COMPILED BY : CA RAJESH R DALAL-J.M.PATEL COLLEGE OF
COMMERCE-FOR CLASS WORK
(A) Fill in the blanks:
(1) In ________ two firms come together to avoid competition, expansion and so on.
(2) The old firm which is taken over is called _________ and new firm which takes over the
old firm is called as __________.
(3) The vendor firm is __________ on amalgamation.
(4) AS 14 deals with Amalgamation of firm with ________ Method.
(5) ________ is the amount payable by the purchasing firm to the vendor firm for taking
over its business.
(6) Gross Value of Debtors is transferred to the __________ of the Realisation Account and
R.D.D. is transferred separately to the ___________ of the Realisation Account.
(7) Accumulated Losses/Profits are transferred not to __________ A/c but transferred to
__________ A/c.
(8) Under Lump sum Method, any excess of Purchase Consideration over Net Assets taken is
called as __________.
(9) Asset or Liability, if taken over by partner, entry should be passed for ___________.
(10) Goodwill should be written off in __________ Ration in Purchasing Firm.
(11) Assets and Liabilities not taken over by the New Firm should be transferred to
____________ in their _______________.
(12) ____________ is excess of assets over liabilities takes over.
(13)Goodwill should be written off in the ___________.
(14)New capital of all partners should be calculated according to ____________.
(15)AS _________ deals with amalgamation of firm.
(16)Realisation of assets in instalment and payment to creditors in instalments called as
___________.
(17)Liabilities which are not secured by assets are _____________.
(18)Liabilities which are secured by assets are _______________.
(19)Excess capital method is also called as _________________.
(20)Outsider’s liabilities are known as ______________.
(21)Partner’s liabilities are known as _______________.
(22)Excess Capital are paid to all partners in ___________.
(23)Undistributed profit is distributed among partners in their ___________ ratio.
(24)Any liability taken over by partner is ____________ to capital A/c of partner.
(25) Amounts which are unpaid to partner s capital represent _______________.
(A) Select the most appropriate alternative from those given below and rewrite the statement
[Multiple Choice Questions]:
(1) Assets and liabilities are transferred to Realisation A/c at____________.
(a)Cost price
(b) Book Value
(c) Market Value
(d) Agreed value.
(2) Excess of credit oven debit side of Realisation A/c is __________.
(a) Profit on Realisation (b) Loss on Realisation (c) None of these
(3) Amount of Purchase Consideration is payable by ____________.
(a) Old firm to new firm
(b) New firm to old firm
(c) One partner to another partner (d) none of these
(4) Assets taken over by partners are debited to ___________.
(a) Realisation A/c
(b) Cash A/c
(c) Partner’s Capital A/c
(d) none of these
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COMPILED BY : CA RAJESH R DALAL-J.M.PATEL COLLEGE OF
COMMERCE-FOR CLASS WORK
(5) Goodwill written off in the books of new firm is debited to ________.
(a) Realisation A/c
(b) Old Partner’s Capital A/c
(c) All Partner’s Capital A/c
(d) none of these
(6) Loss on Realisation is debited to ____________.
(a) Realisation A/c
(b) Partners Capital A/c
(c) Cash/ Bank A/c
(d) None of these
(7) When two Partnership firms merge or combine into one partnership firm it is called as _____
(a) Amalgamation of Partnership Firms (b) Absorption of Partnership Firms
(c)External Reconstruction
(d) Internal Reconstruction
(8) Under Lumpsum Method any excess Of Purchase Consideration oven Net Assets taken over is
treated as ___________. (a) Capital Reserve
(b) General Reserve
(c)Goodwill
(d) None of these
(9) Under Lumpsum Method, any excess of Net Assets over Purchase Consideration is to be
taken as ________ (a) General Reserve
(b) Capital Reserve
(c)Goodwill
(d) None of these
(10) Any assets and liabilities are not taken over by purchasing firm in such case Cash/Bank A/c
is debited in Realisation A/c with ___________.
(a) Book Value
(b) Adjusted Cash/Bank A/c
(c)Nil
(d) None of these
(11) Take over of asset by a partner is debited to _____________.
(a) Cash/ Bank A/c
(b) Realisation A/c
(c)Partner’s Capital A/c
(d) Partner’s Loan A/c
(12) Realisation expenses are _____________.
(a) Debited to Realisation A/c
(b) debited to Partner’ Capital A/c
(c) Debited to Bank A/c
(d) debited to Partner’s Loan A/c
(13) Objective of Amalgamation is _____________.
(a) to avoid competition
(b) to enlarge size of a firm
(b) To establish financial stability (d) all of above
(14) On Amalgamation of firms following problems are to be dealt with: ___________.
(a) Determination of Purchase Consideration
(b) Determination of New Profit Sharing
(c) Revaluation of Assets and Liabilities
(d) All of above
(15) Accumulated losses include _______________.
(a) Profit & Loss- Dr. Balance
(b) Profit & Loss- Cr. Balance
(c) (a) and (b) both
(d) none
(16) General Reserve should be distributed in _____________.
(a) Capital Ratio
(b) Profit Sharing Ratio
(c) Equal Ratio
(17) Profit & Loss account (debit balance) should be ______________.
(a) Added to partner s capital
(b) Deducted from partners’ capital
(b) No Effect
(18)Government Liabilities are ______________.
(a) External Liabilities
(b) Internal Liabilities
(c )Preferential Liabilities
(d) Contingent Liabilities
(19) Partners Loan are ________________.
