The following points highlight the two main types of amalgamation of a company. The types are:- 1. Amalgamation in the Nature of Merger 2. Amalgamation in the Nature of Purchase. Type # 1. Amalgamation in the Nature of Merger: An amalgamation in the nature of merger should, according to the Accounting Standard - 14, satisfy the following conditions: 1. All [...]
The amount of purchase consideration can be computed under any of the following four methods:- 1. Lump Sum Method 2. Net Worth or Net Assets Method 3. Net Payment Method 4. Intrinsic Value Method (Shares Exchange Method). Method # 1. Lump Sum Method: The purchasing company may agree to pay a lump-sum to the vendor company on account of the [...]
Here is a compilation of top five accounting problems on amalgamation, absorption and reconstruction with its relevant solutions. Illustration 1: The Balance Sheet of Z Ltd. and A ltd. as on September 30, 2006 are given below: A Ltd. propose to take over Z Ltd. on the following terms: (1) A Ltd. will issue a sufficient number of its [...]