X Co. Ltd. having share capital of 50 lakhs divided into equity shares of 10 each was taken over by Y Co. Ltd. X Co. Ltd. has General Reserve of…
CA Intermediate · Advanced Accounting · RTP · September 2025
X Co. Ltd. having share capital of 50 lakhs divided into equity shares of 10 each was taken over by Y Co. Ltd. X Co. Ltd. has General Reserve of 10,00,000 and Profit and Loss account Cr.5,00,000. Y Co. Ltd. issued 11 equity shares of 10 each for every 10 shares of X Co. Ltd. How the Journal entry would be passed in the books of Y Co. Ltd. for the shares issued under the ‘Pooling of interest method' of amalgamation.
Suggested Answer and Working Notes:
In the books of Y Co. Ltd. Journal Entries Particulars ₹ Business Purchase A/c Dr. 55,00,000 To Liquidator of X Co. Ltd. 55,00,000 (Being business of X Co. Ltd. purchased) Assets A/c (Bal. Fig.) Dr. 65,00,000 To Business Purchase A/c 55,00,000 To General Reserve A/c* (10,00,000 - 5,00,000) 5,00,000 To Profit and Loss A/c 5,00,000 (Being assets and reserves and surplus taken over) Liquidator of X Co. Ltd. Dr. 55,00,000 To Equity share capital A/c 55,00,000 (Being purchase consideration discharged through equity shares of Y Co. Ltd.) Working note: *Purchase consideration (11/10*50 lakh) ₹ 55,00,000 Less: Share capital of X Co. Ltd.50,00,000 To be adjusted from general reserve - 5,00,000
Topics: AS 14
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