What is the treatment of accumalated losses like Profit & Loss account in the books of selling company in amalgamation in the nature of purchase and merger both in the books of both companies ? URGENT
Rama chary Rachakonda
(Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294)
(3293 Points)
Replied 06 August 2015
1. In the case of an ‘amalgamation in the nature of merger’, the balance
of the Profit and Loss Account appearing in the financial statements of the
transferor company is aggregated with the corresponding balance appearing
in the financial statements of the transferee company. Alternatively, it is
transferred to the General Reserve, if any.
2. In the case of an ‘amalgamation in the nature of purchase’, thebalance
of the Profit and Loss Account appearing in the financial statements of the
transferor company, whether debit or credit, loses its identity.
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