- ~,turu,

- - - · •u f.fflil ur 111 u t)
7.. Con1b1naUon or c051,, Shar~s and O b
I
·~ / e entures~
I 111strat 1 ~ ti
- Cal . -e the amount of purchase co1mdrm1L1011 from foU ,11 W.a ls:
The ~ q n g CllmpilJlY agfeed to lSSl>.-» 1S OOJ nm tt •"~-- ·
def,a:Jtlft?S,or, 10 each at a disaxm 0 r11:Qf ... ' "-·' 4MllYa 1tu -~-it a! f 10 eadl w 1,Ed at' 12 eac:11. 6 000, 6
.1:opaya1shequalto10 Gf f&"Je :!Etm - -an:JdEb!mll me!t
ibe amp.any also ag, eed to meet OISSO!ulton expenses or n..sco. (B.Com ~su H:iw.2CJD-4J
SD utfon
Calculation of Purchase Const de-ratf an
15.~ Equity Shams or f10 each vatued at, rz per share (1511 ~111
6,000, ~ _Debentur5 of r 1D 1each at a discount of 5 (6.000x9.5D)
Cisl 10! or facevah e af ecJ!llLVstHres and debenll.11?5 (1,~..0JJ+60,.CDJ=Z,1 0 ~O"'J
Total Pur:chase consideration
unratl~J,'
C:atculate the purchase consideration from the fotlawin1 details:
The purichastng company has agreed ta Issue 8000 equity shares of ,10 each at~ 5DO B
erenceshares of r100 each at 1DI premium* 1000 debentures of rso each at 1D!i d1SEIDltand
cash equal to 10% or total purchase consideration. (8. Com. BU, NDY-~DOSJ; 1
 urnal cn1.11~ a1 1u UCIUlfH,.:.e"
accounts J 0
~stta\ton 6 Lum um n,ethod Led e
:,on~s of New Comp8nVJ . .i r 1 •1, Tneir balance sheet on 3t.l.J014 c-,
1n the rat o a • ,·
P and n.ners shanng profits · was as f otla\"15~
ed the r bus ess nUJ a company
r Assets
60,000 Cash
p 20,000 Deb to rs
Stock
p ~o.ooo Machinery
Q 20,000 Fr~ehold pfiemtses

De:" o r au the a~ts and UabUit1es except mortgaee on freehold

pure '!O 000 p.r)'l..bl!? as to ,24,000 in cashJ! t4B,000 in debentures and the
eq t • 00 ath
boa rm after th above transactions have been carried out,
~ to '1 re the debentures ,and shares tn proport ion to their
t~ In bookS of lhe firm ana joulinat entr les and balanc
book •
 ;i6s77
111lt.:r,11Uon B {Lumpsum ,.,r.1t19dl IO 0 f 3, 1 1 he rottow,
":;;;f" A 11.nd B-w en:d11 11m t ncrship s harl n 1>1 oms 1.md Ia.ssc5 I11 u,crat • • 'I h
Balance Sheet of the p1u1n rslnp as nt 31 SI i\rtn h 20 1 1. 1

lfab1htle.s Amount _.:.: A::,s:_f5,=,=--:----------i-~~

•l~
Capital Accounts"' Fixed Assels
A 24,00J SIDCIK 11
B 8.(00 Dablors 19
Curirent Cosh ,i ll Dank
A 4 9200
e 2.000
Lonn 3,000
orealtars 14,320
55,520

X Ltd. agreelll tto take overstock and lhed assets, exc,udlng the value of Motor
a considerat on of t ~8,,000\Yhidl is co be 5atisfied by payment of cash f 16,000, allo
car,
m>refe e, e shares of 110D ead1 ,talued al 175 1per share and the balance by allotment
Shares or the face value of f10 each.,
The D btors realised f 19,200 and tlhe CrecHtor5,were set tled for, 14,000,. The fol
ag,ree.d betw n U1e parlners: l(lfJ llle Equity Shares shou ld be allotted in the ratio of the
1

c piml aOGounts es per Balance Sheet. ('Ii) A to lake 0-ver UMe rnotar ca1r at an agreed
1

