Amalgmation & reconstruction

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Querist : Anonymous

Querist : Anonymous (Querist)

05 November 2015 In this ques in takeover entry
Deb are taken at RV=115000
But creditors at 300000
Shouldnt they be recorded at 3 lac - payment 1 lac = 2 lac (RV)

Ques wording as follows:
Deb holders in reckless ltd are to receive 6% debentures of face value 115000. Careful ltd will issue to the shareholders additional 20000 shares of ₹20 each. These shares are fully subscribed & out of the sum received 100000 is paid to creditors.

B/s value deb : 200000
Creditors : 300000

Querist : Anonymous

Querist : Anonymous (Querist)

05 November 2015 Please revert

Amol S Joglekar

Amol S Joglekar (Expert)
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05 November 2015 debenture holders are settled at 6% FV 115,000 of carefull ltd. (This is as per the relisable value as decided at the time of amalgamation/reconstruction)

85,000 worth debentures are thus diluted in the process of amalgamation /recontruction

if possible share the full version.

Querist : Anonymous

Querist : Anonymous (Querist)

05 November 2015 Putting an image of the ques is not possible. Can you explain about creditors from this much info itself ?

Amol S Joglekar

Amol S Joglekar (Expert)
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06 November 2015 Most of the times the questions appear to be "test of ENGLISH language" rather than "test of accountancy" Hence I thought of asking for the original manuscript.

Anyway, the situation seems to be.... creditors worth 300,000 were settled for 100,000. This can very well happen in real life as well, especially in the cases of RECONSTRUCTION.

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