Page 67 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Accounting for Companies – II

notes To Various Reserve A/c
To Business Purchase A/c

(Being sundry assets, liabilities and reserves of Transferor Company taken over)

Notes (a) All the assets and liabilities will be shown individually at the book values.
(b) If debit side is greater than credit side, difference will be credited to the Capital Reserve
A/c and if credit side is greater than the debit side, difference will be debited to the
Goodwill A/c.

(3) For making the payment of purchase consideration to the liquidator of the transferor
company:
Liquidator of Transferor Company A/c Dr.
To Bank A/c

To Debentures A/c
To Equity Share Capital A/c
To Preference Capital A/c
(Being discharge of purchase consideration in cash, debentures and shares)

If shares or debentures are issued on discount, discount account will also be debited and if shares
or debentures are issued at premium, premium account will be credited in the above entry.
(4) For the payment of liquidation expenses of the transferor company
Goodwill A/c Dr.

To Bank A/c
(Being payment of liquidation expenses)
(5) For maintaining the statutory reserve-

Amalgamation Adjustment A/c Dr.
To statutory Reserve A/c
(Being incorporation of statutory reserves of the transferor company)
(6) For the payment of preliminary expenses-
Preliminary Expenses Account Dr.

To Bank A/c
(Being payment of preliminary expenses)
(7) For the payment of various liabilities of the transferor company-
Various Liabilities A/c Dr.

To Bank A/c
To Debentures A/c
To Share capital A/c
(Being payment of liabilities of the transferor company)

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