Unit – IV Types of Corporate Restructuring

Corporate restructuring is an action taken by the corporate entity to modify its capital
structure or its operations significantly. Generally, corporate restructuring happens when a
corporate entity is experiencing significant problems and is in financial jeopardy.

Amalgamation:

The term amalgamation is used when two or more existing companies go into liquidation and a new companyis
formed to take over their business. The term absorption is used when one or more existing companies go into
liquidation & one existing company takes over or purchases their businesses. However this difference between
amalgamation & absorption has been dispensed with the Accounting Standard (AS-14) ‘Accounting for
Amalgamations’ issued by ICAI. Thus amalgamation means merging of one company with another company
or merging of two or more companies to form a new company or one company is taken over by the other.
Hence amalgamation includes absorption. In amalgamation the assets & liabilities of transferor company(ies)
are amalgamated with the transferee company.
AS-14 specifies the procedure of accounting for amalgamations and the treatment of any resultant goodwill or
reserves. The following terms are used in this standard with reference to amalgamation of companies.
a) Amalgamation means an amalgamation pursuant to the provisions of Companies Act, or any otherstatute,
which may be applicable to companies.
b) Transferor Company means the company, which is amalgamated into another company.
c) Transferee Company means the company into which Transferor Company is amalgamated.
d) Reserve means the portion of earnings, receipts or other surplus of an enterprise (whether capital or revenue)
appropriated by the management for a general or a specific purpose other than a provision for depreciation or
diminution in value of assets or for known liability.
Types of Amalgamation: Amalgamation for accounting purpose can be classified into two categories.
1. Amalgamation in the nature of merger and
2. Amalgamation in the nature of purchase.
Amalgamation in the nature of Merger: This is a type of amalgamation which satisfies all the following
conditions.
1. All the assets and liabilities of the transferor company become after amalgamation, the assets and liabilities
of the transferee company.
2. Shareholders holding not less than 90% of the face value of the equity shares of the transferor company
become equity shareholders of transferee company by virtue of the amalgamation.
3. The consideration for the amalgamation receivable by those equity shareholders of transferor company who
agree to become equity shareholders of the transferee company is discharged by the transferee company
wholly by issue of equity shares in transferee company except that cash may be paid for in respect of any
fractional shares.
4. The business of the transferor company is intended to be carried on by the transferee company.
5. No adjustment is intended to be made to the book value of the assets and liabilities of Transferor Company
when they are incorporated in the accounts of Transferee Company, except to ensure that the accounting
policies are uniform.
Amalgamation in the nature of Purchase: Amalgamation may be considered in the nature of purchase when
any one or more of the five conditions specified for amalgamation in the nature of merger is not satisfied. These
amalgamations which are in effect a mode by which one company acquires another company & hence the equity
shareholders of the combining entities do not continue to have a proportionate share in the equity of the combined
entity or the business of the acquired company is not intended to be continued after amalgamation.
Purchase Consideration: According to AS-14, purchase consideration for the amalgamations means the
aggregate of the shares & securities issued and the payment made in the form of cash or other assets by the
