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Exe Ltd. Took over assets of ₹ 7,00,00...

Exe Ltd. Took over assets of ₹ 7,00,000 and liabilities of ₹ 60,000 of Wyc Ltd. For the purchase consideration by issuing 9% Debentures of ₹ 100 each at 10% premium. Pass Journal entries in the books of Exe Ltd.

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` 1. Calculation of the number of Debentures:
issue Price of debenture = ₹ 110
For payment of ₹ 6,60,000 company has to issue
₹ 6,60,000/₹ 110 = 6,000 debentures of ₹ 100 each , i.e., ₹ 6,00,000.
2. Amount by which purchase consideration - Net Assets (i.e., the difference between the agreed value of the assets taken over and the agreed amount of liabilities assumed ) is debited to Goodwill Account .
Goodwill = Purches Consideration - Net Assets (i.e., Sundry Assets - Sundry Liabillties )
= ₹ 6,60,000 - (₹ 7,00,000 - ₹ 60,000) = ₹ 20,000.
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