Amalgamations-partnership, Financial Accounting

AMALGAMATIONS

Two sole traders and a partnership,two or more partnerships or a sole trader and other partnerships may combine or join together to forma a single partnership.

The benefit of amalgamation includes:

  • An expansion of the capital base
  • Wider pool of experts

 

In accounting, for amalgamation, the process involves closing off the books of the individual partnerships or businesses and preparing the opening balance sheet of the newly combined business. The process of closing the books of individual businesses follows the same procedure as that of dissolutions but instead of assets being sold, they are being taken over in the new business.

Therefore a realization account is opened whereby the book values of the assets are debited and newly agreed values are credited. The balance of the realization account represents a profit or loss on amalgamation which is closed off to the capital accounts according to the old profit sharing ratio.

The capital required by each partner in the new business should be balance carried down (c/d) in the partners capital accounts. The balancing figures it the capital accounts will be the cash that will be either paid out or introduced by a partner.

The remaining cash in an individual business will now be transferred to the newly combined business.

Posted Date: 12/11/2012 7:16:06 AM | Location : United States







Related Discussions:- Amalgamations-partnership, Assignment Help, Ask Question on Amalgamations-partnership, Get Answer, Expert's Help, Amalgamations-partnership Discussions

Write discussion on Amalgamations-partnership
Your posts are moderated
Related Questions
Function to return the phase of a complex number 1. What is Annuity kind of cash flow? 2. What do understand by Portfolio risk? 3. What do you understand by 'Loan Am

This assignment requires you to pretend you have $10,000 to invest for 4 weeks.  You are to "invest" this money in stocks or mutual funds and to track your investments on a weekly

STATEMENTS OF FINANCIAL POSITION: as at 31 December 2011 Group                                 Note         2011                         2010        RM'

Personal representatives powers Personal representation shall have the following powers: 1) To enforce for the deceased's estate by suit or otherwise all causes of action that

Illustration: Holding company with direct share holding Rain Ltd., Storm Ltd. and Thunder Ltd. are in the business of manufacturing tents. Their balance sheets as at 30 September

Generally Accepted Accounting Principles (GAAP) are guidelines for companies to follow as tehy prepare and issue financial statements. Let's start by getting an understanding of wh

This subject has really beeen difficult for me. This is, by far, the most challenging assignment I have had to deal with. Please help! If someone can do it for me, that would be ev

Assume that prices and wages adjust rapidly so that the markets for labor, goods, and assets are always in equilibrium. What are the effects of each of the following on real money


Bakers Bagels LLC produces and sells 20 types of bagels by the dozen. Bagels are priced at $6.00 per dozen (or $0.50 each) and cost $.020 per unit to produce. The company is consid