question_answer

X Ltd purchased the assets of Y Ltd for Rs. 1,00,000 payable in fully paid equity shares of Rs. 10 each. What entries will be passed in the books of X Ltd if such issue is

(i) at par

(ii) at a premium of 25%

Answer:

JOURNAL

Date	Particular		LF	Amt (Dr)	Amt (Cr)
	Sundry Assets A/c	Dr		1,00,000
	To Y Ltd				1,00,000
	(Being assets purchased from Y Ltd)
(i)	Y Ltd	Dr		1,00,000
	To Equity Share Capital A/c				1,00,000
	(Being 10,000 share issued to Y Ltd)
(ii)	Y Ltd	Dr		1,00,000
	To Equity Share Capital A/c				80,000
	To Securities Premium Reserve A/c				20,000
	(Being 8,000 shares issued at a premium of 25% to Y Ltd)

Working Notes 1. Number of Equity Share Issued \[=\frac{1,00,000}{10}=10,000\,Shares\] 2. Number of Equity Issued \[=\frac{1,00,000}{10+250}=8,000\,Shares\]