As 14

8,333 views

Published on

Published in: Business, Economy & Finance
1 Comment
8 Likes
Statistics
Notes
  • i want to download this ppt.
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
No Downloads
Views
Total views
8,333
On SlideShare
0
From Embeds
0
Number of Embeds
31
Actions
Shares
0
Downloads
361
Comments
1
Likes
8
Embeds 0
No embeds

No notes for slide

As 14

  1. 1. ACCOUNTING STANDARD - 14 ACCOUNTING FOR AMALGAMATIONS J.P., KAPUR & UBERAI
  2. 2. PURPOSE <ul><li>Accounting for amalgamations, </li></ul><ul><li>Treatment of any resultant goodwill or reserves. </li></ul><ul><li>It does not deal with acquisition by one company of another company in consideration for payment in cash or by issue of shares. </li></ul>J.P., KAPUR & UBERAI
  3. 3. TYPES OF AMALGAMATIONS <ul><li>NATURE OF MERGER </li></ul><ul><li>NATURE OF PURCHASE </li></ul>J.P., KAPUR & UBERAI
  4. 4. CONDITIONS FOR NATURE OF MERGER <ul><ul><li>All the assets and liabilities are transferred; </li></ul></ul><ul><ul><li>Shareholders holding not less than 90% of the face value of the equity shares of the transferor company become shareholders of transferee company; </li></ul></ul><ul><ul><li>The consideration is discharged by the issue of equity shares in the transferee company; </li></ul></ul><ul><ul><li>The business of the Transferor Company is intended to be carried on; & </li></ul></ul><ul><ul><li>No adjustment to be made to the book values of the assets and liabilities. </li></ul></ul>J.P., KAPUR & UBERAI
  5. 5. METHODS FOLLOWED <ul><li>NATURE OF MERGER -- Pooling of Interests method </li></ul><ul><li>NATURE OF PURCHASE -- Purchase method </li></ul>J.P., KAPUR & UBERAI
  6. 6. POOLING OF INTERESTS METHOD <ul><ul><li>The assets, liabilities and reserves are recorded at their existing carrying amounts. </li></ul></ul><ul><ul><li>Uniform set of accounting policies is adopted. </li></ul></ul><ul><ul><li>The difference between the share capital issued and the share capital of the transferor company should be adjusted in reserves. </li></ul></ul>J.P., KAPUR & UBERAI
  7. 7. PURCHASE METHOD <ul><ul><li>The assets & liabilities are recorded either at existing carrying values or by allocating the consideration on the basis of Fair values on the date of amalgamation. </li></ul></ul><ul><ul><li>The reserves of the transferor company, other than the statutory reserves, should not be included in the financial statements of the transferee company. </li></ul></ul><ul><li> Contd….. </li></ul>J.P., KAPUR & UBERAI
  8. 8. PURCHASE METHOD <ul><li> CONSIDERATION </li></ul><ul><ul><li>Securities </li></ul></ul><ul><ul><li>Cash </li></ul></ul><ul><ul><li>Other assets </li></ul></ul><ul><li>In determining the value of the consideration, an assessment is made of the fair value of its elements. </li></ul>J.P., KAPUR & UBERAI
  9. 9. PURCHASE METHOD <ul><li>If </li></ul><ul><ul><li>Consideration > Net Asset value GOODWILL </li></ul></ul><ul><ul><li>Consideration < Net Asset value CAPITAL RESERVE </li></ul></ul>J.P., KAPUR & UBERAI
  10. 10. DISCLOSURES <ul><li>FIRST YEAR - BOTH NATURES OF AMALGAMATION </li></ul><ul><ul><li>names and general nature of business of the amalgamating companies; </li></ul></ul><ul><ul><li>effective date of amalgamation for accounting purposes; </li></ul></ul><ul><ul><li>the method of accounting used to reflect the amalgamation; and </li></ul></ul><ul><ul><li>particulars of the scheme sanctioned under a statute. </li></ul></ul>J.P., KAPUR & UBERAI
  11. 11. DISCLOSURES <ul><ul><ul><li>FROM SECOND YEAR </li></ul></ul></ul><ul><ul><ul><li>Pooling of Interests method </li></ul></ul></ul><ul><ul><ul><li>(a) description and number of shares issued, </li></ul></ul></ul><ul><ul><ul><li>(b) the amount of any difference between the </li></ul></ul></ul><ul><ul><ul><li> consideration and the value of net assets acquired </li></ul></ul></ul><ul><ul><li>Purchase method </li></ul></ul><ul><ul><ul><li>(a) a description of the consideration paid or payable; </li></ul></ul></ul><ul><ul><ul><li>(b) any difference between the consideration and </li></ul></ul></ul><ul><ul><ul><li>the value of net assets acquired. </li></ul></ul></ul>J.P., KAPUR & UBERAI

×