The following are the balance sheets of Emerald Ltd. & Diamond Ltd. as at 31 March 2011:
|
Liabilities |
Emerald |
Diamond |
Assets |
Emerald |
Diamond |
|
Share Capital: |
Fixed Assets: |
||||
|
Share of the Face Value of |
7,50,000 |
6,00,000 |
Cost Less Depreciation |
7,00,000 |
3,75,000 |
|
Rs. 10 Each |
Current Assets: |
||||
|
Reserves |
4,75,000 |
50,000 |
Stock |
2,10,000 |
2,35,000 |
|
10% Debenture |
— |
1,00,000 |
Trade Debtors |
1,50,000 |
2,50,000 |
|
Current Liabilities: Trade |
2,35,000 |
1,60,000 |
Balance at Bank |
4,00,000 |
50,000 |
|
Creditors |
|||||
|
14,60,000 |
9,10,000 |
14,60,000 |
9,10,000 |
Emerald Ltd. agreed to absorb Diamond Ltd. as on 31 March 2011 on the following terms:
- Emerald Ltd. agreed to repay 10% debentures of Diamond Ltd.
- Emerald Ltd. revalue its fixed assets at 9,75,000 to be incorporated in the books
- Share of both the companies to be valued on net assets basis, after considering 2,50,000 towards the value of goodwill of Diamond Ltd.
- The cost of absorption of 15,000 are met by Emerald Ltd.
You are required to prepare:
- Ratio of exchange of shares
- Journal entries in the books of Emerald Ltd.
- Bank A/c to arrive at the balance sheet on absorption