As 14
This query is : Resolved
05 June 2017
In case of Amalgamation in the nature of merger what should be the treatment for Security premium lying in the books of Transferor company. Whether it will be added to the security premium of the Transferee company or will it be adjusted with the reserves of the Transferee company?
05 June 2017
It will be added in reserves of Transferee Co.
07 June 2017
Thanks for your prompt reply Ma'm.
As per AS 14 - The identity of the reserves shall continue to exist in books of the transferee company as they appear in books of the transferor whether it is a capital reserve, statutory reserve, general reserve, revaluation reserve.
Regarding Share Capital - The difference between the amount recorded as share capital issued (plus any additional consideration in the form of cash or other assets) and the amount of share capital of the transferor company is adjusted in Reserves in the financial statements of the transferee company.
So my Query is whether to Treat Security Premium as a reserve or should it be treated as Share capital.
As per AS 14 - The identity of the reserves shall continue to exist in books of the transferee company as they appear in books of the transferor whether it is a capital reserve, statutory reserve, general reserve, revaluation reserve.
Regarding Share Capital - The difference between the amount recorded as share capital issued (plus any additional consideration in the form of cash or other assets) and the amount of share capital of the transferor company is adjusted in Reserves in the financial statements of the transferee company.
So my Query is whether to Treat Security Premium as a reserve or should it be treated as Share capital.
07 June 2017
It is treated as reserve not share capital.
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