CA Inter P1 · Chapter 11 · Question 10 of 10
Case: In the books of Gauri Ltd (transferor), assets transferred to the realisation account have a book value of ₹70,00,000 and liabilities transferred have a book value of ₹25,00,000. The purchase consideration receivable from the transferee is ₹52,00,000, and Gauri Ltd itself pays liquidation expenses of ₹1,00,000. The profit on realisation is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) ₹6,00,000
Explanation
Realisation account: debit assets 70,00,000 and liquidation expenses 1,00,000; credit liabilities 25,00,000 and purchase consideration 52,00,000. Profit = 52,00,000 + 25,00,000 - 70,00,000 - 1,00,000 = ₹6,00,000. This profit is transferred to the equity shareholders' account.
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