For more than 30 years, physicians have heard concerns about escalating health care costs, including warnings of dire consequences from unsustainable trends. (c) two or more companies are liquidated. Give any two objectives of internal reconstruction. Enjoy the videos and music you love, upload original content, and share it all with friends, family, and the world on YouTube. In this topic, we will cover some important points of Amalgamation methods, Absorption, purchase consideration & External reconstruction in corporate accounting. d) Give the journal entry for purchase consideration due, in the books of vendor company. a) Creditors b)Shareholders c) Debenture holders d) All of these ... Amalgamation b)External reconstruction c) Absorption d)Internal reconstruction 8. Steps for Reconstruction Scheme | Capital. External reconstruction is more or less same as that of amalgamation in the nature of purchase. 5. The note considers why groups reorganise and some of the key legal issues which may arise on intra-group share and asset transfers. On amalgamation , payment to creditors do not form part Purchase of Consideration. Reduction of share capital 2. On 31st March, 2012, Thin Ltd. was absorbed by Thick Ltd., the latter taking over all the assets and liabilities of the former at book values. Purchase consideration is payable to _____. State the methods of accounting for amalgamation. Lump Sum Method: The purchasing company may agree to pay a lump-sum to the […] Important Objectives. The total of such payment s will be the purchase consideration. Method of internal reconstruction Internal reconstruction is the process of re-arranging he share capital and liabilities. 34. As the business and assets/liabilities are taken over in case of external reconstruction, a purchase consideration is … Internal Reconstruction 89) When liquidation expenses is paid and borne by seller company then it is debited to _____ a. 3. : 0092-313-9911865; email:arshad_mccm@yahoo.com Purchase Consideration Purchase Considerationreferstothe considerationpayable bythe purchasing company to the vendor company for taking over the assets and liabilities of Vendor Company. The most common method of breast reconstruction performed uses tissue expanders and breast implants. purchase consideration. Method # 1. Losses to be written off are to be determined by adding accumulated losses, fictitious assets, overvaluation of assets, under-provision of liabilities, preliminary expenses etc. C Yield Value. 10. While calculating purchase price, the following values of assets are considered (A) Book value (B) Revised Value (C) Average values (D) Market values 4. Under On internal reconstruction, assets are written off except ----- a) land & building b) goodwill e) Mention any four ledger accounts opened in the books of Transferor company under absorption. The following steps are taken into consideration for drafting a scheme, in brief: 1. C External reconstruction. On the other hand, an external reconstruction is a form of corporate restructuring wherein the existing company is liquidated to give birth to a new company, for continuing the business of the existing one. Ileal conduit urinary diversion. Lump Sum Method 2. Unit 5: Internal Reconstruction of Companies ... Purchase Consideration: The amount payable by the purchaser company to the vendors for acquisition of business is called Purchase Consideration or Purchase Price. It also provides an overview of the transaction process when carrying out an intra-group reorganisation. Under net assets method , accumulated profits should not form part of liabilities. View Answer Answer: Absorption ... 33 If the market price of the shares to be given for Purchase Consideration at the time of absorption, of the share is to be determined A Intrinsic Value. Shareholders and debenture holders c. Shareholders and creditors 13. The purchase of an existing company which goes into liquidation by another existing company is known as _____. Goodwill A/c c. Realisation A/c d. ... Purchase consideration must be paid in equity shares by the transferee company except for fraction shares. Trading account. c) Mention the methods of calculating purchase consideration. 3) Discharge of Purchase consideration: The purchase consideration is discharged by the transferee company fully by way of equity shares except the fractions which are issued by way of cash. Loss or profit on realization a/c is transferred by the transferor company. 2. 1 Internal Reconstruction: Under it neither any new company is formed nor any existing company is liquidated. Internal and External Reconstruction 3 ARSHAD ISLAM; contact no. (i) Absorption (45) Accumulated profits include— (c) if the purchase consideration is calculated under Net Assets method (d) if the amalgamation is in the nature of external reconstruction as defined under the Companies Act 34.The difference between the purchase consideration and the net assets of the vendor company, Net Worth or Net Assets Method 3. Generally, purchase B Internal reconstruction. Internal reconstruction - Alteration of Share capital : Alteration of share capital may take the forms of: fresh issue of shares, subdivision and conversion of existing shares and cancellation of unissued share capital. ACCOUNT ESOP, BUY BACK, AMALGAMATION, INTERNAL RECONSTRUCTION If the acquirer revalues the assets of acquiree on amalgamation, it is a case of a. 4,00,000 equity shares … Trading account Profit and … 31) Reconstruction includes all of the following except 32) . Alarms first sounded in 1980 when health care costs rose to 9.2% of the gross domestic product from 5.2% in … When one of the existing companies take over business of another company or companies, it is known as ..... (A)Amalgamation (B)Absorption (C)Internal reconstruction (D)External reconstruction 31. Net Payment Method 4. Ans. The entire purchase consideration is to be paid by Z Ltd. in its fully paid shares. in thousands Date Particulars Debit Credit Part – I (Internal Reconstruction) Loan from bank A/c