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What this sentence means"debt due to x Ltd is also to be discharged in shares of xy LTD , discharged means that. Trade receivabke will not take place in xy Ltd? What is the treatment if that sentence is not given ? Please help me with this
Answers (31)
Best Answer
Thread Starter
venkatesh sundharamoorthyYou said that Loan from x Alc dr To xy Ltd A/c What will be the incorporation entries in the books of xy ltd
Yes this entry can be passed in the absence of info. Now how will Y ltd. pay XY Ltd. is missing in question. There is too much missing info in the question, so unnecessary to think over what shall be entries as not asked for.
That sentence mean that loan given by X Ltd. To Y Ltd. will be discharged(to repay) by XY Ltd. In the form of shares. If that sentence is not given u should take that loan should be taken into realisation a/c. After that if u r asked to give journal entries in the XY Ltd. Also in that after incorporarion entry u should cancel that I ter owing debts
Thread Starter
venkatesh sundharamoorthyIf that trade receivabke separately settled ,why there was need inter company transaction
If setteled, then no need for inter company owings
Thread Starter
venkatesh sundharamoorthyOhh ,then what will happen to trade payable in y ltd
It's not trade payable ji. It is loan seperately given in balnace sheet. Check it
Thread Starter
venkatesh sundharamoorthyIt's loan ok, but it is payable to x Ltd only
Haa yes ji. In that case that loan a/c in YLtd. Also will be cancle. Entry will be Loan from XLtd. a/c. Dr To shares in XY LTd. a/c
Likhitha Sivani
Haa yes ji. In that case that loan a/c in YLtd. Also will be cancle. Entry will be Loan from XLtd. a/c. Dr To shares in XY LTd. a/c
If you don't mind can you please send me , incorporation entries in XY LTD
Thread Starter
venkatesh sundharamoorthyWhat is the treatment for loan from x Ltd (in yltd balance sheet) becoz we already discharged that loan to y ltd then how can we remove loan from X ltd after incorporation
In question we will be asked XY Ltd. Balance sheet. They won't ask Y Ltd. Balance sheet seperately because Y Ltd. Also going to merge in XY Ltd. In any question, they r asking only ledger accounts in selling companies. So, in the XY Ltd. Balance sheet both laon from XLtd and laon to YLtd will be cancelled they won't come in balance sheet in the share capital 15000 value shares will be included
Thread Starter
venkatesh sundharamoorthyIf you don't mind can you please send me , incorporation entries in XY LTD
K I will send but tbe problem is they didn't give any information about y ltd
Thread Starter
venkatesh sundharamoorthyIf you don't mind can you please send me , incorporation entries in XY LTD
To find out the purcahse consideration there is no information for y ltd so I think we can't write incorporation entries.
Likhitha Sivani
To find out the purcahse consideration there is no information for y ltd so I think we can't write incorporation entries.
It is assumed to be net assets basis ,and that sentence tells that all settlement are done in shares ,why don't. You understand that
Likhitha Sivani
Haa yes net assets only I know
Good conversation. Thanks for adding value to the thread Likhitha. What's your pending doubt Venkatesh?
Sahibdeep Singh
Good conversation. Thanks for adding value to the thread Likhitha. What's your pending doubt Venkatesh?
Can we write journal entries y ltd and draw XY Ltd balnace sheet with tha information given in question sir?
Likhitha Sivani
Can we write journal entries y ltd and draw XY Ltd balnace sheet with tha information given in question sir?
Not in Y Ltd., we don't know at what value assets etc. were taken. So, pls don't bother on this aspect. However, Based on assumption, they were taken at book values, we may draw up as usual. For long-term borrowings that XY ltd. is paying on behalf of Y Ltd. to X Ltd. we can give credit to XY Ltd. in books of Y Ltd by entry Loan from X Ltd. to XY Ltd.
Sahibdeep Singh
Good conversation. Thanks for adding value to the thread Likhitha. What's your pending doubt Venkatesh?
Sir ,I think that sentence is just saying purchase consideration is settled by shares( that word also ) If not Then the entries in xltd , share capital in xy A/ c dr To loan to y A/c Share holder alc dr To share capital alc Entries in XY ltd Loan from x Ltd alc dr Sahre capital alc Is this what your saying right?
Thread Starter
venkatesh sundharamoorthyThis is how I solved that qn ,please check it whether I am right or wrong
Did you compare the solution with ICAI?
Thread Starter
venkatesh sundharamoorthyThis is how I solved that qn ,please check it whether I am right or wrong
For books in X Ltd, shares that it is getting in place of loan given to Y ltd. will not form a part of purchase consideration. Reason - it is specifically given in the question that XY Ltd. is taking over sundry assets and trade payables only. So, purchase consideration will be Rs.75,000 as given in ICAI SM. Same as I mentioned above in books of Y Ltd. borrowings is to be separately treated, it will not go to Realisation A/c
Sahibdeep Singh
Not in Y Ltd., we don't know at what value assets etc. were taken. So, pls don't bother on this aspect. However, Based on assumption, they were taken at book values, we may draw up as usual. For long-term borrowings that XY ltd. is paying on behalf of Y Ltd. to X Ltd. we can give credit to XY Ltd. in books of Y Ltd by entry Loan from X Ltd. to XY Ltd.
You said that Loan from x Alc dr To xy Ltd A/c What will be the incorporation entries in the books of xy ltd
Sahibdeep Singh
Yes this entry can be passed in the absence of info. Now how will Y ltd. pay XY Ltd. is missing in question. There is too much missing info in the question, so unnecessary to think over what shall be entries as not asked for.
Finally now I'm cleared , thank you sir and thanks to likihita