at e A cc ou nt in g (5th Se Ill) :

--
9) · c o rp o r· ~ ~ .: -- -- ""
:-
.- -- -- -- -- -- -- := -= -= ~ ;- ;. 56
rp ti o n Of
88 30 34 • .
B ha lo tia C la ss es (9
. & A~b·~S~Ok:..=]...i~~--
A m a lg a m a t, o n
m p a n ie s [1 5 M a r s XY Ltd (New Co.)
CO. h . taken ove r hy
Old Co . w hi c wns
X Ltd . & Y Ltd . is the
pn.:parc:
For Old Co mpm~r we ha w to
a. Journal
b. Ledger

prepare;
For New Company we have to
a. Jou rna l
b. Balance Sheet

Wo rki ng Note:
of purchase
i. Am alg am ati on in na tur e
of me rge r
ii. Am alg am ati on in na tur e

TURE OF PU RC HA SE
AM AL GA M AT IO N IN NA
: - Pu rch ase Co nsi der ati on
: - Ne t As set s taken ov er
~~, or~ !;, ,;a-:.h <?tC , )
: - G/ will or Capital Reserve •
.·.=... .
n . t... .
t -o
- =h ""
., . _
~, q~
,,01_ n. , '·.l\'li-'!d~ pf p..-yrtH'.1nt. ~, !fl
clt'J, •·· -, - · '
·.·· .A_ __. ._, "
~, Purch111 ~~ C,c;,r,~f~~r~tl
Eq uity Shareholders =

Pref. Sh are hol der s =

TO): -
b. Ne t Assets Taken Ov er (NA
P/L (Dr. Ba l.)]
r (Exel. G/W ill, Misc. Exp.,
Su nd ry Assets tak en ove
el. Capital & Reserves)
Less: Su ndr y Liabilities (Ex
ve
c. G/ Wi ll OR Capital Reser TO
ase Co nsi de rat ion - NA
Co nsi de rat ion > NATO the n G/Will = Purch
If Pu rch ase
ser ve= NATO - Pu rch ase
Consideration
< NA TO the n Ca pita l Re
If Purchase Co nsi de rat ion cluding G/W ill)
t giv en the n Pu rch ase Co ns ide rat ion = NA TO (in
no
ff Purchase Consideration is

Jo ur na l Entrv
an y:
In the books of New Comp
----------- Dr.
a. Business Purchase A/c ----
To Liq uid ato r of Old Co. A/c
(Being P.C. due)
---- ---- ---- ---D r.
b. 5/Assets A/ c ---- ---- ----
----------Dr.
G/W ill A/c ---------------- ----
To $/L iab iliti es A/c
To Capital Reserve A/c
To Business Purchase A/c
are tak en ove r)
(Being S/ Assets & Liabilities

a /C ~
on fo r R eg ul fo r a. co
• 84 -A dm is si on G oi ng I". ra sh C ou rs e
r

411111otia Classes
(9 8 8 3 0 3 4 5 6 9 ): C
" c. uquidator
of Old Co. Ne --- orporate A .
--------Dr. .
ccounting (5th
io Equity Share Cap
ital A/c Sem)
io Pref. Share Cap
ital A/c
io Debenture A/c
io Security Premiu
m A/c
io Bank/Cash A/c
(Being payment to
liquidation)
d. oebenture holder
s of Old Co. A/c - -
Discount on issue of ----Dr.
debenture A/c ------
---------Dr.
io Debenture A/c
io Securities Prem
ium A/c
(Being Payment to
debenture holders)
e. Creditors A/c ---
----------------------O
r
io Debtors A/c
(Being intercompa
ny debt set off)
f. Bills Payable A
/c ------------ --~----O
r.
io Bills Receivable
A/c
(Being intercompany
acceptance set off)
Note: D ts co un te d
bi\\ will not be se
g, GiWill A/c t 0ff.
----- -- ··
--- --- --- ---- Or .
To 8ank A/ c
{Being liquidation ex
penses paid by new
h. Preliminary Expe company)
nses A/ c ---------------
Dr.
To Bank A/c
(Formation Expens
es paid by new com
i. Issue of Shares pany)
/Debentures A/c
Bank A/ c ---------------
---------------------------
Discount on issue of Dr.
share/debenture A/
To Equity Share Cap c ------------Dr.
ital/Pref. Share Cap
ital/Debenture A/c
Journal Entrv
ln the books of Old
a. Sf Assets to be Com padny:
close [Except P/L/ (Dr. Ba
l.), Misc Expenditu
Realisation A/c ------ re, Cash & Bank (if
-----------Dr. {Book V not taken over)]
alue)
To S/Assets A/c
b. S/liabilities to be
closed lExcept Capi
tal & Reserve1
S/Liabilities A/c --- ---
---..----Dr.
Provisions A/c ------
--- --- ----Dr. ·
Debenture A/c ------
--------Dr.
To Realisation A/c
c. Assets Soldlnot
taken over) (either
recorded or unreco
Bank A/c ---------- rded)
------Dr.
To Real isation A/c
· as -Admission Goin
g on fo r Regula
r/Crash Course
for B.com. Call
 te Jill~-~--=-=------ =- --= --. :.·· v~. ~ ).
03 45 69 ): co rp or a
98 83 ·
Bh al ot ia Cl as se s (
taken over)
A/c -------------Dr.
d. Liabilities paid off (no t .
Realisation
To Bank A/C
.d by old com pan y
Exp ens es par ------------Dr.
e. Realisation •
Realisa tion A/c
To Bank A/c

