AMALGAMATION

Computation of shares and debentures to be issued

1
Intelligent Ltd. Diligent Ltd.
(i) Equity shares 22,000 x 7/11 = 14,000 14,00,000
(W.N.1)
22,000 x 4/11 =8,000 8,00,000
(W.N.1)
(ii)Preference 3,00,000 3,75,000
( × 125)
shares 100
2,00,000 2,50,000
( × 125)
100
(iii) Debentures Refer (W.N.3) 17,50,000 11,25,000
Total Purchase Consideration (i + ii + iii) 35,25,000 21,75,000

Balance Sheet of Genius Limited

as at 1st April, 2024 (after amalgamation)

Notes no. `
I. Equity and Liabilities
(1) Shareholder’s fund
(a) Share Capital 1 27,00,000
(b) Reserves & Surplus 2 1,25,000
(2) Non-current Liabilities
(a) Long term borrowings 3 28,75,000
(b) Other non-current liabilities 4 5,00,000
(3) Current Liabilities
(a) Trade Payables 15,00,000
(12,00,000 + 4,00,000 – 1,00,000)
Total 77,00,000
II. Assets
(1) Non-current Assets
(a) Property, Plant & Equipment 5 32,50,000
(b) Intangible Assets 6 22,50,000
(2) Current Assets
(a) Inventories (6,00,000 + 3,00,000) 9,00,000
(b) Trade Receivables 8,00,000
(6,00,000 + 3,00,000 - 1,00,000)
(c) Cash & Cash Equivalents 5,00,000
Total 77,00,000

Compiled by Academy
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 AMALGAMATION
Notes to Accounts:

Sr. Particular `
No.
1. Share Capital
Authorized Share Capital
a) Equity Share Capital
30,000 Equity Shares of ` 100 each 30,00,000
b) Preference Share Capital
10% 10,000 Preference Shares ` 100 each 10,00,000
40,00,000
Issued, Subscribed & Paid-up Capital
a) Equity Share Capital

22,000 Equity Shares of `100 each 22,00,000

(out of the above all shares are issued for
consideration other than cash)
b) Preference Share Capital
10% 5,000 Preference Shares of `100 each 5,00,000
(out of the above all shares are issued for
consideration other than cash)
27,00,000
2. Reserves & Surplus
Securities Premium 1,25,000
3. Long term borrowings
12% Debentures of ` 100 each 28,75,000
4. Other Non-current Liabilities
Gratuity Fund 5,00,000
5. Property, Plant & Equipment
Land & Building (11,00,000 + 8,50,000) 19,50,000
Plant & Machinery (9, 00,000 + 4,00,000) 13,00,000
32,50,000
6. Intangible Assets
Goodwill 22,50,000

Working Notes:
1. Calculation of Ratio of Equity Shares

Intelligent Ltd. Diligent Ltd


Opening balance P&L 4,50,000 2,50,000
Profit for the current year 2,50,000 1,50,000
Total 7,00,000 4,00,000

Compiled by Academy
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 AMALGAMATION
The total profits- ` 7,00,000+ ` 4,00,000 = ` 11,00,000.
No. of shares to be issued = 22,000 equity shares in the proportion of the
preceding 2 years’ profits. i.e. in 7:4.
2. Calculation of Net assets as on 31.3.2024

Particulars Intelligent Ltd. Diligent Ltd

Assets (after revaluation)
Land and Buildings 11,00,000 8,50,000
Plant & Machinery 9,00,000 4,00,000
Inventories 6,00,000 3,00,000
Trade Receivables 6,00,000 3,00,000
Cash & Cash Equivalents 4,00,000 1,00,000
Total (a) 36,00,000 19,50,000
Liabilities
Trade Payables 12,00,000 4,00,000
Gratuity Fund 3,00,000 2,00,000
Total (b) 15,00,000 6,00,000
Net Assets (a – b) 21,00,000 13,50,000

3. Calculation of 12% Debentures to be issued to Intelligent Ltd. and

Diligent Ltd.

