Accounting Aspects of Mergers and Acquisition: Numericals

1. Vimal Ltd and Vishal Ltd were amalgamated on and from 1

st
April 2003 and
Mayur Co. Ltd was formed. The Balane !heets of "oth the Companies as on 31#3#
2003 are gi$en "elow%
Balane !heets
Lia"ilities Vimal
&s.
Vishal
&s.
Assets Vimal
&s.
Vishal
&s.
Share Capital 'i(ed Assets 3)00000 3000000
*+uity !hares of &s.
10 *ah
2)00000 2,00000 -n$estments )20000 220000
.eneral &eser$e /00000 ,00000 !to0 100000 1100000
2rofit 3 Loss Aount )00000 200000 4e"tors 500000 1110000
-n$estment Allowane
&eser$e
200000 )0000 Bills &eei$a"le 20000 10000
*(port 2rofit &eser$e 20000 )0000 Cash# Ban0 1,0000 1/0000
1)6 4e"entures 1200000 1/00000
Creditors 300000 )00000
Bills 2aya"le 100000 200000
5220000 6080000 5220000 6080000
The new ompany issued e+uity shares to ma0e the payment to the e+uity shareholders
of "oth the ompanies. Calulate the purhase onsideration as per 7i8 2ooling of -nterest
Method and prepare the new Balane !heet of Mayur Ltd.
2. A Ltd and B Ltd. deided to amalgamate on 31#3#20039 for whih A Ltd ta0es o$er the
"usiness of B Ltd. their "alane sheets on that date were as follows%
Balance Sheets as on !""200
Lia"ilities A Ltd
&s.
B Ltd
&s.
Assets A Ltd
&s.
B Ltd &s.
Share Capital Land and Building 100000 310000
*+uity !hares of &s. 10
*ah
1000000 /00000 2lant and Mahinery /10000 3)0000
126 2referene !hares
of &s. 10 eah
))0000 3)0000 'urniture 111000 50000
.eneral &eser$e 100000 10000 -n$estments 1)0000 100000
2rofit 3 Loss Aount 110000 100000 !to0 210000 1:0000
-n$estment Allowane
&eser$e
# 20000 4e"tors 1,0000 20/000
*(port 2rofit &eser$e /0000 )0000 Cash and Ban0 1)1000 10)000
1)6 4e"entures 100000 50000
Creditors :0000 50000
;ther Current Lia"ilities )0000 30000
!#80000 !20000 !#80000 !20000
A Ltd too0 o$er the "usiness of B Ltd as on 1#)#2003. A Ltd paid the purhase prie as
follows%
50000 e+uity shares of &s. 10 eah fully paid to the e+uity shareholders of B Ltd.
Accounting Aspects of Mergers and Acquisition: Numericals
1)6 preferene shares of &s. 100 eah to ma0e the payment to the preferene share
holders of B Ltd at a premium of 106.
4e"entures of B Ltd were on$erted into e+ual num"er of de"entures of A Ltd.
The statutory reser$es of B Ltd are still to "e retained for two more years.
2repare the Balane !heet of A Ltd. in following two ases.
1. -f the amalgamation is in nature of Merger.
2. -f the amalgamation is in nature of 2urhase.
3. 'ollowing are the partiulars of two ompanies9 A Ltd and T Ltd%
2artiulars A Ltd T Ltd
*arnings after Ta( 200000 /0000
<o. of *+uity !hares ;utstanding ,000 )000
*2! 21 11
2=* &atio , 1
Mar0et 2rie 110 51
Calulate%
1. *(hange &atio 7!wap &atio8 "ased on *2! and Mar0et 2rie.
2. Value of the 'irm.