,,~, 20tt Uh) Tb pt efefence sha~es to be allotted to A to t he va Iue or his loan arid the
bu allotted u Uy between the p rtners. (Iv) Balil nce r1 e1 malntns to be settled In cash.
Prepar~ Uu: R;;alfsaUon Ju:cou t, f>;artner's, Capi tal account, Bank Account.
 IJ'U

Pro_b1em under Net Pa ent M

1

The Balance Sheet of A,B and C stood as ~aUows on J,1st Naich l.014:
[Jabilities r Assets
Credilors 14.000 Cash at Bank
Bills ~ayallle 2,tlOD Deblar5
C~irals: Less: Reserve
A 40,000 Stock
B 40,000 Machinery & Pil ant
C 20,000 Fhctures
(jocdw1U
1.16;,400
It Yta5 decided to sen the business to a Lfmrted Company agreeing to allot 12,000 fully p1111.-
of I 10 each in futl wttsfactton of the purchase consideration.. The company assumed the lllllli!
excep L bilbi payable and took aver all the assvts excluding the Bank balance. The pcart1111rs jl:C:
1

pn,fj ts and losses In proportions of ½, ½ and ¼ respecttvel.1..

Pireparc ac~ount.s shawlne Lhe Unal seltlemenl as re1ard5 lhe partneir-5 assumln1 that 1111 , -
were duty allotted.
~ . 1tlnri!
(' ..~SJ natlon el(,yfnlfH:U ,,,,c1ju,d•l edger 11 ccou r5 11
1 2 (NCI
1 I] ooKs orrnrr10

V x. T and l re equnl r,.,1 tne, 111 Al/11.xvz. r !lows·

Th , Balance Sheet of the rim1 115 nt 3 ~ SL Mnrcb 201 " wns il!i " •
'Ort c a Am1ount Porrlcular:s
L--=--~~~~~====~,~~5~ - =ntmnn=- Lend and Bulldina
Lioan lrom Ban'k: ,m,000 Plnnl and f.\athlnery 2JXJtat
Cretlftars 1,00, Stock
Cap ml Acawm:: 50,,cm Dcb1ars
:t,llla
1AI.II
:

0 dtte ft was decfd

UXl,DIXI
7.50,0JO
~he fl
l's Cnpltnl

u'ld be ted Into a ILi

-
fol ms
( D
, n and bu lding be Yldued 1D t ,2,00,000.
Piam and Ni!dhinery be valued at ,2,SCtOO0.
(c 1 af book ¥Blue, U> be writte-n off for obsolete stock.
(dlJ A eser,e fo1 bad deblli to be made at 101 of debtors.
eJ A ~ e ror dascount on cred1totS al 61 to be miade ..
Cfl The new company wuuld Issue 12,000 l?{Julty shares or, IO eac.h fully paid, sudl
be v:i luc--d at 11 ,501 000 and 660tl B- debentures af, 100 each.
(s) Shares end D b 11turcs ere t.o be dlstrlbuted according to profit sharlna ratio.
(h) Md1ttonal ruj exl:55 copit:ols nre to be lld}usted i1CC:Drdl111gly by brl11ihlJ .....
r,aying of( lh r,urne.
Ctgraoe the books or the Jhm l>Y preparing 1tie necessary ledger account. In the
Company pass incorporation cntrte5 and prepa I e Vert lcal Ba la 11 ce Shee l. {B. ccm. .._.~,,.,.
Solulton:
 Uu stra tfo_n1 - ~~bl~~~~~~~~~~~~L__Jt:1nr=,'IMll~t~~t
o em un de r H Asset Method
Mahnd ev ant'! Govi d et -
~
nce 5~ ~ - - J
nnd lhe lr a
Blll~
es◄ wa
o 2:1
•Marb1
,.1a 201
_lftr
ch _ s as ro11_ow - profits In lh
- n s:nre pnr tncr& shn rinB e llltl