Intelligent Ltd. Diligent Ltd

` `
Net assets (Refer working note) 21,00,000 13,50,000
10% return on Net assets 2,10,000 1,35,000
12% Debentures to be issued 17,500
100
[2,10,000× ] =17,50,000of ` 100 each
12
100 11,250
[1,35,000× ] =11,25,000 of ` 100 each
12

4. Calculation of Goodwill / Capital Reserve

S. Particulars Intelligent Diligent
No. Ltd. Ltd.
(i) Purchase Consideration Paid 35,25,000 21,75,000
(ii) Less: Net Assets 21,00,000 13,50,000
(iii) Goodwill 14,25,000 8,25,000 22,50,000

Alternatively:

Compiled by Academy
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 AMALGAMATION
4. Calculation of Goodwill / Capital Reserve

S. Particulars Intelligent Diligent

No. Ltd. Ltd
(i) Purchase Consideration Paid 35,25,000 21,75,000
(ii) Less: Net Assets* 22,00,000 12,50,000
(iii) Goodwill 13,25,000 9,25,000 22,50,000
* Calculation of Net assets taken over

Particulars Intelligent Ltd. Diligent Ltd

Assets (after revaluation)
Land and Buildings 11,00,000 8,50,000
Plant & Machinery 9,00,000 4,00,000
Inventories 6,00,000 3,00,000
Trade Receivables 6,00,000 2,00,000*
Cash & Cash Equivalents 4,00,000 1,00,000
Total (a) 36,00,000 18,50,000
Liabilities
Trade Payables 11,00,000** 4,00,000
Gratuity Fund 3,00,000 2,00,000
Total (b) 14,00,000 6,00,000
Net Assets (a – b) 22,00,000 12,50,000

*` 3,00,000 - ` 1,00,000= ` 2,00,000

**` 12,00,000 - ` 1,00,000 = ` 11,00,000

Compiled by Academy
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 AMALGAMATION

Journal Entries in the books of Z Ltd.

2 ` `
Business Purchase A/c Dr. 54,00,000
To Liquidator of A Ltd. A/c 54,00,000
Land & Building A/c Dr. 28,00,000
Plant & Machinery A/c Dr. 20,00,000
Long term advance to B Ltd. A/c Dr. 2,20,000
Inventories A/c Dr. 10,40,000
Trade Receivables A/c Dr. 8,20,000
Cash and Bank A/c Dr. 3,00,000
Goodwill A/c Dr. 12,20,000
To Retirement Gratuity Fund A/c 1,00,000
To 10% Debentures A/c 20,00,000
To Unsecured Loan A/c 6,00,000
To Trade Payables A/c 1,00,000
To Other liabilities A/c 2,00,000
To Business Purchase A/c 54,00,000
10% Debentures A/c Dr. 20,00,000
To 12% Debentures A/c 20,00,000
Liquidator of A Ltd. A/c Dr. 54,00,000
To Equity Share Capital A/c 27,00,000
To Securities Premium A/c 27,00,000
Business Purchase A/c Dr. 28,80,000
To Liquidator of B Ltd. A/c 28,80,000
Land and Building A/c Dr. 21,00,000
Plant & Machinery A/c Dr. 7,60,000
Inventories A/c Dr. 7,00,000
Trade Receivables A/c Dr. 5,20,000
Cash and Bank (less dividend) A/c Dr. 60,000
To Unsecured Loan A/c 8,20,000
To Trade Payables A/c 3,40,000
To Business Purchase A/c 28,80,000
To Capital Reserve A/c 1,00,000
Liquidators of B Ltd. A/c Dr. 28,80,000
To Equity Share Capital A/c 14,40,000
To Securities Premium A/c 14,40,000
Unsecured Loans A/c Dr. 2,20,000
To Long term Advance to B Ltd. A/c 2,20,000
*Capital Reserve A/c Dr. 1,00,000
To Cash and Bank A/c (Liquidation expenses) 80,000
To Goodwill A/c 20,000

Compiled by Academy
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 AMALGAMATION
Note:
1. The journal entries for A Ltd. and B Ltd. have been given separately in the above solution.
Alternatively, the entries may be given as combined for both companies.
2. *Alternatively, following set of entries may be given in place of the last entry given in the
above solution:

