CA Inter P1 · Chapter 11 · Question 5 of 10
Case: On amalgamation, the trade payables of Vimal Ltd (transferee) are ₹18,00,000 and those of Waman Ltd (transferor) are ₹9,00,000. Waman Ltd's payables include ₹3,00,000 owed to Vimal Ltd for goods supplied. The trade payables in the balance sheet of Vimal Ltd after amalgamation are:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) ₹24,00,000
Explanation
Inter-company owings are eliminated on amalgamation because a company cannot owe money to itself. Combined payables = 18,00,000 + 9,00,000 = 27,00,000; less the mutual owing of 3,00,000 = ₹24,00,000. The corresponding receivable in Vimal Ltd's books is also eliminated.
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