Help Required from CA Final Students

Final 723 views 4 replies

sivaram

Asst Mgr-Taxation

6918 Points Joined April 2009

Type –Inter Company Holdings-Purchasing Company in selling Company

In the Books of Transferor

Amount Due to Outside Shareholders

a. Share Capital (Remaining Capital after cancellation) and Reserves in Full

Note : Reserves to the extent of Purchasing Company interest is also included in the above Reserves since the impact on amount due to outside shareholders remains the same even if prorate share of reserves is transferred to Realisation Account since Realisation profit will increase by the same amount.

Can any one can give Numerical Illustration to make me understand the higlighted Point to a layman like me to understand

Thanks in advance

Replies (4)

Ramanan Krishnamoorthy

Chartered Accountant

158 Points Joined March 2007

Hi Sivaram

Please see the attatched file. I think it will help you

Regards

Ramanan Krishnamoorthy

sivaram

Asst Mgr-Taxation

6918 Points Joined April 2009

Thanks Mr Raman Krishnamoorthy but the wordings are Realisation profit increases by same Amount but here in your workings Realisation Profit Differs

Ramanan Krishnamoorthy

Chartered Accountant

158 Points Joined March 2007

Hi Sivaram

Please read your query again and see the example.

If you cancel the prorata share of purchasing company in reserves by debiting reserve and crediting realisation. Realisation pft will be increade by amount which is equal to Prorata share of Pur Comp in reserves.

Same amount means realisation prt increased by amt equal to prorata share