In this article we will discuss about the accounting for liquidation of a company. Liquidation— Bankruptcy: When an insolvent company is to be liquidated, the provisions established by Chapter 7 of the Bankruptcy Reform Act regulate the process. This set of laws was written to provide an orderly and equitable structure for selling assets and paying debts. To this end, [...]
Here is a compilation of top three problems on liquidation of companies with its relevant solutions. Problem 1: The Ultra Optimist Ltd. went into liquidation. Its assets realised Rs 3, 50,000 excluding amount realised by sale of securities held by the secured creditors. The following was the position: Share Capital: 1,000 shares of Rs 100 each Rs 1,00,000 Secured [...]
In this article we will discuss about:- 1. Meaning of Liquidation 2. Liquidation and Insolvency 3. Consequences of Winding Up. Meaning of Liquidation: The word 'Liquidation' has not been used anywhere in the Companies Act, 1956. It is the word 'winding up' which has been used in this Act. By winding up of a Company, we mean, "Winding up of [...]