This document discusses Accounting Standard 14 regarding the types, methods, and treatment of amalgamations. There are two types of amalgamations - amalgamation in the nature of a merger and amalgamation in the nature of a purchase. The two methods of accounting for amalgamations are the pooling of interest method and the purchase method. Goodwill arising from an amalgamation must be amortized within 5 years, considering factors like future business prospects and potential competition. The common procedure for an amalgamation involves finalizing terms, preparing a scheme, obtaining shareholder approval, forming a new company, and liquidating the transferor company.
This document discusses Accounting Standard 14 regarding the types, methods, and treatment of amalgamations. There are two types of amalgamations - amalgamation in the nature of a merger and amalgamation in the nature of a purchase. The two methods of accounting for amalgamations are the pooling of interest method and the purchase method. Goodwill arising from an amalgamation must be amortized within 5 years, considering factors like future business prospects and potential competition. The common procedure for an amalgamation involves finalizing terms, preparing a scheme, obtaining shareholder approval, forming a new company, and liquidating the transferor company.
This document discusses Accounting Standard 14 regarding the types, methods, and treatment of amalgamations. There are two types of amalgamations - amalgamation in the nature of a merger and amalgamation in the nature of a purchase. The two methods of accounting for amalgamations are the pooling of interest method and the purchase method. Goodwill arising from an amalgamation must be amortized within 5 years, considering factors like future business prospects and potential competition. The common procedure for an amalgamation involves finalizing terms, preparing a scheme, obtaining shareholder approval, forming a new company, and liquidating the transferor company.
Group Members Anjali Sharma Ashish Sharma Dhruv Choksi Piyush Kabadi Sakshi Patil Types of Amalgamations 1. Amalgamation in the nature of merger shrikant
All the assets and liabilities of the transferor Company becomes
asset and liabilities of the transferee Company. Shareholders holding not less than 90% of the face vale of the equity shares of transferor Company becomes equity shareholders of the transferee Company
2.Amalgamation in the nature of purchase
Amalgamation in the nature of purchase will only be considered when any one or more of the conditions mentioned in ''Amalgamation in the nature of Merger'' is not satisfied. Methods of Accounting for Amalgamation As mentioned in AS-14 there are two types of amalgamation- 1. Pooling of interest method In this method balance sheet of both companies are added together during acquisition or merger based on the book value. 2. Purchase method In this method accounting of merger and acquisition in which one firm has purchased the asset of the other firm. As mentioned in AS-14 there are two types of amalgamation- Treatment of Goodwill Arising on Amalgamation Goodwill arising on amalgamation represents a future income and it is considered as an asset of the company. It is difficult to estimate goodwills life because of its nature. Goodwill should be amortized within 5years. Factors to be considered in estimating the useful life of of goodwill arising on amalgamation include: 1. The future of the business 2. Changes in demand and other economic factors 3. Expected or potential competitors . Main Principles In case of Pooling of Interests Method- Description and number of shares issued
In case of purchase method
Description in respect of consideration paid or payable Common Procedure 1.The terms of amalgamation are finalized by the board of directors of the amalgamating companies. 2.A scheme of amalgamation is prepared and submitted. 3.Approval of the shareholders’ of the constituent companies is obtained. 4.A new company is formed and shares are issued to the shareholders’ . 5.The transferor company is then liquidated . Conclusion... Hence, it can be concluded that Accounting Standard-14 helps the Companies to keep the uniformity in Accounting for amalgamation and accordingly, the Companies need to give the treatment and if there is any deviation in the treatment needs to be disclosed in the financial statement so that stakeholders can get the transparency.
A Business Combination Can Be Aptly Defined As Amalgamation of The Assets of Two or More Business Entities For Their Consolidation As A Single Entity Under Single Ownership
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