Question 1 Balance Sheet as at March 31, 2015

Liabilities X Limited Y Limited Assets

Equity Capital (Rs. 10 each) 1000000 600000 Fixed Assets
General Reserve 180000 50000 Current Assets
Statutory Reserve 50000 40000
P&L A/c 20000 10000
Debentures 400000 200000
Creditors 350000 100000

Total 2000000 1000000

X Limited takes over Y Limited. The purchase consideration is discharged by X Ltd. As follows:

(a) Issued 80,000 shares of Rs. 10 each in X Limited (fair value also Rs. 10 each).

(b) Debenures of Y Ltd. will be absorbed in X Ltd. on the same terms and conditions.

(c) All creditors of Y Ltd. have agreed to become creditors of X Ltd.

(d) Fair value of Fixed Assets of Y Ltd. is Rs. 7,50,000

(e) Statutory Reserves are required to be mainatined for the next 5 years.

Draw up the balance sheet of X Limited at April, 2015

(a) assuming all merger conditions are fulfilled;
(b) all merger conditions are not fulfilled and based on carrying value of the assets;
(c) all merger conditions are not fulfilled and based on fair value of the assets;
X Limited Y Limited
1800000 700000
200000 300000

2000000 1000000