lustration1 (Purchase Consideration: Net Assets Method)

The following balances have been taken from the books of Bhavna Ltd. as at 31 March 2020 is given below:
Credit Balances Debit Baia
2,40,000
Equity Share Capital 8,00,000 Building
8% Preference Share Capital 2,00,000 Plant and Machinery 5,10,000
10% Debentures 1,00,000 Furniture 1.15,000
Reserve Fund 45,000 Investments (M.V. 90,000) 1,20,000

Securities Premiumn 48,000 Inventories 90,000

Profit and Loss Account 12,000 Debtors 3,12,000

Workmen Compensation Fund 56,000 Bills Receivable 45,000

Bills Payable 35,000 Cash in hand 55,000
1,11,000
Creditors 2,25,000 Cash at Bank
Provident Fund 1,10,000 Goodwill 45,000
Provision for Tax 20,000
32,000 Preliminary Expenses
wwwwwwwwwwwwww
16,63,0000
16,63,000
Mwww wwwww.w
13.8
Fundamentals of Corporate Accou
terms and valuation:
Sakshi Ltd. intends to take over the business on the following

2,00,000; Plant and Machinery at R 4,65,000;

Furniture at 36,000; Inventories at 1 200
(i) Building at
Debtors subject to a provision of 10% for doubtful debts; goodwill found to be nil. Cho ,000,
Fund. or Conoido>od
(ii) There was a liability of 26,000 against Workmen Compensation
(ii) Actual tax liabilityis 40,000. Hw has A ke taee/poidoneo
(iv) Realisation expenses estimated at 15,000 to be borne by Sakshi Ltd. Not to be i cndad
(v) Preference shareholders are to be paidincash. Fet st« co Cal) 1 bom b
tsaucd

(vi) Balance to be paid in equity shares of Shakshi Ltd. of 100 share.(Co hen obote
fontis
Solution
Calculation of Purchase Consideration

der the
Assets taken over

Building 2,00,000 Whe

Plant and Machinery 4,65,000
Furniture 36,000 The
Investments 90,000 torm
Stock 1,20,000 vei
Debtors 3,12,000
Less: Provision 31,200 2,80,800
lustratio-
Bills Receivable 45,000
pigand
Cash in hand 55,000 Kcost of a
Cash at Bank 1,11,000 the deb-
14,02,800 tate in C
Less: Liabilities Mevery 4
Creditors 2,25,000 paid
Bills Payable
Rure of
35,000
Provident Fund
Workmen Compensation Fund
1,10,000
26,000
auton
Provision for Tax 40,000
10% Debentures 1,00,000
(5,36,000)
Purchase Consideration 8,66,800 Few%pmePrnestle
Mode of Payment of Purchase Consideration

Cash (for Preference Shareholders) 2,00,000 hares

6,66,800
Equity Shares 100)
8,66,800

TUTORIAL NOTES
() Realisation expenses though paid by transfree company is not part or tne purchase consideration.

(i) In case realisation expenses are payable by the transferor (vendor) company, tne amount of cash to be framcferred .a

the transferee company would be reduced accordingly.

huxdhad
 Amalgatal1on of Companics
Lumting
For
13.9
TOTAL PAYMENTS METHOD OR NET PAYMENTS METHOD

his method, the purchase consideration is calculated by adding up the total amount (money value) of equity
his
Under
preference sharesandcashreceived from the transferee (purchasing)company for theshareholders(equityandd
shares.p
areference) of the transteror (vendor) company.

