Amalgamation and Absorption of Companies: Journal Entries
This content provides detailed journal entries for the amalgamation and absorption of companies, covering topics such as asset and liability transfers, purchase prices, treatment of debentures and preference shares, realization profits or losses, and settlement of purchase prices. It also explains the transfer of share capital, accumulated profits, reserves, and more during the process.
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Presentation Transcript
AMALGAMATION ABSORPTION OF COMPANIES JOURNAL ENTRIES
1. Asset Transfer to Realisation Realisation A/c .Dr To Assets A/c 2. Liabilities Transfer to Realisation Liabilities A/c .Dr To Realisation A/c 3. Purchase price received by Purchasing (New) or limited Company to firm. Purchasing Company A/c .Dr To Realisation A/c
4. If the debentures or pref shares are issued at premium. Realisation A/c Dr To debentureholders A/c To Pref. Shareholders A/c 5. If the debenture issued at discount Debentureholders A/c ..Dr Pref. Shareholders A/c .Dr To Realisation A/c . 7. Realisation profit /Loss 8. Settlement of Purchase price in mode of e.s / deb/ cash paid by purchasing company to purchased company. 9. When the share capital & Accumulated profits or reserve transfer 10. When the profit& loss A/c Dr balance Transfer.
7. Realisation profit /Loss Realisation A/c ..Dr To Equity shareholders A/c 8.Settlement of Purchase price in equity shares deb/ cash paid by purchasing company to purchased company. Equity Shares in(Purchasing Com.)A/c .Dr Debentures in (Purchasing Com.) A/c Dr Cash/bank A/c Dr To Purchasing Company A/c
9. When the share capital & Accumulated profits or reserve transfer [All Funds, Reserves, P&L Cr bal] Equity Share capital A/c ..Dr Forfeited Shares A/c ..Dr Share premium A/C Dr Deb. Redemption Funds A/c ......Dr Profit&loss A/c ..Dr To Equity Shareholders A/c . 10. When the profit& loss A/c Dr balance Transfer. Equity shareholders A/c Dr To Profit&loss A/c .. To Preliminary Exps A/c
11. Purchase price Equity shareholders A/c ..Dr To Equity shares in purcha.com A/c To Deb. In purchasing com. A/c To Pref.Share in purchasing Com. A/c To Cash/bank A/c [Note- 1. transfer capital balances 2. transfer cash/bank balances