------------Dr.
f. Purchase Consideration due
Ne w Company A/c .---
To Realisation A/c
. to
A/c
be
closed
---------Dr.
end itur e d
g. P/L (Dr. Bal.), Misc. Exp
Equity Share hol er
To P/L A/c
To Misc. Exp end itur e A/c
D
h. Reserve A/c -- -- -D r.
------ .r.
Equ ity Share Capita I Alc ----
·-------
To Equity Share hol der A/c

------------Dr.
i. Preference Share Capital A/c
Dr. (fx t r.,0 Payment)
Realisation A/c ----------------
To Pref. Shareholder A/c
pay me nt)
To Realisation A/c (for short

r.
j. Reafisa~ion A/c - - - - - D
alisation Pro fit)
To Equity Shareholder A/c (Re
)
(Realisation Pro fit transferred

:
k. Purchase Consideration receive
y A/c --- --- --- -O r . .
Equity Shares in new com pan
pan y A/c ---- ---- ---D r.
Preference Shares in new com
Bank A/c ---------------------Dr.
To New Company A/c

nce Sh are hol der }

. ---D r. (Payment to Pre fere
Pref. Share hol der A/c ---- ---
1.
com pan y A/c
To Preference Shares in new
To Bank A/c

ers:
m. Payment to Equity Sharehold
Equity Shareholder A/c --------
------------Dr.
y A/c
To Equity Shares in new com pan
To Bank A/c

c;i ll ·
fo r Re gu l ''C
- 86 -A dm is si on Go in g on ar, ra sh Co ur se fo r a.corn•
 g (5 th Sem)
es (9 88 30 34 56 9) : C or po ra te A cc ou nt in
911a 1otia C la ss
algamation in natu re of Merger
Am
TT\ill /Ledger are same.
- Jou
- the books of Old Company
In
books of New Company:
--- --- --- Dr .
!!t,tl!! Business Purchase A/c ---
a. mpany
To Liquidator of Old Co
(Being P.C. due)
c Expenses)
--- --- --- --- --- -D r. (incl. P/L Dr Bal., & Mis
b. sundry Assets A/c
---Dr.
Loss on Merger A/c - -
l. Rese~es)
el. Share Capital but inc
To Sundry Liabilities (Ex
To Profit on Merger A/c
To Business Purchase A/c

y A/c -------------Dr.
c. Liquidator of Old Compan
A/c
To Equity Share Capital
(P.C. paid by shares only)
To Pref. Share Capital A/c
To Security Premium A/c

Co . A/c --- --- --D r.

d. Debentureholder of Old
To Debenture A/c

--------Dr.
Preliminary Expenses Mc
To Bank A/c

.
Old Co. Paid by New Co
f. Liquidation Expenses of
-- -- D r.
General Reserve A/c --
To Bank A/c
----Dr.
g. Profit on Merger A/c
To General Reserve A/c
-
h. loss on Merger A/c : r.
r Reserve A/c -- -- D
Generai Reserve or Othe
To Loss on Merger A/c
ore.
Other Entries are same as bef
aining Statutory Reserve.
No entry required for maint
Working Note: in shares, cash etc.)
ymen t to shareholde rs (Mode of payment -
ion: - Pa
a. Purchase Considerat
rs =
Equity Shareholde
Pref. Shareholders =
r: -
b. Loss/Profit on Merge
Merger
> Share Capital = Loss on
If Purchase Consideration on Merger
< Share Capital = Profit
If Purchase Consideration
Loss on Merger = Positive
tive
Profit on Merger = Nega
al l
C ou rs e fo r B .c om . C
99 -Admission G oi ng on fo r R eg ul ar /C ra sh
-