The procedure is summarised below:

(a) Amount of Preference shares i.c., Number ofShares x Issue Price

(6) Cash for preference shareholders

Amount of Equity shares i.e. Number of Equity Shares x Issue Price

(d) Cash for Equity shareholders (for fractional shares)

Purchase consideration =Total Payments under (a) + (b) + (c) + (d)

Essential Points

Under the Total Payments Method, the following essential points must be carefully noted:
00,00 () Whateverisreeeived from thepurchasing company for the shareholders of the vendor company is added. Unlike
65,000 net assets method, nothing is deducted.
36.0
i) The purchase consideration willnotinclude the paymentsmadebythetransferee (purchasing) company in any
90.00 formtothe debentureholders and other forms ofliabilities Such liabilities will be transferred by thetransteror
20,00 (vendor) company to the transferee (purchasing) company and paid by the latter company after the take over.

lustration 2APurchase Consideration: Total or Net Payments Method)

80,800
45,0 Rajnigandha Ltd. is absorbed by Vasundhara Ltd., the consideration being the take over of liabilities; the payment
55,00
ofcost of absorption as a part ofpurchase consideration not exceeding 20,000 (actual cost 17,000); the payment
of the debentures of T 1,00,000 at a premium of 10% in 9% debentures issued at par; and the payment of 1 6 per
Snare in cash and allatment of one 14% preference share of R 10 each and 6 equity shàresof R 10 gach fully paid
02,800
orevery4 shares in ajnigandha Limited. The number of shares of the vendor company are2.00.00D-of R 10 each
ly paid. Calculate purchase consideration as per Accounting Standard-14 assuming it is an absorption in the
nature of purchase.

Solution
CALCULATION OF PURCHASE CONSIDERATION AS PER AS-14

Cash
Payment to Shareholders 2,00,000x 16 ( 32,00,000
yment to Shareholders in shares of purchasing company:
14% Preference Shares of 7 10 each for every

2,00,000
4 shares held in Rajnigandhaie.
x10 5,00,000
4
x2L x1o
and 6 Equity Shares of R 10 each for every 4 shares

eld in Rajnigandha. |ie.x2,00,000 x10 30,00,000

4 x2L x io
Purchase Consideration 67,00,000
Fayments for cost of absorption and debentureholders are not to be included in the purchase consideration as ner

AS-14.
per AS-14.

Consideration:Total or Net Payments Method)

Illustration4(Purchase
31st March, 2020: time the t
Balance Sheet of P Ltd. as on
The following is the t
Note No. a basis of
Particulars runy. The

EQUITY AND LIABILITIES

IASiC value
1. Shareholder's Funds
Aed to cal
(a) Share Capital 50,00,000 mine the
100 each)
Equity Share Capital (R 10,00,000
13% Preference Share Capital (7
100 each) imethod i
(6) Reserve and Surplus 2,50,000 anple
General Reserve
Non-Current Liabilities
2. 6,00,000
(a) Long term Borrowings (14% Debentures) Net Asset-=
3.
Current Liabilities

Creditors
5,00,000
No.of eq
Payables
Trade
2,00,000trinsic
ntrinsic
-

(a)
- Bills Payables 50,000
Share Exc
Short term Provisions (Current Tax) 76,00,000
(b)
Total the Sha
ASSETS
thetr sha
II
1. Non-Current Assets 40,00,000

(a) Property, Plant & Equipment (Tangible) 1,50,000 adure

(b) Non-Current Investments ut the LC
2. Current Assets 25,50,000 e he 1C
(a) Inventories (Stock-in-trade) 7,00,000

Trade Receivables (Debtors) 2,00,000

(6)
(c) Cash and Cash Equivalents (Bank) 76,00,000
Total me sha
ate Atcoum
For Amalgamation of Companies 13.11
4a9umting

AdditionalInformation:
iabtiter (a) T Ltd.
takes over P Ltd. on 15 April 2020.

benturs
nthelG
b) 13% preference shareholders of P lad, are discharged at a premium of l0% by issuing 14% preference shares of
100 each. OL+10. 10LL 11L
(The net assets value per equity share of P Ltd. is R 250 and that of T Ltd. is 400. T Ltd. will issue equity shares
to satisfy the equity shareholders of P Lid. on the basis ofintrinsic value. However, the purchase considerationis
to be based on the basis of par value only. The face value of equity share of T Ltd. is 7 100. P A S
(d) Debentureholders of P Ltd. are to be discharged at a premium of 15% by issuing 14%/Debentures in T Ltd.