transferee company to the shareholders of the transferor company. Purchase consideration does not include the
amount of liabilities taken over by the transferee company or the amount paid directly to the creditors of the
transferee company. There are different methods in which consideration may be calculated:
1. Lump Sum method: This is the simplest method. The amount to be paid by Transferee Company as purchase
consideration may be stated in the problem as lump sum. In such case no calculation is required.For example
it may be stated that A Ltd. takes over the business of B Ltd. for Rs. 25,00,000. Hence thesum of Rs.
25,00,000 is purchase consideration.
2. Net Payment Method: Under this method, the purchase consideration is ascertained adding up the total
payments made by transferee in whatever form either in shares, debentures or in cash to the liquidator of the
transferor company for payment to equity shareholders and preference shareholders of the transferor
company. While ascertaining the purchase consideration, care should be taken of the following:
a) The value of assets and liabilities taken over by the transferee company are not to be considered.
b) The payments made by the transferee company for shareholders whether in cash or in shares or in
debentures must be taken into account.
c) Where the liabilities are taken over by the transferee company & subsequently discharged such amount
should not be added to purchase consideration.
d) When liabilities are taken over by transferee company they are neither deducted nor added to the
amount arrived at as purchase consideration.
e) Any payments made by transferee company to some other party on behalf of the transferor company
are to be ignored.
f) If the liquidation expenses of the transferor company are paid by the transferee company the same
should not be taken as a part of the purchase consideration.
g) If any liability is not taken over by the transferee the same should be excluded.
h) The term business will always mean both the Assets and Liabilities of the company.
3. Net Assets Method: Normally the net payment method is used to compute the purchase consideration.
However, it cannot be used if details of all payments are not available e.g. in case where the purchasing
company agrees to pay, say by way of 1,000 shares and the balance in cash, the purchase considerationis
determined by adding up the ‘agreed values of all assets taken over’ and deducting the ‘agreed value of all
liabilities taken over’. While determining the amount of purchase consideration under this method, care should
be taken of the following:
a) The term ‘Assets’ will always include cash in hand and cash at bank, unless otherwise stated but shall not
include any fictitious assets like preliminary expenses, underwriting commission, discount on issue of
shares or debentures, profit and loss account (debit balance), etc.
b) Asset not taken over by Transferee company should be excluded.
c) If there is goodwill or prepaid expenses, the same should be included in the assets taken over unless
otherwise stated.
d) The term ‘liabilities’ will mean all liabilities to third parties.
e) The term ‘trade liabilities’ will mean trade creditors and bills payable.
f) The term ‘liabilities’ shall not include any past accumulated profits and reserves such as general reserve,
reserve fund, sinking fund, dividend equalization fund, capital reserve, share premium account,capital
redemption reserve account, profit and loss account etc. These are payable to the shareholders and not to
the third parties.
g) If any fund or portion of any fund denotes liability to third parties the same must be included in Liabilities
such as staff provident fund, workmen’s savings bank account, workmen’s profit sharing fund, workmen’s
compensation fund (up to the amount of claim if any), etc.
h) If any liability is not taken over by the transferee the same should be excluded.
i) The term businesses will always means both the Assets and Liabilities of the Company.

