MR. DIVEY MITTAL (student) (62 Points)
02 October 20081. IS EVERY LIABLITIES{ RESERVES & SURPLUS, P& L (CR.)} TRANSFERS TO TRANFEREE COMP. IN CASE OF AMALGAMATION IN NATURE OF PURCHASE?
2. WHAT ENTRY IS TO BE PASSED IN BOOKS OF SHAREHOLDERS(IN CASE OF FIRMS & COMP.) FOR RECEIVING THE BONUS SHARES?
3. IF TRANSFEROR IS NOT A COMP. THEN WHICH ACCOUNT SHOULD BE OPENED WITH REALISATION ACCOUNT SO AS TO CLOSE THE BOOKS OF TRANSFERROR COMP.?
PLZ GIVE NECESSARY DETAILS REGARDING MY QUESTIONS.
Shubhankar Limaye
(B.Com.)
(174 Points)
Replied 03 October 2008
1. Unless otherwise prescribed by the Competent Court, ALL reserves of amalgamating company shall be maintained by amalgamated company. (AS-14)
2. If it forms part of consideration then it is to be taken into consideration while making an entry of Purchase Consideration receivable. If the shares are issued as fully paid bonus shares subsequent to the completion of scheme of amalgamation, no entry will be required to be passed in the books of shareholders.
3. Realisation account, members' capital account etc. may be opened in this case.
Venkat Rao Marella
(Manager Business Finance)
(1451 Points)
Replied 03 October 2008
1. In case of Amalgamation in the nature of purchase, all reserves need not be taken over. That is only for amalgamation in the nature of merger where in all the items in the books of the transferor should be merger with items in transferee books. If the reserves are of specific nature (statutory reserves), they should be taken over by the transferor company. Other reserves need not be considered. 2. No entry is required. Bonus share comes as a result of original holding and does not involve any economic outflow. 3. Closing the books remains same. Realization account needs to be opened as the assets are to be realized so as to discharge the liabilities
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