All India Motels Ltd. absorbed the business of West India Motels Ltd. as on 31st March, 2016.
Question:
All India Motels Ltd. absorbed the business of West India Motels Ltd. as on 31st March, 2016. Their respective position of assets and liabilities as on that date, prior to absorbtion were as under:
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Share Capital Reserve and Surplus Debentures Sundry Creditors Goodwill Buildings Machinery Sundry Debtors Inventories / Inventory Cash Investments Assets and Liabilities All India Motels Ltd. 600 540 800 220 448 1,160 180 60 80 32 200 West India Motels Ltd. 600 360 960 480 320 1,120 160 560 200 40 The intrinsic value of West India Motels Ltd.'s share has to be determined. Equivalent intrinsic value worth of 10 fully paid up shares of All India Motels Ltd. are to be issued to the shareholders of West India Motels Ltd. 50% of debtors of All India Motels Ltd. comprises money due from West India Motels Ltd. Inventory of West India Motels Ltd. includes goods worth 30 lakhs sold by All India Motels Ltd. at cost plus 20%. Value called and paid-up on All India Motels Ltd.'s share is 8 per share whilst it is 5 share in case of West India Motels Ltd.
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