4. Intrinsic worth/ Share Exchange Method: In this method, purchase consideration is ascertained on the basis
of the ratio in which the shares of the transferee company are to be exchanged for the shares of the transferor
company. The exchange ratio is generally determined on the basis of the intrinsic value of each company
shares.
Methods of Accounting for Amalgamations:
According to AS 14 there are two methods of accounting for amalgamations:
1. Pooling of Interests Method: This method issued in case of amalgamation in nature of merger. The
accounting is done in the following manner.
a. The assets, liabilities, profit & loss account and reserves (whether capital, revenue or revaluation reserves)of
the transferor company are recorded in the books of the transferee company at the same values and in the
same form as at the date of amalgamation. This reflects the fact that the entries are simply merged together.
No goodwill account should be accounted for.
b. If at the time of amalgamation, the transferor and transferee companies have conflicting accounting
policies, a uniform set of accounting policies should be adopted following amalgamation.
c. The difference between the amounts recorded as share capital issued (plus any additional consideration in the
form of cash or other assets) and the amount of share capital of Transferor Company should be adjusted
against reserves of Transferee Company.
2. Purchase Method: This method is used for amalgamation in nature of purchase. The application of
method involves the following:
a) The assets and liabilities of the transferor company should be incorporated in the books of transferee
company on the basis of their agreed values (i.e. either book values or the fair values).
b) The reserves (whether capital, revenue or revaluation reserves) of the transferor company other thanthe
statutory reserves should not be included in the financial statements of the transferee company.
c) Any excess of the purchase consideration over the value of net assets of the transferor company should
be treated as goodwill and debited to goodwill account. On the other hand if purchase consideration is
lower than the value of net assets acquired, the difference should be credited to capitalreserve. AS-14
recommends that goodwill arising on amalgamation should be amortized over a period of five years unless
a somewhat longer period can be justified.
d) No reserves, other than statutory reserves, of the transferor company should be incorporated in the
financial statements of the Transferee Company. Statutory reserves of
e) the transferor company should be incorporated in the balance sheet of the transferee company by way of
the following journal entry.
Amalgamation Adjustment A/c ................................... Dr.
To Statutory Reserves A/c
When the above statutory reserves will no longer be required to be maintained by transferee company,such
reserves will be eliminated by reversing the above entry.
Journal Entries in the Books of Transferor Company:
1 A 8 For Disposing assets not taken over by Transferee
ssets Transfer : Co
Realisation A/C Dr Cash / Bank A/C Dr
To Assets A/C To Realisation A/C
2 Transfer of Liabilities taken over by 9. For payment of liabilities not taken over by
. transferee company : Transferee company :
Liabilities A/c Dr Liabilities A/C Dr
To Realisation A/c To Cash / Bank A/C
3 Transfer preference share capital to 1 For liquidation expenses :
. preference share holder : 0 a. Paid by Transferor Company
Preference share capital A/C Dr Realisation A/C Dr
To preference share holder A/C To Cash / Bank A/C
4 Transfer of Equity Capital & Reserves : b. Paid by Transferee Company
. Equity Share Capital A/C Dr No Entry
Reserves & Surplus A/C Dr c. Paid first by Transferor and later recovered
Transferee Co A/C Dr.
To Equity Share holder A/C
To Cash A/C
Cash A/C Dr.
To Transferee Co A/C
 5. Transfer of Accumulated Losses or 11. Payment of Preference shareholders :
Fictitious Assets :
Equity Shareholders A/C Dr Preference share holder A/C Dr
To Accumulated Loss/Ficti. Assets To Equity/Pref Sh. in Transferee Co/ Cash /Bank A/C
A/C
6 For Purchase Consideration Due: 12 To close Realisation Accounts :
Transferee Company A/c Dr a In Case of Profit :
To Realisation A/C Realisation A/C Dr
To Equity share holder A/C
7 For Purchase Consideration received : b In Case of Loss :
Cash / Bank A/C Dr Equity share holder A/C Dr
Equity Shares / Preference Shares / Deb. To Realisation A/C
In Transferee Co A/C Dr
To Transferee Co A/C 13 Close Equity Share Holder Accounts :
Equity shareholders A/C Dr
To Equity share / Preference Share / Cash/Bank A/C

