Question 26 Chapter 9 of +2-Part-1
26. (Different Cases of Debentures issues for Purchase Consideration other the Cash)
X Ltd. Took over the assets of Rs. 3,00,000 and Liabilities of Rs. 10,000 of Y Ltd. For agreed purchase consideration of Rs. 2,70,000 to be satisfied by the issue of 15% Debentures of Rs. 100 each at 20% premium. Show the necessary journal entries in t Journal of X Ltd.
(b) Z. Ltd. Allotted 3,000 15% Debentures of Rs. 100 each at a discount of 10% to USA Ltd. For supplying Technical know-how. Give the necessary Journal entries.
The solution of Question 26 Chapter 9 of +2 Part-1: –
| Journal |
|||||
| Date | Particulars |
L.F. | Debit ₹ | Credit ₹ | |
| i | Sundry Assets A/c | Dr. | 3,00,000 | ||
| To Sundry Liabilities A/ c | 10,000 | ||||
| To Y Ltd. | 2,70,000 | ||||
| To Capital Reserve A/ c (WN) | 20,000 | ||||
| (Being the purchase of Assets & liabilities from Y Ltd. As per agreement dated) | |||||
| ii | Y Ltd. A/c | Dr. | 2,70,000 | ||
| To 15% Debenture A/c | 2,25,000 | ||||
| To Securities Premium Reserve A/c | 45,000 | ||||
| (Being the issue of 2250 debentures of Rs. 100 each at premium of 20%) | |||||
b) Z Ltd. Allotted 3,000 15% debentures of Rs. 100 each at a discount of 10% to USA Ltd. For supplying Technical know –how .give necessary journal entries
| Journal |
|||||
| Date | Particulars |
L.F. | Debit ₹ | Credit ₹ | |
| i | Technical Know-how A/c | Dr. | 2,70,000 | ||
| Discount on Debentures A/ c | 30,000 | ||||
| To 15% Debenture A/c | 3,00,000 | ||||
| (Being technical know-how purchased & payment made by issue of debentures at 10 % discount.) | |||||
Working Note :-
Capital Reserve = (Assets –Liabilities ) – Purchase Consideration
(3,00,000-10,000)-2,70,000 = ₹ 20,000
It all about Question 26 Chapter 9 of +2-Part-1, If you have any problem please comment below.
Issue of Debentures from the point of view of Redemption
End of Solution
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