Cre dito rs
t ' Asse:s Jut
2.0,000 Cash In hand t
BIils payable

~•=
BIi~ ,etel\•able ,ii
1Jiahadev's Imm 5,000
Ut,000 Debtors 1 1.so:i
Mahadev·s cap ita l 15,000 l.ffl '; Reserve for doUbtfu dcl m
Govlnd's tapltal Sto ck -- -• - '' :za.500
Rl'~ M Fund 3.00000
10,0 Ma chin ery

The agr eed

ycas lo sel l theasbm S lO
intsWI: I Uml eel -cOfflPl!1Y and the cofflPlllW to like CM r 1M ilD!U
Including h and lla bll lll~ ro\lO t_

fltlchln ery at tB,000

Sto ck at !17,500
Debtor s at t25 ,35 0
Bills Receivable at r2,SOO
00 r creditors at f 19,500, The t ~ of mt mt lon lfflOlalled to
Goodw
The illpan
com rJ,0
at Y 11reed to tak e tNt

'20,000 of 1M purct'IIM price 1n no ruUy 1111d tQ\lltY wres and lht balllD 1n
11~. The firm rrcefved
ta h. Pan Joum•l EntrieS end prepare nec~rv Ledaer
accounts In tM bOOkS of tM ttnn
 .u,uuv .c•,gvu
lustration , 5 (Pfioblem under Net Asset' Method)
Ram~ R!L't m and ~ nn? in pall1nenhfll sharing profil.5 and lr..-ses In U1e rat.in of JI:]: ff r ~
31..]_m12 the)! ag @ed to sen dmir ~ tu a limited CompanJ. The pas11ion on that dlte was as'«•
Uabil1ti.es I r Assets
Capjrr;Js: Freehold property
Ram ..;.o,JD3 N..ach1nery
Rahim 30~000 Book deb[S
Robert 26 ' ODJ
-
St0c1k
Loan fn:m _,,-r,. 8, 000 Cam
Suru:if) C .,___.. 161 1110
1,10.000
The - - " ! ! : ,......... took Ute rouownq assets except cash al lhe valuation shown below:
r
fireetiOld propeny 44,00D
M d11neJY ll,{X)O
Root debts 28,IXll
Ste- • 2,.000
8,000
The co:JU2nj lm a.gleed to paM' Ute aeditar5 Whlc.h was agreed at r 15[t..OOW TI'M!
3, 30D shares m , O eadi fuUy paid and the balanre In cash .. The expenses amounted m ,1
Prepare ll1t! n oessary leaser I ccc nts in 1the boo'ks of the firm~
/8nnonfnra~.liiliiilAl!:!DmL....111•
 Probf~ u de, Nel 1A uet Melihod
ustra_hbn 1
Anand a 11d Bishan canyin1 an bUJfnEU In NrblEMfJ Cledded lD dlssalve rhe 1n m, and setli
1

lblllfness tm iC" Campan)~ Ltd. 1rm .Jt,l ~l 1l 114 when the Hrm:s 1PDS11tlon ts M 1und er:
1
°"•
_ abftJ ~ s , Assets
Cqicals: !Landi
A JJ,llara Fuirntture
I 17,mll 5'toe1k
t reCd'mri 11. 150 D'e blors
Cuh

DE ~ i s v.ii..h the CGnlpany ls as faUaws:

(!] I.End c:r~ al l 5Cl,OII~
[DJ F.w?iiW?E Mid SlDck are taken l 't ,me belmw die lb ao" ·values.
1
1

(c G:md'Wlll af the firm h ¥alued a'I r 1 500.,

1

fdJ ~ a~ lakm et 11.000 bU1 ltil! Cl'l!dllD1'5 IU the 8aLm11Ee• Silcel(!JuR.

