Rohit (CA-Final) (1485 Points)
16 September 2012
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 ]
Yash Gupta
(Article)
(205 Points)
Replied 16 September 2012
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
Rohit
(CA-Final)
(1485 Points)
Replied 16 September 2012
But accoring to the book Answer is Rs. 1,00,000 ...
i.e 12% Debtures Dr. 1,00,000
To 14% Debentures 100,000
Yash Gupta
(Article)
(205 Points)
Replied 16 September 2012
Hi Rohit,
I think you are not reading it correctly... Check page 5.24 , 4th Journal entry...
Thanks
Yash
Rohit
(CA-Final)
(1485 Points)
Replied 16 September 2012
OK So you have Same Book :D
I was asking for Journal Entry in the Books of PRARTHANA Ltd. [ here written as X Ltd. ] ......
Yash Gupta
(Article)
(205 Points)
Replied 16 September 2012
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
Rohit
(CA-Final)
(1485 Points)
Replied 16 September 2012
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
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