Solution: 1
Realization Account
Particulars
To
Furniture A/c
To
Trademarks A/c
To
Stock A/c
To
Debtors A/c
To
Bank A/c (W.N. 2)
Rs.
12,000
21,000
30,000
48,000
54,000
Particulars
By
Provision for doubtful debts A/c
By
Creditors A/c
By
Bank A/c (W.N. 1)
A = Rs. 11,153
B = Rs. 11,153
C = Rs. 7,435
D = Rs. 7,435
Rs.
1,500
46,500
81,000
37,176
1,66,176
1,66,176
Bank Account
To
To
To
To
To
Particulars
Balance b/d
Realisation A/c (W.N. 1)
Partner’s Capital A/cs
A = 11,153
B = 11,153
C = 7,435
C
D
Rs.
6,000
81,000
By
By
By
29,741
11,100
18,000
1,45,841
Particulars
Realisation A/c (W.N. 2)
A’s Loans A/c
Partner’s Capital A/cs: (final Payment)
Rs.
54,000
30,000
A
B
34,665
27,176
1,45,841
Partners Capital Account
Particulars
To
To
To
To
Balance b/d
Realisation A/c
(Loss)
C’s Capital A/c
(W.N. 4)
Bank A/c (Final
Settlement)
A
Rs.
-11,153
B
Rs.
-11,153
C
Rs.
48,000
7,435
D
Rs.
18,000
7,435
Particulars
By
By
Balance b/d
Bank
25,335
19,000
---
---
By
34,665
27,176
---
---
By
Bank A/c (final
dividend)
Realisation A/c
(Comm.)
Bank A/c
A;s Capital A/c
(w.N. 4)
B’s Capital A/c
(W.N. 4)
By
By
By
71,153 57,329 55,435 25,435
Working Notes:
Totals assets realized = Rs. (33,000 + 3,000 + 24,000 + 12,000 + 9,000) = Rs. 81,000
Total Payment = Rs. (46,500 + 7,500) = Rs. 54,000. A’s loan has been paid directly.
Calculation of Commission payable to B:
Let B’s Commission = x
Realization loss before taking into account B’s commission is Rs. 36,000.
Therefore, realization loss after B’s commission = Rs. 36,000 + x.
Share of A = 3/10 (36,000 + x) = 10,800 + 3x/10
Share of C = 2/10 (36,000 + x) = 7,200 + 2x/10
Share of D = 2/10 (36,000+x) = 7,200 + 2x/10
C’s deficiency = Rs. 48,000 + (Rs. 7,200 + 2x/10) – Rs. 11,100 = Rs. 44,000+x/5
Share of A in C’s deficiency = 4/7 of (44,100 + x/5) = Rs. 25,200 + 4x/35
A will finally get
= Rs. 60,000 – (Rs. 10,800 + 3x/10+25x200+4x/35)
= Rs. 60,000- Rs. 10,800 – 3x/10-25,200-4x/35
= Rs. 24,000 – (21x + 8x)/70
= Rs. 24,000 – 29x/70
X = 5% [24,000-29x/70]
or, 5/100 [24,000 – 29x/70]
or, x = 1,200 - .02071x
A
Rs.
60,000
11,153
B
Rs.
45,000
11,153
C
Rs.
---
D
Rs.
---7,435
--
---
11,100
---
---
1,176
---
---
-----
-----
--25,335
18,000
---
---
---
19,000
---
71,153
57,329
55,435
25,435
or, x+.02071x = 1,200
or, x = 1,200/1.02071
or, x = 1175.64 = 1,176 (approx.)
C’s Deficiency of Rs. 44,335 is to be share by A and B in their Capital ratio of 60,000:45,000 or 4:3. D will not bear any deficiency
loss because his capital account has debit balance.
SOLUTION: 2
(a)
(i)
In the books of Cyber Ltd. i.e. Old company's books
Realisation Account
Rs.
