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alo Liabilities Rs. Assets Rs. Profit and Loss A/c 2,10,000 Cash and Bank Balances Add: Proposed (2,75,000 + 1,30,000 - 40) 4,04,960 Dividend cancelled 140,000 3,50,000 Miscellaneous Expenses: Export Profit Reserve 1,10,000 Preliminary Expenses 10,000 (70,000 + 40,000) Amalgamation Secured Loans Adjustment A/c 40,000 12% Debenture 2,00,000 (1,00,000 + 1,00,000) Current liabilities and provisions: Sundry creditors (40,000 + 45,000) 85,000 Provision for tax (1,00,000 + 60,000) 1,60,000 28,59,960 28,59,960 Illustration - 10 The following are the Balance sheets of Fat Ltd. and Thin Ltd. for the year ending on 31st March, 2009, (Figures in Crores) Fat Ltd. Thin Ltd. Equity Share capital. @ Rs. 10 each 50 Preference Share capital - in 12% preference shares of Rs. 100 each Reserves and surplus 200 150 250 250 Loan - Secured 100 100 Total 350 350 Fixed assets (at cost less depreciation) 150 150 Current assets less Current liabilities 200 Total 350 350 The present worth of Fixed assets of Fat Ltd. is Rs. 200 crores and that of Thin Ltd, is Rs. 429 crores. Goodwill of Fat Ltd. is Rs. 40 crores and of Thin Ltd. is 75 crores. Thin Ltd. absorbs Fat Ltd. by issuing equity shares at par in such a way that intrinsic networth is maintained Goodwill account is not to appear in the books. Fixed assets are to appear at old figures. (a) Show the Balance Sheet after absorption, (b) Draft a statement of valuation of shares on intrinsic value basis and prove the accuracy of your workings. 40 60 200

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