A Ltd. take over B Ltd. on April 01, 2006 and discharges consideration for the b

Question

A Ltd. take over B Ltd. on April 01, 2006 and discharges consideration for the business as follows: (i) Issued 42,000 fully paid equity shares of Rs. 10 each at par to the equity shareholders of B Ltd. (ii) Issued fully paid up 15% preference shares of Rs. 100 each to discharge the preference shareholders (Rs. 1,70,000) of B Ltd. at a premium of 10%. (iii) It is agreed that the debentures of B Ltd. (Rs. 50,000) will be converted into equal number and amount of 13% debentures of A Ltd.

With Calculation if any.

Explanation / Answer

purchase consideration :42000*10=420000

170000*110% =187000

total P.C =607000

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