CORPORATE ACCOUNTING | UNIT-2 AMALGAMATION (AS-14) PROBLEMATIC EXPLAINATION (2) ‎⁨@shivanipallela

Added: 2026-06-01

[00:00:00]Hello students, welcome back to our channel. So here in this video we are going to discuss the corporate accounting subject unit number two amalgamation second topic. Okay. So in previous video we have discussed the first problematic concept. In unit number two in corporate accounting now we are discussing unit number two second topic problematic. Okay. So previously we have already discussed amalgamation in the nature of merger. Now in this video we are doing the amalgamation in the nature of purchase. So I request you to watch the first problematic topic then only you will understand second problematic topic in unit number two directly. If you are watching second topic means you will not understand anything clear. After watching first problematic explanation then only watch this uh this uh video. Okay. So today now in this video we are discussing amalgamation in the nature of purchase.

[00:00:59]Okay simple thing what is the question is that see here the question X limited and Y limited decided to amalgamate and a new company by name X and Y limited is formed to take over the both companies as on 31st March 2018. See X and Y company both are merged together and formed a new company. What is the company name? XY Limited. Okay.

[00:01:32]What is the balance sheet they have given? They have given liabilities of X and Y Limited. Assets of X and Y Limited. Otal balance sheet they have given. Now show how the amount payable to each company is arrived at and prepare amalgamate balance sheet of XY Limited assuming amalgamation is done in the nature of purchase they have mentioned no in the nature of purchase in the nature of merger. So here they are clearly mentioning in the nature of purchase that is second topic. So they are asking journal entries they are asking balance sheet also. So before writing journal entries, first we will do the balance sheet. Okay. First we will do the balance sheet then only we will able to uh do the journal entries. Okay. So what is the balance sheet profarma? Same like first one only. Okay. What is the first thing you'll have in the balance sheet? M equity and liabilities. No see here I'm keeping equity and liabilities.

[00:02:39]In equity and liabilities, what is the first one you will have? First one you'll have shareholders fund. Yes or no?

[00:02:48]Shareholders funds. In shareholders funds you will have share capital.

[00:02:59]Second one is reserves and surplus.

[00:03:05]These two you will have yes or no. Same like merger only only two to three changes it will be there. Okay. So what we will do in share capital share capital we will write the purchase consideration no. So purchase consideration of X limited purchase consideration of Y limited both we will do and we will add it and we will put it here in the share capital. Same like margin only two differences only will be there. So first we need to do the calculation of purchase consideration of X limited. What is the purchase consideration of X limited? Like how we will do assets minus liabilities. So total assets minus liabilities. No. So first we need to understand what is there in the assets of X limited. So here I'm writing assets. What is the assets we are having? Goodwill is there.

[00:03:57]How much is the X goodwill? 10. Next land, next plant, next patents, nothing is there. Stock 20, data is 10, cash five. So total you need to add it. Okay.

[00:04:08]See here I'm writing first you're having goodwill. No. So goodwill.

[00:04:15]How much is the goodwill? 10.

[00:04:18]Inner column I'm writing for the calculation. Next land is 25. Next plant is 20. Next stock you are having patent is zero so that's why I'm not writing so patent is also 20 datars is 10 cash you are having business receable nothing is there so cash is five so total assets of x limited is so how you'll do so 10 + 25 + 20 + 20 like that so 10 + 25 35 20 40 50 55 so 55 so total is 90 so total asset of X limited is 90.

[00:04:58]From that what we need to do we need to deduct the liabilities. So what is the liabilities we are having in the purchase consideration? You should not take capital. You should not take reserve fund. You should not take profit and loss account. You should not take any kind of fund also only we will take the current liabilities. What is the current liabilities we are having? Bank overdraft, credits and bills payable.

[00:05:23]Okay. So bank overdraft of X limited is nothing. we are having so that's why we are not taking so bank overdraft is nil so here I'm writing bank overdraft is nil next what you are having credit hours okay credits is 10 so bills payable bills payable you are having five so total how much it is total current liabilities is 15 so 10 + 5 is 15 no so what is the purchase consideration that means 90 minus 15 how much it will be 75. Okay, like this you need to do the purchase consideration of X limited. Now after doing the X limited same way purchase consideration of Y liimited. So same thing assets minus liabilities. So what is assets you are having?

