Following are the Balance Sheets of A Ltd. and B Ltd. as on 1.4.2016:

Two companies decided to amalgamate in the nature of merger. A new company, AB Ltd. is formed to take over all the assets and liabilities. The authorised share capital of AB Ltd. is 40,000 equity shares of ₹ 10 each ---- out of which 30,000 shares will be issued to A Ltd. and B Ltd. The market values of the land and building, and plant and machinery of the two companies are different from book values. For the purpose of calculating purchase consideration, assets and liabilities taken over at book values, subject to the following changes

You are required to:

(i) Calculate purchase consideration;

(ii) Close the books of both the companies;

(iii) Pass opening journal entries in the books of AB Ltd.; and (iv) prepare the Balance Sheet of AB Ltd.

Transcribed Image Text:

I. EQUITY AND LIABILITIES (1) Shareholders' Funds: Balance Sheets of A Ltd. and B Ltd. as at 1st April, 2016 A Ltd. (a) Share Capital - Equity Share of 10 each (b) Reserves and Surplus - General Reserve Profit and Loss Account TOTAL II. ASSETS (1) Non-current Assets: (a) Fixed Assets (2) Share Application Money Pending Allotment : (3) Non-current Liabilities: (4) Current Liabilities : (a) Trade Payables TOTAL Particulars (1) (i) Tangible Assets: (2) Current Assets: (a) Inventories (b) Trade receivables (c) Cash and cash equivalents Land and Building Plant and Machinery Furniture and Fixtures Note No. (2) (3) 1,50,000 35,000 15,000 50,000 2,50,000 75,000 50,000 40,000 35,000 25,000 25,000 2,50,000 B Ltd. (₹) (4) 1,00,000 30,000 10,000 35,000 1,75,000 60,000 40,000 25,000 15,000 20,000 15,000 1,75,000