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 UniversityÂ
– Gauhati University
– Assam University
2022: 6. (a) Following are the Balance Sheets of Reny Ltd. and Moni Ltd. as at 31st 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 1st 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. Â Â Â Â Â Â Â Â Â 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 31st 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. Â Â Â Â Â Â Â 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 31st 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 31st 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 1st 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. Â Â Â Â Â Â Â Â Â Â 4
ii. Pass Journal Entries in the books of Anjan Ltd. Â Â Â Â Â Â Â Â Â 8
4. (2012) Following is the balance sheet of P Ltd. As at 31st 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 31st 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 31st 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 31st 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 31st 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 1st 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 31st March 2007:
Liabilities |
P Ltd.Rs. |
S Ltd.Rs. |
Assets |
P Ltd.Rs. |
S Ltd.Rs. |
Equity shares capital (Rs. 10 each)Â Â Â Â Â Â Â Â Â Â 10% preference Share Cap. (Rs. 100 each)Â Â Â Â General Reserve Statutory Reserve Profit & Loss Account 12% Debenture Current Liabilities |
8,000 1,000 4,610 390 563 Â 1,437 |
3,000 Â 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 1st 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
AMALGAMATION AND EXTERNAL RECONSTRUCTION
Important Theory Questions for 2023 BCOM Exams available here.