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
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