The financial details of X Ltd. and Y Ltd. as on 31st March, 2024 was as under: X Ltd. (₹) Y Ltd. (₹) Equity Shares of 10 each 30,00,000 9,00,000 9%…

In the Books of Y Ltd. Realisation Account ₹ ₹ To Sundry Assets: By Retirement Gratuity Fund 60,000 Goodwill 75,000 By Trade payables 2,40,000 Land & Building 3,00,000 By X Ltd. (Purchase Consideration) 15,90,000 Plant & Machinery 4,50,000 Inventory 5,25,000 Trade receivables 3,00,000 Bank 60,000 17,10,000 To Preference Shareholders (Premium on Redemption) 30,000 To Equity Shareholders (Profit on Realisation) 1,50,000 18,90,000 18,90,000 Balance Sheet of X Ltd. (after absorption) as at 31st March, 2024 Particulars Notes ₹ Equity and Liabilities 1 Shareholders' funds A Share capital 1 48,30,000 B Reserves and Surplus 2 2,70,000 2 Non-current liabilities A Long-term provisions 3 2,10,000 3 Current liabilities A Trade Payables 4 6,10,000 B Short term provision 5 7,500 Total 59,27,500 Assets 1 Non-current assets A Fixed assets Tangible assets 6 33,00,000 Intangible assets 7 3,00,000 2 Current assets A Inventories 8 12,22,500 B Trade receivables 9 8,80,000 C Other current Assets 10 15,000 D Cash and cash equivalents 11 2,10,000 Total 59,27,500 Notes to accounts ₹ 1 Share Capital Equity share capital 4,20,000 Equity Shares of 10each fully paid (Out of above 1,20,000 Equity Shares were issued in consideration other than for cash) 42,00,000 Preference share capital 6,300 9% Preference Shares of 100each (Out of above 3,300 Preference Shares were issued in consideration other than for cash) 6,30,000 Total 48,30,000 2 Reserves and Surplus Securities Premium 60,000 General Reserve 2,10,000 Total 2,70,000 3 Long-term provisions Retirement Gratuity fund 2,10,000 4 Trade payables (3,90,000 + 2,40,000 - 20,000*) 6,10,000 * Mutual Owings eliminated. 5 Short term Provisions Provision for Doubtful Debts 7,500 6 Tangible assets Land & Buildings 14,00,000 Plant & Machinery 19,00,000 Total 33,00,000 7 Intangible assets Goodwill (1,50,000 +1,50,000) 3,00,000 8 Inventories (7,50,000 + 4,72,500) 12,22,500 9 Trade receivables (6,00,000 + 3,00,000 - 20,000) 8,80,000 10 Other current Assets 15,000 11 Cash and cash equivalents (1,50,000 +60,000) 2,10,000 Working Notes: 1. Computation of goodwill ₹ Profit of 2022-23 90,000 Profit of 2021-22 adjusted - 78,000 + 10,000) 88,000 Profit of 2020-21 adjusted (₹ 72,000 – 25,000) 47,000 2,25,000 Average profit 75,000 Goodwill to be valued at 2 times of average profits = 75,000 x 2 = 1,50,000 2. Purchase Consideration: ₹ Goodwill 1,50,000 Land & Building 5,00,000 Plant & Machinery 4,00,000 Inventory 4,72,500 Trade receivables 3,00,000 Unrecorded assets 15,000 Cash at Bank 60,000 18,97,500 Less: Liabilities: Retirement Gratuity 60,000 Trade payables 2,40,000 Provision for doubtful debts 7,500 (3,07,500) Net Assets/ Purchase Consideration 15,90,000 To be satisfied as under: 10% Preference Shareholders of Y Ltd. 3,00,000 Add: 10% Premium 30,000 9% Preference Shares of X Ltd. 3,30,000 Equity Shareholders of Y Ltd. to be satisfied by issue of 1,20,000 equity Shares of X Ltd. at 5% Premium 12,60,000 Total 15,90,000