Question

Corporda Accounting
11.64
II. The liquidator of a company is entitled to a remuneration of 3% on the amounts
realised (excluding cash in hand) and 2% on the amount distributed to the unsecured
creditors. Unsecured creditors, including preferential creditors of Rs. 5.000,amounted
to Rs. 40,000
Debentureholders were paid Rs. 51,875 together with interest. Preferential creditors
were paid in full. Expenses of liquidation come to Rs. 510.
Cash on hand Rs. 1,000 and assets realised Rs. 79.000. Calculate the liquitors total remuneration.
​

Answer 1

The total remuneration for the liquidator is 3,140.

The total amount of expenses and payments to debentureholders and preferential creditors is

51,875 + 40,000 + 510 = 92,385

The amount realized excluding cash on hand is

79,000 - 1,000 = 78,000

The liquidator's 3% remuneration on amount realized is

78,000 × 3% = 2,340

The liquidator's 2% remuneration on amount distributed to unsecured creditors is 40,000 × 2% = 800

The total remuneration for the liquidator is 2,340 + 800 = 3,140.

• Liquidator: A person appointed to wind up or dissolve a company, sell its assets, and distribute the proceeds to creditors and shareholders.

• Remuneration: A fee or compensation paid to the liquidator for their services.

• Amounts realized: The total value of assets sold or recovered by the liquidator during the liquidation process.

• Cash in hand: The amount of cash available at the time of liquidation.

• Unsecured creditors: Creditors who do not have any collateral or security for their loans. They are paid after secured creditors in the order of priority.

• Preferential creditors: Creditors who have a legal right to be paid before unsecured creditors in the event of liquidation. Examples include employees for unpaid wages, and tax authorities for unpaid taxes.

• Debentureholders: Holders of debentures, which are debt securities issued by a company. They are usually paid after preferential creditors but before unsecured creditors.

• Expenses of liquidation: The costs incurred during the liquidation process, such as legal and accounting fees.

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