Archive about 'Company Reconstruction'

Internal Company Reconstruction-Accounting Entries For Capital Reduction Where Capital Is Not Represented by Available Assets

Tweet Accounting Entries Used In Capital Reduction Where Capital Is Not Represented By Available Assets (1) Being Amount Written Off From Share Capital Account Debit Credit Share Capital Account XXX Capital Reduction Account XXX (2) Being Reserves Utilized For Capital Reduction Scheme Debit Credit Reserve Account XXX Capital Reduction Account XXX (3) Being Amount Written […]

Internal Company Reconstruction-Capital Reduction Where Capital Is Not Represented by Available Assets

Tweet Situations In Capital Reduction Where Capital Is Not Represented by Available Assets:- large amount of accumulated losses and or some of the assets are overvalued/overstated some of the assets are fictitious Illustration: Balance Sheet Of XYZ Ltd $ Total Assets 500,000 Less:Current liabilities (450,000) Net Assets 50,000 Ordinary Share of $1 each 600,000 Accumulated […]

Internal Company Reconstruction-Capital Reduction By Refunding Surplus Capital To Shareholders (Part B)

Tweet Internal Company Reconstruction-Capital Reduction As described, basically there are three situations refunds any surplus capital cancel paid up capital not represented by assets reduces/write off uncalled capital on any of the shares Accounting For Company Reconstruction- REFUND OF SURPLUS CAPITAL In this case, it is merely a cash outflow where money are return to the […]

Company Reconstruction-Type (Part 1)

Tweet Company Reconstruction:- · A term used to describe the drastic formal changes in a company’s capital structure as a result of certain circumstances. Type of Reconstruction:- · Divided into two(2) types namely: · Internal reconstruction · External reconstruction Internal Reconstruction:- · Undertaken by companies that have surplus capital or companies whose capital has been […]

Purchase of A Partnership's Business(Part 2)

Tweet When a partnership is taken over by a limited company, the partnership is considered as dissolved and the business is sold as a going concern to the limited company. Accounting entries in the Purchaser’s book ( limited company) is similar to the sole trader’s business. Refer to Part 1 re: purchase of a sole-trader […]

Purchase Of A Sole Proprietor’s Business (Part 1)

Tweet This type of purchase of business is usually a mere “conversion” of a sole-proprietorship to a limited company where the seller (sole-proprietor) will be allotted shares in the Limited Company. In the Purchaser’s books, the following steps need to be taken: (a) transfer all assets & liabilities into the Purchase of Business a/c (b) […]

Purchases Of Businesses By Limited Companies ( Part 1)

Tweet (A) Basic Principles when a limited company takes over another business (1) It can satisfies the purchase consideration by giving cash, shares or debentures assuming the trade liabilities any combination of cash, shares/debentures/assuming trade liabilities (2)  the assets acquired are often different from the values shown in the vendor business’s book ( example : […]