A Ltd Acquires B Ltd.
How to treat contingent liability in case of Amalgamation?Explain with Logic.
Bills receivable discounted by A Ltd. were
all accepted by B Ltd.
Bills Payable (A Ltd)-20,000
Bills Payable (B Ltd)-20,000
Bills Receivable (A Ltd)-50,000
BR (B Ltd)-10,000
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Amalgamation
Replies (5)
Any additional payment w.r.t the contingency should be included in the consideration if payment is probable and a reasonable estimate can be made.
What will be effect on BR and BP amount after Amalgamation??and Why?
is this BP/BR related to the contingency ?
| Originally posted by : bibin | ||
 |
is this BP/BR related to the contingency ? |  |
Yes
After Amalgamation there will be no set-off for inter-co B/R and B/P as the bills are discounted. There will be no contingent liability but the discounted bills are actual liability to bank and are reflected in B/P.
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