X Ltd. and Y Ltd. had been carrying on business independently. They agreed to amalgamate and form a new company XY Ltd. with an authorized share…

(1) Computation of amount of Debentures and Shares to be issued: (i) Average Net Profit X Ltd. Y Ltd. ₹ (42,50,000+44,45,760-75,000+37,79,240)/4 31,00,000 ₹ (26,50,000+27,60,000+34,00,000+35,90,000)/4 31,00,000 (ii) Equity Shares Issued (a) Ratio of distribution X Ltd. : Y Ltd. 1 : 1 (b) Number of shares X Ltd. : 3,10,000 Y Ltd. : 3,10,000 6,20,000 (c) Amount of shares 3,10,000 shares of ₹ 5 each = ₹ 15,50,000 3,10,000 shares of ₹ 5 each = ₹ 15,50,000 (iii) Capital Employed (after revaluation of assets) X Ltd. (₹) Y Ltd. (₹) Property, plant and equipment 71,00,000 39,00,000 Current Assets 29,95,000 15,77,500 1,00,95,000 54,77,500 Less: Current Liabilities (59,70,000) (18,02,500) 41,25,000 36,75,000 (iv) Debentures Issued X Ltd. (₹) Y Ltd. (₹) 4% Return on capital employed 1,65,000 1,47,000 7.5% Debentures to be issued to provide equivalent income: 1,65,000 × 100/7.5 1,47,000 × 100/7.5 22,00,000 19,60,000 (2) Balance Sheet of XY Ltd. As at 31st March 2025 (after amalgamation) Particulars Note No ₹ I. Equity and Liabilities (1) Shareholders' Funds (a) Share Capital 1 31,00,000 (b) Reserves and Surplus 2 5,40,000 (2) Non-Current Liabilities (a) Long-term borrowings 3 41,60,000 (3) Current Liabilities (a) Trade Payables 4 76,35,250 Total 1,54,35,250 II. Assets (1) Non-current assets (a) PPE 5 1,10,00,000 (2) Current assets (a) Other current assets 6 44,35,250 Total 1,54,35,250 Notes to Accounts ₹ 1. Share Capital Authorized 8,00,000 Equity Shares of ₹ 5 each 40,00,000 Issued and Subscribed 6,20,000 Equity Shares of ₹ 5 each 31,00,000 (all the above shares are allotted as fully paid-up pursuant to a contract without payment being received in cash) 2. Reserve and Surplus Capital Reserve 5,40,000 3. Long-term borrowings Secured Loans 7.5% Debentures X Ltd. 22,00,000 Y Ltd. 19,60,000 41,60,000 4. Current Liabilities: Trade Payables X Ltd. 59,70,000 Y Ltd. 18,02,500 77,72,500 Less: Mutual Owings (1,37,250) 76,35,250 5. Property, Plant and Equipment: X Ltd. 71,00,000 Y Ltd. 39,00,000 1,10,00,000 6. Other Current Assets: X Ltd. 29,95,000 Y Ltd. 15,77,500 45,72,500 Less: Mutual Owings (1,37,250) 44,35,250 Working Notes: X Ltd. ₹ Y Ltd. ₹ Total ₹ (1) Purchase Consideration Equity Shares Issued 15,50,000 15,50,000 31,00,000 7.5% Debentures Issued 22,00,000 19,60,000 41,60,000 37,50,000 35,10,000 72,60,000 (2) Capital Reserve (a) Net Assets taken over Property, plant & equipment 71,00,000 39,00,000 1,10,00,000 Current Assets 29,95,000 14,40,250* 44,35,250 1,00,95,000 53,40,250 1,54,35,250 Less: Current Liabilities (58,32,750**) (18,02,500) (76,35,250) 42,62,250 35,37,750 78,00,000 (b) Purchase Consideration 37,50,000 35,10,000 72,60,000 (c) Capital Reserve [(a) - (b)] 5,12,250 27,750 5,40,000 * ₹15,77,500 – ₹ 1,37,250 = ₹ 14,40,250 ** ₹59,70,000 – ₹ 1,37,250 = ₹ 58,32,750 Note: In Working note 2 given above, the mutual owings amounting ₹ 1,37,250 included in debtors and creditors of X Ltd. and Y Ltd. have been adjusted. Alternatively, the capital reserve can be computed without adjustment of mutual owings