Goodwill A/c Dr. 50,000

To Cash & Bank A/c (Liquidation expenses of A Ltd.) 50,000
Capital Reserve A/c Dr. 30,000
To Cash and Bank A/c (Liquidation expenses of B Ltd.) 30,000
Capital Reserve A/c Dr. 70,000
To Goodwill A/c 70,000
Balance Sheet of Z Ltd. as at 31 st March, 2022
Particulars Note No. (`)
I. Equity and Liabilities
(1) Shareholder's Funds
(a) Share Capital 1 41,40,000
(b) Reserves and Surplus 2 41,40,000
(2) Non-Current Liabilities
(a) Long-term borrowings 3 20,00,000
(b) Long term provisions 4 1,00,000
(3) Current Liabilities
(a) Short-term borrowings 1 5 12,00,000
(b) Trade payables 6 4,40,000
(a) Other liability 2,00,000
Total 1,22,20,000
II. Assets
(1) Non-current assets
(a) i. Property, plant and equipment 7 76,60,000
ii. Intangible assets 12,00,000
(Goodwill 12,20,000-20,000)
(2) Current assets
(a) Inventories 8 17,40,000
(b) Trade receivables 9 13,40,000
(c) Cash and cash equivalents 10 2,80,000
Total 1,22,20,000

1Unsecured loans have been considered as short-term borrowings. Alternatively, it may be considered
as long-term borrowings and presented accordingly.

Compiled by Academy
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 AMALGAMATION
Notes to Accounts
(`) (`)
1. Share Capital
Authorized Share Capital
6,00,000 Equity shares of ` 10 each 60,00,000
Issued: 4,14,000 Equity shares of ` 10 each 41,40,000
(all these shares were Issued for consideration
other than cash)
2. Reserves and surplus
Securities Premium Account
(4,14,000 shares × ` 10) 41,40,000
3. Long-term borrowings
12% Debentures 20,00,000
4 Long term Provisions
Retirement gratuity fund 1,00,000
5. Short-term borrowings
Unsecured loans
A Ltd. 6,00,000
B Ltd. 8,20,000 14,20,000
Less: Mutual (2,20,000) 12,00,000
6. Trade payables
A Ltd. 1,00,000
B Ltd. 3,40,000 4,40,000
7. Property, plant & equipment
Land and Building
A Ltd. 28,00,000
B Ltd. 21,00,000 49,00,000
Plant and Machinery
A Ltd. 20,00,000
B Ltd. 7,60,000 27,60,000
76,60,000
8. Inventories
A Ltd. 10,40,000
B Ltd. 7,00,000 17,40,000
9 Trade receivables
A Ltd. 8,20,000
B Ltd. 5,20,000 13,40,000
10 Cash & cash equivalents
A Ltd. 3,00,000
B Ltd. [3,00,000-2,40,000(dividend)] 60,000
3,60,000
Less: Liquidation Expenses (80,000) 2,80,000

Compiled by Academy
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 AMALGAMATION

Working Note:
Calculation of amount of Purchase Consideration

A Ltd. B Ltd.
Existing shares 3,00,000 2,40,000
Agreed value per share ` 18 ` 12
Purchase consideration 54,00,000 28,80,000
No. of shares to be issued of ` 20 each (including ` 10 premium) 2,70,000 1,44,000
Face value of shares at ` 10 27,00,000 14,40,000
Premium of shares at ` 10 27,00,000 14,40,000

Compiled by Academy
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 AMALGAMATION

(i) Calculation of Purchase Consideration

3
` in Lakhs
Goodwill 7.500
PPE 36.445
Inventory 5.280
Trade receivables 4.650

Cash in hand 0.315

Cash at Bank 0.600
Unrecorded assets 1.160
(i) 55.950
Less: Liabilities:
10% debentures 7.200
Retirement Gratuity Fund 1.300
Trade payables 4.250
Other current liabilities 0.880
Short term provisions 0.320
(ii) 13.950
Net Assets/ Purchase Consideration 42.000
To be satisfied as under:
Equity Shareholders of Yellow Ltd. to be satisfied by issue of
40,000 (42 lakhs/105) Equity Shares of Blue Ltd. at 5%
Premium (40,000 x 105)

