Explore topic-wise InterviewSolutions in .

This section includes InterviewSolutions, each offering curated multiple-choice questions to sharpen your knowledge and support exam preparation. Choose a topic below to get started.

1.

XYZ Ltd. Acquired a business and agreed to pay purchase consideration of ₹ 2,00,000. The assets taken over are ₹ 5,50,000 and liabilities assumed are ₹ 4,00,000 What is the amount that will be debited to Goodwill Account or credited to Capital Reserve Account and why?

Answer» Goodwill Account will be debited by ₹ 50,000 It is so because the amount paid, i.e., ₹ 2, 00,0000 is more then the value of nert assets acquired, i.e., ₹ 5,50,000(Assets) - ₹ 4, 00,000(Liabilities)= ₹ 1,50,000.
Discussion
2.

Wellbeing Ltd. Took over assets of ₹ 9,80,000 and liabilities of ₹ 40,000 of HDR Ltd. At an agreed value of ₹ 9,00,000. Wellbeing Ltd. Paid to HDR Ltd. Bu issue of 9% Debentures of 100 each at a premium of 20% . Pass necessary Journal entries to record the above transaction in the books of Wellbeing Ltd.

Answer» Correct Answer - (i) Dr. Sundry Assets A/c by ₹ 9,80,000, Cr. Sundry Liabilities A/c by ₹ 40,000; HDR Ltd by ₹ 9,00,000 and Capital Reserve A/c by ₹ 40,000.
(ii) Dr. HDR Ltd. By ₹ 9,00,000, Cr 9% Debentures A/c by ₹ 7,50,000 and Securities Premium Reserve A/c by 1.50,000.
Number of Debentures to be issued = ₹ 9,00,000/ ₹ 120=7,500 Debentures.
Discussion
3.

Exe Ltd. Purchased assets of the books value ₹ 4,00,000 and took over the liabilities of ₹ 50,000 from Mohan Bros. It was agreed thet the purchaase consideration, settled at ₹ 3,80,000, be paid by issuing debentures of ₹ 100 each. It was agreed that any fraction of debentures be paid in cash.

Answer» Correct Answer - Goodwill ₹ 30,000; Case (a) 3,800 Debentures of ₹ 100 each; Cash (b) 4,222 Debentures of ₹ 100 each and paid cash ₹ 20; Case (c) 3,454 Debentures of ₹ each and paid cash ₹ 60.
Discussion
4.

R Ltd. Purchased the assets of S Ltd. For ₹ 5,00,000. It also agreed to take over the liabilities of S Ltd. Amounted to ₹ 2,00,000 for a purchase consideration of ₹ 2,80,000. The payment of S Ltd. Was made by issue of 9% Debentures of ₹ 100 each at par. Pass necessary Journal entries in the books of R Ltd.

Answer» Correct Answer - Capital Reserve - ₹ 20,000
Discussion
5.

Green Ltd. Purchased the assets of Strong Ltd. For ₹ 40,00,000 and took over liabilities of ₹ 7,00,000 at an agreed value of ₹ 32,40,000. Payment was made by issuing 10% Debentures of ₹ 100 each at a discount of 10%. Pass the necessary Journal entries in the books of Green Ltd.

Answer» Correct Answer - (i) Dr. Sundry Assets A/c by ₹ 40,00,000, Cr. Sundry Liabilities A/c by ₹ 7,00,000; Strong Ltd .by ₹ 32,40,000 and Capital Reserve A/c by ₹ 60,000;
(ii) Dr. Strong Ltd. By ₹ 32,40,000 and Capital Reserve A/c by ₹ 3,60,000; Cr. 10% Debentures A/c by ₹ 36,00,000.
Number iof Debentures to be issued = ₹ 32,40,000/ ₹ 90 = 36,000 Debentures .
Discussion
6.

Define Redeemable Debentures.

Answer» Redeemable Debentures : The debentures, which are repayable after a certain period as per the terms of their issue, are called redeemable debentures. Sometimes, they can be redeemed by the company on demand by the holders or at the discretion of the company.
Discussion
7.

Define Non-convertible Debentures.

Answer» Non-Convertible Debentures :The debentures, which are not convertible into equity shares, are called non-convertible debentures.
Discussion
8.

Deepak Ltd. Purchaed furniture of ₹ 2,20,000 from M/s. Furniture Mart. 50% of the amount was paid to M/s. Furnishar Mart by accepting a Bill of Exchange and for the balance the company issued 9% Journal entries in the books of Deepak Ltd.

Answer» (i) Dr. Furniture A/c and Cr M/s Furniture Mart by ₹ 2,20,000.
(ii) Dr. M/s Furniture Mart - ₹ 2,20,000, Cr. Bills Payable A/c - ₹ 1,10,000, 9% Debentures A/c ₹ 1,00,00 and Securities Premium Reserve A/c - ₹ 10, 000.
Discussion
9.

Pass Journal entries. Also give Journal entries for writing off Loss on Issue of Debentures.

Answer» Dr. Securities Premium Reserve A/c by ₹ 10,000 and Statement of profit and Loss by ₹ 20,000,
Cr. Loss on Issue of Debentures A/c by ₹ 30,000.
Discussion
10.

Kitply Ltd. Issued ₹2,00,000, 10% Debentures at a discount of 5%. The terms of issue provide the rapayment at the end of 4 years. Kitplu Ltd. has a balance of ₹ 5,00,000 in Securities Premium Reserve. Pass the Journal entries for issue of debentures and writing off the discount .

Answer» Dr. securites Premium Reserve A/c and Cr. Discount on Issue of Debentures A/c by ₹ 10,000.
Discussion
11.

Newton Ltd. purchased a Machinery from B for ₹ 5,76,000. to be paid by the issue of 9% Debentures of ₹ 100 each at 4% discount . Journalise the trnsactions.

Answer» Correct Answer - 6,000 Debentures of ₹ 100 each .
Discussion
12.

Romi Ltd. Acquired assets of ₹ 20 lakhs and took over creditors of ₹ 12 lakhs from Kapil Enterprises. Romi Ltd. Issued 8% Debentures of ₹ 100 each at premium of 25% as purchase consideration . Record necessary Journal entries in the books of Romi Lted.

Answer» Correct Answer - No of Debentures Issued - 14,400.
Difference between the value of assets and liabilities taken over is treated as purchase consideration.
Discussion