Bright Ltd. Took over the assets of ₹ 6,60,000 and liabilities of ₹ 80,000 of star Ltd. For an agreed purchase consideration of ₹ 6,00,000 payable 10% in cash and the balance by the issue of 12 % Debentures of ₹ 100 each. Give necessary Journal entries in the books of Bright Ltd ., assuming that:
Case(a): The debantures are issued at par.
Case (b): The debentures are issued at 20% Premium.
Case (c): The debentures are issued at 10% discount .
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Correct Answer - Entry in all Cases: Dr Sundry Assets A/c- ₹ 6,60,000 and Goodwill A/c - ₹ 20,000;
Cr . Sundry Liabilities A/c - ₹ 80,000 and star Ltd. - ₹ 6,00,000.
Entry for Cash Payment in all Cases: Dr Ster Ltd. And Cr Cash/ Bank A/c by ₹ 60,000.
Case (a): Dr.Ster Ltd.and Cr. 12% Debentures A/c by - ₹ 5,40,000.
Case (b): Dr . Star Ltd. - ₹ 5,40,000; Cr 12% Debentures A/c - ₹ 4,50,000 and Seurities Premium Reserve A/c - ₹ 90,000.
case (c): Dr. Star Ltd.- ₹ 5,40,00 and Discount on Issue of Debentures A/s - ₹ 60,000; Cr. 12 % Debentures A/c ₹ 6,00,000.