Amalgamation Doubts IPCC

PLZ PLZ Help!

Thanks in Advance!

1. What all provosions & Reserves are to be taken i calculations of Net Assets taken over (Except General & Capital Reserves)?

2. Should we even consider Statutory Reserves (Ex. Gratuity Reserve) as a liability in net assets taken over(Ex. X reserve is proposed to be carried on for 4 years)

3. What is the easiest way to find out debit to Goodwill / Credit to Capital Reserve in Transferee Books??

4. What all assets should be taken in Realization A/c of transferor company?? i.e. should we take even assets & liabilities not taken over by new Co. ?

5. Effect on Net Assets & Purchase consideration if there exists :

(i)Only Transferor holding shares of Transferee (NOT BOTH)

(ii)Only Transferee holding shares of transferor (NOT BOTH)

6. Effect of inter company owing on Purchase Consideration.

7. Do unrecorded liabilities come into the calculation of Purchase Consideration?

1 & 2) Provisions may be provision for depriciation/repairs & renewals, provsision for doubtful debts, provistion for taxation etc. Fictitious assets like preliminary exp , p/l (dr.bal) etc are not to be considered

In case of amalgamation in the nature of merger the identities of reserves like General reserve, capital reserve, revaluation reserve or any reserve available for distribution of dividend, of the transferor comapny should be maintainded in the financial statements of the transferee company in the same form as before.

In case of amalgamation in the nature of purchase the transferee company shall not show the said reserves.

But statutory reserves like development allowance reserve, investment allowance reserve, etc, may be preserved for a certain period as such there reserves may be taken over by the transfereee comapny in amalgamation in the nature of purchase by debiting 'amalgamation adjustment acc' and crediting the reserve acc.

4. all the assets provided liquidator is not retaining any asset (like it may retain cash and debtor to pay off the creditors etc). Does not matter if new co. didnt take any asset.

5 & 6) Read AS-14 or short notes of amalgamation and see solved example to understand the concept.

7. yes