 r ~ a ......_,.......... .. •• • 1•~--- •• ·•-- -
11
_
ustr:ation 16 Met •sse t Met hod -Led er accounts In the boo ks of the
f m
A, BandC \Yer ~ the partilefS in~n nrm
stmring profits and losses In th: mti~ of S:J:2 on 31.12.2014
They agreed toseU tiheir business to a hmlted company on that date thei r post
t1on was as follows·
1

fabf llrfrs r Assets

Capitals: Buildings
A 60.CXXJ Machinery 15,IXI)
B 36_.rBl Stock 25,GI)
C • JD,000 Deb tar5
Loan from Bank 10,a xl Cash
Crred itors 30,(D)
1,66,0CO
The cnm_pany aareed lD take over the follaw1n1 assets at the values shown aaal
nst
r
Bufldinls 1, 00 .000
Madlinely io.ooo
Stnck 26 000 1
Deb mrs 321000
GoactMll 2D•000
. The company also tookover the creditors at tZl, 000 . The com pan
y paid
consideration b,y allotment 10,DOD shares of t 110 each and the balance In cash. the
or
The ~eaUsatJon expenses amounted lo ,5,000.
Show it.he necessary ledger accounts In lhe books of the fl~m.
_,flUistrafio et Ass thod · unts In the Books or
ttie ff rm
1M X, Y and z we~e part ners cany1ng on partnership buslness and shar ing
prof its and losses In the
~ · 31- March 2014. The1r Bala nce sheet was as under:
r Assets
Cred itors Buildings
ents ~ya tde Mac hine ry
Y's lloan ~co unt Vehicles •
capitals: Stock
X 10,0CIJ Deb tors,
y 20.00J Cash
l 30ll(D J Inve stme nts
1,00,0CO ,.- :
On the afxJv'.e date a Private llimited Company called India Ga. Ud. was
incorporated to blllllr
the abov e busbiess on the following telims and conditions.
1.. A'.ll asse t§ (exc ept cash and 'investments) and aU liab ilitie s exc ept V's
1

ave r by the com pae y far whic h an assets arie valu ed at par exc ept buU
loan to
dings
be •
whldll
cormdered wor th t27, 000 and stoc k as worth f 14,0 00, GoodWiU is valued at
tlCIAJI
2. Y's lean Account to be pan ly liqu idat ed by his taki ng over the firm "s (ash and
~
at par. for the balance he fs aiven 1~ Debentures received Jrom the company llfl
pay men t of purc hase; consideration. "
liJ..!i-: 1Itrcai1ars 14,Gll ta1t1
I G'i t-mrart
1
m~mm
811
DeilJln
mn~ h.rrlld 11111
l \ilb IRNP,,,Mdr
~ , mall• ll,IIID St«M
Prl lffl!J
N.Kh Ine-rr,
IL.and & lbr'ldlnil
vs,oaa
fire 1:am11~ny Iha~ hl:J~I ID lb'.l':-C' ~ 11ffl1=diall! u:uuldfflt1.Jb M (It• r
1i n
e ~aadwlU ct llhe lllfffl Yt1U, ~ wlum at z Jelffl
1 ~ i a~ E. ! ~ '~
p~gld ) \T~TI.
PrDt1l ror· 1011..,ff 2 ,., f IIJ!D): 2011·1 l ~ I'll ,tul ud Hflri,1lt ~ 'l lt,tlJl.
L the, CElfflJlllnJ WIU rake IM9" I.he tDan crdltun by all~ 'llf!i Ffl!!!l"ff'"'!.;!;;l 11"'•-a. 'l:'i
gnny wlll nat 1!'00! l7'tll'I' l:be ~ creG Ila l'I aml 11rik a;im11, '~
Lnrul and buUc:IUl!Jp will tie n ~ It fMl,lllill MIU:hll'll"!'Ji ro Ul -
1
,

(eM tCPl ctllh1j v.alued al i,.klJ belail ¥-al~\! t J . -

llle 'ICridOr.ii [Cl Im r.!tou.mi f-CPlll!I' lhlUIMi 111I f ICI I:' h a:-, ~ •
1

4
pu,,hn~c tunsld~ma1 len.
1ou IJfC '"uh:nd lll ~UIW lht! nf't~ mtlll 1,..,1,,,,r ilfflnllll' :l I Ii tu~

