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Question
Accounting for amalgamation is governed by
If the business of an existing company ABC Limited is taken over by an existing company PQR Limited, it is called
On amalgamation, if pref. shares are settled at a premium
Amalgamation Adjustment Account
Under the Companies Act, 1956.
Loss or profit on realization a/c is transferred by the transferor company, under amalgamation to
In which of the following methods, the purchase consideration is calculated on the basis of the agreed value of the shares of the
‘Pooling of interest’ is a method of
The asset which is not taken under Net assets method of calculating purchase consideration is
On amalgamation, Profit & Loss A/c (Dr.) balance of the vendor company
When the merger involves liquidation of one existing sick company and formation of one new company, it is called
According to AS 14, Amalgamations fall into two categories
The agreed values at which the assets or liabilities are taken over by the purchasing company are
As per AS-14 purchase consideration is what is payable to
Adjustment entry passed to eliminate the inter-company bills of exchange is
If there is a provision (RDD) against the debtors, such debtors are transferred to the Realization a/c at
Under 'Purchase method', any excess of the amount of purchase consideration over the net acquired assets of the transferor com
Goodwill arising on amalgamation is to be
If the ABC Limited and DEF Limited are taken over by a new company XYZ Limited
Under the 'Purchase method of accounting' , the transferee company incorporates in its books:
According to AS 14 , Transferor company means the company
Under the pooling of interest method the difference between the purchase consideration and share capital of transferee company
On amalgamation , share issue expenses A/c appearing on Assets side of the balance sheet of the vendor company
If the business of ABC ltd , a loss making company , is taken over by a new company ABC (New) Limited , it is called
If the ABC Limited and DEF Limited are taken over by a new company XYZ Limited
A feature which is common in all cases of merger viz. absorption , amalgmation and external reconstruction is
When amalgamation is in the nature of merger , the accounting method to be followed is
Amalgamation of adjustment reserve is opened in the books of transferee company to incorporate
On amalgamation , Provident Fund A/c appearing on the liabilities side in the balance sheet of the vendor company
According to AS 14 , Transferee company means the company
Option A Option B
AccountingStandard 1 Accounting Standard 13
External reconstruction Internal reconstruction
the premium is credited to Realization A/c the premium is debited to Realizati
should be shown as a Fixed Asset in the balance sheet should be shown as a Fictitious Ass
Absorption’ includes‘amalgamation' Amalgamation includes ' absorption
Preference shareholders a/c Equity shareholders a/c
Net Asset Method Net Payment Method
Charging Depreciation Accounting for Amalgamation
Loose Tools Bills Receivables
is closed by debit to Realization A/c is closed by debit to Equity Shareh
Internal reconstruction Absorption
Amalgamation and absorption Merger and purchase
Ignored while calculating purchase consideration by n Ignored while calculating purchase
Shareholders Shareholders and debenture holders
Debit bills payable a/c credit bills receivable a/c Debit bills receivable a/c credit bil
Net Amount i.e. Debtors less RDD Current Market Value
Capital Reserve Goodwill
Retained in the books of the transferee company Amortized to income on a Systemat
Only the assets, liabilities and
it is called absorption it is calledreserves
statutory amalgamation
of the
Only the assets and liabilities of the transferor companytransferor company
Which is amalgamated into another company Into which a company is amalgama
General Reserve Amalgamation adjustment reserve
is closed by debit to Realization A/c is closed by debit to Equity Shareh
Internal reconstruction Absorption
ABC ltd and DEF ltd are known as the Vendor companiABC ltd and XYZ ltd are known as
Purchase of one company by another company Liquidation of at least two compani
Equity method Purchase Method
The assets of the transferor company The liabilities of the transferor co
Is closed by credit to Purchasing Company A/c Is closed by credit to Realisation A
Which is amalgamated into another company Into which a company is amalgama
Option C Option D
Accounting Standard 14 Accounting Standard 11
Absorption Amalgamation
the premium is credited to Sec premium is debited to Capital Reserve A/c
should be shown under Reserves should be shown as a Fictitious Asset in the balance sheet of the purchasing company
Amalgmation excludes ' absorpinternal reconstruction’ includes " external reconstruction
Profit & loss appropriation a/c Capital Reserve
Intrinsic Value Method None of the above
Calculation of Purchase ConsidNone of the above
Machinery Share issue Expenses
is closed by credit to Equity S is closed by credit to Realization A/c
External reconstruction Amalgamation
Amalgamation and reconstruct External reconstruction and internal reconstruction
considered while calculating p None of the above
Shareholders and creditors Shareholders and Debtors
Debit amalgamation adjustmentDebit a Statutory Reserve a/c, credit amalgamation adjustment a/c
Gross Amount of Debtors Current Cost Value
Profit & Loss A/c General Reserve
Adjusted against reserves and pshould be shown as a Fixed Asset in the balance sheet of the purchasing company
it is called external reconstruct it is called internal reconstruction
Only the assets, liabilities and None of the above
Which is newly formed None of the above
Goodwill or Capital reserve None of the above
is closed by credit to Equity S is closed by debit to profit & loss A/c
External reconstruction Amalgamation
XYZ ltd and DEF ltd are knownXYZ ltd is known as the vendor company
Formation of atleast one new Liquidation of at least one existing company and formation of atleast one new company
Pooling of interests method None of the above
The statutory reserves of the t None of the above
is closed by credit to Equity S Is closed by debit to Realisation A/c
Which is newly formed Which is liquidated
e purchasing company

rchasing company

atleast one new company