Question

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 debentures are issued at par.
Case (b): The debentures are issued at 20% premium.
Case (c): The debentures are issued at 10% discount.

Answer 1

Books of Bright Ltd. Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
	Assets A/c	Dr.		6,60,000
	Goodwill A/c(Balancing Figure)	Dr.		20,000
	To Liabilities A/c				80,000
	To Star Ltd.				6,00,000
	(Purchase of business of Star Ltd.)
				60,000
	Star Ltd.	Dr.			60,000
	To Cash A/c
	(Payment made in cash)
(a)	Star Ltd.	Dr.		5,40,000
	To 12% Debentures A/c				5,40,000
	( Purchase consideration discharged by issue of 12% Debentures)
(b)	Star Ltd.	Dr.		5,40,000
	To 12% Debentures A/c				4,50,000
	To Security Premium Reserve A/c				90,000
	( Purchase consideration discharged by issue of 12% Debentures)
(c)	Star Ltd.	Dr.		5,40,000
	Discount on Issue of Debentures A/c	Dr.		60,000
	To 12% Debentures A/c				6,00,000
	( Purchase consideration discharged by issue of 12% Debentures)

Working Note:

$\text{1) Number of Debentures to issued}=\frac{5,40,000}{120}=4,500\text{Debentures}$
$\text{2) Number of Debentures to issued}=\frac{5,40,000}{90}=6,000\text{Debentures}$