Journal Entries in the Books of Transferee Company

Amalgamation in Nature of Merger Amalgamation in Nature of Purchase
1. For taking over Business: 1. For taking over Business:
Business Purchase A/C Dr Business Purchase A/C Dr
To Liquidator of Transferor Company To Liquidator of Transferor Company A/C
A/C
2. For taking over Assets, Liabilities & 2. For taking over various Assets, Liabilities:
Reserves :
Assets A/C Dr Assets A/C Dr
Profit & Loss A/C Dr To Liabilities A/C
To Liabilities A/C To Business Purchase A/C
To Reserves A/C Note: The Difference between Net Assets and
To General Reserves / P& L A/c Purchase Consideration is to be adjusted to Goodwill
To Business Purchase A/C or Capital Reserve A/c
3. Payment of Purchase Consideration : 3. Payment of Purchase Consideration :
Liquidator of Transferor Company A/C Liquidator of Transferor Company A/C Dr
Dr
To Equity Share Capital / Preference To Shares / Cash / Bank / Debentures A/C
Capital To Securities Premium A/c
To Security Premium A/c
4. Discharging the liabilities taken over : 4. Discharging of any Liability taken over
Deb. / Other Liab. of Transferor Co. A/C Deb. / Other Liab. of Transferor Co. A/c Dr
Dr
To Debentures/ Cash /Shares A/C To Debentures / Cash / shares A/c
5. For any Formation Expense incurred : 5. For any Formation Expense incurred :
Preliminary Expense A/C Dr Preliminary Expense A/C Dr
To Cash / Bank A/C To Cash / Bank A/C
6. For payment of Liquidation / winding 6. For payment of Liquidation / winding up expense of
up
expense of Transferor Company : Transferor Company :
Profit & Loss A/C or Gen. Reserves A/c Goodwill / Capital Reserve A/c Dr
Dr
To Cash / Bank A/C To Cash / Bank A/C
7. For Maintaining statutory reserve of Transferor
Company
Amalgamation Adjustment A/C Dr
To Statutory Reserves A/C
 1. Following are the assets and liabilities of A LTd and B ltd as on 31st March 2022.
Liabilities A LTd B Ltd
Share capital ( Rs 10 per share ) 15,00,000 6,00,000
Securities premium 1,50,000
Capital Reserve 15,000
General Reserve 4,70,000
Profit and loss 1,89,360
10% Debentures (Rs 100 each) 2,00,000
Creditors 2,33,070 5,100
Total 25,42,430 8,20,100
Assets
Land and Building 5,60,000
Plant 9,42,000 3,60,000
Furniture 1,01,500 89,500
Stock 5,37,340, 2,52,410
Debtors 2,80,630 97,850
Cash at bank 1,20,960 20,340
Total 25,42,430 8,20,100
Other Information:
The two company’s agreed to amalgamate and form new company called G Ltd. Which takeover all assets and
liabilities of both companies on 1st April 2022.
The consideration is agreed at Rs 19,50,000 and Rs 6,80,000 for A ltd and B ltd resp. And the entire amount
being payable by G ltd in the form of its fully paid equity shares of Rs 10 each.
B Ltd’s 10% debentures are converted into identical number of G ltd’s 11% debentures for Rs 2,00,000. Expenses
of amalgamation amounting to Rs 15,000 are borne by G Ltd.
Pass journal entries and prepare important ledger accounts to close the books of A ltd and B Ltd. Also pass
journal entries in the books of G ltd and prepare its balance sheet immediately after the amalgamation.
Ex. 2
Case of Amalgamation, A ltd & B Ltd- Transferor Co. G Ltd- Transferee Co.
Amalgamation in nature of Merger

Purchase Consideration: (LUMPSUM METHOD)

Liquidator of A Ltd: Rs. 19,50,000
Liquidator of B Ltd: Rs. 6,80,000
Total Purchase Consideration Rs. 26,30,000

Mode of Payment:
Pooling of Interest Method:
Purchase Consideration Rs. 26,30,000
Existing Share Capital (Equity share Capital of A and B Ltd) Rs.
21,00,000 Difference to be adjusted against reserves and surplus of G ltd Rs. 5,30,000

