Following are the summarised Balance Sheets of A Ltd. and B Ltd. as at 31.3.2008:Particulars A Ltd.

Following are the summarised Balance Sheets of A Ltd. and B Ltd. as at 31.3.2008:Particulars A Ltd. B Ltd.Share capital: Equity shares 10 each (fully paid up) 10,00,000 6,00,000Securities premium 2,00,000 -General reserve 3,00,000 2,50,000Profit and loss account 1,80,000 1,60,00010% Debentures 5,00,000 -Secured loan – 3,00,000Sundry creditors 2,60,000 1,70,00024,40,000 14,80,000Land and building 9,00,000 4,50,000Plant and machinery 5,00,000 3,80,000Investment (5,000 shares of B Ltd.) 80,000 -PAPER – 1 : ADVANCED ACCOUNTING 5Stock 5,20,000 3,50,000Debtors 4,10,000 2,60,000Cash at bank 30,000 40,00024,40,000 14,80,000The companies agree on a scheme of amalgamation on the following terms:(i) A new company is to be formed by name AB Ltd.(ii) AB Ltd. to take over all the assets and liabilities of the existing companies.(iii) For the purpose of amalgamation, the shares of the existing companies are to be valuedas under:A Ltd. = Rs.18 per shareB Ltd. = Rs.20 per share(iv) A contingent liability of A Ltd. of Rs.60,000 is to be treated as actual existing liability.(v) The shareholders of A Ltd. and B Ltd. are to be paid by issuing sufficient number ofshares of AB Ltd. at a premium of Rs.6 per share.(vi) The face value of shares of AB Ltd. are to be of Rs.10 each.You are required to:(i) Calculate the purchase consideration (i.e., number of shares to be issued to A Ltd. and BLtd.).(ii) Pass journal entries in the books of A Ltd. for the transfer of assets and liabilities.(iii) Pass journal entries in the books of AB Ltd. for acquisition of A Ltd. and B Ltd.(iv) Prepare the Balance Sheet of AB Ltd. (16 Marks)

 

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