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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