13,50,000 8,80,000 22,30,000 111 Land & Building Plant and Machinery (ii) Intangible assets Goodwill (1,80,000 + 1,90,000) 5. Cash and Cash Equivalents Cash at Bank 3.70,000 70,000 Illustration 2 A Ltd. agreed to acquire the business of B Ltd. as on 31st December, 2011. On that date Balance Sheet of B Ltd. was summarized as follows: Liabilities Assets Share Capital (Fully paid Goodwill 50,000 shares of 7 10 each) 3,00,000 Land, Building and Plant 3.20,000 General Reserve 85,000 Inventory 84,000 P&L A/C 55.000 Trade receivables 18,000 6% Debentures 50,000 Cash & Bank Balance 28,000 Trade payables 10,000 5,00,000 5,00,000 The Debenture holders agreed to receive such 7% Debentures issued as 96 each as would discharge the debentures in B Ltd. at a premium of 20%. The shareholders in B Ltd. were to receive 2.50 in cash per share and 3 shares in A Ltd. for every two shares held - the shares in A Ltd. being considered as worth 7 12.50 each There were fractions equaling 50 shares for which each was paid. The directors of A Ltd. considered the various assets to be valued as follows: Land 1,00,000 Buildings 2,50.000 Plant 3,50,000 Inventory 80,000 Trade receivables 18,000 The cost of liquidation of B Ltd. ultimately was 5,000. Due to a technical hitch, the transaction could be completed only on 1st July, 2011. Till date B Ltd. carried on trading which resulted in a profit 20,000 (subject to interest) after providing 15,000 as depreciation. On 30th June, 2011 Inventory was 90,000. Trade receivables were 25,000 and Trade payables were 15,000. There was no addition to or deletion from the fixed assets. It was agreed that the profit should belong to A Ltd. You are required, as on July 1, 2012, to: (1) prepare Realisation Account and the Shareholders Account in the ledger of B Ltd., and (ii) give journal entries in the books of A Ltd