Particulars Balance Available Balance Adjusted Remaining Balance

General Reserve 4,70,000 4,70,000 Nil
Profit and loss account 1,89,360 60,000 1,29,360 Cr. Bal.
Entries in Books of Gamma Ltd:
1. Business Purchase account ….Dr 26,30,000
To Liquidator of Alpha Ltd account 19,50,000
To Liquidator of Beta ltd. account 6,80,000
(Being Business Taken over )
2. Land and Building account ........................... dr 5,60,000
Plant account ................................................ dr. 13,02,000
Furniture account .......................................... dr. 1,91,000
Stock account................................................ dr. 7,89,750
Debtors account ............................................ dr. 3,78,480
Cash and Bank account ................................dr. 1,41,300
To 10% Debentures account 2,00,000
To creditors account 2,38,170
To Security Premium account 1,50,000
To capital Reserve 15,000
To Profit and Loss account 1,29,360
To Business Purchase account 26,30,000
(Being Asset and Liabilities and Reserves taken over)
3. Liquidator of Alpha Ltd account ................... dr 19,50,000
Liquidator of Beta ltd account ,...................... dr 6,80,000
To Equity share Capital account 26,30,000
(Being discharge of Purchase consideration to liquidator of
Transferor companies )
4. 10% Debentures account ............................ dr. 2,00,000
To 11% Debentures account 2,00,000
(Being Debentures of Beta ltd being discharged )
5. Profit and Loss account............................... dr. 15,000
To Cash and Bank account 15,000
(Being liquidation expenses)
1.Share Capital
Authorized Share Capital -
Issued and Paid Up Capital
2,63,000 equity shares of Rs. 10 each fully paid up 26,30,000
(All the above shares are issued for consideration other than Cash )
2.Reserves and Surplus
Security Premium account 1,50,000
Capital Reserve 15,000
Profit and Loss account (1,29,360-15,000) 1,14,360
Total 2,79,360
3.Long Term Liabilities
11% 2,000 Debentures of Rs.100 each 2,00,000
(Issued to Debenture holders of Alpha ltd)
Total 2,00,000
4. Trade Payables
Creditors 2,38,170
TOTAL 2,38,170
5. Tangible Assets
Land and Building account 5,60,000
Plant account. 13,02,000
Furniture account. 1,91,000
Total 20,53,000
6.Inventories
Stock 7,89,750
TOTAL 7,89,750
7. Trade Receivables
Debtors 3,78,480
Total 3,78,480
8.Cash and bank balance
Cash and bank balance (1,41,300-15,000) 1,26,300
Total 1,26,300
 BALANCE SHEET OF G LTD AS ON 1.4.2023
Equity and Liabilities
Shareholders Fund
Share Capital 1 26,30,000
Reserve & Surplus 2. 2,79,360

Non-Current Liabilities
Long Term Borrowing 3. 2,00,000

Current Liabilities
Trade Payable 4. 2,38,170
Total 33,47,530
Assets
Non-Current Assets
Fixed Assets
Tangible Assets 5. 20,53,000
Current Assets
Inventories 6. 7,89,750
Trade Receivables 7. 3,78,480
Cash and Cash Equivalents 8. 1,26,300
Total 33,47,530
Ledger Accounts in the Books of A Ltd.
Dr Cr
Realisation Account
To Land and Building account 5,60,000 By Creditors 2,33,070
To Plant account 942,000 By G ltd 19,50,000
To furniture 1,01,500 By Equity shareholders account 3,59,360
To stock account 5,37,340
To Debtors 2,80,630
To Cash and Bank 1,20,960

Total 25,42,430 Total 25,42,430

Equity Shareholders account
To Realisation account 3,59,360 By Equity share capital account 15,00,000
To equity shares in G ltd a/c 19,50,000 By Security Premium 1,50,000
By General Reserve 4,70,000
By Profit and Loss account 1,89,360
Total 23,09,360 Total 23,09,360
G Ltd Account
To realization account 19,50,000 By equity shares in G ltd 19,50,000
Total 19,50,000 Total 19,50,000

Ledger Accounts in books of B Ltd.

Realisation Account
To Plant Account 3,60,000 By 10% Debentures 2,00,000
To Furniture Account 89,500 By Creditors 5,100
To Stock Account 2,52,410 By G Ltd 6,80,000
To Debtors 97,850
To cash and bank 20,340
To Equity Shareholder Account 65,000
Total Total 8,85,100
Equity Shareholders account
Equity shares in G Ltd account 6,80,000 By Equity share Capital 6,00,000
By Capital Reserve 15,000
By Realisation account 65,000
Total 6,80,000 Total 6,80,000
 G Ltd Account
To Realisation account 6,80,000 By Equity shares in G ltd 6,80,000
Total 6,80,000 Total 6,80,000

