Please explain me in detail as i am facing problem in it
Why in case of amalgamation (either in nature of purchase of merger) when purchase consideration is more than share capital of transferor company, we usually subtract it from first from equity share capital and if balance is left then from general reserve .
Please explain it by explaining its accounting effect.
When Purchase consideration is more than share capital , then this extra is paid towards goodwill and if it is less than share capital then, it would be transferred to capital reserve.
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
CA Final
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