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Amalgamation query on Debentures discharged

Can anyone pass me the journal entry for this: (K & L amalgamate to form LK Ltd.) Given in Balance Sheet in books of K Ltd: 5% Debentures 2,00,000 Given in Additional Information: Issue of such amount of fully paid 6% debentures in LK Ltd as is sufficient to discharge the 5% debentures in K Ltd at a discount of 5% after takeover. an explanation would be even greater. thanks in advance.

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Kumarjit Dey

Kumarjit Dey

CA Inter

4K+

06-Nov-20

98

Answers (5)

5% Debentures 200000 To 6% Debentures 190000 To Capital Reserve/Goodwill 10000


Suraj Lakhotia

Suraj Lakhotia

Admin

07-Nov-20

Suraj Lakhotia Admin

5% Debentures 200000 To 6% Debentures 190000 To Capital Reserve/Goodwill 10000

Then, Sir, why has Institute computed Pyrchase Consideration (Net Assets Taken Over) deducting debentures 2 Lacs? Shouldn't it be Rs 190000 as thats the worth discharged to debentureholders of transferor?


Thread Starter

Kumarjit Dey

Kumarjit Dey

CA Inter

4K+

07-Nov-20

Discharge at discount is after takeover.


Suraj Lakhotia

Suraj Lakhotia

Admin

09-Nov-20

Suraj Lakhotia Admin

Discharge at discount is after takeover.

Sir, I did not quite follow this. Can you kindly elaborate?


Thread Starter

Kumarjit Dey

Kumarjit Dey

CA Inter

4K+

10-Nov-20

Thread Starter

Kumarjit Dey

Sir, I did not quite follow this. Can you kindly elaborate?

For selling company, valuation is at 100%. Later settled at 5% discount.


Suraj Lakhotia

Suraj Lakhotia

Admin

10-Nov-20

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