Compute the purchase consideration.

TUt 00 Pud. 3 So
2,00080
6,00.00 Solution
o oLxin
8,00.00 Calculation of Purchase Consideration

6,00,00
2,00.00
0For preference shareholders of P Ltd. 11,00,000 (11,000, 14% Preference Shares of T Ltd. of 100 each.) PuA
8,00,00
iFor equity shareholders of P Ltd. 31,25,000 (31,250 Equity Shares ofT Ltd. of 100 each)
(250/400 x 50,00,000) x 100
derationsu 42,25,000
Debentures of P Ltd. will be taken over by T Ltd. and then paid.

EXCHANGE METHOD OR SWAP RATIo METHOD]

ometime thetransferee (purchasing) company takes over the business of the transieror (vendor) company or companies
onthebasis of the ratio in which the shares of the transferee company are to be exchanged for the shares of the transferor
c0mpany. The Exchange Ratio or Swap Ratio is generally based on intrinsic value of each company' share.

rinsic value of shares means the valtue of shares based onnetassets of the company, In an examination problem, it may
De asked to calculate the intrinsic value of shares of the vendor company and purchasing company respectively and
50.00.00
ermine the ratio of exchange of the shares between the two said companies.
10.00.00

his method is also known as

Exchange Method or Swap Ratio Method.
2.500 Example
Jaya Ltd. Lalita Ltd.
(Purchasing Co.) (Vendor Co.)
a) Net Assets 55,00,000 82,50,000
6) No. of
equity shares 1,00,000 75,000
CIntrinsic value per share (A + B) 55 110
Share Exchange Ratio or Swap Ratio 2

t h e Share Exchange Ratio or Swap Ratio for shareholders of Lalita Ltd. is 1:2 i.e. for every 1 share in Lalita
4,their shareholders will get 2 shares in Jaya Ltd.

Procedure
nd out
the LCM of intrinsic
i values of 55 and 110 LCM is 110.

de
I10
.R the LCM 110 2
by intrinsic value of Jaya Ltd. i.e.

Then, divide LC 110

110 by intrinsic value of Lalita share 1e.
110
Thus, o ild.
Share in Lalita Ltd. is equal to 2 shares in Jaya
Accordingly the holder of shares in Lalita Ltd. is entitled to 2 shares in Jaya Ltd.
 13.12 Fundamentals of Corporate Accountin
llustration5 Intrinsic Value of Shares)
The following are the balances of of Pratiksha Ltd. and Nidhi Ltd. as on 31 March 2022:
Pratiksha Ltd.

Credit Balances Debit Balances

Share Capital
20,000 Shares of 10 each 2,00,000 Fixed Assets
3,50,000
General Reserve 2,50,000 Investments 2,50,000
Surplus 1,50,000 Current Assets
3,00,000
Debentures 1,75,000
Current Liabilities 1,25,000
|9,00,000 9,00,000

Nidhi Ltd.
Credit Balances
Debit Balances
Share Capital:
9,000 Shares of 10 each
90,000 Fixed Assets
General Reserve 1,50,000
50,000 Current Assets
Profit and Loss Account 1,00,000
40,000
Current liabilities:
Creditors
50,000
Bills payable
20,000
2,50,000
2,50,000
Pratiksha Ltd. agrees to take over Nidhi Ltd. Find out the ratio of
exchange of shares on the basis of the book values.
Solution
CALCULATION OF INTRINSIC VALUES OF SHARES
Particulars
Pratiksha Ltd. Nidhi Ltd.
(A) Assets
Property, Plant & Equipment
Investments 3,50,000 1,50,000
Current Assets
2,50,000
3,00,000 1,00,000
(B) Less
9,00,000
External Liabilities
2,50,000
Debentures
Current Liabilities
1,75,000
Net Assets (A-B)
1,25,000 70,000
3,00,000 70,000

