Amalgamation and External Reconstruction:

Problem and Solution # 1.

The following information has been extracted from
the balance sheets of P Ltd. and S Ltd. as on 31st
March, 2012:

P Ltd. takes over S Ltd. on 1st April, 2012, and

discharges consideration for the business as
follows:
ADVERTISEMENTS:
(i) Issued 35 lakh fully paid equity shares of Rs 10 each at
par to the equity shareholders of S Ltd.
(ii) Issued fully paid 12% preference shares of Rs 10 each to
discharge the preference shareholders of S Ltd. at a
premium of 10%.
It is agreed that the debentures of S Ltd. will be converted
into equal number and amount of 10% debentures of P Ltd.
ADVERTISEMENTS:
You are required to show the balance sheet of P
Ltd. assuming that:
(i) The amalgamation is in the nature of merger, and
(ii) The amalgamation is in the nature of purchase.
Amalgamation and External Reconstruction:
Problem and Solution # 2.
On 31st March, 2012, Thin Ltd. was absorbed by Thick Ltd.,
the latter taking over all the assets and liabilities of the
former at book values. The consideration for the business
was fixed at Rs 40 crore to be discharged by the transferee
company in the form of its fully paid equity shares of Rs 10
each, to be distributed among the shareholders of the
transferor company, each shareholder getting two shares
for every share held in the transferor company.
The balance sheets of the two companies as on 31st
March, 2012 stood as under:
ADVERTISEMENTS:
Amalgamation expenses amounting to Rs 10 lakh
were paid by Thick Ltd. You are required to:
(i) Show the necessary ledger accounts in the books of Thin
Ltd.,
(ii) Show the necessary journal entries in the books of Thick
Ltd., and
ADVERTISEMENTS:
(iii) Prepare the balance sheet of Thick Ltd. after the
amalgamation.
Amalgamation and External Reconstruction:
Problem and Solution # 3.
White Ltd. agreed to acquire the business of Green
Ltd. as on March 31, 2012. The summarised balance
sheet of Green Ltd. at that date was as follows: