Amalgamation and External Reconstruction Question Bank [BCOM 2nd Sem CBCS Pattern 2023]

Amalgamation and External Reconstruction Question Bank

[BCOM 2nd Sem CBCS Pattern 2023]

In this post you will get Amalgamation and External Reconstruction Question Bank for BCOM 2nd SEM CBCS Pattern. In this Question Bank we will cover Questions asked in the following universities exam:

– Dibrugarh University 

– Gauhati University

– Assam University

2022: 6. (a) Following are the Balance Sheets of Reny Ltd. and Moni Ltd. as at 31^st March, 2022:

	Reny Ltd. Rs. (‘000)	Moni Ltd. Rs. (‘000)
I. Equity and Liabilities 1. Shareholders’ Funds: (a) Share Capital: (i) Equity Share Capital (Rs. 10 each) (ii) 12% Preference Share Capital (Rs. 10 each) (b) Reserves and Surplus: (i) General Reserve (ii) Statutory Reserve (iii) Surplus 2. Non-Current Liabilities 14% Debentures 3. Current Liabilities	24,000 –   13,800 1,200 1,700   – 4,300	9,000 3,000   2,900 400 1,080   750 2,970
	45,000	20,100
II. Assets: 1. Non-Current Assets Fixed Assets 2. Current Assets	33,000 12,000	14,200 5,900
	45,000	20,100

On 1^st April, 2022, Reny Ltd. takes over Moni Ltd. on the following terms:

(1) Reny Ltd. will issue 10,50,000 Equity Shares of Rs. 10 each at par to the Equity Shareholders of Moni Ltd.

(2) Reny Ltd. will issue 33,000, 12% Preference Shares of Rs. 100 each at par to the Preference Shareholders of Moni Ltd.

(3) Debentures of Moni Ltd. will be converted into equal number of 15% Debentures of the same denomination.

You are informed that statutory reserves of Moni Ltd. are to be maintained for three years.

You are required to give necessary Journal Entries in the books of Reny Ltd. and show the Balance Sheet of Reny Ltd. assuming that amalgamation in the nature of merger.           5+6=11

1. (2014. 2017, 2018 old course) A Ltd. And B Ltd. Decided to amalgamate and a new company named AB Ltd. is formed to take over both the companies as on 31^st March, 2018. The following are the Ledger balances of the companies as on that date:

Credit Balances	A Ltd.	B Ltd.	Debit Balances	A Ltd.	B Ltd.
Share Capital: (Shares of Rs. 10 each Fully paid-up) Reserve Fund Profit & Loss A/c Dividend Equalization Fund Workmen Compensation Fund Bank Overdraft Sundry Creditors Bills Payable	5,00,000 2,00,000 30,000 – 20,000 – 90,000 50,000	3,00,000 1,50,000 50,000 1,00,000 – 50,000 1,10,000 30,000	Goodwill Land and Buildings Plant and Machinery Patents and Trade Mark Stock Sundry Debtors Bills Receivables Cast at Bank	1,00,000 2,50,000 2,00,000 – 2,00,000 90,000 – 50,000	80,000 1,90,000 2,55,000 52,500 1,50,000 40,000 20,000 2,500
	8,90,000	7,90,000		8,90,000	7,90,000

Pass Journal Entries and prepare the Balance Sheet of AB Ltd. Assuming that amalgamation is done in the nature of purchase.         6+5=11

2. (2016) X Ltd. and Y Ltd. decided to amalgamate and a new company XY Ltd. is formed to take over both the companies as on 31^st March, 2016. The following are the Balance Sheets of the companies as on that date:

Liabilities	X Ltd.	Y Ltd.	Assets	X Ltd.	Y Ltd.
Share Capital: Shares of Rs. 10 each fully paid Reserve fund Profit & Loss A/c Dividend Equalization Fund Workmen Compensation fund Bank Overdraft Sundry Creditors Bills Payable	5,00,000 2,00,000 30,000 – 20,000 – 1,00,000 50,000	3,00,000 1,50,000 50,000 1,00,000 – 50,000 1,20,000 30,000	Goodwill Land and Buildings Plant and Machinery Patents and Trade Mark Stock Sundry Debtors Bills Receivable Cash at Bank	1,00,000 2,50,000 2,00,000 – 2,00,000 1,00,000 – 50,000	80,000 1,90,000 2,55,000 52,500 1,50,000 50,000 20,000 2,500
	9,00,000	8,00,000		9,00,000	8,00,000

Show how the amount payable to each company is arrived at the prepare the amalgamated Balance Sheet of XY Ltd. assuming amalgamation is done in the nature of purchase.

