Table of Contents
What are the conditions which according to AS 14 on accounting for amalgamations must be satisfied for an amalgamation in the nature of merger?
An amalgamation should be considered to be an amalgamation in the nature of merger when all the following conditions are satisfied: All the assets and liabilities of the transferor company become, after amalgamation, the assets and liabilities of the transferee company.
What is the accounting standard 14?
Accounting Standard 14 caters to accounting for amalgamations and the treatment of the resulting goodwill or the reserves. AS 14 basically applies to companies. However, some of its requirements are also applicable to the financial statements of other enterprises.
How is purchases consideration calculated as 14?
As per AS-14, Purchase consideration means, βthe aggregate of the shares and other securities issued and the payment made in the form of cash or other assets by the transferee company to the shareholders of the transferor companyβ.
What are the condition to be fulfilled in case of amalgamation in the nature of merger?
As per standard, an amalgamation should be considered to be an βamalgamation in the nature of mergerβ when all the following conditions are satisfied: All assets and liabilities of the transferor company become, after amalgamation, the assets, and liabilities of the transferee company.
What is difference between amalgamation in nature of merger and amalgamation in nature of purchase?
When the conditions do not meet for the amalgamation in the nature of merger, the same is referred as amalgamation in the nature of purchase. In this, a transferor company acquires a transferee company and there is no proportionate shareholding of the shareholders of the transferee company in the amalgamated company.
Is transferred to capital reserve?
When a company sells off its assets and makes a profit, a company can transfer the amount to capital reserve. Since a company sells many assets and shares and can’t always make profits, it is used to mitigate any capital losses.
How do you calculate purchase consideration in the case of sale to a company?
Net Worth or Net Assets Method: Under this method, purchase consideration is calculated by adding up the values of various assets taken over by the purchasing company and then deducting there from the values of various liabilities taken over by the purchasing company.
What are the types of purchase consideration?
π³ππΎππΎ πΊππΎ πΏπππ π½ππΏπΏπΎππΎππ ππππΎπ ππΏ ππππΌππΊππΎ πΌπππππ½πΎππΊππππ ππΎπΌππππππΎπ πππΊπ πΌπΊπ π»πΎ ππππ πππΎπ½ ππ ππππ πΎπππππΊππππ:
- ππΎπ πΊπππΎπ ππΎππππ½ β π³ππΎ ππππΌππΊππΎ πππππππ ππ πΎπππππΊπ πΎππ ππ πππΎ πΊπ π -πππ ππΎπ ππΎπππππΌπΎ ππΏ πππΎ πππΊπππΏπΎπππ ππππΊππππΊππππ.
- ππΎπ ππΊπππΎππ ππΎπΌππππππΎ β
- π«πππ π²ππ π¬πΎππππ½ β
- π¨ππππππππΌ ππΊπ ππΎ/ π²ππΊππΎ πΎππΌππΊπππΎ ππΎππππ½ β
What is transferor and transferee company?
(b) Transferor company means the company which is amalgamated into another company. Page 4. Accounting for Amalgamations 147. (c) Transferee company means the company into which a transferor company is amalgamated.
What is the difference between amalgamated and amalgamating company?
‘Transferor company’ means the company which is merging also known as amalgamating company in case of amalgamation and ‘transferee company’ is the company which is formed after merger or amalgamation also known as amalgamated company in case of amalgamation.
What is difference between Merge and amalgamation?
Definition of Merger and Amalgamation. A merger is where two or more business entities combine to create a new entity or company. An amalgamation is where one business entity acquires one or more business entities.
What is the difference between amalgamation and acquisition?
Acquisition is driven by the buyer company with or without consent of the acquired company. Amalgamation is initiated by both the companies with equal interest. Assets and liabilities of absorbed company are consolidated. One firm acquires all the assets and liabilities of the target firm.
What is difference between amalgamation and absorption?
Amalgamation is the legal process, in which two or more companies combine themselves to form a new company. On the other hand, absorption is when two or more companies are combined into an existing company.
What is full form IFRS?
Overview. International Financial Reporting Standards (IFRS) are a set of accounting standards that govern how particular types of transactions and events should be reported in financial statements. They were developed and are maintained by the International Accounting Standards Board (IASB).
What is difference between reserve capital and capital reserve?
A capital reserve is defined as the reserve that is created from the capital profits of the company. On the other hand, reserve capital is defined as the reserve that is uncalled, i.e., this capital is called only when the company is on the verge of liquefying.
Which reserve can be transferred to CRR?
The capital redemption reserve fund is transferred from undistributed profits i.e general reserves profit or loss account…. If Buyback is from FREE RESERVES or Securities Premium , then, an amount equal to NOMINAL VALUE of Shares so bought back is transferred to CRR.
What are the accounting standards for amalgamations?
1. This standard deals with accounting for amalgamations and the treatment of any resultant goodwill or reserves. This standard is directed principally to companies although some of its requirements also apply to financial statements of other enterprises. 2.
What is IFRS IAS 14?
IAS 14 was issued in August 1997, was apΒplicΒaΒble to annual periods beginning on or after 1 July 1998, and was suΒperΒseded by IFRS 8 Operating Segments with effect from annual periods beginning on or after 1 January 2009.
When should an adjustment be recognised on balance sheet?
In all other cases, the adjustment should be recognised as soon as the amount is determinable [see Accounting Standard (AS) 4, Contingencies and Events Occurring After the Balance Sheet Date]. 42.
Who must apply IAS 14?
IAS 14 must be applied by entities whose debt or equity seΒcuΒriΒties are publicly traded and those in the process of issuing such seΒcuΒriΒties in public seΒcuΒriΒties markets. [IAS 14.3]