Query about two entries in case of internal reconstruction?

A/c entries 1635 views 2 replies

Ankur

252 Points Joined March 2011

hello friends, plz help me on the following two doubs regarding internal reconstruction;

1. if it is not stated in the question to write off goodwill under the reconstruction scheme whether goodwill should be written off or not?

2. if reserve, specially capital reserve is already in the given in the balance sheet then whether the balance of such capital reserve be taken into reconstruction account in case of reconstruction accounts value falling short of the aggregate of the amounts to be written off?????????

plz help me

Replies (2)

Bhuvnesh kumar

23 Points Joined September 2015

If salary is outstanding what entry willbe pass

Kaushik Sekar

Article Assistant

66 Points Joined July 2014

Hi Ankur.

The very purpose of Internal Reconstruction is to alter your Profit and Loss (Debit balance). It is on the basis of your assumption whether to write off goodwill or not, if not given in the question. GENERALLY, goodwill is written off at the time of reconstruction.

As I already said that Internal Reconstruction is a process of altering you financials, you should not have any deficit for writing off any assets. Hence, you can use your Capital Reserve to knock off the assets to be written off, in case of insufficiency in Reconstruction Account.