To Goodwill
5,000 By 8% Debentures
To Fixed Assets
2,57,000 By Interest accrued on debentures
To inventories
50,000 By Trade payables
To Trade receivables
60,000 By P Ltd. (Purchase consideration)
To Bank
1,000 By Equity shareholders
To Preference share holders A/c
(Bal. fig.)
(W.N.3)
6,000
(ii)
To Profit & loss A/c
To Equity shares in Mahal Ltd.
To Realisation A/c
(b)
(i)
To Business Purchase
To Equity shares application &
allotment A/c (W.N.4)
Rs.
1,00,000
8,000
1,00,000
1,36,000
35,000
3,79,000
3,79,000
Equity Shareholders Account
Rs.
1,25,000 By Equity shares capital
80,000
35,000
2,40,000
In the books of Mahal Ltd. (New company)
Bank Account
Rs.
1,000 By Goodwill (for expenses on
absorption)
56,000 By Trade Payables
1,00,000
× 16
100
By Balance c/d (Bal. fig.)
57,000
Balance Sheet as on 31st March, 2012
Note No.
(ii)
Particulars
1.
Equity and Liabilities
(1)
Shareholders Funds
Share Capital
(2)
Non-current liabilities
Long term borrowings
Rs.
2,40,000
2,40,000
Rs.
8,000
16,000
33,000
57,000
Rs.
1
3,00,000
2
1,00,000
4,00,000
Total
II.
Assets
(1)
Non-current assets
Fixed assets
(a) Tangible assets **(W.N.2)
(b) Intangible assets
(2) Current assets
(a) Inventories
(b) Trade receivables
(c) Cash and cash equivalents
2,52,000
8,000
3
47,000
60,000
33,000
4,00,000
Total
Notes to Accounts
Rs.
1
Share Capital
Authorised share capital
30,000 equity shares of Rs. 10 each
3,00,000
issued and Subscribed
30,000 shares of Rs. 10 each fully paid up
(out of the above, 24,400 (W.N.4) shares have been issued for
consideration other than cash)
2
Long term Borrowings
Secured
8% Debentures
3
Intangible assets
Goodwill
Working Notes:
1- Calculation of Purchase consideration
2-
3.
1,00,000
8,000
Rs.
Payment to preference shareholders
5,000 equity shares@ Rs. 10
50,000
For arrears of dividend: (Rs. 12,000 x 5 shares / Rs. 100 @ Rs. 10)
6,000
Payment to equity shareholders
(24,000 shares x 1/3) @ Rs. 10
80,000
Total purchase consideration
1,36,000
Calculation of fair value at which fixed assets have been acquired by Mahal Ltd.
Since the question states that balance of purchase consideration is being attributed to fixed assets", it is implied that the
amount of purchase consideration is equal to the fair value at which the net assets have been acquired.
Therefore, the difference of fair value of net assets (excluding fixed assets) and the purchase consideration is the fair value
at which the fixed assets have been acquired.
Rs.
Purchase consideration / Net assets
1,36,000
Add: Liabilities:
8% Debentures
1,08,000
1,00,000
1,00,000
1,16,000
Trade Payables (
× 16) × (
× 10 × 10)
100
100
3,60,000
Less: Inventory Rs. (50,000-3,000)
Debtors
Bank
Fair value at which fixed assets has been acquired
Preference shareholders’ Account
47,000
60,000
1,000
Rs.
56,000
To Equity Shares in Mahal Ltd.
4.
3,00,000
(1,08,000)
2,52,000
Rs
50,000
6,000
56,000
By Preference Share Capital
By Realisation (Bal.fig.)
56,000
Calculation of number of Equity Shares issued to public
Authorised Equity Shares
Less:
Equity shares issued for
Interest accrued on debentures
Trade Payables of Cyber Ltd.
1,00,000
(
× 10 𝑠ℎ𝑎𝑟𝑒𝑠)
100
Preference shareholders of Cyber Ltd.
12000
Arrears of preference dividend (
× 5)
100
24,000
Equity shareholders of Cyber Ltd. (
3
)
Number of equity shares issued to public at par for Cash
Number of Shares
30,000
800
10,000
5,000
600
8,000
(24,400)
5,600