Question

On amalgamation, realisation account is opened *

Answer 1

Answer:

In case of amalgamation the transferor company has to wind up its business and hence it will dispose off its assets, pay its liabilities and distribute the surplus if any among its shareholders. It is done through opening a new account known as Realisation Account.

Answer 2

Answer:

In the event of an amalgamation, the transferor firm must wind up its operations; as a result, it will sell its assets, settle its debts, and distribute any remaining funds to its shareholders. It is accomplished by creating a brand-new account called a Realization Account.

Explanation:

• A realization account is created when a partnership firm is dissolved. Reason: Upon the dissolution of a partnership business, a realization account is formed. The assets and liabilities in this account are transferred at their book values.
• A Realisation Account is formed when a partnership business dissolves. The assets and liabilities in this account are transferred at their book values.
• In the event of an amalgamation, the transferor firm must wind up its operations; as a result, it will sell its assets, settle its debts, and distribute any remaining funds to its shareholders. It is accomplished by creating a brand-new account called a Realization Account.
• The guideline for the realization account, a nominal account, is to credit gains and income and debit any losses and costs. It keeps track of when assets are sold and when liabilities are settled. When a business dissolves, this account is created once in a lifetime.

kind of shape dissolves during amalgamation:

The act of combining two or more businesses into one new company with the intention of conducting business is known as amalgamation. The merging firms are dissolved in order for the merger to take place, and the partners from the dissolved firms are now partners in the newly created firm.