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Q. 23. Yum Ltd. and Thung Ltd. are two companies. On 31st March, 2010 their Balance Sheets were as under (Rs in crores) Yum Ltd. Thung Ltd. Sources of funds Share capital Authroised 500 500 Issued: Equity shares of Rs. 10 each fully paid up 300 200 Reserves and surplus. Capital reserves 40 20 Revenue reserves 700 425 Surplus 10 750 5 450 Owners' funds 1,050 650 Loan funds 250 350 Total 1,300 1,000 Funds' employed in: Fixed assets Cost 1,000 700 Less : Depreciation 600 B00 400 Net Current assets: Current assets 2.000 1.500 Less : Current liabilities (1 300) 700 (900) 600 1,300 1,000 (400) Yum Ltd. has 2 divisions - very profitable division A and loss making division B. Thung Ltd. similarly has 2 divisions-very profitable division B and loss making division A. The two companies decided to reorganise. Necessary approval's from creditors and members and sanction by High Court have been obtained to the following scheme. 1. Division B of Yum Ltd. which has Fixed assets costing Rs. 400 crores (written down value Rs. 160 crores). Current assets Rs. 900 crores Current liabilities Rs. 750 crores and loan funds of Rs. 200 crores is to be transferred at Rs. 125 crores to Thung Ltd. 2 Division A of Thung Ltd. which has Fixed assets costing Rs. 500 crores (depreciation Rs. 200 crores), Current assets Rs. 800 crores Current liabilities Rs. 700 crores and loan funds Rs. 250 cres is to be transferred at Rs. 140 crores to Yum Ltd. 3. The difference in the two consideration is to be treated as loan carrying interest at 15% per annum. The directors of each of the companies revalued the Fixed assets taken over as follows 1. Division A of Thung Ltd. taken over : Rs. 325 crores. ii. Division B of Yum Ltd. taken over : Rs. 200 crores. 4 All the other assets and liabilities are recorded at the balance sheet values. The directors of both the companies ask you to prepare the balance sheets after reconstruction (showing the corresponding figures before reconstruction) a. n 75 b. Mr. Poor, who owns 50,000 equity shares of Yum Ltd. and 30,000 equity shares of Thung Ltd. wants to know whether he has gained or lost in terms of net asset value of equity shares on the above recognisation

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