Compiled by Academy
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 AMALGAMATION

Balance Sheet of Blue Ltd (after absorption)

as on 31/03/2025

Particulars Notes ` in lakhs

Equity & Liabilities
1 Shareholders’ Fund
a Share Capital 1 80.000
b Reserves & Surplus 2 3.500
2 Non -Current Liabilities
a Long-term Borrowings 3 22.200
b Long-term Provisions 4 4.750
3 Current Liabilities
a Trade Payables 5 10.150
b Other current liability 6 2.120
c Short term provisions 7 1.030

Total 123.750
Assets
1 Non-current assets
a Property, Plant & Equipment 8 72.095
b Intangible assets 9 16.250
2 Current assets
a Inventories 10 14.170
b Trade receivables 11 16.685
c Cash and cash equivalents 12 3.390
d Other current assets 13 1.160
Total 123.750

Compiled by Academy
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 AMALGAMATION
Notes to Accounts

Particulars ` in lakhs
1 Share Capital
Authorised share capital
Issued, Subscribed & Paid up
80,000 Equity Shares of `100 each 80.000
(out of the above 40,000 shares have been issued for
consideration other than cash)
Total 80.000
2 Reserves & Surplus
Securities Premium 2.000
General Reserve 1.500
Total 3.500
3 Long Term Borrowings
10% Debentures of ` 100 (15.000 + 7.200) 22.200
4 Long Term Provisions
Retirement Gratuity Fund (3.450 +1.300) 4.750
5 Trade Payables
(7.400 + 4.250 -1.500) 10.150

6 Other Current Liabilities

(1.240 + 0.880) 2.120
7 Short term provisions
(0.710 + 0.320) 1.030
8 Property, Plant and Equipment
PPE (35.650+36.445) 72.095
9 Intangible Assets
Goodwill (8.750+7.500) 16.250
10 Inventories
(8.890 + 5.280) 14.170
11 Trade Receivables
(13.530 + 4.650 – 1.500) 16.685
12 Cash & Cash equivalent
Cash in hand (0.485+0.315) 0.800
Balance with banks (1.990+0.600) 2.590
13 Other Current Assets 3.390
1.160

Compiled by Academy
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 AMALGAMATION

Working notes
1. Calculation of goodwill

Particulars ` In lakhs
Total profit
Year:
2021-22 4.50
2022-23 (3.90+0.50) 4.40
2023-24 2.35
(i) 11.25
Average profit (i/3) (ii) 3.75
No of years of purchase (iii) 2 years
Goodwill (ii*iii) 7.5

Compiled by Academy
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 AMALGAMATION

Balance Sheet of Bright Ltd. as at 1st April, 2021

Particulars Note No. (` in lakhs)
4
I. Equity and Liabilities
(1) Shareholder's Funds
(a) Share Capital 1 2,250
(b) Reserves and Surplus 2 4,200
(2) Non-Current Liabilities
Long-term borrowings 3 84.375
(3) Current Liabilities
Trade payables 4 915
Total 7449.375
II. Assets
(1) Non-current assets
(a) i. Property, plant and equipment 5 2,325
ii. Intangible assets 6 633.375
(b) Non-current investments 7 300
(2) Current assets
(a) Inventories 8 900
(b) Trade receivables 9 975
(c) Cash and cash equivalents 10 2316
Total 7449.375

Notes to Accounts
(` in lakhs) (` in lakhs)
1. Share Capital
Authorized Share Capital
1,50,00,000 Equity shares of `10 each 1500
7,50,000 16% Preference Share of 100 each 750
Issued: 1,50,00,000 Equity shares of ` 10 1500
each
(Out of which 1,05,00,000 Shares were Issued
for consideration other than cash)
7,50,000 16% Preference Shares of 100 each
(Issued for consideration other than cash) 750 2,250
2. Reserves and surplus
Securities Premium Account
(1,50,00,000 shares ×` 25) 3750
(7,50,000 shares × ` 60) 450 4,200
Investment Allowance Reserve 150
Amalgamation Adjustment Reserve (150) 4,200
3. Long-term borrowings
16% Debentures (56,25,000+28,12,500)
(W.N. 3) 84.375
4. Trade payables
Dark Ltd. 630
Fair Ltd. 285 915
Compiled by Academy
5. Property, plant & equipment 13