Ullon:
mJDI; 1 r:a.rcut11ian1 af Gnadwlll:
 u1us.tr affon 2 0 (H e t A
V , ~ -- ~ _, ..,,\CU At m un t
ss e t M
Shastll and Vasu, shartne th o d w i h
r t a d ju st m e nt on Goodwin
L 1tetides
Company, o n 31st Ma ~ :, )
s ~ ~ ~ ~ :enloss
thes
ei requaon
llyc.,ede
Bal Scihde
- d lo c.onve
dry C re dito rs = • stoodasfon cwth3 Ir bu!;lftnrr••,
~
Lnan Credi tors r Assets F
•
nl Overd ra ft "8,000 Sundry Debt S JJ m
M ? Fund <IO ,CXXJ Bills Receiva:1~ 10J[D
16,000 Stock ]&Jm
to Account s:
.... .. . ... ll. 6, (0 > Patents
«J .<XO M nch1
I~ n d
I'll lnnr
....u.IryBulldl"8S
«t,OCD
1,90,0XI 1 90
(at Toe 8()0dwlll o f the nrm was
th e previous three years. to be varied at 2 years purct,ase
of th e m;:
lb ) T o e Loan.Creditor has agre • e ra ~ pnifits of
ed to accept 7 1 /2 " r ~ e P
rete r e n c • S h lr n 1n
se tt le m
(c) Land and Builden t o f his claim .
ing and Machinef'Y 'INefl? to be
(dl T h e Vendors w er e to valued at 11 ,00,000 and '24 co
(e) T h e p a st working re b e al lo tt ed equi ty sh ares ol
o ~
su ll S o f th e nrm showed th lh e w tue of ,2 10,000
2009·1 0, '3 6,00o in 2012 at u.ey hi,d .mde profits of
I
13 and n2,000 In 2013 ·1• af no 000
ter sett n t• ~ n OQOto
I You arReesreequ
rve fund each year.
ired to 5hOW Realisation NaCw
,e b,oOkSaf the lll'W i;GNIII-PD
'1

I ...,...__.. n g joumal entrieS In u ind cupltal acioounts tn IN tlOok

I flY, ca.u. a.com S of the rum and
I
i ·· ~ -
_ , ,_--,a.can M/IVOJ
 .. .. ------~ .
Piar • 1 [I: \ 11 1,nt Pa r
To ln Hy 1JnLl110 bid
Sund r 1
1
t
6,0,000

~f-il'!li,'l'l"ft;!I Ni ta take a'4er Uri~ assets ond I 1abll.h ios ref A 1E}nci B. The Batarruce S
\M m faUm,~:
Amaunl AS!elS
8,000 cam irn hand
Cash al bnnk
80,000 Boak debts
,B0,000 Stack
furniWre
Land and BuUcunes

• p-xdlas ... CJa

erati0n was aareed al r2~00,DDD and was 10 be paid as tLnde-
(a :S:;j equity share of f20 eadh r11Jly pa1da (bl f68,DOD in 6,Z pn:farence sha~
eadtl ~~E~ - • ~r. (c no.l!l~O n caih.
~lies" ere valued as per Balance Sheet except Um IX>Qk di.~ts ""'
m 11 n CltifflPrlflY raised h.nher apltnl by ~le of , SOO!I equft),
1
mires
1

~t sil ~ , r -- JJwrchas~3tJ to, , 1,00,000 ont:I addlttanal stock o ; 1, .. .

abLnln~ rt ~ R!:e-ord tlt[.I, lllmViri l rr,ns;{lt;tfOfl5i in -~,e books of R Ltdaa th -
[11tn~ ~ 1 1 Dill n c Sh It [ft Com DU. ,1 , :
SrJ'lullon~
Yl,ur~1na Unl1~:
calculatfon af ,~ode of pn:ymr:nt cf iiurcl111:;r, r;gnsldrcnl 1011:
5j600 eqUlty share 01 I ZO e d1
~It: n11ofcu~,:a c:h:. ra "r Ii IM t:'l:1rl1