The following are the summarized Balance Sheets of B Ltd. and G Ltd. as at 31 st March, 2025: Particulars Notes B Ltd. (₹) G Ltd. (₹) EQUITY AND…

CA Intermediate · Advanced Accounting · PYQS · January 2026
The following are the summarized Balance Sheets of B Ltd. and G Ltd. as at 31 st March, 2025: Particulars Notes B Ltd. (₹) G Ltd. (₹) EQUITY AND LIABIILTIES 1. Shareholders' Funds a. Share Capital 1 46,30,000 14,20,000 b. Reserves and Surplus 2 17,50,000 -6,45,000 2. Non-current Labilities a. Long-term Borrowings 3 19,40,000 5,72,500 3. Current Liabilities a. Trade Payables 14,72,000 2,64,000 b. Short-term Borrowings 1,89,500 Total 97,92,000 18,01,000 ASSETS 1. Non-current Assets a. Property, Plant and Equipment 63,00,000 14,53,000 b. Non-current Investments 23,50,000 2. Current Assets a. Inventories 43,000 1,16,000 b. Trade Receivables 7,90,000 2,32,000 c. Cash and Cash Equivalents 3,09,000 Total 97,92,000 18,01,000 Notes to Accounts: B Ltd. (₹) G Ltd. (₹) 1. Share Capital Equity Share Capital Issued, subscribed & paid-up capital Equity Shares of 100 each 36,50,000 11,50,000 Preference Share Capital Issued, subscribed & paid-up capital 9% Preference Shares of 100 each 9,80,000 10% Preference Shares of 100 each 2,70,000 2. Reserves and Surplus Balance of Profit and Loss A/c 17,50,000 -6,45,000 3. Long-term Borrowings 9% Debentures of 100 each 10,90,000 10% Debentures of 100 each 1,80,000 Loan from Banks 8,50,000 3,92,500 Details of Trade Receivables and Trade Payables are as under: B Ltd. (₹) G Ltd. (₹) 1. Trade Receivables Debtors 7,30,000 1,75,000 Bills Receivables 60,000 57,000 7,90,000 2,32,000 2. Trade Payables Creditors 13,85,000 2,25,000 Bills Payables 87,000 39,000 14,72,000 2,64,000 On 31.03.2025, B Ltd. absorbs the business of G Ltd. on the following terms: (i) For every equity share held by the equity shareholders of G Ltd., they receive 10in cash and one equity shares of 100 each at par in B Ltd. (ii) The 10% debenture-holders of G Ltd. were to be allotted such 9% debentures of 100 each in B Ltd. as would bring the same amount of interest. (iii) 10% Preference Shareholders of G Ltd. are to be paid at 15% premium by issue of 9% Preference Shares of 100 each in B Ltd., in such a way that the existing dividend quantum of the preference shareholders of G Limited will not get affected. (iv) A contingent liability of G Limited amounting to 72,000 to be treated as actual liability in trade payables. (v) Expenses of Liquidation of G Ltd. are to be reimbursed by B Ltd.10,000. (vi) Inventory of G Ltd. is taken over at 10% more than their book value by B Ltd. (vii) Debtors of B Ltd. include - 51,400 receivables from G Ltd. (viii)Property, Plant and Equipment of G Ltd. are revalued at 20% above their book value. (ix) The remaining Assets and Liabilities of G Ltd. are taken over at book value by B Ltd. You are required to: (a) Pass the Journal Entries to record the above in the books of B Ltd. (b) Prepare Balance Sheet of B Ltd. as at 31 st March, 2025 after absorption.