Land and Building 1350

Plant and Machinery 975 2,325
 AMALGAMATION

6. Intangible assets
Goodwill [W.N. 2] 624.375
Add: liquidation exp. (6+3) 9.00 633.375
7. Non-current Investments
Investments (225+75) 300
8. Inventories
Dark Ltd. 525
Fair Ltd. 375 900
9 Trade receivables
Dark Ltd. 450
Fair Ltd. 525 975
10 Cash & cash equivalents
Dark Ltd. 450
Fair Ltd. 300
Liquidation Expenses (6+3) (9)
Shares issued for cash (45 lakh shares x `35) 1575 2316
Working Notes:

(` in lakhs)
Dark Ltd. Fair Ltd.
(1) Computation of Purchase consideration
(a) Preference shareholders:
4,50,00,000
( )
100 720
i.e. 4,50,000 shares × ` 160 each
3,00,00,000
( )
100 480
i.e. 3,00,000 shares × ` 160 each
(b) Equity shareholders:
12,00,00,000 × 5
( )
100 2,100
i.e. 60,00,000 shares x ` 35 each
11,25,00,000 × 4
( )
100
i.e. 45,00,000 shares × ` 35 each _____ 1,575

Amount of Purchase Consideration 2,820 2,055

(2) Net Assets Taken Over
Assets taken over:
Property Plant & Equity 1,350 975
Non-Current Investments 225 75
Inventory 525 375
Trade receivables 450 525
Cash and bank 450 300
3,000 2,250
Less: Liabilities taken over:
Compiled by Academy
10% Debentures 14 56.25 28.125
 AMALGAMATION
Trade payables 630 (686.25) 285 (313.125)
Net assets taken over 2,313.75 1936.875
Purchase consideration 2,820 2055.00
Goodwill 506.25 118.125
Total goodwill 624.375
(3) Issue of Debentures
Debentures ` 90,00,000 ` 45,00,000
Interest 10% ` 9,00,000 ` 4,50,000
9,00,000 × 100 4,50,000 × 100
( )= 56,25,000 ( )= 28,12,500
16 16

NOTE: In the above solution ` 35 has been considered as the issue price of Equity shares
for public issue also. Alternative considering this as ` 10 also possible. In that case, the
balance of cash and cash equivalents will be ` 1,191 lakhs and securities premium will be
` 3,075 lakhs in place of the balances given in the balance sheet in the above solution.

Compiled by Academy
15
 AMALGAMATION

5 Adjustment in bank balance and profit & loss account before

amalgamation
Other assets of Bright limited

` In lakhs
Book value 1.75
Less: Sale proceeds (0.50)
Loss on sale of other assets (debited to Profit & Loss A/c) 1.25
The new balance of Bank = 2.85 +0.5= 3.35 (` In lakhs)
The new balance of Profit & Loss A/c = 4-1.25= 2.75 (` In lakhs)
(a) (i) Realisation Account
Light Ltd. Bright Ltd. Light Ltd. Bright Ltd.
(` In lakhs) (` In lakhs) (` In lakhs) (` In lakhs)
To Sundry Assets, By Long term 1.50 -
transfer : provision
To Land & Building, 58.00 44.00 By Trade payables 3.40 2.00

To Plant & machinery 7.50 4.50 By Rainbow Ltd. - 80.00 64.00

purchase
To Other assets 3.20 -
To Inventories 5.75 7.10
To Trade receivable 4.30 5.80
To Cash & Bank 3.15 3.35
Balance
To Equity 3.00 1.25
Shareholders -
profit
84.90 66.00 84.90 66.00

(ii) Shareholders Account

Light ltd. Bright Ltd. Light Ltd. Bright Ltd.
(` In lakhs) (` In lakhs) (` In lakhs) (` In lakhs)
To Shares in 80.00 64.00 By Share Capital A/c - 50.00 40.00
Rainbow Ltd. transfer
By Statutory reserve 2.00 -
By General Reserve 18.00 15.00
By Securities premium - 5.00
By Profit & Loss A/c 7.00 2.75
By Realisation A/c 3.00 1.25
80.00 64.00 80.00 64.00

Compiled by Academy
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 AMALGAMATION
(b) Balance Sheet of Super Rainbow Ltd.