[00:06:14]Goodwill 8.

[00:06:20]could bill 8.

[00:06:22]Land is 19.

[00:06:27]Plant is 25.

[00:06:30]Plant is 25. Yes. Patent is five.

[00:06:39]Stock is 15.

[00:06:42]Stock is 15. Datars is five.

[00:06:50]Bills receivable is two, cash is 1. Yes, all assets. Bills receivable is 2, cash is 1. So, total you need to do the assets. So, 8 + 19 + 25 + 5 + 15, sorry, 8 + 19 + 25 + 5 is 30. 15 + 5 is 20. 2 + 1 is 3. So total is 80. So total assets is 80. From that what we need to do? We need to do the minus liabilities.

[00:07:26]So what is the liabilities we are having? Ma bank overdraft is five.

[00:07:30]Cratas is 12. Bills payable is three.

[00:07:34]Yes or no? So here I'm writing bank overdraft is five.

[00:07:41]Credit hours is 12.

[00:07:45]bills payable is 3.

[00:07:49]So 12 + 3 is 15. 15 + 5 is 20. So how you'll do the purchase consideration? 80 - 20. 80 - 20 is 60. So purchase consideration of Y limited is 60. So we have calculated purchase consideration of X limited, purchase consideration of Y limited. So after getting the purchase consideration only we will write it in the share capital. No. What is the purchase consideration of X? 75. What is the purchase consideration of Y? 60.

[00:08:21]That means see here 75 + 60. We need to do it. Okay. So, what is 75 + 60? 75 + 60 is 135. So, 135 is the share capital.

[00:08:36]That's it. Okay. Next what you are having and one more thing remember we are doing in the nature of purchase.

[00:08:45]Okay. When you are doing in the nature of purchase, we should not take any kind of reserves. We should not take any kind of profit and loss account. We should not take any kind of fund. Okay?

[00:08:57]Nothing. We should not take anything.

[00:08:59]That means here in reserves and surplus though in the question you are having reserve fund, P&L account, dividend fund, workman compensation fund, you should not consider in the solution.

[00:09:12]Simply we need to ignore when you are doing in the nature of purchase. In the merger we need to take it. Okay. But in purchase you should not take it. That is reserves and surplus always it will be nil. Okay. After shareholders fund what is the second one? You will have current liabilities. Yes or no? So current liabilities.

[00:09:36]So current liabilities. What is the current liabilities? We are having bank overdraft. So bank overdraft you are having? Yes. Simply we will add it. So how much is bank overdraft? Five. So directly here I'm giving five. Next what you are having? Catas and bills payable.

[00:09:53]Cratas and bills payable together we will get we will write it in the trade payable. No. So here I'm writing trade payable. In trade payable we are adding craters and bills payable. So 10 + 5 is 15. 12 + 3 is 15. So 15 + 15 is 30. So 15 + 15 is 30. So that's it. So share capital purchase consideration we have taken. We should not take any kind of fund. We have taken bank overdraft, credits and bills payable. So liabilities is over. That means total liabilities is over. So total of liabilities is 135 + 5 is 140. 140 + 30 is 170. So total liabilities is 170. Now next one coming back to the assets side.

[00:10:39]So second one what you'll have my assets. In assets what you will have?

[00:10:43]First one non-current assets. Yes or no prof you having remembered or not?

[00:10:48]Non-current assets. In non-current assets again you'll have fixed assets.

[00:10:55]Okay. Here you'll have again fixed assets. What is the fixed assets we are having? Simply we need to add every asset. Okay.

[00:11:07]See here I'm doing the working notes for fixed assets.

[00:11:15]What is a fixed asset? Goodwill is a fixed assets. Land, plant, patents.

[00:11:20]These four are the fixed assets. Yes or no? Simply I'm adding that. So goodwill 10 + 8 is equal to 18. Next land 25 + 9.

[00:11:37]25 + 19.

[00:11:40]So what is 25 + 19? 25 + 19 is 44.

[00:11:46]Okay. Next what you are having? Plant.

