CBSE 2025, Set 2

Question

(b) Earth Ltd. took over assets of ₹ 8,00,000 and liabilities of ₹ 1,00,000 of Mars Ltd. for a purchase consideration of ₹ 8,00,000. Earth Ltd. issued 9% Debentures of ₹ 100 each at a discount of 20% in full satisfaction of purchase consideration.

Pass necessary journal entries in the books of Earth Ltd.

Edvaya · Accepted Answer

The correct answer is Subjective. **Books of Earth Ltd. - Journal** | Date | Particulars | L.F. | Dr. Amount (₹) | Cr. Amount (₹) | |---|---|---|---|---| | | Assets A/c ...Dr. Goodwill A/c (Balancing figure) ...Dr.     To Liabilities A/c     To Mars Ltd. (Assets and liabilities of Mars Ltd. taken over) | | 8,00,000 1,00,000 | 1,00,000 8,00,000 | | | Mars Ltd. ...Dr. Discount on issue of debentures A/c ...Dr.     To 9% Debentures A/c (Issue of 10,000 debentures at a discount of 20%) | | 8,00,000 2,00,000 | 10,00,000 | *Working Note: Number of Debentures to be issued = Purchase Consideration / Issue Price = 8,00,000 / 80 = 10,000 Debentures.*

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Accountancy > Accounting For Companies > Issue Of Debentures

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