3. (2004, 2015 old course) The summarized Balance Sheet of Ranjan Ltd. as on 31^st March, 2013 was as follows:

Liabilities	Rs.	Assets	Rs.
Shares of Rs. 10 fully paid General Reserve Profit & Loss A/c 12% Debentures Creditors	6,00,000 1,70,000 1,10,000 1,00,000 20,000	Goodwill Land and Buildings & Plant Stock Debtors Cash	1,00,000 6,40,000 1,68,000 36,000 56,000
	10,00,000		10,00,000

Anjan Ltd. agreed to absorb the business of Ranjan Ltd. with effect from 1^st April, 2013. The purchase consideration payable by Anjan Ltd. was agreed as follows:

1) A cash payment equivalent to Rs. 2.50 for every Rs. 10 shares in Ranjan Ltd.

2) The issue of 90000 equity shares of Rs. 10 each fully paid in Anjan Ltd. having an agreed value of Rs. 15 per share.

3) The issue of such an amount of fully paid 14% debentures in Anjan Ltd. at Rs. 96 per debenture as is sufficient to discharge 12% debentures in Ranjan Ltd. at a premium of 20%. While computing purchase consideration, Anjan Ltd. valued Land, Building and Plant at Rs. 12,00,000, stock Rs. 1,42,000 and Debtors at their face valued subject to a reserve of 5% for doubtful debts. The cost of liquidation of Ranjan Ltd. was Rs. 5,000.

i. Prepare Realization A/c in the books of Ranjan Ltd.            4

ii. Pass Journal Entries in the books of Anjan Ltd.                   8

4. (2012) Following is the balance sheet of P Ltd. As at 31^st March, 2011:

Liabilities	Amount	Assets	Amount
Share capital: Issued and paid up 250000 Equity Share of Rs. 10 each, 8 per share paid up 100000, 10% Pref. share of Rs 10  Reserve and Surplus: General Reserve Profit and Loss Account Current Liabilities: Creditors Workmen’s Profit Sharing Fund	20,00,000 10,00,000 6,00,000 8,00,000 4,00,000 3,00,000	Fixed Assets: Goodwill Building Plant and Machinery Current Assets: Stock Sundry Debtors Bank Balance Miscellaneous Exp: Preliminary Expenses	8,00,000 7,00,000 13,00,000 7,00,000 9,00,000 6,60,000 40,000
	51,00,000		51,00,000

Q Ltd deicide to absorb the business of P Ltd. At the respective book value of assets and trade liabilities except Building which was valued at Rs. 1200000 and Plant & Machinery at Rs. 1000000. The purchase Consideration was payable as follows:

(i) Assumption of trade liabilities at book value.

(ii) Payment of liquidation expenses Rs. 5000 and Workmen’s Profit Sharing Fund at 10% premium.

(iii) Issue of equity share of 10 each fully paid at Rs. 11 per share for every Preference share and every equity share of P Ltd and a payment of 4 per equity share in cash.

Calculate the Purchase consideration and show the Realisation Account Share Accounts in the book of P Ltd. And Opening Journal Entries in the books of Q Ltd.

5. (2010, 2004 Hons) X Ltd. and Y Ltd. decided to amalgamate and a new company XY Ltd. is formed to take over both the companies as on 31^st March, 2016. The following are the Balance Sheets of the companies as on that date:

Liabilities	X Ltd.Rs.	Y Ltd.Rs.	Assets	X Ltd.Rs.	Y Ltd.Rs.
Share Capital: Shares of Rs. 10 each fully paid Reserve fund Profit & Loss A/c Dividend Equalization Fund Workmen Compensation fund Bank Overdraft Sundry Creditors Bills Payable	5,00,000 2,00,000 30,000 – 20,000 – 1,00,000 50,000	3,00,000 1,50,000 50,000 1,00,000 – 50,000 1,20,000 30,000	Goodwill Land and Buildings Plant and Machinery Patents and Trade Mark Stock Sundry Debtors Bills Receivable Cash at Bank	1,00,000 2,50,000 2,00,000 – 2,00,000 1,00,000 – 50,000	80,000 1,90,000 2,55,000 52,500 1,50,000 50,000 20,000 2,500
	9,00,000	8,00,000		9,00,000	8,00,000

Show how the amount payable to each company is arrived at the prepare the amalgamated Balance Sheet of XY Ltd. assuming amalgamation is done in the nature of purchase.