Particulars Notes (` In lakhs)

Equity and Liabilities
1 Shareholders' funds
A Share capital 1 144.00
B Reserves and Surplus 2 1.00
2 Non-current liabilities
A Long-term provisions 1.50
3 Current liabilities
A Trade Payables 5.40
Total 151.90

Assets
1 Non-current assets
A Property, Plant and Equipment 3 121.20
B Intangible assets 4 1.25
2 Current assets
Inventories 12.85
Trade receivables 10.10
Cash and cash equivalents 6.50
Total 151.90

(c) Notes to Accounts

(` In lakhs)
1. Share Capital
Equity share capital
Issued, subscribed and paid up
1,44,000 Equity shares of ` 100 each 144.00
(all shares are issued for consideration other than cash)
2. Reserves and Surplus
Statutory Reserves 2.00
Amalgamation Adjustment Reserves (2.00)
Capital Reserves 1.00
1.00
3. Property, Plant and Equipment
Land and Buildings 106.00
Plant and Machinery 12.00
Other Assets 3.20
121.20
4 Intangible assets
Compiled by Goodwill
Academy 1.25
17
 AMALGAMATION
Working notes:
1. Calculation of purchase consideration

Light ltd. Bright Ltd.

(` In lakhs) (` In lakhs)
80,000 Equity Shares of ` 100 80
64,000 Equity Shares of ` 100 64
2. Calculation of Net assets taken over

(` In lakhs)
Particulars Light Ltd. Bright Ltd.
Assets taken over:
Land and Buildings 62.00 44.00
Plant and Machinery 7.50 4.50
Other Assets 3.20 -
Inventory 5.75 7.10
Trade Receivable 4.30 5.80
Cash at Bank (2.85 + 0.50) 3.15 3.35
(i) 85.90 64.75
Liabilities taken over:
Long term provisions 1.50 -
Trade payable 3.40 2.00
(ii) 4.90 2.00
Net assets taken over (i) – (ii) 81.00 62.75
3. Calculation of Goodwill/Capital Reserve

(` In lakhs)
Particulars Light Ltd. Bright Ltd.
Net Assets takeover 81.00 62.75
Less: Purchase Consideration (80.00) (64.00)
Goodwill/ (Capital Reserve) (1.00) 1.25

Compiled by Academy
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 AMALGAMATION
6
Calculation of Purchase Consideration

Particulars Computation B Ltd. (`)

i Amount Payable to Equity Shareholders
In the form of
11,500 equity shares of ` 100 each 11,500 x 100 11,50,000
Cash 11,500 x 10 1,15,000
Subtotal (i) 12,65,000
ii Amount payable to Preference shareholders
In the form of
3,000 9% Preference Share of ` 100 each 3,000 x 100 3,00,000
[27,000/9% = 30,000 shares]
Premium on preference shares [` 3,10,500 - 10,500
` 3,00,000]
[` 2,70,000 +15% premium= 3,10,500] - (ii) 3,10,500
iii Total Purchase Consideration (i + ii) 15,75,500

In Books of B Ltd.
Journal Entries

Particulars Debit ` Credit `

1 Business Purchase A/c Dr. 15,75,500
To Liquidators of G Ltd 15,75,500
(Being the purchase consideration payable
for the business of G Ltd.

