Accounting For Amalgamation
Anupam09
Given below are the balance sheets of two companies as on 31st March 2020.
Balance Sheet of A Ltd.
As at 31st March 2020
| Liabilities | Rs | Assets | Rs |
| Equity Share Capital @Rs10 per share fully paid up. | 15,00,000 | Goodwill | 1,50,000 |
| Securities Premium Account | 4,500 | Freehold property | 4,00,000 |
| General Reserve | 1,00,000 | Plant and Machinery | 3,50,000 |
| Balance of Profit and Loss | 1,65,650 | Stock | 6,82,000 |
| 8% Debentures | 3,50,000 | Sundry Debtors | 2,58,500 |
| Sundry Creditors | 57,850 | Bank | 3,37,500 |
| Total | 21,78,000 | Total | 21,78,000 |
Balance Sheet of B Ltd.
As at 31st March 2020
| Liabilities | Rs | Assets | Rs |
| Equity Share Capital @Rs10 per share fully paid up. | 3,90,000 | Goodwill | 50,000 |
| 8% Debentures | 70,000 | Freehold property | 1,80,000 |
| Bank Overdraft | 6,000 | Plant and Machinery | 1,00,000 |
| Sundry Creditors | 2,57,000 | Stock | 1,62,000 |
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| Sundry Debtors | 95,000 |
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| Balance of Profit and Loss | 36,000 |
| Total | 7,23,000 | Total | 7,23,000 |
The two companies decided to amalgamate on 1st April 2020 and a new Company AB Ltd was formed with an authorized capital of Rs 25,00,000 in shares of Rs10 each. The terms of amalgamation were as follows.
A Ltd:
- 6 Equity shares of Rs 10 each fully paid up in the new company in exchange of every 5 shares in A Ltd and Rs 10,000 in cash.
- The Debenture holders were to be allotted such debentures in the new company bearing interest at 7% per annum as would bring the same amount of interest.
B Ltd.
- 1 Equity share of Rs 10 each fully paid up in the new company in exchange of every 3 shares in B Ltd and Rs 5,000 in cash.
- The Debenture holders were to be allotted such debentures in the new company bearing interest at 7% per annum as would bring the same amount of interest.
The new company took over all assets and liabilities of the two existing companies. Prepare the opening Balance Sheet immediately after amalgamation.