Dr. To Reconstruction A/c (Being loan from bank waived off to the extent of Rs.60 thousand) 60 False 14) Loss on issue of Debenture Account or debenture discount is a capital loss, not asset. How do you calculate purchase consideration under net assets method ? Internal reconstruction can be defined as the reorganization of the company, without liquidating the existing company and forming a new one. Shareholders b. Purchase consideration using payments method: Total of consideration paid to both equity and preference shareholders in various forms. Internal reconstruction refers to making internal arrangements for overcoming financial difficulties. Intrinsic Value Method (Shares Exchange Method). (a) no company is liquidated. (d) one or more companies go into liquidation. If the two companies have different accounting policies in respect of the same item, then they ... Internal reconstruction (B) Absorption (C) External reconstruction (D) Amalgamation 36. (C)Internal reconstruction (D)External reconstruction 30. b) Distinguish netween External Reconstruction and Internal Reconstruction. a) Payment to shareholders b) Payment to debenture holders ... Internal reconstruction b. Absorption c. External reconstruction d. Amalgamation 56. Purchase consideration (20,000 x 100) Rs.2,00,000 Journal Entries in the books of B Ltd. (Rs. 13) Under net payment method purchase consideration is calculated by adding the various payments made by the purchasing company. External Reconstruction, Internal Reconstruction & Liquidation of Companies | Corporate Accounting II 2 Purchase Consideration Purchase Consideration refers to the consideration payable by the purchasing company to the vendor company for taking over the assets and liabilities of Vendor Company. Mention the methods of winding up of company. It includes the following two methods: 1. Amalgamation of companies is governed by AS 13. B Fair Value. The purchase consideration is agreed at Rs. (ii) External reconstruction (iii) Amalgamation. Since there is no takeover by any company in the case of internal reconstruction, there is no calculation of purchase consideration. Purchase Consideration is settled as per Book Value of the assets and current liabilities taken over only. Who is liquidator ? a. Amalgamation b. Absorption c. Internal reconstruction d. External reconstruction 69) While calculating purchase price, the following values of assets are considered a. Alternation or re-arrangement of share capital All direct & indirect expenses related to business are charged. (ii) External reconstruction (44) X Ltd. goes into liquidation and an existing company Z Ltd. purchases the business of X Ltd. Post-Your-Explanation-1. Bank A/c b. State the two forms of internal re-construction. Purchase b. Shares received from the new company are recorded at - (A) Face value (B) Average price For daily updates for articles, notes , books, ebooks, and online courses directly in your inbox, you can subscribe to our newsletter below via your email. c) Internal Reconstruction d) External Reconstruction 25) The main object of Amalgamation is ..... a) To maximum common benefits b) To reduce Internal Competition c) To minimize Common Expenses d) All the above 26) Excess of purchase consideration over net … Book value b. The Debentures will be taken over by Sarthi ... An internal reconstruction scheme as follows was agreed to by all concerned: (i) Creditors agreed to forego 50% of the claim. 60,000 for X Ltd. and Y Ltd. respectively. As per AS-14 purchase consideration is what is payable to a. Merger c. Internal reconstruction d. External reconstruction 4. 2) Reduction of share capital of a company means reduction in subscribed and / or paid-up share capital. Example: A. Ltd takes over B. Ltd and for that it agreed to pay Rs 5,00,000 in cash. Answer-1. Purchase consideration. 1, 20,000 and Rs. 8. It is a case of— (i) Absorption (ii) External reconstruction (iii) Amalgamation. While calculating purchase price, the following values of assets are considered Ans. 1) In Internal Reconstruction no company is liquidated. Business Purchase A/c Dr. 14,84,000 To Liquidators of Beta Ltd. Account 14,84,000 (Being business of Beta Ltd. taken over) Goodwill Account Dr. 1,40,000 V’SMART EXAM PREP CA INTER GROUP II CLASS TEST 3 SUGGESTED ANSWER – ADV. Purchase b. D Face Value. In return for debentures in X Ltd. debentures of the same amount and denomination are to be issued by Z Ltd. Except for fractional shares, purchase consideration is paid to willing share holders of acquiree in shares of acquirer when amalgamation is in the nature of a. In internal reconstruction, method of calculation of purchase consideration is by ----- a) Net Asset Method b) Net Payment Method c) no purchase consideration required d) none of the above 35. In internal reconstruction, methods of calculation of purchase consideration is 33) Methods of capital reduction 34) While preparing Balance Sheet after reconstructed following points are to be kept in mind 35) 6. When company purchases the business of another company ..... comes into existence. Purchase consideration as per A s - 14, should include cash and securities agreed to be gi ven by the transferor company s ----- a) Shareholders b) Shareholders & debenture holders (c) Credi tors, debenture holders and shareholders ... Internal reconstruction (d) Internal reconstruction 7. ADVERTISEMENTS: The amount of purchase consideration can be computed under any of the following four methods:- 1. d. b. if the amalgamation is in the nature of external reconstruction c. if the amalgamation is in the nature of purchase as defined under AS14 12. treatments of pooling of interests and purchase methods respectively (ii) Computation and meaning of purchase consideration (iii) Problems based on purchase method of accounting only 2 Capital Reduction and Internal Reconstruction (i) Need for reconstruction and Company Law provisions (ii) Distinction between internal and external reconstructions

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