Taking the data of Example 10 under amalgamation in the nature of merger, show how realization account
Question:
Taking the data of Example 10 under ‘amalgamation in the nature of merger’, show how realization account and equity shareholder’s account will appear in the books of CL and post amalgamation balance sheet in the books of DL.
Data from Example 10
On 1st April, 2011, Dickins Limited (DL) acquired the business of Ceepee Limited (CL) by acquiring all the assets and liabilities at the book value it agreed to discharge the purchase consideration as follows:
(i) To issue 1,75,000 equity shares of face value of ₹10 each to the equity shareholders of CL
ii) To issue requisite number of 10% preference shares of ₹10 at par so as to redeem 15% preference shares of CL at a premium of 10%
Show how purchase consideration will be calculated if it is
(i) Amalgamation in the nature of merger and
(ii) Amalgamation in the nature of purchase.
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