Balance Sheet of X Ltd. [Extract] as at 31.03.2012
| Liabilities | Rs. |
| 12% Debentures | 1,00,000 |
Adjustment :-
The issue of such an amount of fully paid 14% debentures in Y Ltd. at 96% as is sufficient to discharge 12% Debentures in X Ltd. at a Premium of 20% .
What should be the Treatment and Journal Entry ???
[ Source : CA. Dr. PC Tulsian CA IPCC Groupt 1 Accounting Book (2012) , Chapter 5 Amalgamtion Illustration no.5 point no. (c), pg no. 5.22 ]
Hi Rohit,
What is the difficulty in this problem.. It fairly simple.. Let me explain :
1) You have to discharge 12% debenture of Rs. 1,00,000 at 20% premium by way of 14% debentures issued at 96%. (i.e. 4% discount)
2) so, 100000+ 20% = 1,20,000 /96% = Rs 1,25,000. This means you issued Rs 1,25,000 debentures to discharge the liability of Rs 1,20,000 debentures.
3) so entry is : 12% debenture in X ltd - Dr. 1,20,000
Discount on issue of debentures - Dr. 5,000
To 14% Debentures in Y Ltd. 1,25,000
Thanks
Yash
Ernst and Young
But accoring to the book Answer is Rs. 1,00,000 ...
i.e 12% Debtures Dr. 1,00,000
To 14% Debentures 100,000
Hi Rohit,
I think you are not reading it correctly... Check page 5.24 , 4th Journal entry...
Thanks
Yash
OK So you have Same Book :D
I was asking for Journal Entry in the Books of PRARTHANA Ltd. [ here written as X Ltd. ] ......
Rohit,
In books of Prathana Ltd., the entry would only be with book values as it is getting absorbed by Piyush Ltd.
Evertything will be transfered to realisation account
12% Debentures A/c -Dr. 1,00,000
To Realisation A/c 1,00,000
Thanks
Yash
OK ...
Thanks for your response
Can You please tell me on [ pg. no. 5.8 ,5.9 & 5.10 ]
Are following answers correct ???
-> Case II Cash for fraction [ 0.55 * Rs. 100 = 55 ] , It should be 0.55* Rs.55 = 30 because 55(10+45) is market value of share ....
-> Similar problem in Case III , Case IV , Case V , Case XI
-> In Case XII Market Value should ne Rs.15 and not Rs. 55 ....
-> Similar Problem in Case XIII
CAclubindia
