Amalgamation - treatment of reserves
This query is : Open
29 March 2013
This doubt is in reference with Amalgamation and Treatment of Reserves, specifically while calculating purchase consideration pooling of interest method.
Issue:
When two companies amalgamate and we follow 'Pooling Interest Method', the difference between the amt recorded as share capital issued (by transferee)and share capital of transferor company is adjusted against the reserves available.
Doubt:
> What if the reserves are too less to adjust the difference amount?
> In which account head we should show 'Negative Reserve' (since we can't create 'Goodwill' under pooling of interest method)
Thanks.
-Shagun Borgaonkar
Issue:
When two companies amalgamate and we follow 'Pooling Interest Method', the difference between the amt recorded as share capital issued (by transferee)and share capital of transferor company is adjusted against the reserves available.
Doubt:
> What if the reserves are too less to adjust the difference amount?
> In which account head we should show 'Negative Reserve' (since we can't create 'Goodwill' under pooling of interest method)
Thanks.
-Shagun Borgaonkar
30 March 2013
i think u will reduce the profit and loss account
Message likes :
1 times
30 March 2013
Sorry Sir,
By reserves i mean including P&L Account.
By reserves i mean including P&L Account.
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