6,00,000 1,80,000

Intrinsic Value of Share = 6,00,000 = R30 1,80,000

20,000 9,000 = 20 20
Valce No of .
Calculation of Ratio of
LCM of 30, and 20 (intrinsic values) of Exchange
shares
shares of two
companies is 60
S |30,20 SX 2x 3x 2
Therefore, 2 of Pratiksha Ltd. =
R 60 and 3
shares of Nidhi Ltd. 6,4
= 7 60.
Illustration 6 (Calculation of Purchase Consideration)
The following balances are extracted from the books of Vrinda ILtd
Illustratiop 7 (Calculation of Number of Debentures)
of 7 100 each of the face value
of 22,50,000. 9%
S Ltd. is to be taken over by R Ltd. S Ltd. has 9% debentures 100 each so as to
number of its 15% debentures of ion
debentureholders
of S Ltd. are discharged by R Ltd. issuing such
maintain the same amount of interest.

Calculate the number of debentures to be issued by R Ltd.

Solution
Calculation of Present Interest = 22,50,000 x 9%

= 2,02,500

Amount of Interest 1
Calculation of Number of Debentures New Rate of Interest Face Value

2,02,500 T
Am of No-of x Ra
15% 100
t
= 13,50,000 x 1
100
= 13,500 debentures.

fustration 3(Absorption: Amalgamation in the Nature of the Merger

The Balance Sheets of W Ltd. and S Ltd. as at 31st March, 2022 were as follows:

lculatpn of Preseny nterest Particalars Note No. W Ltd s Ltd

L EQUITY AND LIABILITIES

clao1. Shareholder's Funds
(a) Share Capital
Equity Share Capital (shares of 10 each) 30,00,0000 15,00,000
(b) Reserve and Surplus
General Reserve 40,000 3,60,000
2. Current Liabilities
(a) Trade Payables (Creditors) 2,00,000 90,000
Total 32,40,000 19,50,000
 f Companies 13.31
Amalgamation

untingFor
Dunting
ASSETS

. Non-Current Assets

nount (a)Property,Plant & Equipment (Tangible)

ation. Land and Building 15,00,000 9,00,000
ill be
Plant and Machinery 9,00,000 6,00,000
Current Assets

(a) Inventories (Stock-in-trade) 2,80,000 1,95,000

(6) Trade Receivables (Debtors) 3,60,000 1,50,000
2,00,000 1,05.000
(c) Cash and Cash Equivalents (Bank)
es are
Total 32,40,000 19.50,000
isting
Comes
WLxd agreed to absorb the business of S Ltd. on the following terms
stance WLtd. would acquire all assets and liabilities ofS Ltd. at book value.
sisting i) WLtd. agreed to issue six shares off 10 each for every five shares of S Ltd.
1
Ieexpenses of absorption amounting to 30,000 were paid by W. Ltd.

as journal entries in the books of W Ltd. according to pooling of interests (merger) method and prepare its balance
.9% sheet after absorption.
0 as to
Solution
Purchase Consideration

Equity Shares: x
1,50,000 x T 10 =/18,00,000

In The Books of W LTd.

Journal Entries

Debit () Credit
Particulars

Business Merger Account Dr. 18,00,000

To Liquidators of S Ltd. 18,00,000
the business of S Ltd.)
5eing the purchase consideration for taking over

Land & Building Account Dr. 9,00,000

Plant & Machinery Account Dr. 6,00,000
Dr. 1,50,000
Sundry Debtors Account
Stock Account Dr. 1,95,000
Cash at Bank Account
6fon Dr. 1,05,000
To Business Merger Account W 18,00,000
To Sundry Creditors Account 90,000
To General Reserve 60,000
Account(Balancing Figure) the
eing the transfer ofall assets and al liabilities including reserves;

atference is the balancing figure of general reserve

Dr. 18,00,000
Liquidators of SLid.
18,00,000
To Equity Share Capital Account
Being payment of purcbase price)
Dr. 30,000
LAquidation Expenses Account
60000
To Bank Account 30,000
V) 5eing payment of liquidation expenses
General Reserve Account Dr. 30,000
To
Liquidation Expenses Account 30,000
eng liquidation expenses transferred to general reserve
 Fundamentals of Corporate Accountis
13.32

