Illustration - 39 a32 The following is the balance sheet of Diverse Ltd. having an authorised capital of Rs.1,000 Cr. as on 31st March, 2009: (Rs, in crores) RS Rs. Sources of funds Shareholders' funds Share capital Equity shares of Rs.10 each fully paid in cash 250 Reserves and surplus (Revenue) 250 1,000 Loan funds Secured against : (a) Fixed assets Rs. 300 Cr. (b) Working capital Rs. 100 Cr. 400 Unsecured 600 1000 2,000 Employment of funds Fixed Assets Gross block 800 Less: Depreciation 20,9 600 Investment at cost (Market value Rs.1,000 Cr.) 400 Net Current assets Current assets 3,000 Less: Current liabilities (2.000) 1,000 2.000 Capital commitments: Rs. 700 crores. The company consists of 2 divisions. 1. Established division whose gross block was Rs.200 crores and net block was Rs. 30 crores, Current assets were Rs.1,500 crores and working capital was Rs.1,200 crores, the entire amount being financed by shareholders' funds. ii. New project division to which the remaining Fixed assets, Current assets and Current liabilities related a b The following scheme of reconstruction was agreed upon. Two new companies Sunrise Ltd. and Khajana Ltd. are to be formed. The authorised capital of Sunrise Ltd. is to be Rs. 1,000 crores. The authorised capital of Khajana Ltd. is to be Rs.500 crores. Khajana Ltd. is to take over investments at Rs.800 crores and unsecured loans at balance sheet value It is to allot equity share of Rs. 10 each at par to the members of Diverse Ltd. in satisfaction of the amount due under the arrangement, Sunrise Ltd. is to take over the Fixed assets and net working capital of the new project division along with the secured loans and obligation for capital commitments for which Diverse Ltd. is to continue to stand guarantee at book values. It is to allot one crore equity shares of Rs. 10 each as consideration to Diverse Ltd. Sunrise Ltd.. made an issue of unsecured convertible debentures of Rs.500 crores carrying interest at 15% per annum and having a right to convert into equity shares of Rs. 10 each at par on 31.3.2014. This issue was made to the members of Sunrise Ltd. as a right who grabbed the opportunity and subscribed in full d. Diverse Ltd. is to guarantee all liabilities transferred to the 2 companies. Diverse Ltd. is to make a bonus issued of equity shares in the ratio of one equity share for every equity share held by making use of the Revenue reserves.. Assume that the above scheme was duly approved by the Honourable High Court and that there are no other transactions. Ignore taxation You are asked to 1. Pass journal entries in the books of Diverse Ltd., and ii. Prepare the balance sheets of the three companies giving all the information required by the Companies Act, 1956 in the manner so required to the extent of available information