Fm Business Restructuring New Problems + Solution With Xtra Pro. (New Syllabus)

8/3/2019 Fm Business Restructuring New Problems + Solution With Xtra Pro. (New Syllabus)

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(Q.1) Shashi Ltd.

Balance Sheet as on 30.09.10 (Rs. in Crore)

Liabilities Rs. Assets Rs.

Share Capital

Profit & Loss A/c

Bank LoanCreditors

40

20

3020

Land and Building

Plant and Machinery

StockDebtor

Cash / Bank

50

20

1020

10

110 110

Sunanda Ltd.

Balance Sheet as on 30.09.10 (Rs. in Crore)


Share Capital

Profit & Loss A/c

10% DebenturesCreditors

30

20

3010

Land and Building

Plant and Machinery

FurnitureStock

DebtorCash

30

20

1010

1010

90 90

Land & Building of Sunanda Ltd. is to be appreciated by 100%, & Plant and Machinery to be

depreciated by 50%

Calculate:-

1. Shashi Ltd. will issue shares to Sunanda Ltd. at premium of 60. Calculate:- (a) Purchase

Consideration (b) B/s of Shashi Ltd. after Takeover.

2. Shashi Ltd. will Issue 1,50,000 Shares of Rs.10 each at a premium of Rs. 60 each. Calculate

(a) Purchase Consideration (b) B/s of Shashi Ltd. after Takeover.

3. Shashi Ltd. & Sunanda Ltd. will merge to form a new company Taroor Pushkar Ltd., Prepare B/s

after merger. Shares will be issued to both companies at a premium of Rs. 10 each

Q.1 Solution:-

1 A) Calculation of Purchase Consideration:-

Net Asset Method

Particulars Rs.

Asset taken over at agreed value :-

Land & Building

Plant & MachineryFurniture

Stock

DebtorsCash

(i)

60

1010

10

1010

110

Less :- Liabilities T/o at agreed value:-10% Debentures

Creditors

(ii)

30

10

40

Purchase Consideration (i ii) 70


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Discharge of Purchase consideration

Issue Price = F.V + Premium= 10 + 60

= 70

No. of Shares of Shashi Ltd. to be issued

icePrIssue

C.P

=70

70

= 1 Crore Shares

1 B) Balance Sheet of Shashi Ltd. after Takeover:-

Liabilities Rs. Asset Rs.

Share Capital (4 + 1) x 10Profit and Loss A/c

Share Premium (1 x 60)

10% Debentures

Bank LoanCreditors (20 + 10)

5020

60

30

3030

Land and Building (50 + 60)Plant & Machinery (20 + 10)

Furniture (0 + 10)

Stock (10 + 10)

Debtor (20 + 10)Cash / Bank (10 + 10)

11030

10

20

3020

220 220

2 A) Calculation of Purchase Consideration:-Net Payment Method:-

1.5 crore shares issues at Rs.70 = 105I.P = F.V + Prem.

= 10 + 60

= 70

Calculation of Goodwill / Capital Present

Particulars Rs.

Asset taken over at agreed value :-Land & Building

Plant & Machinery

FurnitureStock

Debtors

Cash(i)

60

10

1010

10

10

110

Less :- Liabilities T/o at agreed value:-

10% DebenturesCreditors

(ii)

3010

40

Net Turnover Asset (i ii) 70

Purchase Consideration 105

Excess of P.C over Net asset T/o i.e. goodwill 35


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2 B) Balance Sheet of Shashi Ltd. after T/o:-

Liabilities Rs. Asset Rs.

Share Capital

(4 + 1.5) x 10

Profit and Loss A/cShare Premium (1.5 x 60)

10% Debentures (0 + 30)Bank Loan (30 + 0)

Creditors (20 + 10)

55

2090

3030

30

Goodwill

Land and Building (50 + 60)

Plant & Machinery (20 + 10)Furniture (0 + 10)

Stock (0 + 10)Debtor (20 + 10)

Cash / Bank (10 + 10)

35

110

3010

2030

20

255 255

3. Calculation of Purchase Consideration

Net Asset Method

Particulars Rs. Rs. Rs.

