222

$show=home

Welcome to Accounting Education

The Free Online University with 3400+ Accounting contents as study material which can watch, read and learn anyone, anywhere.

Start your studies

$show=home

Why Accounting Education Important


Free
Simple
Have Quality Study Material
Taught by Expert

Connect Vinod Kumar (Educator)

Why Accounting Education Volunteer


Free training
It's educational
It's fun
It helps others

Become Volunteer Teacher

Accounting for Corporate Restructuring

Introduction

In the accounting for corporate restructuring, we treat the cost and losses of simple and internal restructuring, asset based restructuring, capital restructuring, amalgamation and absorption. This is CA Final's financial reporting topic. Examiner expects your knowledge of this topic. First of all we discuss about the treatment of cost and losses of simple and internal restructuring. In this treatment, we have to record of cost of changes in operation, cost of closing any plant or product line, cost of termination the services of employees and other legal and advertising charges.

{A} Accounting Treatment for Simple and Internal Corporate Restructuring 

Following Steps will be useful in this accounting :

1. # All cost and losses which have been identified in corporate restructuring will be shown in the liability side before actual payment.

2.# In accounting for corporate restructuring, it is must to know the commitment date. For example, on 15th Oct. 2010m we have decided to terminate the service of our 500 employees by giving million dollar under our corporate restructuring contract, but it has approved from both parties in 1st march 2011 but before closing of our financial year. So, in our financial statement, final payment to 500 employee will be shown as liability.

3. # Cost of future benefit will not include in it.

4. # Liability will be recognized when company has obligated to pay due of contract.

{B} Accounting for Corporate  Asset based Restructuring

In corporate asset based restructuring, we include merger, acquisition, demergers and asset swap. merger means to join two or more company for working. Acquisition means to buy other company. Demergers means to transfer of part of company in other by giving the free shares of new company to existing shareholders. Asset swap means to sell the asset of company for restructure. In the accounting for these corporate restructuring, we have to pass proper journal entries and to show the effect of these restructure in our financial statement. Following is its example


Journal Entries in the books of Diverse Ltd. 

In this question, diverse ltd demerge into two companies One is sunrise ltd and other is khajana ltd.

1. Our investment is taken over by khajana ltd. So, receiver of khajana ltd will be debit, our investment goes out, so our investment will credit

Khajana Ltd Account Dr.  800 Crores

Investment Account Cr.  800 Crores

2. Khajana Ltd also has taken over our unsecured loan, with this, our unsecured loan liability decreased, so it will be debit and khajana ltd will become the giver of the payment of our this  liability, so khajana ltd account will credit. 

Unsecured Loan Account Dr. 600 crores 

Khajana Ltd. Account Cr. 600 crores 

3. Because difference between investment takeover and unsecured loan account is 200 Crores, it means same will be equity share capital of khajana ltd transferred from diverse ltd. 

Equity share capital account Dr. 200 crores

Khajana Ltd account Cr. 200 crores

4. Entry for transfer of assets and liabilities to sunrise ltd. (Amount in crores)

Sunrise ltd Dr. 10

Provision for depreciation account Dr 30 

Secured loan against fixed assets account Dr. 300

Secured loan against working capital account Dr.  100

Current liability account Dr. 1700 

Fixed asset account Cr. 600

Current asset account Cr.  1500

Capital Reserve Cr. 40

5. Transfer of Equity shares in Sunrise ltd

Equity shares of sunrise ltd Dr. 10 crores

Sunrise ltd Cr. 10 crores 

6. Issue of convertible debentures by sunrise to diverse ltd will be 

Investment in Debentures account Dr. 500 crores

Bank account Cr. 500 crores

7. Diverse ltd bonus shares issue to existing shareholders 

Revenue Share to Equity Share Capital account Dr. 250 Crores

Equity Share capital account Cr.  250 Crores

You can now easily make balance sheet of diverse ltd, khajana ltd and sunrise ltd. For more reference, see the example in ICAI's pdf at http://www.icai.org/resource_file/19329sm_finalnew_cp4.pdf

Accounting for Amalgamation Restructuring

If you want to know accounting for amalgamation, you can learn it at here.

