Definition: Liquidation is the process of selling off assets to repay creditors and distributing the remaining assets to the owners. In other words, liquidation is the process of closing a business, paying off creditors, and giving the investors whatever is left over. What Does Liquidation Mean?
What is liquidation basis accounting?
Liquidation basis accounting is concerned with preparing the financial statements of a business in a different way if its liquidation is considered to be imminent. “Imminent” refers to either of the following two conditions: Liquidation plan. A plan for liquidation has been approved, and is likely to be achieved. Forced liquidation.
What is “imminent” liquidation?
“Imminent” refers to either of the following two conditions: Liquidation plan. A plan for liquidation has been approved, and is likely to be achieved. Forced liquidation. A third party is forcing the business into liquidation, and is likely to achieve this goal.
What is a claim settlement in a liquidation process?
The primary sequence of claim settlement in the liquidation process is as follows: Secured: First, the company settles its preferential creditors such as employees and landlord; reimburses all secured creditors like the bank that provided mortgage loan; and pays the insolvency practitioner hired for liquidation.
