43. M/S XYZ Ltd. agreed to acquire the busi- ness except cash of M/S KLM Ltd....

 

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43. M/S XYZ Ltd. agreed to acquire the busi- ness except cash of M/S KLM Ltd. as on 31 March 2011. The summarized balance sheet of M/S KLM Ltd. as on that date was as follows: Liabilities Share Capital: 90,000 Shares of 9,00,000 Land & Building 10 Each General Reserve Profit and Loss Account 12% Debentures Creditors * Assets Goodwill 1,50,000 3,00,000 6,60,000 Plants & 3,00,000 Machinery 1,20,000 Stock-in-Trade Sundry Debtors 1,50,000 Cash at Bank 60,000 2,40,000 90,000 90,000 15,30,000 15,30,000 The consideration payable by M/S XYZ Ltd. was agreed as follows: (i) A cash payment of 75 for each share of 10 in M/S KLM Ltd. (ii) The issue of 1,80,000 shares of 7 10 cach was fully paid at an agreed value of ? 15 per share. (iii) The issue of such as amount of 14% debentures of M/S XYZ Ltd. at 4% discount is sufficient to discharge 12% debentures of M/S KLM Ltd. at a premium of 20%. While computing the agreed consideration the management of M/S XYZ Ltd. valued land and building at 9,00,000; plant & machinery at 10,50,000; stock in trade at 2,10,000 and debtors at their face value subject to an allowance of 4% to cover doubtful debts. Prepare realization account and equity share- holders account in the books of M/S KLM Ltd. and pass acquisition entries in the books of M/S XYZ Ltd. 43. M/S XYZ Ltd. agreed to acquire the busi- ness except cash of M/S KLM Ltd. as on 31 March 2011. The summarized balance sheet of M/S KLM Ltd. as on that date was as follows: Liabilities Share Capital: 90,000 Shares of 9,00,000 Land & Building 10 Each General Reserve Profit and Loss Account 12% Debentures Creditors * Assets Goodwill 1,50,000 3,00,000 6,60,000 Plants & 3,00,000 Machinery 1,20,000 Stock-in-Trade Sundry Debtors 1,50,000 Cash at Bank 60,000 2,40,000 90,000 90,000 15,30,000 15,30,000 The consideration payable by M/S XYZ Ltd. was agreed as follows: (i) A cash payment of 75 for each share of 10 in M/S KLM Ltd. (ii) The issue of 1,80,000 shares of 7 10 cach was fully paid at an agreed value of ? 15 per share. (iii) The issue of such as amount of 14% debentures of M/S XYZ Ltd. at 4% discount is sufficient to discharge 12% debentures of M/S KLM Ltd. at a premium of 20%. While computing the agreed consideration the management of M/S XYZ Ltd. valued land and building at 9,00,000; plant & machinery at 10,50,000; stock in trade at 2,10,000 and debtors at their face value subject to an allowance of 4% to cover doubtful debts. Prepare realization account and equity share- holders account in the books of M/S KLM Ltd. and pass acquisition entries in the books of M/S XYZ Ltd.

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DISCHARGE OF PURCHASE CONSIDERATION Issue of 180000 shares of 10 each 15 each 180000x15 2700000 Cash ... View the full answer