[00:11:49]20 + 25 that is 45. So plant is 20 + 25 that is 45. Okay. Next you are having patents. So only five you are having. So patence is five. So total fixed assets 45 + 5 is 50. 50 + 44 is 94. 94 + 18 is 112. So total fixed assets is 112. So like this you need to do the working notes. Here we are doing working notes number 112 because we have done the working notes.

[00:12:26]Now you need to show it here in the table. Okay. For this we have done the working notes. Next what you are having?

[00:12:32]So fixed assets is over. Stock will comes here in the inventories only. No that will comes in the current assets.

[00:12:40]Current assets. In current assets what you are having? Inventories.

[00:12:47]Okay. What is inventories? 20 + 15. You need to show it in the working notes.

[00:12:54]So second one inventories.

[00:12:59]What is inventories you are having?

[00:13:01]Inventory is nothing about stock. No. So 20 + 15. So 20 + 15 is nothing about 35.

[00:13:09]Clear? So here I'm writing working notes number two 35. Okay. Next what you are having datas and bills receivable. Datas and bills receivable together we'll write it in the trade receivable. No. So trade receivable working notes number three what you will write it here? So we are doing for trade receivable. In trade receivable what will come? Datas and bills receivable. So what is the datas? 10 + 5 billable is 2. So 10 + 5 is 15. 0 + 2 is 2. So 15 + 2 is 17.

[00:13:54]Okay.

[00:13:56]So here in trade receivable I'm doing 17. Okay. Next last one what you are having cash. Cash will come here in the cash and cash equalence. That means see cash and cash equalence that is working notes number four. So here I'm writing working notes number four cash and cash equivalence.

[00:14:22]So what is the cash balance?

[00:14:26]5 + 1. So 5 + 1 is nothing about six.

[00:14:32]Simply I'm writing here six. Just do the total. Everything is over in the question. Okay. So 112 112 + 35 + 17 + 6. So it is 170. So like this it should get tall. Assets is 170.

[00:14:53]Liabilities is 170. Here what is the difference between merger and purchase?

[00:14:58]We are not taking any kind of reserves and surplus. Even though you are having this general fund, reserve fund, pre panal account everything if you are having also you should not take that.

[00:15:11]Okay, that is the difference you are having. So solution is over. No, now we will write the journal entries for XY Limited. Okay, how you will write the journal entries? What is the year they have given 2018? No. So here I am writing 2018.

[00:15:28]Okay, what is the date we are having?

[00:15:30]March.

[00:15:32]Okay. March. Okay. So like this we are having. So what is the first thing we need to do? It means business is purchasing. No means X is taking amalgamating with purchasing. X is taking with Y. No. So first transaction will be business purchase account data. Okay. to X limited to Y limited. So what is the purchase consideration of X and Y? 75 and 60. Oh, so here I'm writing in the credit side X is giving 75 and Y is giving 60. So 75 + 60 in the debit side it will become 135. Here in the bracket what you will write it ma B purchase consideration due to liquidator of X and Y limited that's it okay purchase consideration this is the first transaction after every transaction you need to write You need to draw a line. After that what we are having we have done the purchase consideration no. So purchase consideration of X purchase consideration of Y. For this we need to write the journal entries. First we will write for this one. How you'll write in debit side what you are having goodwill everything you are having in credit side you are having this one. Yes or no? So how you will write this one means simply see. So goodwill goodwill account data next land account data all will come here in the debit side only no plant account data goodwill land plan next stock account data next datas account data uh next cash account data.

[00:17:49]Okay. So what is the values you are having? 10 25 20 sorry 10 25 20 10 10 and 5 you are having no so that I'm writing in the 10 25 20 10 10 and five yes so where we are crediting two credits so what is the credit as 10 here I am writing in the 10 in the credit balance okay so two next what you are having bills payable able. So to bills payable it is five. Next remaining balance will go to the business purchase. No. So business purchase account. So that means 10 simple C here. So if you deduct this value means what is the remaining lef over value? 75. No that will go to the business purchase account. That means in the credit side you need to write 75. So here total if you're doing mean 90. Here total if you're doing miss 90. Okay.

[00:18:48]What you'll write the narration bracket open.

[00:18:51]being assets and liabilities taken over by X limited. This is the second journal entry you need to do it.

[00:19:07]And what is the third journal entry?

[00:19:09]Purchase consideration of P limited.