6. (2007, 2008) The following are the balance sheet of Bata Ltd as at 31^st March 2003

Liabilities	Rs.	Assets	Rs.
Share Capital: 24000 Shares of Rs. 10 Sundry Creditors Bank Loan	240000 60000 52000	Building Machinery Stock Debtors	200000 80000 30000 42000
	352000		352000

The company went into liquidation and the assets were sold to Liberty Company Ltd. For Rs. 292000. The consideration was payable as follows:

a) Rs. 114000 in cash (which sufficed to discharge the liabilities and to pay the cost of winding up Rs. 2000) and

b) the balance Rs. 180000 by the allotment of 24000 shares of Rs. 10 each, Rs. 7.50 per share paid up to Bata Company Ltd.  Close the books of Bata Company Ltd

7. (2006) Radha Co Ltd and Shyam Co. Ltd entered into an agreement for amalgamation to form ‘Radheshyam Co/ Ltd’ as on 31^st March 2005. Their respectively Balance Sheets on That date were as under:

Liabilities	RadhaLtd	Shyam Ltd	Assets	Radha Ltd	Shyam Ltd
Share Capital: Share of Rs. 10 each fully paid	1000000	2000000	Goodwill	200000	400000
Capital Reserve	400000		Land & Building	400000	200000
General Reserve	200000	100000	Plant & Machinery	800000	700000
Profit % Loss A/C	300000		Furniture	100000	100000
Securities Loan	700000	500000	Stocks	800000	1000000
Sundry Creditors	400000	500000	Debtors	650000	530000
			Cash at Bank	50000	20000
			Profit & Loss A/C (Debit)		150000
	3000000	3100000		3000000	3100000

The purchase consideration of the two companies was as under:

Radha Co. Ltd – Allotment of 200000 fully paid shares of Rs. 10 each.

shyam Co. Ltd – Allotment of 150000 fully paid shares of Rs. 10 each.

From above particulars

a) Pass Journal Entries in the books of Radheshyam Co. Ltd;

b) Prepare the Opening Balance Sheet of Radheshyam Co. Ltd;

8. (2005 Major) Following is the Balance Sheet of Star Ltd. As on 31^st March 2002

Liabilities	Amount	Assets	Amount
Share Capita1: 1,20,000 Shares of Rs. 10 each fully paid Capital Reserve Long Term Loan Creditors	12,00,000 20,000 3,60,000 3,00,000	Plant & Machinery Furniture Stock Debenture Bank Profit & Loss Account	9,00,000 1,50,000 4,00,000 2,20,000 1,00,000 1,10,000
	18,80,000		9,00,000

On 1^st April 2002 a new company Suraj Ltd. Was formed which took over fixed assets and stock of Star Ltd. For Rs. 1260000 payables as Rs. 900000 in the form of 180000 equity shares of Rs. 5 each and Rs. 360000 in the form 3600, 12% Mortgage Debentures of Rs. 100 each Lender accepted the debentures in the Suraj Ltd. In the discharge of Loan. Debtors realized Rs. 205000. Expenses liquidation amounted to Rs. 8000 and was met by Star Ltd. The available cash was distributed among creditors in full satisfaction of their claim. Show necessary lender accounts to close to close the book of Star Ltd.

9. (2004) Following are the abridged balance sheets of P. Ltd and S. Ltd as on 31^st March 2007:

Liabilities	P Ltd.Rs.	S Ltd.Rs.	Assets	P Ltd.Rs.	S Ltd.Rs.
Equity shares capital (Rs. 10 each)           10% preference Share Cap. (Rs. 100 each)       General Reserve Statutory Reserve Profit & Loss Account 12% Debenture Current Liabilities	8,000 1,000 4,610 390 563   1,437	3,000   980 125 355 250 990	Fixed Assets Current Assets	11,000 4,000	4,730 1,970
	15,000	6,700		15,000	6,700

On 1^st April 2007 P. Ltd takes over S. Ltd. On the following terms:

1. P. Ltd will issue 350000 Equity shares of Rs. 10 each at par to the Equity shareholders of S. Ltd

2. P. Ltd will issue 11000 10% Preference share of Rs. 100 each at part the preference shareholders of S. Ltd.

3. The Debenture of S. Ltd will be converted into an equal number of 12.5% debentures of the same denomination. You are required to show the balance sheet of P. Ltd immediately after the above mentioned scheme of amalgamation has been implemented assuming that the amalgamation in the nature of merger.

PRACTICAL QUESTION BANK (FROM 2012 TO 2022)

ISSUE OF SHARES, RIGHT SHARES AND BONUS SHARES

REDEMPTION OF PREFERECE SHARES

ISSUE AND REDEMPTION OF DEBENTURES

FINAL ACCOUNTS OF COMPANIES

INTERNAL RECONSTRUCTION

AMALGAMATION AND EXTERNAL RECONSTRUCTION

ACCOUNTS OF BANKING COMPANIES

CASH FLOW STATEMENT

ACCOUNTS OF HOLDING COMPANIES

Important Theory Questions for 2023 BCOM Exams available here.