Amalgamation in simple Steps

Amalgamation in simple Steps

Amalgamation is of two type 

1. In nature of purchase 
2. In nature of merger 

In nature of purchase 

New company will pay purchase consideration to old company.... It may cash, share, Debentures etc. 

New company will pass journal entry.... 

That is normal.... 

Business purchase a/c Dr. 
To liquidator of old company 

Assets a/c Dr. 
To liabilities a/c
To Business purchase
Difference will be goodwill or Capital reserve 

Liquidator of old company a/c Dr. 
To share 
To cash
To Debentures 

For expenses 

Goodwill create karni h

Statuatory reserve create karne h

Amalgamation adjusment a/c Dr
To Statuatory reserve

Purchase consideration is of three types

1. Net assets method 
2. Net payment method 
3. Intrinsic value based

Accounting for old company 

1. Revaluation a/c at book value 
2. New company a/c

In nature of merger 

Same entries in new company 

Difference is - in purchase we will not take reserve and surplus in First entry 

In merger we will take all items in first entry 

2. In purchase the statuatory reserve are created 
In merger there is no need because it is already created in first entry

Comment your opinions below .!! πŸ˜ƒ


Follow by Email