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    Corporate Accounting

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    Kdlr RR
    This document provides an overview of accounting for amalgamation according to AS 14. It defines amalgamation, absorption, and external reconstruction. It also describes the forms of amalgamation as merger and acquisition. The vendor company refers to the company being amalgamated, while the purchasing company takes over the business. Purchase consideration is the amount paid by the purchasing company. There are different methods to calculate purchase consideration such as lumpsum, net asset, and payment methods. The document also discusses the types of amalgamation as merger nature and purchase nature and the accounts to be prepared in the books of the selling company.

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    Corporate Accounting

    Uploaded by

    Kdlr RR
    9 views12 pages
    This document provides an overview of accounting for amalgamation according to AS 14. It defines amalgamation, absorption, and external reconstruction. It also describes the forms of amalgamation as merger and acquisition. The vendor company refers to the company being amalgamated, while the purchasing company takes over the business. Purchase consideration is the amount paid by the purchasing company. There are different methods to calculate purchase consideration such as lumpsum, net asset, and payment methods. The document also discusses the types of amalgamation as merger nature and purchase nature and the accounts to be prepared in the books of the selling company.

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    This document provides an overview of accounting for amalgamation according to AS 14. It defines amalgamation, absorption, and external reconstruction. It also describes the forms of amalgamation as merger and acquisition. The vendor company refers to the company being amalgamated, while the purchasing company takes over the business. Purchase consideration is the amount paid by the purchasing company. There are different methods to calculate purchase consideration such as lumpsum, net asset, and payment methods. The document also discusses the types of amalgamation as merger nature and purchase nature and the accounts to be prepared in the books of the selling company.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    9 views12 pages

    Corporate Accounting

    Uploaded by

    Kdlr RR
    This document provides an overview of accounting for amalgamation according to AS 14. It defines amalgamation, absorption, and external reconstruction. It also describes the forms of amalgamation as merger and acquisition. The vendor company refers to the company being amalgamated, while the purchasing company takes over the business. Purchase consideration is the amount paid by the purchasing company. There are different methods to calculate purchase consideration such as lumpsum, net asset, and payment methods. The document also discusses the types of amalgamation as merger nature and purchase nature and the accounts to be prepared in the books of the selling company.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 12

    S.Y.B.

    COM
    CORPORATE ACCOUNTING
    AS 14- ACCOUNTING FOR
    AMALGAMATION

    BY : Ankitha Pai
    Dept. of commerce
    Dr.D.Y.Patil ACS College,
    Pimpri
    INTRODUCTION

     AS 14 deals with Accounting for Amalgamation. Sec 391


    to Sec 394 of the companies act governs the provision of
    amalgamation.
     This standard is applicable with effect from 1-4-1995.

     Meaning of Amalgamation
    Amalgamation means formation of a new company to
    take over the business of atleast two existing companies
    which go into liquidation.
     Meaning of absorption

    Absorption means ,one existing company takes over


    another existing company which goes into liquidation.

     Meaning of External Reconstruction


    It takes place when an existing weak company goes into
    liquidation and a new company is formed to take over its
    business and run it under a new name.
     Amalgamation = Two or more liquidation and one
    formation

     Absorption = One liquidation and No formation

     External Reconstruction = One liquidation and one


    formation
    FORMS OF AMALGAMATION:
     A) Merger

    X Ltd
    XY Ltd
    Y Ltd

     B) Acquisition

    ABC Industries Ltd


    ABC Industries Ltd

    ABC Petrochemical
    Ltd.
     Vendor company

    The companies which are to be amalgamated ,absorbed i.e.

    the companies which are going into liquidation after the sale

    of their existing business is termed as vendor company. it is

    also known as selling company or transferer company.

     Purchasing Company

    The company purchasing or taking over the business is

    termed as Purchasing company or transferee company.


     Purchase Consideration

    It is the amount which is paid by purchasing company to the

    selling company for taking over the business of selling

    company .
    METHODS OF CALCULATING PURCHASE
    CONSIDERATION

     Lumpsum Method : Amount of Purchase consideration will be


    stated .

     Net Asset Method


    Purchase consideration = agreed value of assets taken over
    –
    agreed value of liabilities taken over
     Payment Method :
    All the modes of payment will be added to arrive at the amount
    of purchase consideration.
    TYPES OF AMALGAMATION
     Amalgamation in the nature of Merger
    ( Satisfies All 5 conditions)
    ➢ All the Assets and liabilities of transferer company become,
    after amalgamation , the assets and liabilities of transferee
    company.
    ➢ Atleast 90% shareholders of the transferor company should
    continue as shareholders of transferee company by the virtue of
    amalgamation
    ➢ Consideration must be paid through the issue of equity shares
    only. In case of fractional shares ,fractional amount can be paid
    in cash.
    ➢ The business of transferor company is intended to
    be carried on by the transferee company after
    amalgamation .

    ➢ No adjustment is intended to be made to the book


    values of assets and liabilities of transferer
    company , when they are incorporated in the
    financial statement of transferee company
     Amalgamation in the nature of Purchase ( Does
    not satisfy one or more conditions)
    ACCOUNTS TO BE PREPARED IN THE BOOKS
    OF SELLING COMPANY

     Realization Account

     Equity Shareholders Account

     Purchasing Company Account

     Asset or Liabilities account if it is not taken over

    by purchasing company
    THANK YOU

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