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model absorption mdash fraction of shares the following are the balance sheets of x 620698

Model: Absorption—Fraction of shares The following are the balance sheets of X Ltd. and Y Ltd. as on 31 March 2011:

Liabilities

X Ltd.
Rs.

Y Ltd.
Rs.

Assets

X Ltd.
Rs.

Y Ltd.
Rs.

Share Capital:

Share of Rs. 10 Each

8,00,000

16,00,000

Fixed Assets

9,60,000

20,00,000

General Reserve

3,20,000

4,80,000

Debtors

1,60,000

80,000

Profit and Loss A/c

80,000

Stock

2,40,000

3,20,000

Sundry Creditors

2,40,000

4,00,000

Cash

80,000

80,000

14,40,000

24,80,000

14,40,000

24,80,000

Y Ltd. agreed to absorb X Ltd. on the following terms:

  1. Y Ltd. to give one share of Rs.10 each as an agreed value of Rs.30 per share for every three shares in X Ltd. The shares of Y Ltd. are quoted in the market at Rs.45 per share.
  2. The trade liability is to be taken over.

You are required to prepare:

  1. Journal entries in the books of Y Ltd.
  2. Balance sheet of Y Ltd. after absorption assuming the amalgamation is in nature of purchase

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