WIL.td.
Balance Sheet As at
31 March 2022

Note
Particulars
A
EQUITY AND LIABILITIES
1. Shareholders' funds
(a) Share capital (30L t18) 48,00,000
o t6 70,000
6) Reservesand Surplus ak+ae 0K30Ka,mp
Sub Total 48,70,000
2. Current Liabilities

Trade PayablesL 90 2,90,000

Total Equality and Liabilities 51,60,000
II. ASSETS
1. Non-current Assets
(a) Property, Plant & Equipment
) Tangible Assets
1SL+ 9 +9L T6L) 39,00,000
ystra
2. Current Asset
(a) Inventories 2.8L + 1.9SL) 4,75,000 lOW
5,10,000
(b) Trade Receivables C36L +1.Si)
(c) Cash and Cash Equivalents 2L t 10 Saas 30 S»o, 2,75,000
Sub Total 30k ( liqy.ep p) 12,60,000
Total Assets 51,60,000

Notes to Accounts

1. Share Capital
Equity Share Capital

Issued, subscribed and fully paid

4,80,000 Shares of R 10 each. 48,00,000

Reserves and Surplus

General Reserves:
Balance b/d 40,000
Add: S Ltd. portion 60,000

1,00,000

Less: Liquidation Expenses 30,000

70,000
3. Trade Payables
Creditors for Goods 2,90,000
Tangible Assets
Land and Building 24,00,000

Plant and Machinery 15,00,000

39,00,000
Inventories

Stock of Goods 4,75,000

6. Trade Receivables

Debtors for Goods 5,10,000

Cash and Cash Equivalents

Cash at Bank 2,75,000
13.38
1 Pso boo Fundamentals of Corporate Accounting
lustration 10 (Absorption: Net Payment Method: Inter Co. Debt, Unrealised Profit on Stock etc.)
The following are the Balance Sheets of Alpha Ltd. and Beeta Ltd. as on 31st March, 2022:
Particulars Note No. Alpha Ltd. Beeta Ltd
EQUITY AND LIABILITIES
1. Shareholder's Funds
(a) Share Capital
7% Preference Shares of 100 each
Equity shares of 100 each
4,50,000 6,00,000
8,00,000 12,00,000
(b) Reserve and Surplus
General Reserve
70,000 80,000
Surplus Account
45,000 62,000
Statutory Reserves
2. Non-Current Liabilities 27.000 48,000
(a) Long-term borrowings (10% Debentures)
3. Current Liabilities 1,50,000 84,000
(a) Trade Payables- Creditors
75,000 1,20,000
Bills Payable
25,000 35,000
Total
ASSETS 16,42,000 22,29,000
1. Non-Current Assets
(a) Property, Plant & Equipment (Tangible):
Premises
Plant & Machinery 6,50,000 7,00,000
4,80,000 6,20,000
Computers 1,20,000 2,00,000
(b) Intangible - Goodwill
60,000 1,00,000
2. Current Assets
(a) Inventories (Stock-in-trade)
1,80,000 2,50,000
b) Trade Receivables-Debtors
- Bills Receivables |1,10,000 3,15,000

