Accounting for Amalgamation
- Where two or more existing companies are combined to form a new company, it is called :
(a) Absorption
(b) Amalgamation
(c) External Reconstruction
(d) Internal Reconstruction - Where two or more existing companies are combined but not formed a new company, it is called :
(a) Absorption
(b) Amalgamation
(c) External Reconstruction
(d) Internal Reconstruction - Which of the following cases a new company is not formed :
(a) Absorption
(c) External Reconstruction
(b) Amalgamation
(d) Internal Reconstruction
Codes:
(i) (a) , (b) , (c) & (d)
(ii) (a), (b) & (c)
(iii) (a) & (d)
(iv) (a) & (c) - In which case only one company is involved :
(a) Absorption
(b) Amalgamation
(c) External Reconstruction
(d) Merger - When amalgamation is in the nature of merger, the accounting method to be followed is :
(a) Consolidated Method
(b) Purchase Method
(c) Pooling of interest Method
(d) Equity Method - Amalgamation adjustment account is opened in the books of transferee company to incorporate :
(a) The liability of the transferor company
(b) The assets of the transferor company
(c) The statutory reserve of the transferor company
(d) The non-statutory reserve of the transferor company - Under the purchase method of accounting the transferee company incorporates in its books :
(a) The assets and liability of the transferor company
(b) The assets, liabilities and statutory reserve of the transferor company
(c) The assets, liabilities and non-statutory reserve of the transferor company
(d) The assets liabilities and reserve of the transferor company - Under the pooling of interest method the difference between the purchase consideration and share capital of the transferee company should be adjusted to :
(a) Amalgamation reserve
(b) General reserve
(c) Goodwill or capital reserve
(d) Either (b) or (c) - Goodwill arising on amalgamation is to be :
(a) Retain in the books of transferee company
(b) Amortized to income on systematic basis
(c) Adjusted against reserve and profit and loss account of the transferee company immediately.
(d) Either (b) or (c) - When amalgamation is in the nature of purchase, the accounting method to be followed is :
(a) Consolidated Method
(b) Purchase Method
(c) Pooling of interest Method
(d) Equity Method - Under the pooling of interest method of accounting the transferee company incorporates in its books :
(a) The assets and liability of the transferor company
(b) The assets, liabilities and statutory reserve of the transferor company
(c) The assets, liabilities and non-statutory reserve of the transferor company
(d) The assets, liabilities and reserve of the transferor company - Under the pooling of interest method of accounting the transferee company incorporates assets, liabilities and reserve
(a) At their Market Value
(b) At their Book Value
(c) At Agreed Value
(d) At their Purchase Value - Under the purchase method of accounting the transferee company incorporates assets, liabilities and reserve
(a) At their Market Value
(b) At their Book Value
(c) At Agreed Value
(d) At their Purchase Value - Under Net Assets Method Purchase consideration not consider
(a) Assets
(b) Liability
(c) Liquidation Expenses
(d) Debentures - When the expenses of liquidation are borne by the vendor company itself, then the vendor company credits :
(a) Realization A/c
(b) Goodwill A/c
(c) Bank A/c
(d) None of these - If Liquidation Expenses of the Vendor Company is Borne / Reimbursed by Purchasing Company then the purchaser company debits :
(a) Realization A/c
(b) Goodwill A/c
(c) Bank A/c
(d) None of these - Liabilities not taken over by the new firm (at the time of amalgamation) will be transferred to :
(a) New firm’s account
(b) Revaluation account
(c) Capital accounts
(d) Not transferred anywhere - Any balance in the profit and loss account of the amalgamating firm will be transferred to :
(a) Capital accounts of the partners
(b) Revaluation account
(c) New firm’s account
(d) Not transferred anywhere - The assets, liabilities and capital accounts of the amalgamating firm are closed by opening :
(a) Realization Account
(b) Revaluation account
(c) New firm’s account
(d) Not transferred anywhere - In the case of amalgamation profit or loss on the sale of the firm is ascertained through :
(a) Realization Account
(b) Revaluation account
(c) Profit & Loss Adjustment account
(d) None of the above - Which of the following cases a new company is formed :
(a) Absorption
(b) External Reconstruction
(c) Amalgamation
(d) Internal Reconstruction
Codes:
(iii) (a) , (b) , (c) & (d)
(ii) (a), (b) & (c)
(iii) (b) , (c) & (d)
(iv) (b) & (c) - Absorptions is :
(a) Amalgamation in the nature of merger
(b) Amalgamation in the nature of purchase
(c) Amalgamation in the nature of absorption
(d) None of the above - If same business is not carried on by Transferee Company :
(a) Amalgamation in the nature of merger
(b) Amalgamation in the nature of purchase
(c) Amalgamation in the nature of absorption
(d) None of the above - If Same Equity Shareholders “Hold 80 % of face Value of the Equity share” in transferee Company :
(a) Amalgamation in the nature of merger
(b) Amalgamation in the nature of purchase
(c) Amalgamation in the nature of absorption
(d) None of the above - If Same Equity Shareholders “Hold 95 % of face Value of the Equity share” in transferee Company :
(a) Amalgamation in the nature of merger
(b) Amalgamation in the nature of purchase
(c) Amalgamation in the nature of absorption
(d) None of the above - When there is no liquidation of company :
(a) Amalgamation
(b) Absorption
(c) External Reconstruction
(d) Internal Reconstruction - If Company A purchases the majority shares of Company B, what combination would this be
referred to?
(a) Amalgamation
(b) Takeover
(c) Absorption
(d) None of the above