Amalgamation in the nature of purchase Given below are the balance sheets of Strong Ltd....
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Accounting
Amalgamation in the nature of purchase Given below are the balance sheets of Strong Ltd. and Weak Ltd. as on 31 March 2011. Weak Ltd. was merged with Strong Ltd. on 1 April 2011.
Balance Sheets as on 31 March 2011
| Liabilities | Strong Ltd. | Weak Ltd. | Assets | Strong Ltd. | Weak Ltd. |
| Share Capital: |
|
| Fixed Assets | 3,000 | 2,000 |
| Equity Share of Z100 Each | 2,500 | 1,500 | Non-trade Investments | 750 | 500 |
| General Reserve |
|
| Current Assets: |
|
|
| Profit & Loss A/c | 1,000 | 500 | stocks | 1,000 | 750 |
| Export Profit Reserve | 500 | 375 | Debtors | 1,000 | 500 |
| 10% Debentures | 400 | 200 | Bank Balance | 750 | 300 |
| Trade Creditors | 600 | 625 | Preliminary Expenses | 100 | - |
| Tax Provision | 500 | 300 |
|
|
|
| Proposed Dividend | 500 | 250 |
|
|
|
|
| 600 | 300 |
|
|
|
|
| 6,600 | 4,050 |
| 6,600 | 4,050 |
Other information:
- Strong Ltd. would issue sufficient number of debentures at par to the debenture holders of Weak Ltd.
- For every share of Weak Ltd, Strong Ltd. would issue one share at a premum of 20 per share. You are required to prepare the balance sheet of Strong Ltd. after merger assuming it to be in the nature of purchase.
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