Whether merger effect to be given in financials??

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 May 2013 I had a query with regards to merger effect to be given in the financials. There are 3 Companies A, B and C. B and C have got merged into A by pooling of interests method.

In this case the statutory audit of all the companies is 31 December 2012. The merger is approved by the High Court on 4 January 2013 and intimated to the ROC on 18 January 2013. However, the appointed date of merger is 1 April 2011. The Question is:-

Whether merged accounts can be prepared for the year ended 31 December 2012??

My assessment:
As per AS 14 if the When an amalgamation is effected after the balance sheet date but
before the issuance of the financial statements of either party to the
amalgamation, disclosure is made in accordance with AS 4, ‘Contingencies
and Events Occurring After the Balance Sheet Date’, but the amalgamation
is not incorporated in the financial statements.

However, while reading the same with context to AS 4 it can also be said that the condition existed on date of balance sheet and is known before signing of accounts and hence we can incorporate the same in the accounts.

Kindly advise or brain storm...

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)

14 July 2013 Yes you are correct the merger once approved by the High Court and intimation also sent to the ROC it is approved but the date is material. It is approved only after the end of the financial year and merger effect is to be given only on the date of happening.

So in the balance sheet by way of notes to the accounts the information for incidence after the balance sheet date is to be incorporated as the audit report is signed after the merger has taken place.

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