Suggested Answer and Working Notes:

(a) Calculation of Purchase Consideration Particulars Computation B Ltd. (₹) i Amount Payable to Equity Shareholders In the form of 11,500 equity shares of 100each 11,500 x 100 11,50,000 Cash 11,500 x 10 1,15,000 Subtotal (i) 12,65,000 ii Amount payable to Preference shareholders In the form of 3,000 9% Preference Share of 100each [27,000/9% = 30,000 shares] 3,000 x 100 3,00,000 Premium on preference shares [₹ 3,10,500 -3,00,000] 10,500 [₹ 2,70,000 +15% premium= 3,10,500] - (ii) 3,10,500 iii Total Purchase Consideration (i + ii) 15,75,500 In Books of B Ltd. Journal Entries Particulars Debit ₹ Credit ₹ 1 Business Purchase A/c To Liquidators of G Ltd (Being the purchase consideration payable for the business of G Ltd. Dr. 15,75,500 15,75,500 2 Property, Plant and Equipment A/c (14,53,000 + 20%) Inventories A/c Trade Receivables Goodwill To 10% Debentures A/c To Loan from Bank A/c To Short term borrowings A/c To Trade payables A/c (2,64,000 + 72,000) To Business purchase A/c (Being the various assets and liabilities of G Ltd. taken over) Dr. 17,43,600 Dr. 1,27,600 Dr. 2,32,000 Dr. 5,90,300 2,00,000 3,92,500 1,89,500 3,36,000 15,75,500 3 Liquidator of G Ltd. A/c To Equity Share Capital A/c To 9% Preference Share Capital A/c To Securities Premium A/c To Cash (Being the discharge of purchase consideration) Dr. 15,75,500 11,50,000 3,00,000 10,500 1,15,000 4 10% Debenture A/c To 9% Debentures A/c (Being the issue of 9% debentures to G Ltd.'s debenture holders) Dr. 2,00,000 2,00,000 5 Goodwill A/c To Bank A/c (Being the liquidation expenses of G Ltd. reimbursed by B Ltd.) Dr. 10,000 10,000 6 Trade Payables A/c To Trade Receivables A/c (Being the elimination of inter-company balances) Dr. 51,400 51,400 (b) Balance Sheet of B Ltd (after absorption) as on 31 st March, 2025 Particulars Note No ₹ in '000 I Equity & Liabilities 1. Shareholders' Fund Share Capital 1 6080.00 Reserves& Surplus 2 1760.50 2. Non-Current Liabilities Long-term borrowings 3 2532.50 3. Current Liabilities Trade Payables 4 1756.60 Short-term borrowings 189.50 Total 12319.10 II Assets 1. Non-current assets (a) Property, Plant & Equipment 8043.60 (b) Intangible assets (goodwill) 5 600.30 2. Non-current investment 2350.00 3. Current assets a) Inventories (43,000 +1,27,600) 170.60 b) Trade receivables 6 970.60 (c) Cash and cash equivalents (3,09,000 - 1,15,000 -10,000) 184.00 Total 12319.10 Notes to Accounts: Notes Particulars ₹ in '000 1 Share Capital Authorized share capital Issued, Subscribed & Fully Paid up share capital a 48,000 Equity Shares of 100each 48,00.00 (Out of the above 11,500 equity shares have been issued for consideration other than cash) b 9%, 12,800 Pref. Shares of 100each 12,80.00 (Out of the above 3,000 pref. shares have been issued for consideration other than cash) Total 6080.00 2 Reserves & Surplus Balance of P&L 1750.00 Securities Premium 10.50 Total 1760.50 3 Long Term Borrowings 9% Debentures of 100each (10,90,000 + 2,00,000) 1290.00 Loan from bank (8,50,000 + 3,92,500) 1242.50 Total 2532.50 4 Trade Payables Creditors (13,85,000 + 2,25,000 - 51,400) 1558.60 Bills payable (87,000 + 39,000) 126.00 Contingent liability 72.00 1756.60 5 Intangible Assets Goodwill (590300 + 10,000) 600.30 6 Trade receivables Debtor (7,30,000 + 1,75,000 - 51,400) 853.60 Bill receivable (60,000 + 57,000) 117.00 970.60

Topics: Amalgamation of Companies

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