[00:19:11]What you are having land, goodwill, uh plant, everything. No. So this is third one. Same again goodwill account data.

[00:19:23]Next land account data are next plant account data.

[00:19:31]Goodwill land patents stock data are stock account data bills receivable cash. No. Next data account data bills receivable bills receivable account data cash account data to for where we are transferring bank overdraft credits and bills payable simple thing to bank overdraft account two bills payable account to citors remaining will we will going to the two business purchase account okay so how what is the values 8 1925 8 1925 here in the debit column only I'm writing mark 55 55 2 and 1 so 2 1 is the bank overdraft bank Overdraft is five in the crates side five.

[00:20:52]Okay. Next crate is 12. Crater is 12.

[00:20:57]Bills payable is three. Bills payable is three. What is the remaining purchase consideration? 60. So it is 60. So if you add all this means you will get the value of 80. If you add all this means you'll get 80. That's it. What we'll be writing in the bracket being assets and liabilities are of Y limited taken over. That's it.

[00:21:34]Clear? So only three general entries we will write it. Ma one is for the business purchase. Okay. Second one is the purchase consideration of first company and third general entry will be purchase consideration of second company. So here I have discussed in the nature of business journal entries purchase consideration working notes here also purchase consideration of I limited then balance sheet this is the working notes like this you need to do the solution in the examination clear understood okay this is easy answer simple answer simple to understand also now I'll give you I will explain another question also for better understanding okay now for better understanding Now see this question.

[00:22:20]Ever limited, Ever Limited and Green Limited agreed to amalgamate. That is Evergreen Limited was incorporated. So Ever Limited and Green Limited agreed and they have amalgamated and they have formed Evergreen Limited. You need to sh take over the balance sheet. You need to show the balance sheet. You need to show the amalgamation. So before doing the balance sheet before doing the balance sheet what is the balance sheet profarma we will write it again we need to write the balance sheet profarma first one equity and liabilities no so equity and liabilities in equity and liabilities what is the first one you will have shareholders fund same previous only so understand the concept so shareholders fund in shareholders fund so What you will have share capital you will have second one you will have reserves and surplus but one thing when you are doing in the nature of purchase you will not have any reserves and surplus even though you are having profit and loss account even though you are having reserve fund we should not take any reserve fund to do the share capital what we will do we need to do the purchase consideration of ever com company and we need to do the purchase consideration of uh Green Limited Company. How you'll do the M like calculation? Assets minus liabilities.

[00:23:49]No, first we need to do the purchase consideration. So assets minus liabilities. What is the total assets we are having in the ever limited? What is the total assets we are having in the ever limited map? So land we are having.

[00:24:03]Yes, just put it out here. So land is one lakh. Okay. Next plant you are having 40,000 goodwill you are having 30,000 stock you are having again 30,000 datars you are having 20,000 cash you are having 10,000 now you need to add total assets so 1 lakh + 40,000 is 1 lakh 40,000 1 lakh 40 + 30 is 1 lakh 50 60 1 lakh 70,000 so 1 lakh 70,000 plus 30,000 20,000 50 60 plus 60,000 how much it will be 2 lakhs 30,000 so total assets is 2 lakh 30,000 from that 2 lakh 30,000 we need to deduct the liabilities what is the liabilities we will take it in the purchase consideration we will not take share capital we will not take P&L account we will not take any resource but we will take credit bills payable bank overdraft no but here in The question we are having only craters so only craters we need to do the deduction. So cratas of ever limited is 16,000. So we need to deduct the 16,000 from the total assets. So 2 lak 30,000 minus 16,000 if you're doing means sorry 230,000 minus 16,000 if you are doing means you are getting the value of 2 lak 14,000. So this 2A 14,000 is called as purchase consideration of ever limited.

[00:25:38]Next same like that only purchase consideration of green limited also we need to do it. So first you'll take the assets. So what is the assets we are having again same land 60,000 land you are having 60,000 plant you are having 30,000 goodwill you are having 10,000 stock you are having again 10,000 datars you are having 5,000 cash you are having 5,000. Okay. So, total assets we need to do it. So, 60 + 30 is 90. 90 + 10 is 1 lakh. 1 lakh 10,000. 1 lakh 10,000 + 10,000 is 1 lakh 20,000. So, 1 lakh 20,000 is the total assets. From total assets, we need to deduct the liabilities.

