University:
Cypress College
Course:
ACCT 101 C | Financial Accounting
Academic year:

2018
Views:

57

Pages:

2
Author:

socofan312acs

New Company Example: Assume old Co. Deb. 1,00,000 (i) New Co. is to settle Deb. of Old Co. 1 , 00 , 000 × 100 % = 1 , 00 , 000 × 100 % 1,00,000×100%=1,00,000×100% Agreed value = 1,00,000 Offsetted = 1,00,000 Realisation = 1 , 00 , 000 Realisation=1,00,000 (ii) New Co. is to issue 9% Deb. in such a way that interest is maintained: 1 , 00 , 000 × 8 % = 6 , 000 1,00,000×8%=6,000 𝑥 × 9 % = 6 , 000 𝑥 = 6 , 000 9 = 66 , 667 x×9%=6,000x= 9 6,000 =66,667 Agreed value = 66,667 Old Co. = Realisation = 1,00,000 (iii) New Co. is to issue necessary Deb. at 5% premium to settle Old Deb.: 1 , 00 , 000 × 105 % = 1 , 00 , 000 × 100 % 1,00,000×105%=1,00,000×100% Agreed value = 1,00,000 Deb. holders A/c Dr 1,00,000 To New Deb. A/c 95,238 To Sec. Premium 4,762 Old Co.: Realisation = 1,00,000 (iv) Old Co. debenture to be discharged at 5% premium by the issue of new shares: Old 1 , 00 , 000 × 105 % = 1 , 05 , 000 × 100 % 1,00,000×105%=1,05,000×100% New Co. Agreed value = 1,05,000 Deb. holders A/c Dr. 1,05,000 To New Deb. 1,05,000 Old Co.: Old Co. lift to realisation of 1,00,000 (v) Old Co. Deb. to be discharged at 5% discount by issue of new deb. at 10% premium: Old 1 , 00 , 000 × 95 % = 95 , 000 = ( 𝑥 110 ) 1,00,000×95%=95,000=( 110 x ) 𝑛 = 95 , 000 = 86 , 364 n=95,000=86,364 𝑥 = 95 , 000 110 = 86 , 364 x= 110 95,000 =86,364 New Co.: To Deb. holder = 95,000 (Agreed value) (vi) Deb. holder A/c Dr. 95,000 To Deb A/c 86,364 To Sec. Premium 8,636