Asset taken over at agreed value :-

Land & BuildingPlant & MachineryFurniture

Stock

Debtors

Cash(i)

5020-

10

20

10

601010

10

10

10

1103010

20

30

20

110 110 220

Less :- Liabilities T/o at agreed value:-

10% DebenturesBank Loan

Creditors

(ii)

-30

20

30-

10

3030

30

50 40 90Purchase Consideration (i ii) 60 70 130

Discharge by issue of Shares of TP

Ltd.icePrIssue

C.P

20

60

20

70

20

130

= 3 Crore = 3.5 Crore = 6.5 Crore

Balance Sheet of T.P. Ltd.


6.5 Crore Shares of Rs.10 each

Share Premium (6.5 x 10)10% debentures

Bank Loan

Creditors

65

6530

30

30

Land & Building

Plant & MachineryFurniture

Stock

DebtorsCash / Bank

110

3010

20

3020

220 220


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(Q.2) Calculate the amount of purchase consideration payable by Mini Limited to Maxi Limited. The

Balance Sheet of Maxi Limited as on March 31, 2010 is as follows :


Equity Share Capital

(Shares of Rs.10)

8% Pref. Share Capital(Shares of Rs.10)

Capital ReserveGeneral Reserve

Profit & Loss A/c

7.5% Debentures (Rs. 100 each)

Sundry CreditorsOutstanding expenses

1,50,000

60,000

8,00014,000

3,000

30,000

12,0008,000

Goodwill

Land

BuildingMachinery

InvestmentStock

Debtors

Cash & Bank

Preliminary Expenses

30,000

35,000

40,0001,00,000

25,00024,000

15,000

13,000

3,000

2,85,000 2,85,000

Mini Limited decided to take over Maxi Limited by issuing 6 Equity Shares of Rs. 10 each fullypaid and Rs. 6.50 in cash for every 5 Equity Shares held in Maxi Ltd. The Preference

Shareholder are to be paid at premium of 15% by issue of 10% Preference Share in Mini Ltd.Debentureholders of Maxi Ltd., will be paid 9.5% Debentures of Mini Ltd. for equal value.Realisation expenses of Rs. 7,500 are to be borne and paid by Mini Ltd. to Maxi Ltd.

Q.2 Solution:-

Calculation of Purchase Consideration:-

Particulars Amount

Equity Shares in Mini Ltd.

Home Get5 Rs.6

15,000 ?

= 18,000 Shares x 10 1,80,000Cash

Home Get5 Rs.6.50

15,000 ?

10% Pref. Shares in Mini Ltd. (60,000 + 9,000)

19,500

69,000

P.C 2,68,500

I.P = F.V + Prem.

= 10 + 0= 10

Payment x debentures holders and realisation expenses are not to be considered in calculation ofpurchase consideration (AS 14)

(Q.3) Homer Ltd. and Illiad Ltd. propose to amalgamate.

Goodwill may be taken at Rs. 96,000 for Homer Ltd. and Rs. 38,000 for Illiad Ltd. The Stock ofHomer Ltd. and Illiad Ltd. to be taken at Rs. 2,04,000 and Rs. 1,42,000 respectively. You are

required to find out the purchase consideration receivable by both the companies on the basis of

the Net Assets Method.


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Their financial position as on December 31, 2009 were :

LiabilitiesHomer

Rs.

Illiad

Rs.Assets

Homer

Rs.

Illiad

Rs.

Share Capital

Equity Shares of Rs.10 each

Reserves & Surplus:General Reserve

Profit & Loss A/c

Current Liabilities :

Creditors

5,00,000

2,00,000

1,00,000

1,00,000

2,00,000

20,000

30,000

50,000

Fixed Assets

(at cost less depreciation)

InvestmentCurrent Assets :

StockDebtors

Cash & Bank

4,00,000

1,00,000

2,00,0001,70,000

30,000

1,00,000

-

1,30,00060,000

10,000

9,00,000 3,00,000 9,00,000 3,00,000

Q.3) Solution:-

Net Asset Method:-

Particulars Homer Illiad Total

Asset taken over at agreed value :-Fixed AssetsInvestments

Stock

Debtors

Cash & BankGoodwill

(i)

