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Amalgamation

pooja (student) (85 Points)

09 September 2016

In amalgamation in the nature of purchase , purchasing company will take over the statutory reserve then while closing the a/c of equity share holders y do we again transfer such statutory reserve to equity share holders a/c , I am unable 2 understand can any one plz explain

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11 Replies

Vignesh P (Company Secretary) (109 Points)
Replied 09 September 2016

Hai,

As per my understanding, in case of amalgamation in nature of purchase the purchasing company(transferee company) would record statutory reserves under AMALGAMATION ADJUSTMENT ACCOUNT.

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Vignesh P (Company Secretary) (109 Points)
Replied 09 September 2016

it will not be transferred to shareholders account

pooja (student) (85 Points)
Replied 09 September 2016

Tnq fr replying but in one problem I observed that such statutory reserve also been transferred 2 share holders a/c

Vignesh P (Company Secretary) (109 Points)
Replied 09 September 2016

You can send PM if u need further help on this. It wont be taken to equity shareholders account am sure about that.

Thanks and Regards

CA Naveen (Employed ) (38 Points)
Replied 09 September 2016

In case Transferor company or selling company AS-14 is not applicable hence the main objective is closing books of accounts including reserves which include statutory reserves and equity share capital to shareholders account.
In case of transferee Co or purchasing company, in purchase method there statutory reserves are incorporated by following entry
Amalgamation Adjustment
To Statutory reserve

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pooja (student) (85 Points)
Replied 09 September 2016

OK leave this question but l also observed in amalgamation in the nature of merger all the reserves will be taken over by the transferee co and at the same time those reserves also been transferred 2 equity share holders a/c y like that can u explain me plz

pooja (student) (85 Points)
Replied 09 September 2016

Tnq fr replying but can u explain y as-14 is not applicable

CA Naveen (Employed ) (38 Points)
Replied 09 September 2016

In Transferor company books main objective is closing books of accounts hence all reserves are transferred to shareholders account irrespective whether it is amalgamation in nature of merger or purchase.