When same set of books are continued

05/05/2021 1 By indiafreenotes

But if the company desires to continue with the same set of books, the following accounting treatment should be suggested for the purpose:

(i) Open Revaluation Account:

A Revaluation Account should be opened where increased and decreased values of assets and liabilities are to be adjusted as we have seen in case of an admission of a partner. The profit or loss so made should be transferred to capital accounts.

(ii) Close Reserve:

Any balance of accumulated or undistributed profits or reserves should be transferred to capital accounts in profit-sharing ratio.

(iii) Close assets and liabilities not taken over:

Any asset or liability which is not taken over by the purchasing company should be transferred to capital accounts in profit- sharing ratio. But when an asset is worth its book value, the same can be transferred to capital accounts according to the ratio of final claim till the value of the asset is fluctuating.

(iv) Close Capital Accounts:

The Capital Accounts are then closed by transferring to Share Capital Amount, or Debentures Account or Cash Account.