Pre & Post Incorp.

Pre Incorporation Profit is a:

• Capital Nature and transfer to Capital Reserve

• Revenue Nature (Free Reserve)

Avg. Monthly Sales for Pre Incorporation Period is Just 1.5 Tiimes of Post Incorporation Period.

Pre Incorporation Period is 7 Months & Post Incorporation Period is 5 Months.

• 10 : 21

• 21 : 10

• 2 : 1

Sales Ratio = 2:5

COGS per unit was reduced by 20% in Post Period

Total COGS is 21 Lacs.

COSG IN PRE AND POST ?

• 6 Lacs Pre

  15 Lacs Post

• 11.66 Lacs Pre

  9.33 Lacs Post

• 7 Lacs Pre

  14 Lacs Post

Sales Ratio is 7:16

GP ratio Pre Period was 20%

GP ratio in Post Period increased by 5%

GP Amount is 27,50,000

GP in Pre and Post ?

• Pre = 8,36,957

  Post = 19,13,043

• Pre = 7,12,963

  Post = 20,37,037

• Pre = 8,08,824

  Post = 19,41,176

What is the Treatement of Pre Incorporation Loss ?

• Transfer to Capital Reserve

• Added to Goodwill A/c

• Treated as Free Reserve

Time Ratio 1:5

Purchase Price has reduced by 10% as compared to Pre Period

What is Purchase Ratio ?

• 2:9

• 9:2

• 9:50