Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

As 14 - method of amalgamation

SIVASIVA (FCA, Future CA) (4935 Points)

12 August 2013

friends,

please comment...

how to identify the problem based on the information as

1. pooling of interest method

2. purchase method.

i face lot of difficulties, in ideentifying that.

Reply
Follow
Share

1 Replies

Ayyswariya RG (Knowledge Seeker) (3711 Points)
Replied 13 August 2013

There are 5 conditions of which, if all conditions are satisfied , it is a amalgamation in the nature of merger. If any one condition or none of the conditions are satisfied, then it is amalgamation in the nature of purchase.

The following are the 5 conditions :-

1. After amalgamation, All the assets and liabilities of the transferor company becomes the assets and liabilities of the transferee company.

2. Shareholders holding not less than 90% of the face value of the equity shares of the transferor company become equity shareholders of the transferee company by virtue of the amalgamation.

3. The consideration for the amalgamation receivable by those equity shareholders of the transferor company by the issue of equity shares in the transferee company, except that cash may be paid in respect of any fractional shares.

4. The business of the transferor company is intended to be carried on, after the amalgamation, by the transferee company

5. No adjustment is intended to be made to the book values of the assets and liabilities of the transferor company when they are incorporated in the financial statements of the transferee company except to ensure uniformity of accounting policies.

1 Like