Compiled by Academy
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 AMALGAMATION

2 Property, Plant and Equipment A/c Dr. 17,43,600

(14,53,000 + 20%)
Inventories A/c Dr. 1,27,600
Trade Receivables Dr. 2,32,000
Goodwill Dr. 5,90,300
To 10% Debentures A/c 2,00,000
To Loan from Bank A/c 3,92,500
To Short term borrowings A/c 1,89,500
To Trade payables A/c (2,64,000 + 3,36,000
72,000)
To Business purchase A/c 15,75,500
(Being the various assets and liabilities of
G Ltd. taken over)
3. Liquidator of G Ltd. A/c Dr. 15,75,500
To Equity Share Capital A/c 11,50,000
To 9% Preference Share Capital A/c 3,00,000
To Securities Premium A/c 10,500
To Cash 1,15,000
(Being the discharge of purchase
consideration)
4. 10% Debenture A/c Dr. 2,00,000
To 9% Debentures A/c 2,00,000
(Being the issue of 9% debentures to G
Ltd.'s debenture holders)
5. Goodwill A/c Dr. 10,000
To Bank A/c 10,000
(Being the liquidation expenses of G Ltd.
reimbursed by B Ltd.)
6. Trade Payables A/c Dr. 51,400
To Trade Receivables A/c 51,400
(Being the elimination of inter-company
balances)

Compiled by Academy
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 AMALGAMATION
Balance Sheet of B Ltd (after absorption)
as on 31st March, 2025

Particulars Note No ` in ‘000

I Equity & Liabilities

1. Shareholders’ Fund
Share Capital 1 6080.00
Reserves& Surplus 2 1760.50
2.
Non-Current Liabilities
Long-term borrowings 3 2532.50
3.
Current Liabilities
Trade Payables 4 1756.60
Short-term borrowings 189.50
Total ` 12319.10
II Assets
1. Non-current assets
(a) Property, Plant & Equipment 8043.60
(b) Intangible assets (goodwill) 5 600.30
2.
Non-current investment 2350.00
3.
Current assets
a) Inventories (` 43,000 +` 1,27,600) 170.60
b) Trade receivables 6 970.60
(c) Cash and cash equivalents (` 3,09,000 - 184.00
` 1,15,000 - ` 10,000)
Total ` 12319.10

Notes to Accounts:

Notes Particulars ` in ‘000

1 Share Capital
Authorized share capital

Issued, Subscribed & Fully Paid up share capital

a 48,000 Equity Shares of `100 each 48,00.00
(Out of the above 11,500 equity shares have been issued
for consideration other than cash)
b 9%, 12,800 Pref. Shares of `100 each 12,80.00
(Out of the above 3,000 pref. shares have been issued for
consideration other than cash)
Total 6080.00

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 AMALGAMATION

2 Reserves & Surplus

Balance of P&L 1750.00
Securities Premium 10.50
Total 1760.50
3 Long Term Borrowings
- 9% Debentures of `100 each (10,90,000 + 2,00,000) 1290.00
- Loan from bank (8,50,000 + 3,92,500) 1242.50
Total 2532.50
4 Trade Payables
Creditors (13,85,000 + 2,25,000 - 51,400) 1558.60
Bills payable (87,000 + 39,000) 126.00
Contingent liability 72.00
1756.60
5 Intangible Assets
Goodwill (590300 + 10,000) 600.30
6 Trade receivables
- Debtor (7,30,000 + 1,75,000 - 51,400) 853.60
- Bill receivable (60,000 + 57,000) 117.00
970.60

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 AMALGAMATION

(1) Computation of amount of Debentures and Shares to be issued:

7
(i) Average Net Profit X Ltd. Y Ltd.
` (42,50,000+44,45,760-75,000+37,79,240)/4 31,00,000
` (26,50,000+27,60,000+34,00,000+35,90,000)/4 31,00,000
(ii) Equity Shares Issued
(a) Ratio of distribution
X Ltd. : Y Ltd.
1 1
(b) Number of shares
X Ltd. : 3,10,000
Y Ltd. : 3,10,000
6,20,000
(c) Amount of shares
3,10,000 shares of ` 5 each = ` 15,50,000
3,10,000 shares of ` 5 each = ` 15,50,000
(iii)
Capital Employed (after revaluation of assets) X Ltd. (`) Y Ltd. (`)
Property, plant and equipment 71,00,000 39,00,000
Current Assets 29,95,000 15,77,500
1,00,95,000 54,77,500
Less: Current Liabilities (59,70,000) (18,02,500)
41,25,000 36,75,000