Related : CA Financial Reporting Notes

COMMENTS


Name

access,2,account,87,accountant,92,Accounting,679,accounting definitions,99,accounting ebook,3,Accounting education,85,accounting procedure,2,accounting process outsourcing,2,Accounting Software,54,advance,3,advertising,6,africa,7,Amalgamation,6,amendments,16,announcements,61,Annuity,2,assets,51,audit,46,auditing,41,Australia,2,B.Com.,22,balance sheet,80,bank,111,Bank reconciliation,12,banking,33,basic accounting,110,BBA,1,benefits,13,best,50,bill,12,black money,3,blog,12,bloggers,7,book keeping,4,bookkeeping,2,Branch Accounting - full tutorial,8,budget,35,Budget variance,13,business,65,businessman,9,CA,29,calculator,4,canada,3,capital,72,capital budgeting,27,career,20,cash,40,cash book,8,cash flow statement,8,Chiense,1,children,13,china,6,class,3,coaching,2,coins,2,college,6,commerce,10,commerce students,7,company,36,computer,9,computer accounting,1,conference,4,Contact vinod kumar,1,Control Your Spending,27,corporate accounting,69,cost,159,cost accounting,194,cost center,8,cost centre,1,CPA,2,credit,18,credit card,10,cs,10,currency,35,data,11,Debit and credit,16,debit cards,1,debt,62,debtor,21,degree,6,depletion,2,depreciation,38,Diwali Messages,12,documents,4,dollar,5,domain,3,Downloads,3,Dubai,1,e-accounting,17,earning,17,education,246,Education Loans,6,email,15,employee,4,EPF,2,ERP,7,euromoney,1,examination,7,excel,17,excise duty,6,expenses,65,facebook,7,factor of loan,1,fans,2,feature,32,fifo,5,FII,4,fiji,1,finacle,1,finance,821,Finance Journal Entries,4,Financial,133,financial accounting,144,fire insurance,3,flickr,2,flow,4,forensic,4,forex,21,formula,8,france,1,fraud,6,free,2,fun,34,function,1,fund,48,GAAP,36,GDP,1,gdr,5,germany,1,gold,7,goodwill,4,goodwill accounting,3,google,34,google apps,3,google apps,1,google base,1,google buzz,1,google calendar,1,Google docs,38,google finance,3,google fusion tables,1,google talk,5,govt.,5,GST,33,guide,85,health,6,Hindi,2,Hindi Language,3,history,3,holding company,3,How to treat FBT in Tally 9,1,HRA,3,ICAI,11,ICAWI,3,ICICI Bank,1,IFRS,10,income,17,income statement,11,Income Tax,7,India,57,indian railway,1,Indonesia,1,inflation,4,inflation accounting,3,infographics,8,information,7,inspiration,175,insurance,14,insurance accounting,2,Intangible,3,interest,26,international,7,Internet,41,Introduction of Tally 9,1,inventory,41,investment,135,investment in Shares,6,invoice,3,IT,1,Japan,1,Job costing,4,journal entries,135,Journal Entries eBook Help,4,Kalculate,1,keyboard,3,kuwait,2,laptop,2,law,4,LBT,1,learning,36,lease,5,lecture,11,ledger,15,leducation,1,Leverage Analysis,7,liabilities,16,lifo,3,linkedin,1,loan,74,logical point,1,loss,5,loss of profit,1,M.Com.,5,m.phil,2,malaysia,3,management accounting,129,manual accounting,4,manufacturing account,1,market,11,marketing,3,mastercard,2,material,13,MBA,14,MCA,1,media,4,migration,2,mobile,9,money,61,ms word,3,ms. excel,14,multi currency in tally 9,1,Multicurrency Accounting,3,mutual fund,30,national security,1,new and sacrifice ratio,1,new york times,1,new zealand,1,news,1,NGO,5,nonprofit-accounting,7,North Georgia Mountains,1,Notification,1,NPV,17,NSE,1,odbc,2,office,10,oman,1,online application,2,online accounting,11,Online Accounting Course,4,otcei,1,pakistan,3,parents,3,Partnership,1,pay pal,3,pdf,4,Personal Finance,6,pie chart,1,pie chart of income,2,pnb,4,podcast,1,ppf,1,presentation,10,price,7,privacy policy,2,prof. vinod kumar,13,profit,24,profit and loss account,11,project management,11,provision,13,purchase,9,puzzles,2,quickbooks,2,Quote,22,quotes,42,quotes of svtuition,1,rating agency,2,ratio analysis,34,RBI,7,readers,13,real estate,13,rectification of errors,11,remote control,2,reports,10,reserves,8,responsibility accounting,4,retirement,2,revenue,3,Revenue reserves,2,review,7,risk,11,rupees,9,salary,5,sale,12,saudi arabia,1,saving,19,sbi,9,scholarship,2,school,1,SEBI,13,security,30,service tax,23,share,20,share trading,15,Shares,16,shri lanka,3,singapore,2,sms,6,social accounting,7,society,5,solution,214,South Africa,1,stock,24,stock exchange,22,structure,6,student,39,students,69,study,21,subsidiary company,2,svtuition,13,swiss bank,2,tally,99,tally 9,8,Tally 7.2,8,Tally 9,42,Tally.ERP 9,59,tanzania,2,tax,94,Tax Accounting,30,TDS,15,teacher,62,teaching,112,technology,33,test,40,testimonial,15,testimonials,15,thailand,1,tips,60,trading,5,trading on equity,2,transaction,7,trend,12,trial balance,13,truthfulness,1,tuition,3,twitter,10,UAE,5,UGC - NET Commerce,13,UK,11,United Arab Emirates,1,university,9,usa,25,valuation,8,VAT,22,Video,34,Voucher and vouching,4,Wealth,8,wikipedia,25,working capital,29,youtube,14,
ltr
item
Accounting Education: Accounting for Corporate Restructuring
Accounting for Corporate Restructuring
http://3.bp.blogspot.com/-DHF5Tsu8Vzs/TlssyI9B-HI/AAAAAAAAG1A/d4AnuqosfC0/s1600/question.PNG
http://3.bp.blogspot.com/-DHF5Tsu8Vzs/TlssyI9B-HI/AAAAAAAAG1A/d4AnuqosfC0/s72-c/question.PNG
Accounting Education
https://www.svtuition.org/2011/08/accounting-for-corporate-restructuring.html
https://www.svtuition.org/
http://www.svtuition.org/
http://www.svtuition.org/2011/08/accounting-for-corporate-restructuring.html
true
2410664366776677676
UTF-8
Loaded All Posts Not found any posts VIEW ALL Reply Cancel reply Delete By Home PAGES Contents View All RELATED CONTENTS FOR YOUR LEARNING Topic ARCHIVE SEARCH ALL POSTS Not found any post match with your request Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS PREMIUM CONTENT IS LOCKED STEP 1: Share to a social network STEP 2: Click the link on your social network Copy All Code Select All Code All codes were copied to your clipboard Can not copy the codes / texts, please press [CTRL]+[C] (or CMD+C with Mac) to copy