investment allowance resrve
This query is : Resolved
21 September 2010
what is investment allowance reserve, what is its treatment for accounting entries..
21 September 2010
investment allowance reserve is a tax concept u/s 32 of income tax act which has been omitted from the act since 2001-02.Such reserve is required to be made for 8 years otherwise exemption provided earlier under under income tax act shall be revoked.
in accounts it is like a ordinary reserve
in case of amalgamation entry is made as follows as per AS-11
So at the time of amalgamation a symbol entry is made in the books of purchasing company
Statutory reserve a/c dr.
To investment allowance reserve
And after completion of specified period it is reserved
In the books of selling company(amalgamating co.) it is treated as profit and loss accounts
in accounts it is like a ordinary reserve
in case of amalgamation entry is made as follows as per AS-11
So at the time of amalgamation a symbol entry is made in the books of purchasing company
Statutory reserve a/c dr.
To investment allowance reserve
And after completion of specified period it is reserved
In the books of selling company(amalgamating co.) it is treated as profit and loss accounts
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