Problem:
A Ltd. Obtains B Ltd.for the consideration of Rs.38,00,000 to be satisfied in form of fully paid equity shares of Rs.10 each. The balance sheets of two companies on 31st Dec.2005,the date of acquisition,were as follows:
Balance Sheet as on 31st Dec.,2005
|
Liabilities
|
Rs.
|
Rs.
|
Assets
|
Rs.
|
Rs.
|
|
Share capital:
Equity shares of Rs.10 each
|
40,00,000
|
25,00,000
|
Sundry assets
|
96,00,000
|
58,00,000
|
|
General reserve
|
15,00,000
|
30,000
|
|
|
|
|
Development rebate reserve
|
3,00,000
|
1,00,000
|
|
|
|
|
Export profit reserve
|
6,00,000
|
4,00,000
|
|
|
|
|
Profit & loss A/c
|
12,00,000
|
9,00,000
|
|
|
|
|
Sundry liabilities
|
20,00,000
|
16,00,000
|
|
|
|
|
|
96,00,000
|
58,00,000
|
|
96,00,000
|
58,00,000
|
Required:
You’re required to pass the essential journal entries in books of A Ltd.(transferee company)when combination is by way of (i) merger.Also prepare the resultant Balance Sheet supposing that the Development Rebate Reserve and Export Profit Reserve are needed to be continued.