(a)External Liabilities
(b) Internal Liabilities
(c ) Preferential Liabilities
(d) Contingent Liabilities
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COMPILED BY : CA RAJESH R DALAL-J.M.PATEL COLLEGE OF
COMMERCE-FOR CLASS WORK
(20) Unpaid balance on capital accounts represents_______________.
(a) Loss on Realisation
(b) Profit on realisation (c) None
(21) If cash is inadequate to pay off all partners loans then they are paid in ______________.
(a) Profit sharing ration
(b) Capital Ration
(c ) Outstanding loan ratio
(d) none
(22) In Piecemeal distribution amounts realised from assets are payable in the following order:
(a) Realisation expenses Outside Liabilities Partners Loan Partners Capital
(b) Partners Capital outside Liabilities Partners Loan Realisation Expenses
(c ) Partners Capital Partners Loan outside Liabilities Realisation Expenses
(d ) None of the above
(23) Unsecured Liabilities are paid in the following order:
(a) All Liabilities proportionately.
(b)Government liabilities, other creditors.
(c ) Other Creditors, Government Liabilities.
(d) None of the above
(24) Bill Under discount is a ________________.
(a) Current Liability
(b)Secured Loan
(c )Contingent Liability (d) None
(25) Excess Capital Method is also known as_________________.
(a) Surplus Method
(b) Proportionate Capital Method.
(c )Highest Relative Method.
(d) All of the Above.
(C) State whether the following statement are true or false:
(1) AS 14 deals with Amalgamation of firm.
(2) On amalgamation, old firms are dissolved.
(3) Purchase Consideration means amount agreed to be paid by old firm to new firm.
(4) Amalgamation means merger of two firms.
(5) Excess of Purchase Consideration over Net Assets is goodwill.
(6) Dissolution expenses are debited to cash A/c
(7) Liabilities assumed by partner are debited to Partners Capital A/c
(8) Credit balance on Realisation shows Profit on Realisation.
(9) Assets and Liabilities are transferred to Realisation A/c at book value.
(10) Capital accounts of new firms adjusted through Current A/c or Loan A/c.
(11) The old firm which is taken oven is called vendor firm and new firm which take over the old
Old firm is called as Purchasing Firm.
(12) Loss on Realisation A/c is debited to Partners’ Capital A/c
(13) Profit on Realisation A/c is debited to Partners’ Capital A/c
(14) Assets and Liabilities are transferred to Realisation Account at agreed value.
(15)Under Net Assets Method, agreed value of assets and liabilities are taken into account.
(16) Under Piecemeal Distribution assets realised gradually.
(17) Bill under discount is a continent liability.
(18) Liability which is taken over by partner should be added to partner’s capital account.
(19) Outstanding wages is unsecured liability.
(20) Maximum Loss method and excess capital method both are same.
(21)Provident fund is preferential liability
(22) Partner’s Loan and capital are internal liabilities.
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COMPILED BY : CA RAJESH R DALAL-J.M.PATEL COLLEGE OF
COMMERCE-FOR CLASS WORK
(23) Assets which are taken over by partners, assumed that such amount is paid by partners to
the Firm.
(24) Profit/loss on realisation should be distributed among the partners in their profit sharing
ratio.
(25)If a Partner agrees to bear the cost of realisation, the actual amount spent by him should be
Ignored.
(26)Quotient Method and Excess capital Method under piecemeal distribution are not same.
(D) Simply Problems
1) ABC & Co. Took over assets and liabilities as follows:
Goodwill Rs 50,000,Land & Building Rs 1,00,000,Furniture Rs 30,000,Debtors (Book Value Rs
20,000) at 10% R.D.D. Bank Balance Rs 10,000,Creditors Rs 25,000,Bill Payable (Book value Rs
5,000. Find out Purchase Consideration.
2) Find out cost price of stock if stock recorded at 10% below cost. The value of stock is Rs
18,000.
3) Find out cost price of stock, if stock oven valued by 25%. The value of stock is Rs 45,000.
4) Mr. Raj gifted Rs 5,000 to Mr Vijay towards his Capital, What Will be the entry?
5) Capital balance of P, Q, R, and S were Rs 40,000, Rs 30,000, Rs 25,000 Rs, 10,000.
Goodwill written off Rs 5,000. Total Capital of the new firm is Rs 1,50,000.Their new
ration is 3:2: 3:2. The adjustments are to be made through Current Account. How much
amount is transferred to current A/c?
6) Stock of A & Co. Includes Rs 25,000 worth of goods purchased from B & Co. Whose
Practice is to sell goods at cost plus 25%. The unrealised profit will be.
7) Mr. R took over investment having book value Rs 20,000 at 20% below price. What will
be entry for it?
8) A’s Wife Loan paid by Mr a (Partner). What will be the entry for it?
9) Mortgage Loan Rs 25,000 not taken over by new firm and paid by old firm. Bank balance
of the firm Rs 25,000. While computing Purchase Consideration bank balance to be
taken at what value?
10) Find out Realisation A/c debited with Assets and credited with Liabilities and also
calculate Purchase Consideration.
Particulars
Book Value (Rs)
Agreed Value (Rs)
Goodwill
_
20,000
Land & Building
50,000
60,000
Debtors
40,000
At 5% R.D.D.
Cash/Bank
30,000
?
Investment
10,000
Not taken over
Creditors
5,000
At 5% rebate
Mortgage Loan
3,000
Not taken over
Unrecorded Liabilities (Rs 10,000)
9,000
Realisation expenses (Rs 2,000)
Note: investment taken oven by partners and Mortgage Loan and expenses paid by old
firm.
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