entries in the books of Y Ltd.
- Prepare a post-absorption balance sheet in the books of Y Ltd.