2. A ltd and B ltd were amalgamated on 31st March 2022. A new company C ltd formed to take over the
business of the existing companies, their balance sheet as on 31st March 2022 stood as follows:
(Rs in Lakh)
Liabilities A ltd B Ltd
Equity share capital ( Rs 100 each fully paid up) 800 750
12% Preference shares of Rs 100 each 300 200
Revaluation Reserve 150 100
General Reserve 170 150
Export profit reserve 50 50
Profit and loss A/c 50 30
10% Debentures of Rs 100 each. 60 30
Sundry creditors 270 120
Bills payable 150 70
Total 2000 1500
Assets
Land and building 550 400
Plant and machinery 350 250
Investments 150 50
Stock 350 250
Debtors 250 300
Bills receivable 50 50
Cash and bank 300 200
Total 2000 1500
Additional information :
1. 10 % debentures holders of A ltd and B ltd are discharged by C ltd by issuing such number of its 15%
Debentures of Rs 100 each so as to maintain the same amount of interest.
2. Preference shareholders of both companies are issued equivalent number of 15 % preference shares of C tld
at price of Rs 150 per share (face value Rs 100).
3. C ltd will issue 5 equity shares for each equity shares of A ltd and 4 equity shares for each equity shares of
B ltd. The shares to be issued at Rs 30 each having face value Rs 10 per share.
4. Export profit reserve is to be maintained for next 5 years.
Prepare balance sheet of C tld after amalgamation.

Ex. 3
Transferee Co- C Ltd Transferor Co- A ltd and B ltd
Amalgamation in nature of Purchase
Working Note No.1
Purchase Consideration: (Net Payment Method)
(Rs. In lacs)
Claimant8 Mode of Payment A ltd (Rs) B ltd.(Rs)
12% Pref. Shareholders 3,00,000 15% Pref. Shares in C 450 -
ltd @ 150 each of Rs. 100 each
2,00,000 15% pref. shares in C - 300
ltd.@ 150 each of Rs. 100 each
Equity share holders Equity shares in C ltd.
- (8,00,000 x5) x 30 1,200
- (7,50,000 x4) x 30 900
Total 1,650 1,200
Total Purchase Consideration 2,850
Working Note No.2
Agreed Value of Debentures Taken over

A ltd. Existing Amount of Interest = 60,00,000x 10% = Rs

6,00,000Therefore Principal amount of Debentures at
15% yielding Interest of Rs, 6,00,000 = 6,00,000/15 x100 = Rs. 40,00,000

B ltd. Existing Amount of Interest = 30,00,000 x 10% = Rs.

3,00,000Therefore Principal amount of Debentures at
15% yielding Interest of Rs. 3,00,000 = 3,00,000/ 15 x 100 = Rs.20,00,000
Working Note No.3

1 Asset taken over (A+B) (Rs in Lacs)

Land and Building 950
Plant and Machinery 600
Investment s 200
Stock 600
Debtors 550
Bills Receivable 100
Cash and Bank 500
Total (a) 3,500
2 Less Liabilities taken over
10% Debentures (40+20) 60
Sundry Creditors 390
Bills Payable 220
Total (b) 670
Net Assets (a-b) 2,830
3 Purchase Consideration 2,850
PC > NA = Goodwill (2,850-2830) 20

Entries in Books of C ltd (Rs. Lacs)

1. Business Purchase Account ….Dr 2,850
To Liquidator of A ltd account 1,650
To Liquidator of B ltd Account 1,200
(Being Business taken over )
2 Land and Building a/c ….. Dr. 950
Plant and Machinery a/c ….. Dr. 600
Investment s a/c ….. Dr. 200
Stock a/c ….. Dr. 600
Debtors a/c ….. Dr. 550
Bills Receivable a/c ….. Dr. 100

