Question

Exercise

Amar Ltd. purchased assets of the book value of Rs 99,000 from Abhi Ltd. It was agreed that purchase consideration to be paid by issuing 11% Debentures of Rs 100 each Assume debentures have been issued.

1. At par

2. At Discount of 10% and

3. At Premium of 10%

Record necessary journal entries

Answer 1

Books of Amar Ltd.
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Sundry Assets A/c	Dr.		99,000
	To Abhi Ltd.				99,000
	(Assets purchased from Abhi Ltd.)
	On Issue of Debentures at Par
	Abhi Ltd.	Dr.		99,000
	To 11% Debentures A/c				99,000
	(990, 11% Debentures issued @ Rs 100 each for purchases consideration of Rs 100 each)
	On Issue of Debenture @ 10% Discount
	Abhi Ltd.	Dr.		99,000
	Discount on Issue of Debentures A/c	Dr.		11,000
	To 11% Debentures A/c				1,10,000
	(1,100, 11% Debentures issued @ Rs 100 each (including discount of 10%) for purchase consideration of Rs 99,000)
	On Issue of Debentures at Premium of 10%
	Abhi Ltd.	Dr.		99,000
	To 11% Debentures A/c				90,000
	To Securities Premium A/c				9,000
	(900, 11% Debentures issued @ Rs 110 (including premium of 10%) for purchase consideration of Rs 99,000)

Working Notes:

WN1: Calculation of Number of Debentures, when Debentures issued at Discount of 10%

WN2: Calculation of Number of Debentures, when Debenture issued at Premium of 10%