Chapter 19Chapter 19

External Administration External Administration

Reports and AccountsReports and Accounts

Chapter 19Chapter 19

External Administration External Administration

Reports and AccountsReports and Accounts

Lecture TopicsLecture Topics

• Reports• Closing the accounting records

Lecture ReferencesLecture References

• Text - Chapter 19• Corporations Act

Key ConceptsKey Concepts

• External administration• Statement of solvency• Report as to affairs• Liquidation account• Shareholders distribution

ReportsReports

• Reports prepared in preparation for external administration– Declaration and statement of solvency

• Members’ voluntary winding-up– Report as to affairs

• Creditors’ voluntary winding up• Appointment of liquidator

ReportsReports

• Reports prepared in preparation for external administration– Report as to affairs

• Assets and liabilities at estimated realisable values

• Shows issued and paid-up capital• Ranks liabilities

– Summary of affairs

ReportsReports

• Reports prepared by external administration – Liquidator’s accounts

• Receipts and payments• Cash position• Details of dividends• ‘Position of winding-up’

ReportsReports

• Reports prepared by external administration – Accounts of receiver or receiver and manager

• Receipts and payments– Reports of the voluntary administrator

• No prescribed form

• Reporting party

Closing the Accounting RecordsClosing the Accounting Records

– Create receipts and payments account– Transfer positive cash balances– Create liquidation account– Close non-cash asset accounts to liquidation

account

Cash

balance

Assets

balance

Creditors

balance

Owners’ Equity

balance

Receipts and Payments

cash

Liquidation

assets

S/holders Distribution

equity

Journal entriesJournal entries

Dr Liquidation account xCr Receipts and payments xfees charges and costs incurred

Dr Receipts and payments xCr Liquidation account xcash from sale of assets

Dr Asset Contra accounts xCr Liquidation account x

Journal entriesJournal entries

Dr Creditors accounts xCr Receipts and payments xpayments to creditors

Dr Receipts and payments xCr S/holder’s Distribution xcash from calls

Journal entriesJournal entries

Dr Liquidation account xCr Creditors accounts xundervalued/unrecorded liabilities

Dr Creditors accounts xCr Liquidation account xoverstated/rejected liabilities

Journal entriesJournal entries

Dr Shareholder’s Distribution xCr Liquidation account xtransfer of loss on liquidation

Dr Shareholder’s Distribution xCr Receipts and payments xfinal payment to shareholders

Receipts and Payments

Cash

LiquidationAssets

Shareholders Distribution

Equity

Fees and charges

Fees and charges

Receipts and Payments

Cash

LiquidationAssets

Shareholders Distribution

Equity

Fees and charges

Fees and charges

Asset disposals

Asset disposals

Receipts and Payments

Cash

LiquidationAssets

Shareholders Distribution

Equity

Fees and charges

Fees and charges

Asset disposals

Asset disposals

Calls

Calls

Receipts and Payments

Cash

LiquidationAssets

Shareholders Distribution

Equity

Fees and charges

Fees and charges

Asset disposals

Asset disposals

Calls

Calls

Creditors

Undervalued liabs Overvalued liabs

Receipts and Payments

Cash

LiquidationAssets

Shareholders Distribution

Equity

Fees and charges

Fees and charges

Asset disposals

Asset disposals

Calls

Calls

Creditors

Undervalued liabs Overvalued liabs

Loss on liquidation

Loss on liquidation

Receipts and Payments

Cash

LiquidationAssets

Shareholders Distribution

Equity

Fees and charges

Fees and charges

Asset disposals

Asset disposals

Calls

Calls

Creditors

Undervalued liabs Overvalued liabs

Loss on liquidation

Loss on liquidation

Shareholders

Shareholders

Where to get more informationWhere to get more information

• Other courses• List books, articles, electronic sources