[00:26:34]So, what is the liabilities we are having? Only credits we are having. So, what is the credit value of green limited? 10,000. So 1 lakh 20,000 minus 10,000 is 1 lakh 10,000. That's it. So what is the purchase consideration of green limited? 1 lakh 10,000. So when you add this both you'll get the share capital that is 2 lak 14,000 plus 1 lakh 10,000. See here I'm writing 2 lak 14,000 + 1 lakh 10,000. How much it will be? 3 lakhs 24,000. So in the share capital I'm writing 3 lakh 24,000.

[00:27:16]Okay. Next in the second one you are having current liabilities. In current liabilities we will not take any um share capital. We will not take any penal account. Only we are having credit. Cras is 16,000 plus 10,000. So total 26,000. No. So current liabilities. So current liabilities we are having citors. So in credits 16,000 + 10,000. So 16,000 + 10,000 is 26,000 over every liabilities over. So 26,000 + 3 lak 24,000 is 3 lak 50,000 is the total liabilities.

[00:27:59]So total liabilities is 3 lak 50,000. Okay. Now in the same way we need to do the assets also. Yes or no?

[00:28:10]So assets in assets first one you will have non-current assets in non-current assets. First one you will have fixed assets. So what is the fixed assets you need to add everything okay? That is land plant goodwill is the fixed assets. No you need to add all things. So 1 lakh plus 60,000 is 1 lakh 60,000. So here I'm writing 1 lakh 60,000 plus 40,000 + 30,000 is 40 + 30 is 50 60 70 80,000 so plus 80,000. So goodwill also 30,000 + 10,000 is 40,000.

[00:28:47]So total fixed assets is 2 lakhs 80,000 that's it. So 2 lakhs 80,000 is the total fixed assets. So 1 lakh 60 plus 40 50 60 70 then 40. Okay. So total 1 lakh 60,000 plus 70,000 + 40,000. So 2K 70,000 it will be. So fixed assets is 2 lakhs 70,000.

[00:29:16]Okay. If you want to show the adjustment you can show the working notes also. So next you are having stock. Stock is nothing about inventories. So inventories will come here in the current assets. No. So here I'm writing current assets. you are having inventories.

[00:29:34]A1 is inventory that is 30,000 + 10,000.

[00:29:39]So 30,000 + 10,000 is nothing about 40,000.

[00:29:45]Okay. Next you are having datas. Datas will come here in the trade receivables.

[00:29:51]No. So trade receivable what you are having 20,000 + 5,000. So 20,000 + 5,000 is 25,000.

[00:30:05]Next C1 cash you're having 10,000 + 5,000. So cash here I'm writing 10,000 plus 5,000 it will be 15,000.

[00:30:18]Okay. Everything we have taken everything is over. Just do the total total assets that is 2K70,000 plus 40,000 plus 25,000 + 15,000 how much it will be 3 lakhs 50,000 that's it 3A 50 350 okay but what is the difference between in the nature of margin and in the nature of purchase in margin we will take reserves and surplus in purchase we will not take any reserves and reserves and surplus. Okay, that is the only difference. Remaining everything is same. But here in purchase we have learned the journal entries. How to write the journal entries also we have learned. If they are asking to write the journal entries like this you need to write it. Clear? So this is the in the nature of purchase answer. Clear?

[00:31:10]I hope you have understood. I am giving the question mark. So see take a screenshot of the note. Anyway these notes will be available. So this is the homework problem in the nature of purchase. See they have mentioned assuming amalgamation is done in the nature of purchase. They will mention in the question whether it is nature of merger or whether it is nature of purchase.

[00:31:32]Do this question and tell me your final answer in the uh comment section how much it is how much is the total liabilities and total asset it should get tall. No. So that is the second topic in unit number two. Let me know in the comment section whether the explanation is understanding or not.

[00:31:49]Previously I have already uploaded unit number one. This is completely unit number two. So in upcoming videos, third unit, fourth unit, fifth unit also definitely I'll explain. Okay. So this is all about the video. If you are having any doubts, let me know in the comment section. See you all in next video students. Bye-bye everyone.