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Plz Make My concept Clear

shobhit chandra (ipcc student) (707 Points)

30 April 2011

Friends amalgamation chapter me pls make my concept clear., .. Yar pc nikalne k bd samaj ne ara kya kru.. Kbi to transfer co. K eqty sh se reduce krke remain bal ko g.res se ya kbi p/l c adjust krte h.. Phr kbi bs me show krte h kbi nai krte h. . Kuch samj ne ara pls help me.

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3 Replies

Anand (FINAL CA) (1116 Points)
Replied 30 April 2011

hey after removing pc u have pass the

1. journal entries in the books of new co,(merger method or purchase method)

2. journal entries in the books of old co (realisation a/c wala)

3. finally prepare the b/s on the basis of journal entries of new co

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CA.ViVeK M ACA (ACCOUNTS DEPARTMENT) (28544 Points)
Replied 30 April 2011

better read from a refernce book and learn the concepts on your own

Arjun M K (Student) (181 Points)
Replied 01 May 2011

1. Though the concept of amalgamation, absorbtion and external reconstruction are different, the accounting treatment of the three are same.

2. The problem areas are:

stage 1- calculation of purchase consideration.

stage 2- ledger entries in the books of vendor company.

stage 3- acquisition entries in the books of purchasing company.

3. stage 1- calculation of Purchase Consideration(PC)

methods of calculation:- a) lumpsum method b) net assets method c) net payments method.

net payments method is the most important one. The payments made to the members ( ESH and PSH) of the vendor company alone shall form part of PC. Settlement to debentureholders, creditors etc. & towards liquidation expenses by the purchasing company, are not to be recorded in the books of vendor company. This is para 3(g) of AS 14.

4. stage 2- ledger entries in the books of vendor company. (important step)

update the balance sheet.
record the PC due
record the receipt of PC.
distribute the PC amongst various benefiaries.
transfer of profit/loss to ESH accout.

5. stage 3- acquisition entries in the books of purchasing company.

pass journal entries fin the books of purchasing company for..

PC due
aseets and liabilities taken over
discharge of PC
liquidation expenses

6. prepare the new balance sheet of purchasing company.

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1. This is just a conceptual introduction. this is not enough. you have to get concrete understanding either from accounting faculties or standard textbooks.

2. Practice questions from this area.

3. In nov2010, the amalgamation problem was silly easy. may the same happens this time. all the best to you...

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