Accounting Standard-14

Group Members
Anjali Sharma
Ashish Sharma
Dhruv Choksi
Piyush Kabadi
Sakshi Patil
Types of Amalgamations
1. Amalgamation in the nature of merger
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.