The following are the Balance Sheets of Yes Ltd. and No Ltd. as at 31 st March, 2026: Particulars Notes Yes Ltd (₹ in crores) No Ltd. (₹ in crores)…

CA Intermediate · Advanced Accounting · MTP · September 2026
The following are the Balance Sheets of Yes Ltd. and No Ltd. as at 31 st March, 2026: Particulars Notes Yes Ltd (₹ in crores) No Ltd. (₹ in crores) Equity and Liabilities 1 Shareholders' funds A Share capital 1 12 5 B Reserves and Surplus 88 10 2 Non-current liabilities A Long term borrowings 2 — 10 3 Current liabilities 33 15 Total 133 40 Assets 1 Non-current assets A Property, Plant and Equipment 3 20 6 B Non-current investments 4 13 — 2 Current assets 100 34 Total 133 40 Notes of accounts Yes Ltd. No Ltd. 1 Share Capital Equity share capital Authorized share capital 25 5 Issued and subscribed: Equity shares of ₹ 10 each fully paid 12 5 12 5 2 Long term borrowings Unsecured loan from Yes Ltd. — 10 — 10 3 Property, Plant and Equipment Gross value 70 30 Depreciation (50) (24) 20 6 4 Non-current investments 30 lakhs equity shares of ₹ 10 each 3 - Long term loan to No Ltd. 10 - 13 — On that day Yes Ltd. absorbed No Ltd. The members of No Ltd. are to get one equity share of Yes Ltd. issued at a premium of ₹ 2 per share for every five equity shares held by them in No Ltd. The necessary approvals are obtained. You are asked to pass journal entries in the books of the two companies to give effect to the above if the amalgamation is in the nature of merger.

Suggested Answer and Working Notes:

Journal Entries in the books of No Ltd. (₹ in crores) Dr. Cr. Realization Account Dr. 64.00 To Property, plant and equipment Account 30.00 To Current Assets Account 34.00 (Being the assets taken over by Yes Ltd. transferred to Realization Account) Provision for depreciation Account Dr. 24.00 Current Liabilities Account Dr. 15.00 Unsecured Loan from Yes Ltd. Account Dr. 10.00 To Realization Account 49.00 (Being the transfer of liabilities and provision to Realization Account) Yes Ltd. Dr. 1.2 To Realization Account 1.2 (Being the amount of consideration due from Yes Ltd. credited to Realization Account) Equity Shareholders Account Dr. 13.80 To Realization Account 13.80 (Being the loss on Realization transferred to equity share-holders account) Equity Share Capital Account Dr. 5.00 Reserves and Surplus Account Dr. 10.00 To Equity Shareholders Account 15.00 (Being the amount of share capital, reserves and surplus credited to equity shareholders account) Equity shares of Yes Ltd. Dr. 1.20 To Yes Ltd. 1.20 (Being the receipt of 10 lakhs equity shares of ₹ 10 each at ₹ 12 per share for allotment to shareholders) Equity shareholders Account Dr. 1.20 To Equity shares of Yes Ltd. 1.20 (Being the distribution of equity shares received from Yes Ltd. to shareholders) Journal Entries in the books of Yes Ltd. (₹ in crores) Dr. Cr. Business Purchase Account Dr. 1.2 To Liquidator of No Ltd. Account 1.2 (Being the amount of purchase consideration agreed under approved scheme of amalgamation- W.N. 1) Property, plant and equipment Dr. 6.00 Current Assets Dr. 34.00 To Current Liabilities 15.00 To Unsecured Loan (from Yes Ltd.) 10.00 To Business Purchase Account 1.20 To Reserve & Surplus A/c 10.00 To Profit & loss A/c 3.80 (Being the assets and liabilities taken over and the surplus transferred to Profit and loss account) Liquidator of No Ltd. Dr. 1.20 To Equity Share Capital Account 1.00 To Securities Premium Account 0.20 (Being the allotment to shareholders of No Ltd. 10 lakhs equity shares of ₹ 10 each at a premium of ₹ 2 per share) Unsecured Loan (from Yes Ltd.) Dr. 10.00 To Loan to No. Ltd. 10.00 (Being the cancellation of unsecured loan given to No Ltd.) Working Note: Purchase Consideration ₹ in crores 50 lakhs / 5 × ₹ 12 i.e., 10 lakhs equity shares at ₹ 12 per share = 1.20 Number of equity shares of ₹ 10 each to be issued = 1.20 crores / 12 = 10 lakhs. * As amalgamation in the nature of merger so balancing figure will be transferred to Profit & Loss account.

Topics: Amalgamation of Companies

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