(a) How Amalgamation is different from Liquidation of companies?

(b) With the help of Cash Account and Schedule of Fixed Assets given in Table 4, 5 and 6, prepare CFS by using Indirect Method:

i. Tax charge for the year = $400,000

ii. Opening balance on Tax Liability = 100,000

iii. Other Expenses (Insurance, Paid in Advance) on 30 June.

iv. Insurance paid 300,000 in 2018, and for 2019 it is 400,000

   

 

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Table No. 4: Opening Balance Cash from Cash Sales Cash from Credit Sales Cash from Issuance of Shares Cash from Sales of Office Building Table No. 5: Heads Summarized Cash A/c $500 Wages 3,500 Other Expenses 5,750 1,200 970 $11,920 Cash paid to Suppliers of Firm Paid Taxes Cash paid on Financial Lease Dividends 2018 Interim Dividends 2019 Closing Balance Schedule of Fixed Assets Plant $10,000 4,730 000 Cost at 01-01-2019 Acquisition Disposal Cost at 31-12-2019 Accumulated Depreciation 01-01- 2019 Charge for Year Disposal Accumulated Depreciation 31-12- 2019 $14,730 3,500 650 000 $4,150 Building $15,000 000 (5,000) $10,000 6,000 1,500 (4,500) $3.000 Total $25,000 4,730 (5,000) $24,730 9,500 2,150 (4,500) $7.150 $1,350 600 4,320 100 700 100 50 4,700 $11.920 Table No. 4: Opening Balance Cash from Cash Sales Cash from Credit Sales Cash from Issuance of Shares Cash from Sales of Office Building Table No. 5: Heads Summarized Cash A/c $500 Wages 3,500 Other Expenses 5,750 1,200 970 $11,920 Cash paid to Suppliers of Firm Paid Taxes Cash paid on Financial Lease Dividends 2018 Interim Dividends 2019 Closing Balance Schedule of Fixed Assets Plant $10,000 4,730 000 Cost at 01-01-2019 Acquisition Disposal Cost at 31-12-2019 Accumulated Depreciation 01-01- 2019 Charge for Year Disposal Accumulated Depreciation 31-12- 2019 $14,730 3,500 650 000 $4,150 Building $15,000 000 (5,000) $10,000 6,000 1,500 (4,500) $3.000 Total $25,000 4,730 (5,000) $24,730 9,500 2,150 (4,500) $7.150 $1,350 600 4,320 100 700 100 50 4,700 $11.920

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A Amalgamation vs Liquidation Amalgamation is the process of combining two or more companies into a single legal entity It involves a transfer of assets and liabilities from one entity to another with ... View the full answer