a33 Illustration - 40 The Balance Sheet of Z Ltd, as at 31st March, 2008 is given below. In it, the respective shares of the company's two divisions namely "S" Division and "W" Division in the various assets and liabilities have also been shown. (All amounts in crores of Rupees) S Division W Division Total Fixed assets: Cost 875 249 Less: Depreciation 360 81 Written-down value 515 168 683 Investments 97 Net Current assets: Current assets 445 585 Less: Current liabilities (270 (93) 175 492 667 1,447 Financed by : Loan funds 15 417 Own funds Equity Share capital : Shares of Rs. 10 each 345 Reserves and surplus 685 1.447 Loan funds included, inter alia, bank Loans of Rs. 15 crore specifically taken for W Division and Debentures of the paid up value of Rs. 125 crore redeemable at any time between 1st October, 2007 and 30th September, 2008 On 1st April, 2008 the company sold all of its investments for Rs. 102 crore and redeemed all the debentures at par, the cash transactions being recorded in the Bank Account pertaining to Division. Then a new company named Y Ltd. was incorporated with an authorized capital of Rs. 900 crore divided into shares of Rs. 10 each. All the assets and liabilities pertaining to W Division were transferred to the newly formed company; Y Ltd, allotting to Z Ltd's shareholders its two fully paid equity shares of Rs. 10 each at par for every fully paid equity share of Rs. 10 each held in Z Ltd. as discharge of consideration for the division taken over. Y Ltd. recorded in its books the Fixed assets at Rs. 218 crore and all other assets and liabilities at the same values at which they appeared in the books of Z Ltd. You are required to: i Show the journal entries in the books of Z Ltd. ii. Prepare Z Ltd's Balance Sheet immediately after the demerger and the initial Balance Sheet of Y Ltd. (Schedules in both cases need not be prepared). iii. Calculate the intrinsic value of one share of Z Ltd. immediately before the demerger and immediately after the demerger; and iv. Calculate the gain, if any, per share to the shareholders of Z Ltd. arising out of the demerger