30,000 20,000
(c)Cash and Cash Equivalents (Bank)
24,000
12,000
Total
22,29,000
Beeta Ltd. takes
16,42,000
over Alpha Ltd. on 1 April, 2022 on the following terms:
() Beeta Ltd. discharged purchase consideration as under:
(a) Issued 10,000 equity shares of 100 each at a
premium of 5% for the equity shareholders
(b) Issued 8% preference shares of r 100 each at par to of Alpha L
10% premium. discharge the preference shareholders of Alpha ta
(i) The Debentures of Beeta Ltd. to be converted into
equivalent number of debentures of Beeta Ltd.
(it) Sundry debtors of Alpha Ltd. include 25,000 being amount due
from Alpha Ltd.
(iv) Bills payable of Alpha Ltd. includes
7,000 being the amount of bills accepted in favour of Beeta Ltd. but thebills
receivable of Beeta Ltd. includes 5,000 only being the amount of bills due from
Alpha Ltd.
(The stock of Beeta Ltd. includes of
30,000 worth goods purchased from Alpha Ltd. nade
a profit of 25% on cost. Cot on which Alpha Ltd. na
o S.P,
(vi) Statutory reserves are to be maintained for two more years.

You are required to:

1. Calculate purchase consideration.
Acounting For Amalgamation of Companies 13.39

2. Pass Journal Entries in the books of Beeta Ltd. assuming that amalgamation is in the nature of purchase.

3. Prepare Balance Sheet of Beeta Ltd. after amalgamation.

Solution
Calculation of Purchase Consideration:
1. For Equity Shareholders
10.000 Equity Shares in Beeta Ltd. of Ti00 each at a premium of 5% 10,50,000102
2. For 7% Preference Shareholders:
4.950. 8% Preference Shares in Beeta Ltd. ofR 100 each at par 4,95,000

Yspooot 1g. 9sooo/1o0 : 4Gso 15,45,000

In the Books ofBeeta Ltd. (1o/n
Journal Entries

S.No Particulars Debit Credit

Business Purchases Account 15,45,000
To Liquidators of Alpha Ltd. 15,45,000
(Being purchase consideration of business)

Goodwill Account (Balancing Figure) Eo fos AlL Dr. 2,13,000

Premises Account Dr. 6,50,000

Plant and Machinery Account

Computer Account
( Sioke
Dr
Dr.
4,80,000
1,20,000
Dr. 1,80,000
Stock Account
Dr. 1,10,000
Sundry Debtors Account
Dr. 30,000
Bills Receivable Account
Dr. 12,000
Bank Account
To 10% Debentures of Alpha Ltd. Account
1,50,000
75,000
To Creditors Account
25,000
To Bills Payable Account
15,45,000
To Business Purchase Account
(Being assets and libailities taken over brought into books)
Dr. 15,45,000
Liquidators of Alpha Ltd. Account
10,00,000
To Equity Share Capital Account
50,000
To Securities Premium Account
4,95,000
To 8% Preference Share Capital Account
issue of 10,000 equity shares
of
Being settled purchase consideration by shares of 100 each)
100 each at 5% premium and 4,950 preference
Dr. 1,50,000
(iv) 10% Debentures of Alpha Ltd. Account haj) 1,50,000
To 10% Debentures of Beeta Ltd.
to the debenture
holders of Alpha Ltd.)
(Being issued debentures
Dr. 25,000
(v) Sundry Creditors of Alpha Ltd. Account A
To Sundry Debtors of Beeta Ltd. Dss. Beeta =Ca of ALpha 25,000
(Being inter company debt adjusted)
vi) Ai U) Dr. 5,000
Bills Payable of Alpha Ltd. Account
Account 5,000
To Bills Receivable of Beeta Ltd. am of Bertn
(Being inter company bills adjusted)
Awat
Dr. 6,000
Goodwill Account
6,000
To Stock Account
to &eetr tfd. t» w
(Being unrealised, profit adjusted)
(viii) Amalgamation Adjustment Account
Dr. 27,000
To Statutory Reserves Account
27,000

Being statutory reserves brought into

the books)
torutory T oALpla
2%
13.40 Fundamentals of Corporate Accounting
Beeta Ltd.
Balance Sheet As At 1 April 2022