(iv) Debentures Issued

X Ltd. (`) Y Ltd. (`)
4% Return on capital employed 1,65,000 1,47,000
7.5% Debentures to be issued to 100 100
provide equivalent income: 1,65,000 × 1,47,000 ×
7.5 7.5
22,00,000 19,60,000

Compiled by Academy
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 AMALGAMATION

Balance Sheet of XY Ltd.

As at 31 st March 2023 (after amalgamation)
Particulars Note No `
I. Equity and Liabilities
(1) Shareholders’ Funds
(a) Share Capital 1 31,00,000
(b) Reserves and Surplus 2 5,40,000
(2) Non-Current Liabilities
(a) Long-term borrowings 3 41,60,000
(3) Current Liabilities
(a) Trade Payables 4 76,35,250
Total 1,54,35,250
II. Assets
(1) Non-current assets
(a) PPE 5 1,10,00,000
(2) Current assets
(a) Other current assets 6 44,35,250
Total 1,54,35,250
Notes to Accounts
`
1 Share Capital
Authorized
8,00,000 Equity Shares of ` 5 each 40,00,000
Issued and Subscribed
6,20,000 Equity Shares of ` 5 each 31,00,000
(all the above shares are allotted as fully paid-up pursuant to a
contract without payment being received in cash)
2 Reserve and Surplus
Capital Reserve 5,40,000
3 Long-term borrowings
Secured Loans
7.5% Debentures
X Ltd. 22,00,000
Y Ltd. 19,60,000 41,60,000
4 Current Liabilities:
Trade Payables
X Ltd. 59,70,000
Y Ltd. 18,02,500
77,72,500
Less: Mutual Owings (1,37,250) 76,35,250
5 Property, Plant and Equipment:
X Ltd. 71,00,000
Y Ltd. 39,00,000 1,10,00,000
6 Other Current Assets:
X Ltd. 29,95,000
Y Ltd. 15,77,500
45,72,500
Less: Mutual Owings (1,37,250) 44,35,250
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 AMALGAMATION

Working Notes:
X Ltd. Y Ltd. Total
` ` `
(1) Purchase Consideration
Equity Shares Issued 15,50,000 15,50,000 31,00,000
7.5% Debentures Issued 22,00,000 19,60,000 41,60,000
37,50,000 35,10,000 72,60,000
(2) Capital Reserve
(a) Net Assets taken over
Property, plant & equipment 71,00,000 39,00,000 1,10,00,000
Current Assets 29,95,000 14,40,250* 44,35,250
1,00,95,000 53,40,250 1,54,35,250
Less: Current Liabilities (58,32,750**) (18,02,500) (76,35,250)
42,62,250 35,37,750 78,00,000
(b) Purchase Consideration 37,50,000 35,10,000 72,60,000
(c) Capital Reserve [(a) - (b)] 5,12,250 27,750 5,40,000

* 15,77,500–1,37,250 = 14,40,250
** 59,70,000–1,37,250 = 58,32,750

Note: In Working note 2 given above, the mutual owings amounting ` 1,37,250 included
in debtors and creditors of X Ltd. and Y Ltd. have been adjusted. Alternatively, the capital
reserve can be computed without adjustment of mutual owings. In that case, this working
note will be presented in the following manner:
Capital Reserve
(a) Net Assets taken over
Property, plant & equipment 71,00,000 39,00,000 1,10,00,000
Current Assets 29,95,000 15,77,500 45,72,500
1,00,95,000 54,77,500 1,55,72,500
Less: Current Liabilities (59,70,000) (18,02,500) (77,72,500)
41,25,000 36,75,000 78,00,000
(b) Purchase Consideration 37,50,000 35,10,0000 72,60,000
(c) Capital Reserve [(a) - (b)] 3,75,000 1,65,000 5,40,000

Compiled by Academy
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