When the value of assets as taken over by the purchasing company is at a value that is different from the one appearing in the books , why do we still record the assets at book value?
Please reply :)
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Doubt - realization account
Replies (9)
Dear gauri
Please expain your doubt with some amounts ... question is not clear.
Dear
Are you talking about amalgamation cases??
Relisation accounts are prepared to find out profit or loss on disposal of assets. While we making disposal of assets we take's all book value of assets and liability in corresponding side and taking realisable value in credit side. Anf after balancing it shows the net effect on disposal.
If u will take purchasing price even though u have to deduct book value to find out profit or loss. hence first transfer all assets at book value and then write relisable value to credit of relisation account.
Hey Manoj,
Yes I am talking about preparing a realisation account during amalgamation. :)
Thankyou Saroj Kumar!
ur welcome Gauri. :-)
in amalgmation we take the asset and liabilities at book value not on market value...
as the historical cost concept.....
Thankyou for your reply Rahul Jain :)
Today do we have concept of Realization A/c in the scenario ?
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