Liquidator’s Final Statement of Account - Liquidation of Company, Advanced Corporate Accounting | Advanced Corporate Accounting - B Com PDF Download

Liquidator’s Final Statement of Account

The main job of liquidator is to collect the assets of the company and realise them and distribute it among right claimants.He maintains a cash book for recording the receipts and payments and submit an abstract of cash book to the court (incase winding up by the Tribunal), and to the company (in case of voluntary winding up). The liquidator also prepares an account of winding up. Such an account is called as Liquidator’s Final Statement of Account.

All the receipts are shown on the debit side of this account. They include the following:

a) Amount realised on sale of assets.
b) Amount received from delinquent directors and other officers of the company.
c) Contributions made by the contributories

On the credit side of this account the following payments are shown in the given order:

a) Payment of secured creditors and dues to workmen upto their claim or upto the amount of securities held by secured creditors.
b) Cost of winding up (legal charges).
c) Liquidator’s remuneration.
d) Payment to creditors having a floating charge on the assets of the company.
e) Payment of preferential creditors.
f) Payment of unsecured creditors.
g) Amount paid to preference shareholders.
h) Amount paid to equity shareholders

In the preparation of Liquidator’s Final Statement of Account, the principle of double entry is not involved. It is only a statement although presented in the form of an account.

Form of Liquidator’s Final Statement of Account

Liquidator’s Remuneration or Commission

A liquidator gets remuneration in the form of commission. It is paid as a percentage of the assets realised as well as a certain percentage of the payments made to unsecured creditors. The following points are relevant while calculating liquidator’s remuneration: 

1. Commission on assets given as securities to secured creditors – The liquidator gets commission on the surplus from such assets left after making the payment of secured creditors because he makes an effort of realising the surplus of such assets from secured creditors. However, if he sells the assets himself, he gets commission on the total proceeds of such assets. 

2. Cash and Bank Balance – If the liquidator is to get a commission on cash and bank balance unless otherwise stated. 

3. Unsecured Creditors – If the liquidator is to get a commission on amount paid to unsecured creditors, unsecured creditors will also include preferential creditors for the purpose of calculation of remuneration unless otherwise stated.

If amount available is sufficient to make the full payment of unsecured creditors, the commission can be calculated as follows: 

Comission 

If the amount available is not sufficient to make the full payment on secured creditors, the commission can be calculated as follows:

Comission =