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Amalgamation

Shobhit Jain (CA) (4896 Points)

24 May 2016

A Ltd Acquires B Ltd.
How to treat contingent liability in case of Amalgamation?Explain with Logic.
Bills receivable discounted by A Ltd. were
all accepted by B Ltd.
Bills Payable (A Ltd)-20,000
Bills Payable (B Ltd)-20,000
Bills Receivable (A Ltd)-50,000
BR (B Ltd)-10,000

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5 Replies

bibin (Article) (29 Points)
Replied 24 May 2016

Any additional payment w.r.t the contingency should be included in the consideration if payment is probable and a reasonable estimate can be made.

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Shobhit Jain (CA) (4896 Points)
Replied 24 May 2016

What will be effect on BR and BP amount after Amalgamation??and Why?

bibin (Article) (29 Points)
Replied 31 May 2016

is this BP/BR related to the contingency ?

Shobhit Jain (CA) (4896 Points)
Replied 04 June 2016

Originally posted by : bibin
	is this BP/BR related to the contingency ?

Yes

CA. Sunil Gokhale (Teacher) (1484 Points)
Replied 13 July 2016

After Amalgamation there will be no set-off for inter-co B/R and B/P as the bills are discounted. There will be no contingent liability but the discounted bills are actual liability to bank and are reflected in B/P.