A Co Ltd. agreed to acquire the assets excluding cash as on 31 December 2010 of B Co Ltd. The balance sheet of B Co Ltd. as on that day was as follows:
|
Liabilities |
Assets |
||
|
Equity Capital: |
Goodwill |
3,60,000 |
|
|
Shares of Rs.10 |
18,00,000 |
Land & Buildings |
7,20,000 |
|
Each |
4,80,000 |
Plant & |
12,00,000 |
|
General Reserve |
3,00,000 |
Machinery |
4,80,000 |
|
Debentures |
60,000 |
Stock |
1,80,000 |
|
Creditors |
3,60,000 |
Debtors |
60,000 |
|
Profit & Loss A/c |
Cash |
||
|
30,00,000 |
30,00,000 |
The consideration was as follows:
- A cash payment of Rs.4 for every share of B Co Ltd.
- The issue of one share of Rs.10 each at market value of Rs.12.50 in the A Co Ltd. for every share in B Co Ltd.
- The issue of 6,600 debentures of Rs.50 each in A Co Ltd. to enable B Co Ltd. to discharge its debentures at 10% premium
- The expenses of liquidation of B Co Ltd. amounting to Rs.24,000 were to be met by themselves
Give the journal entries in the books of both the companies.