Cash and Bank a/c ….. Dr. 500

Goodwill a/c ….. Dr. 20
To 10% Debentures a/c 60
To sundry Creditors a/c 390
To Bills Payable a/c 220
To Business Purchase a/c 2,850
(Being Assets and Liabilities taken over )
3. Liquidator of A ltd a/c …. Dr 1,650
Liquidator of B ltd account …Dr 1,200
To 15% Preference Share Capital (500000 x 100) 500
To Equity Share Capital ( 70,00,000 x 10) 700
To Security Premium (250+1400) 1,650
(Being P.C discharged )
4 10% Debentures account … Dr. 60
To 15% Debentures account 60
(Being Debentures of A ltd and B ltd. Discharged)
5. Amalgamation Adjustment a/c …..Dr 100
To Export Profit Reserve 100
(Being Statutory Reserve maintained for 5 years)
Notes: (Rs. In lakhs)
1.Share Capital
Authorized Share Capital -
Issued and Paid Up Capital
70,00,000 equity shares of Rs. 10 each fully paid 700
15% 5,00,000 Preference Shares of Rs. 100 each fully paid 500
(All of the above shares are issued for consideration other than cash ) 1,200
Total
2.Reserves and Surplus
Security Premium 1,650
Export Profit Reserve 100
Total 1,750
3.Long Term Liabilities
15% 60,000 Debentures of 100 each 60
Total 60
4. Trade Payables
Creditors 390
Bills Payable 220
Total 610
5. Tangible Assets
Land and Building account 950
Plant account. 600
.Total 1,550
6. Intangible Assets
Goodwill 20
Total 20
7. Non-current Investment
Investments 200
Total 200
8. Other Non-current Assets
Amalgamation Adjustment Account 100
Total 100
 9.Inventories
Stock 600
TOTAL 600
10. Trade Receivables
Debtors 550
Bills Receivable 100
Total 650
11.Cash and Cash Equivalents
Cash and bank balance 500
Total 500
Balance Sheet of C ltd as on 1.4.2023
Equity and Liabilities
Shareholders Fund
Share Capital 1 1,200
Reserve & Surplus 2. 1,750

Non-Current Liabilities
Long Term Borrowing 3. 60

Current Liabilities
Trade Payable 4. 610
Total 3,620
Assets
Non-Current Assets
Fixed Assets
Tangible Assets 5. 1,550
Intangible Assets 6. 20
Non-Current Investment 7. 200
Other Non-current Assets 8. 100
Current Assets
Inventories 9. 600
Trade Receivables 10. 650
Cash and Cash Equivalents 11. 500
Total 3,620
Ledger Accounts in Books of A ltd
Realisation Account
To Land and Building a/c 550 By 10% Debentures a/c 60
To Plant and Machinery a/c 350 By Creditors a/c 270
To Investments a/c 150 By Bills Payable a/c 150
To stock a/c 350 By C ltd a/c 1,650
To Debtors a/c 250 By Equity Share holders a/c 20
To bills receivables a/c 50
TO Cash and Bank balance a/c 300
To 12% Pref. shareholders a/c 150
Total 2,150 Total 2,150
Equity Shareholders account
To Realisation a/c 20 By Equity Share Capital a/c 800
To equity shares in C ltd a/c 1200 By Revaluation Reserve a/c 150
By General Reserve a/c 170
By Export Profit Reserve a/c 50
By Profit and loss account a/c 50
1220 1,220
12% Preference Shareholders account
To 15% Pref.Shares in C ltd a/c 450 By 12% Pref. Share Capital a/c 300
By Realization a/c 150
450 450
 C Ltd. Account
To Realisation account 1,650 By 15% Pref. Sh in C ltd a/c 450
By equity shares in C Ltd.a/c 1,200
Total 1,650 Total 1,650

Note: The study material is not exhaustive. The questions are given to save time in dictation.
Students are required to refer reference books.