Following is the Balance Sheet of X Co. Ltd. as at 31st March, 2008: Balance Sheet as at 31st March, 2008 Liabilities Rs. Assets Rs. Equity share capital (Rs. 100 each) 11% Pref. share capital General reserve Sundry creditors 15,00,000 5,00,000 3,00,000 2,00,000 Land and building Plant and machinery Furniture and fittings Stock in trade Sundry debtors Cash in hand and at bank 10,00,000 7,00,000 2,00,000 3,00,000 2,00,000 1,00,000 25,00,000 25,00,000 Y Co. Ltd. agreed to take over X Co. Ltd. on the following terms: (i) Each equity share in X Co. Ltd. for the purpose of absorption is to be valued at Rs. 80. (ii) Equity shares will be issued by Y Co. Ltd. by valuing its each equity share of Rs. 100 each at Rs. 120 per share. (iii) 11% Preference shareholders of X Co. Ltd. will be given 11% redeemable debentures of Y Co. Ltd. at equivalent value. (iv) All the Assets and Liabilities of X Co. Ltd. will be recorded at the same value in the books of Y Co. Ltd. (a) Calculate Purchase consideration. (b) Pass Journal entries in the books of Y Co. Ltd. for absorbing X Co. Ltd.
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