amaglamention

1. PRESENTED INTERNAL
SEMINAR OF
COMPANY ACCOUNT
Submitted By:
Vardhan jain
B.Com Ist year
13D244

2. TOPIC
PURCHASE OF BUSINESS OF
ACCOUNTING TREATMENT

3. WHAT IS PURCHASE OF
BUSINESS ?
When a sole proprietor or partnership
converts the existing business into a
company (Public or private company)
with a view to securing to itself the
advantages of a company . (
Alternative the business may be sold
to an existing company this is called
purchase of business.

4. ACCOUNTING ENTRIES
The following entries
are made in case of
purchase of business.

5. In the books of purchasing company
S.no
Particular L.
. F.
Amount Dr Amount Cr
1.
2.
On purchase of business
Business purchase A/C
Dr
To vendor’s A/C
(Being purchase of business)
On assets and liabilities taken over
Sundry assets A/C
Dr
To sundry liabilities A/C
To business purchase A/C
To Capital reserve A/C
OR
Sundry assets A/C
Dr
Good will A/C
Dr
To sundry liabilities A/C
To business purchase A/C

7. IN THE BOOKS OF VENDOR COMPANY (VENDOR)
S.no. Particular L.F. Amount Dr Amount Cr
1.
2.
3.
On assets taken over by the purchasing
company
Realisation A/C
Dr
To sundry assets A/C
(Being assets taken over by the purchasing
co.)
On liabilities transferred
Liabilities A/C
Dr
To realisation A/C
(Being transferred on liabilities)
On second of purchase consideration
Purchasing company A/C
Dr