Following is the information of Anu Ltd. and Banu Ltd. as on 31.03.2023 were as under: Anu Ltd. (₹) Banu Ltd. (₹) Share Capital: 50,000 Equity…

CA Intermediate · Advanced Accounting · MTP · May 2024
Following is the information of Anu Ltd. and Banu Ltd. as on 31.03.2023 were as under: Anu Ltd. (₹) Banu Ltd. (₹) Share Capital: 50,000 Equity Shares of 10 each, Fully Paid 5,00,000 37,500 Equity Shares of 10 each, Fully Paid 3,75,000 General Reserve 3,00,000 - Profit and Loss Account 62,500 62,500 Trade Payables 2,62,500 1,62,500 5% Debentures - 1,50,000 Freehold Property 3,75,000 3,00,000 Plant and Machinery 75,000 50,000 Motor Vehicle 37,500 25,000 Trade Receivables 2,50,000 1,00,000 Inventory 2,87,500 2,25,000 Cash at Bank 1,00,000 50,000 Anu Ltd. and Banu Ltd. carry on business of similar nature and they agreed to amalgamate. A new Company, Anban Ltd. is formed to take over the Assets and Liabilities of Anu Ltd. and Banu Ltd. on the following basis: Assets and Liabilities are to be taken at Book Value, with the following exceptions: (a) Goodwill of Anu Ltd. and Banu Ltd. is to be valued at 1,75,000 and - 50,000 respectively. (b) Plant and Machinery of Anu Ltd. are to be valued at 1,25,000. (c) The Debentures of Banu Ltd. are to be discharged by the issue of 6% Debentures of Anan Ltd. at a premium of 5%. You are required to: Compute the basis on which shares in Anban Ltd. will be issued to Shareholders of the existing Companies assuming nominal value of each share of Anban Ltd. is 10.Draw up a Balance Sheet of Anban Ltd. as on 1st April, 2023, when Amalgamation is completed.

Suggested Answer and Working Notes:

Calculation of Net Assets Particulars Anu Ltd. (₹) Banu Ltd. (₹) Goodwill 1,75,000 50,000 Freehold property 3,75,000 3,00,000 Plant & Machinery 1,25,000 50,000 Motor vehicle 37,500 25,000 Trade receivable 2,50,000 1,00,000 Inventory 2,87,500 2,25,000 Cash at Bank 1,00,000 50,000 Total 13,50,000 8,00,000 Less: Trade payable (2,62,500) (1,62,500) 6% debentures (1,57,500) Net Assets 10,87,500 4,80,000 Calculation of Purchase Consideration Sr. No. Particulars Computation Anu Ltd Banu Ltd 1 Amount payable to Equity Share Holder in the form of 1,08,750 Equity shares of 10each (1,08,750 × 10) 10,87,500 48,000 Equity shares of 10each (48,000 × 10) 4,80,000 Purchase Consideration 10,87,500 4,80,000 Balance Sheet of Anban Ltd. as on 1st April, 2023 Particulars Note No. ₹ Equity and Liabilities (1) Shareholders' Funds (a) Share Capital 1 15,67,500 (2) Non-current Liabilities (a) Long term borrowings 2 1,57,500 (3) Current Liabilities (a) Trade Payables (2,62,500 + 1,62,500) 4,25,000 Total 21,50,000 Assets (1) Non-current Assets (a) Property Plant and Equipment 3 9,12,500 (b) Intangible assets 4 2,25,000 (2) Current Assets (a) Inventories (2,87,500 + 2,25,000) 5,12,500 (b) Trade Receivables (2,50,000 + 1,00,000) 3,50,000 (c) Cash and cash equivalents (1,00,000 + 50,000) 1,50,000 Total 21,50,000 Notes to Accounts: Note No. Particulars ₹ 1 Share Capital Equity share capital 1,56,750 equity shares of 10each 15,67,500 (out of above shares are issued for consideration other than cash) 2 Long term borrowings 6% Debentures 1,57,500 3 Property, Plant & Equipment's Freehold property (3,75,000 + 3,00,000) 6,75,000 Plant & Machinery (1,25,000 + 50,000) 1,75,000 Motor Vehicle (37,500+25,000) 62,500 9,12,500 4 Intangible assets Goodwill (1,75,000 + 50,000) 2,25,000

Topics: Amalgamation of Companies

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