Particulars Note

1. EQUITY AND LIABILITIES

1. Shareholders Funds
whteut
(a) Share capital .
9sDoo +L Eay , 10L 12L) 32,95,000
(b)Reservesand surplus Sor t 3ok t BKr2K t 62K) 2,67.000
Sub Total R
35,62,000
Non-current Liabilities

Long-termborrowings C1.SL +3M) 3 2,34,000

3. Current Liabilities

Trade Payables LSK 2sK) + (3SK2sK SK) -

4 2,25,000
Total Equity and Liabilities 40,21,000
ASSETS
1. Ncn-current Assets

(a) Property, Plant & Equipment(Tangible Assets)Prembes + P2m +lo 27,70,000

(b) Intangible Assetst1L +2-134L +6K) 3,19,000
(c) Other Non-current Assets 27,000
Sub Total 31,16,000
2. Other Current Assets
(a) Inventories (2.SL 3L-6K) 8 4,24,000
(b) TradeReceivables (1.10L 31sL-2SK) 9 4,00,000
)Cash andcashEquivalents K1.1 10 36,000
(d) Short-term and Advances 30K+ 20K-SK) 11 45,000
Sub Total 9,05,000
Total Assets 40,21,000

Notes to Accounts

Particulars
1. Share Capital
(a) Preference share capital
Issued, Subscribed and Fully Paid:
6,000, 7% preference shares of R 100 each
6,00,000
4,950 8% preference shares ofT 100 each 10,95,000
(Of these 4,950 8% preference shares issued for consideration other than 4,95,000
cash to vendors)
(b) Equity Share Capital
Issued, Subscribed and Fully Paid
22,000 equity Shares of 100 each
22,00,000
(Of these 10,000 equity shares issued to vendors for consideration
other than cash)
32,95,000
Reserves and Surplus
6) Securities premium (from issue of 8%Preference shares to
vendors) 50,000
(i) General Reservses
80,000
(il) Statutory Reserves
Beeta Ltd.
48,000
 Companies
For Amalgamation of
counting
13.41

Alpha Ltd. 27,000 75.000

(iv) Surplus 62,000
2,67,000
Long-ternm Borrowings
10% Secured Debentures (Beeta: 1,50,000+84,000) 2,34,000

Alpha Ltd. R 1,50,000, 10% Debentures)

(Issued to

Trade Payables
75,000
Creditors Alpha
25,000
Less: Inter-company
50,000
1,20,000 1,70,000
Beeta
12 months)
25,000
Bills Payable Alpha (Assumed to be payable in
5,000
Less: Inter-company debts
20,000
55,000
35,000
Beeta 2,25,000

Tangible Assets 7,00,000

6,50,000 13,50,000
Premises
Alpha Ltd.
Plant and Machinery 6,20,000

4,80,000 11,00.000
Alpha Ltd.
2,00,000
Computer 3,20,000
1,20,000
Alpha Ltd.
27,70,000

1,00,000
Intangible Assets
2,13,000
Goodwill 6,000
On Amalgamation
stock at cost 3,19,000
R e v a l u a t i o n of
From

27,000
Other Non-current Assets
7. Amalgamation Adjustment Account

2,50,000
Inventories ,000
Stock of Goods 2,44,000
Less: Unrealised profit 1,80,000

4,24,000
Alpha Ltd.
3,15,000
T r a d e R e c e i v a b l e s

Goods
25,000
for
Debtors
2,90,000
Sundry
Debts
Inter Co. 1,10,000
Less:

4,00,000
Alpha Ltd.
13.42 Fundamentals of Corporate Accounting

Cash and Cash Equivalents

Bank 24,000
From Alpha Ltd.
12,000
36,000
1. Short-term Loans and Advances
Bills receivable (Assumed to be receivable within 12 months) 20,000
Less: Inter-company Debts 5,000
15,000
Alpha Ltd. 30,000

45,000 (i
llustration 11 (Absorption: Inter Co. Debt, Goodwill and Capital Reserve Set-Off)
A Ltd. absorbed B Ltd. when their Balance Sheets were as under on 31st March, 2022: