Illustration - 17 It has been decided that P Ltd. will absorb the entire undertaking of Ltd. and T Ltd. as on 1.4.2009. The outside shareholders in the latter companies are to be issued equity shares in PLtd. on the basis of an agreed issue price of Rs.200 per share. For this purpose, the interests of such shareholders are to be determined according to the intrinsic values of the shares of the respective companies. N Ltd. is a subsidiary of T Ltd. a 17 and is also to be merged into F Led appropriately, The Balance Sheets of the companies as at 31.3.2009, stood as under: (Rs. Lakhs) P S T N Sources of Funds: Share capital Equity shares Rs. 100 each Reserves Loans Total 1,500 2.000 1,600 5,100 1,000 540 900 2,440 800 702 1,000 2,502 400 400 700 1,500 (Rs. Lakhs) T P S N 200 500 1,500 400 100 400 800 100 50 100 500 200 10 200 500 50 Application of Funds: Land Buildings Machinery Other Fixed Assets Investments 4 lakhs shares of S 2 lakhs shares of T 4 lakhs shares of N Others Net Current Assets Total 500 300 400 - 100 1,600 5,100 1,040 2,440 1,252 2,502 740 1,500 For the purpose of the scheme, it is agreed to give effect to the following value appreciations of the assets of the companies to be absorbed. Land 100% Buildings 50% Machinery 20% In order to obtain the consent of the creditors of T Ltd., it becomes necessary to accept a claim of Rs 20 lakhs hitherto classified as contingent 60% of the claim is accepted by T Ltd. and the balance is to be settled by P Ltd. You are required to: i. Compute the number of shares to be issued by P Ltd. to eligible outsiders ii. Show journal entries. iii. Draft the Balance sheet of P Ltd. after the absorption