4,00,0004,00,000

2,04,000

1,70,000

30,00096,000

1,00,000-

1,42,000

60,000

10,00038,000

5,00,0001,00,000

3,46,000

2,30,000

40,0001,34,000

10,00,000 3,50,000 13,50,000

Less :- Liabilities T/o at agreed value:-Creditors

(ii)

1,00,000 50,000 1,50,000

1,00,000 50,000 1,50,000

Purchase Consideration (i ii) 9,00,000 3,00,000 12,00,000

EXTRA PRACTISE PROBLEMS:-

(Q.4) Chaitanya Limited is absorbed by New Wave limited. Following re the Balance Sheets of the

above two companies as on 31st

March, 2010. (Mum, Apr. 96, adapted)

Capital & LiabilitiesChaitanya

Ltd. Rs.

New Wave

Ltd. Rs.Assets

Chaitanya

Ltd. Rs.

New Wave

Ltd. Rs.

Share Capital :

Paid up Shares Capital10,000 Equity Shares of

Rs. 100 each Rs. 70

paid up1,00,000 Equity Sharesof Rs.100 each Rs. 75

per Share paid up

Reserves FundProfit & Loss A/c

Sundry Creditors

7,00,000

-

8,50,0003,00,000

2,00,000

-

75,00,000

22,00,0002,00,000

1,80,000

Sundry Assets

Cash in hand

20,30,000

20,000

98,10,000

2,70,000

20,50,000 1,00,80,000 20,50,000 1,00,80,000


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It was decided that the holder of every three shares in Chaitanya Limited was to receive five

shares in New Wave Limited, plus as much cash as is necessary to adjust the rights ofShareholders of both the companies in accordance with the intrinsic value of shares as per

respective balance sheets.

Calculate amount of purchase consideration and show how it will be discharged.

(Q.5) (A) X Ltd., the purchasing company agrees to issue two shares of Rs. 100 each, Rs. 80 paid up

for every 3 shares in the Y Ltd., the vendor company. Find out the number and amount of sharesto be issued by the purchasing company if the vendor company has Rs. 3,00,000 paid-up Capital

Rs. 100 each, Rs. 50 paid up.

(B) A purchasing company agrees to issue two shares of Rs. 100 each, Rs. 75 paid up (quoted inthe market at Rs. 120) for every three shares held in the vendor company. Find the number and

amount of shares to be issued by the purchasing company if the vendor company has Rs.

3,00,000 paid-up capital of Rs. 100 each, Rs. 50 paid up (quoted in the market at Rs. 50).

(Q.6) B Co. Ltd had the following Balance Sheet as on 31st March 2010 :

B CO. LTDLiabilities Rs. Assets Rs.

Share Capital :50,000 Shares of Rs.100 each

Capital Reserve

General ReserveUnsecured Loans

Sundry Creditors

Provisions for Taxation

50,00,000

10,00,000

36,00,00022,00,000

42,00,000

11,00,000

Fixed Assets

Current Assets

Investment

Goodwill

83,00,000

69,00,000

17,00,000

2,00,000

1,71,00,000 1,71,00,000

B Co. Ltd. is absorbed by Beesons Limited as on 31st

March 2004, on which date the Balance

Sheet of Beesons Limited is as follows :BEESONS LIMITED


Share Capital :

8,00,000 Shares of Rs.10 eachGeneral Reserve

secured Loans

Sundry CreditorsProvisions for Taxation

Provisions for Dividend

80,00,0001,00,00,000

40,00,000

46,00,00052,00,000

10,00,000

Fixed Assets

Current Assets

1,60,00,000

1,68,00,000

3,28,00,000 3,28,00,000

For the purpose of the absorption the goodwill of B Co. Ltd. is considered valueless. There arealso arrears of depreciation in B Co. Ltd. amounting to Rs. 4,00,000. The shareholders in B Co.

Ltd. are allotted, in full satisfaction of their claims, shares in Beesons Limited in the same

proportion as the respective intrinsic values of the shares of the two Companies bear to oneanother.

Calculate Purchase Consideration and Prepare the opening Balance Sheet of Beesons Limited

after absorption.

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Fm Business Restructuring New Problems + Solution With Xtra Pro. (New Syllabus)