Sahil Ltd agreed to sell its factory located in Assam to Kali Ltd on 4.12.2023. It entered into a sale deed (transferring all significant risks and…

CA Intermediate · Advanced Accounting · MTP · May 2024
Sahil Ltd agreed to sell its factory located in Assam to Kali Ltd on 4.12.2023. It entered into a sale deed (transferring all significant risks and rewards of ownership) on 1.2.2024. But the transaction was registered with the registrar on 30.5.2024 When should the sale and gain be recognized?
(A) Both sale and gain should be recognized as on the balance sheet date i.e. 31.3.2024.
(B) Both sale and gain should be recognized on 30.5.2024.
(C) The sale should be recognized as on balance sheet date but gain should be recognized on 30.5.2024.
(D) Both sale and gain should be recognized on 4.12.2023.

Suggested Answer and Working Notes:

Correct Answer: Option (A)

Both sale and gain should be recognized as on the balance sheet date i.e. 31.3.2024.

Topics: Amalgamation of Companies

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