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Amalgamation - transfree company reserves
Hello,
On Amalgamation in the nature of merger (Pooling of interest method) while booking for the assets & liabilities taken over the excess of purchase consideration over the share capital of the transferor company has to be adjusted in reserves of the transferee company.
Our query is what would be the treatment when the reserves of transferee company is inadequate to absorb the excess of PC over share capital of transferor.
Replies (2)
In my opinion, such a situation cannot happen as the purchasing company's market value of shares is supposed to be greater than the vendor company.
In that case such excess balance will be debited to Profit and Loss Account.
I have created videos to explain the various concepts of Amalgamation for CA CS CWA students. Below is the link to check the same -
https://youtu.be/ouSL6sRa4vs?list=PLjemDd6cjImDWEsKTgF6OtUZhVOXzoMCI
Please check. Your all doubts will be resolved.
I hope you will be be having a good learning from it.
Thanks !
CA Gopal Somani
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