Read the following text. Based on the information given,
Akhil Ltd purchased a running business from Sunny Ltd for a sum of Rs 22,00,000 by issuing 20,000 fully paid equity shares of Rs 100 each at a premium of 10%. The assets and liabilities consisted of the following : Machinery Rs 7,00,000, debtors Rs 2,50,000, stock Rs 5,00,000, building Rs 11,50,000 and bills payable Rs 2,50,000.
1. Assertion (A): Akhil Ltd issued equity shares to Sunny Ltd for consideration other than cash.
Reason (R): Akhil Ltd did not receive cash from Sunny Ltd for issue of shares on purchase of running business.
2. Assertion (A): The net assets purchased from Sunny Ltd was Rs.23,50,000 and Akhil Ltd issued in return its equity shares at a premium of 10% for a sum of Rs.22,00,000, the difference being capital profit.
Reason (R): The difference Rs.1,50,000 is credited to statement of Profit &Loss.
(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(B) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
(C) Assertion (A) is true but Reason (R) is false.
(D) Assertion (A) is false but Reason (R) is true
