Vikas (Business) (353 Points)
11 March 2013I have problem in understanding Chapter of Demerger in Accounts of Ca Final. I read in the book of Paduka treatment in case of demerger but numerical solved are quite different. Even, M. Vijay kumar has given same solution. Basic problem is in understanding dermeger loss or capital reserve. Can anybody help me in this matter.
Saurabh Maheshwari
(B.com,ACA)
(5923 Points)
Replied 11 March 2013
For Demerged Co.-(i.e the co. whose divsion has got separeted into new co.)
Assests Trf
Less-Liab Trf
If Assests trf is more than liab trf, then difference is Loss on demerger because the co. has transferred its assets in excess of liab.
If liab trf is more than assets trf than diff is Cap Res because here co has reduced its liab by transferring lesser assets.
Vikas
(Business)
(353 Points)
Replied 11 March 2013
But, in many questions it is seen. No entry is made for shares issued to division to be sold. In some case the entry is passed Capital Reserve Dr.
To Resulting Co.
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