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Agarwal Ltd. purchased a running business from Vikas Ltd. for a sum of ₹2,50,000 payable as ₹2,20,000 in fully paid equity shares of ₹10 each and balance by a bank draft. The assets and liabilities consisted of the following : Plant and Machinery ₹ 90,000; Building ₹ 90,000; Sundry Debtors ₹30,000; Stock ₹ 50,000; Cash ₹ 20,000; Sundry Creditors ₹20,000. The amount credited to Capital Reserve will be:
- a)₹10,000
- b)₹20,000
- c)₹1,00,000
- d)₹2,50,000
Correct answer is option 'A'. Can you explain this answer?
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Agarwal Ltd. purchased a running business from Vikas Ltd. for a sum of...
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Assets and Liabilities:
- Plant and Machinery: 90,000
- Building: 90,000
- Sundry Debtors: 30,000
- Stock: 50,000
- Cash: 20,000
- Sundry Creditors: 20,000
Purchase Consideration:
- Equity shares: 2,20,000 (fully paid)
- Balance by bank draft: ?
Calculation of Balance:
The total liabilities of Vikas Ltd. are 20,000 (Sundry Creditors). Therefore, Vikas Ltd.'s net assets are calculated as follows:
Net Assets = Total Assets - Total Liabilities
= (90,000 + 90,000 + 30,000 + 50,000 + 20,000) - 20,000
= 2,60,000
The purchase consideration paid by Agarwal Ltd. is 2,50,000.
Since the net assets of Vikas Ltd. are 2,60,000, Agarwal Ltd. has acquired the business at a discount of 10,000.
Treatment of Capital Reserve:
The discount on the purchase of a business is treated as a Capital Reserve. In this case, since Agarwal Ltd. acquired the business at a discount of 10,000, this amount will be credited to the Capital Reserve.
Therefore, the amount credited to the Capital Reserve will be 10,000 (option A).
- Plant and Machinery: 90,000
- Building: 90,000
- Sundry Debtors: 30,000
- Stock: 50,000
- Cash: 20,000
- Sundry Creditors: 20,000
Purchase Consideration:
- Equity shares: 2,20,000 (fully paid)
- Balance by bank draft: ?
Calculation of Balance:
The total liabilities of Vikas Ltd. are 20,000 (Sundry Creditors). Therefore, Vikas Ltd.'s net assets are calculated as follows:
Net Assets = Total Assets - Total Liabilities
= (90,000 + 90,000 + 30,000 + 50,000 + 20,000) - 20,000
= 2,60,000
The purchase consideration paid by Agarwal Ltd. is 2,50,000.
Since the net assets of Vikas Ltd. are 2,60,000, Agarwal Ltd. has acquired the business at a discount of 10,000.
Treatment of Capital Reserve:
The discount on the purchase of a business is treated as a Capital Reserve. In this case, since Agarwal Ltd. acquired the business at a discount of 10,000, this amount will be credited to the Capital Reserve.
Therefore, the amount credited to the Capital Reserve will be 10,000 (option A).
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Agarwal Ltd. purchased a running business from Vikas Ltd. for a sum of 2,50,000 payable as 2,20,000 in fully paid equity shares of 10 each and balance by a bank draft. The assets and liabilities consisted of the following : Plant and Machinery 90,000; Building 90,000; Sundry Debtors 30,000; Stock 50,000; Cash 20,000; Sundry Creditors 20,000. The amount credited to Capital Reserve will be:a)10,000b)20,000c)1,00,000d)2,50,000Correct answer is option 'A'. Can you explain this answer?
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Agarwal Ltd. purchased a running business from Vikas Ltd. for a sum of 2,50,000 payable as 2,20,000 in fully paid equity shares of 10 each and balance by a bank draft. The assets and liabilities consisted of the following : Plant and Machinery 90,000; Building 90,000; Sundry Debtors 30,000; Stock 50,000; Cash 20,000; Sundry Creditors 20,000. The amount credited to Capital Reserve will be:a)10,000b)20,000c)1,00,000d)2,50,000Correct answer is option 'A'. Can you explain this answer? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about Agarwal Ltd. purchased a running business from Vikas Ltd. for a sum of 2,50,000 payable as 2,20,000 in fully paid equity shares of 10 each and balance by a bank draft. The assets and liabilities consisted of the following : Plant and Machinery 90,000; Building 90,000; Sundry Debtors 30,000; Stock 50,000; Cash 20,000; Sundry Creditors 20,000. The amount credited to Capital Reserve will be:a)10,000b)20,000c)1,00,000d)2,50,000Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Agarwal Ltd. purchased a running business from Vikas Ltd. for a sum of 2,50,000 payable as 2,20,000 in fully paid equity shares of 10 each and balance by a bank draft. The assets and liabilities consisted of the following : Plant and Machinery 90,000; Building 90,000; Sundry Debtors 30,000; Stock 50,000; Cash 20,000; Sundry Creditors 20,000. The amount credited to Capital Reserve will be:a)10,000b)20,000c)1,00,000d)2,50,000Correct answer is option 'A'. Can you explain this answer?.
