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.

Transcribed Image Text:

Liabilities Equity shares of face value * 10 each 15% Preference shares of *10 each General reserve P & La/c Investment Allowance Reserve Export profit reserve 12% Debentures Sundry creditor Other current liabilities Balance Sheet as on 31st March, 2011 CL('000) 1,500 DL('000) 2,500 1,100 250 375 150 250 225 100 4,950 850 125 250 50 100 175 175 75 3,300 Assets Land and building Plant and machinery Furniture & Fixtures Investment Stock Debtors Cash DL('000) 1,250 1,625 288 350 625 450 362 4,950 CL('000) 775 850 175 250 475 515 260 3,300