Agarwal Ltd. purchased a running business from Vikas Ltd. for a sum of 2,50,000 payable as 2,20,000 in fully paid equity shares of 10 each and balance by a bank draft. The assets and liabilities consisted of the following : Plant and Machinery 90,000; Building 90,000; Sundry Debtors 30,000; Stock 50,000; Cash 20,000; Sundry Creditors 20,000. The amount credited to Capital Reserve will be:a)10,000b)20,000c)1,00,000d)2,50,000Correct answer is option 'A'. Can you explain this answer? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about Agarwal Ltd. purchased a running business from Vikas Ltd. for a sum of 2,50,000 payable as 2,20,000 in fully paid equity shares of 10 each and balance by a bank draft. The assets and liabilities consisted of the following : Plant and Machinery 90,000; Building 90,000; Sundry Debtors 30,000; Stock 50,000; Cash 20,000; Sundry Creditors 20,000. The amount credited to Capital Reserve will be:a)10,000b)20,000c)1,00,000d)2,50,000Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Agarwal Ltd. purchased a running business from Vikas Ltd. for a sum of 2,50,000 payable as 2,20,000 in fully paid equity shares of 10 each and balance by a bank draft. The assets and liabilities consisted of the following : Plant and Machinery 90,000; Building 90,000; Sundry Debtors 30,000; Stock 50,000; Cash 20,000; Sundry Creditors 20,000. The amount credited to Capital Reserve will be:a)10,000b)20,000c)1,00,000d)2,50,000Correct answer is option 'A'. Can you explain this answer?.
Solutions for Agarwal Ltd. purchased a running business from Vikas Ltd. for a sum of 2,50,000 payable as 2,20,000 in fully paid equity shares of 10 each and balance by a bank draft. The assets and liabilities consisted of the following : Plant and Machinery 90,000; Building 90,000; Sundry Debtors 30,000; Stock 50,000; Cash 20,000; Sundry Creditors 20,000. The amount credited to Capital Reserve will be:a)10,000b)20,000c)1,00,000d)2,50,000Correct answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for Class 12.
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Agarwal Ltd. purchased a running business from Vikas Ltd. for a sum of 2,50,000 payable as 2,20,000 in fully paid equity shares of 10 each and balance by a bank draft. The assets and liabilities consisted of the following : Plant and Machinery 90,000; Building 90,000; Sundry Debtors 30,000; Stock 50,000; Cash 20,000; Sundry Creditors 20,000. The amount credited to Capital Reserve will be:a)10,000b)20,000c)1,00,000d)2,50,000Correct answer is option 'A'. Can you explain this answer?, a detailed solution for Agarwal Ltd. purchased a running business from Vikas Ltd. for a sum of 2,50,000 payable as 2,20,000 in fully paid equity shares of 10 each and balance by a bank draft. The assets and liabilities consisted of the following : Plant and Machinery 90,000; Building 90,000; Sundry Debtors 30,000; Stock 50,000; Cash 20,000; Sundry Creditors 20,000. The amount credited to Capital Reserve will be:a)10,000b)20,000c)1,00,000d)2,50,000Correct answer is option 'A'. Can you explain this answer? has been provided alongside types of Agarwal Ltd. purchased a running business from Vikas Ltd. for a sum of 2,50,000 payable as 2,20,000 in fully paid equity shares of 10 each and balance by a bank draft. The assets and liabilities consisted of the following : Plant and Machinery 90,000; Building 90,000; Sundry Debtors 30,000; Stock 50,000; Cash 20,000; Sundry Creditors 20,000. The amount credited to Capital Reserve will be:a)10,000b)20,000c)1,00,000d)2,50,000Correct answer is option 'A'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Agarwal Ltd. purchased a running business from Vikas Ltd. for a sum of 2,50,000 payable as 2,20,000 in fully paid equity shares of 10 each and balance by a bank draft. The assets and liabilities consisted of the following : Plant and Machinery 90,000; Building 90,000; Sundry Debtors 30,000; Stock 50,000; Cash 20,000; Sundry Creditors 20,000. The amount credited to Capital Reserve will be:a)10,000b)20,000c)1,00,000d)2,50,000Correct answer is option 'A'. Can you explain this answer? tests, examples and also practice Class 12 tests.
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