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Which method of amalgamation ?

CA Sahil Singla.. (Service Tax ) (3745 Points)

16 September 2011  

Friends

In some questions it is not mentioned whether it is Amalgamation in the nature of purchase or merger. So, can we assume any method in these sort of questions ? or First we have to check the Five conditions of merger & then decide ?


 6 Replies

CS RAJESH C.CHOUDHARY (ASSISTANT MANAGER) (14597 Points)
Replied 16 September 2011

 

I THINK IT WOULD BE POSSIBLE IN AMALGAMATION IN THE NATURE OF PURCHASE ......

BUT IT IS NOT POSSIBLE FOR AMALGAMATION IN THE NATURE OF MERGER AS FOLLOWING 5 CONDITIONS ARE NECESSARY FOR MERGERS :-

1. The Transferor Company must take over all the assets and all the liabilities of the transferor
company.
2. Assets and Liabilities of the transferor company will be taken over by the transferee company
at their book value.
3. The transferee company must carry on the same nature of business as that of the transferor
company.
4. At least 90% of the Equity Shareholders of the transferor company must agree to become the
shareholders of the transferee company.
5. The transferee company must discharge the amount of Purchase consideration by issuing its
Equity Shares to the Equity Shareholders of the transferor Company and if there is any Fraction
it would be paid in Cash.

1 Like

Sneha (CA Final Student) (82 Points)
Replied 16 September 2011

You should not assume. Indirectly in every problem it will be mentioned. For example, if the revised value of assets and liabilities are taken over by the purchasing company, it is under Purchase method because in the nature of merger, assets and libilities of the vendor company should not be changed in the Merged company. It depends on the problem to problem.

1 Like

Pallav Singhania (❤ Work Hard Party Harder ❤)   (31112 Points)
Replied 16 September 2011

in simple words 2 condition dekhna...

1. 90% of the shareholder are agreed to become the shareholder of amalgamated co...by the way of issuing shares..

2. all the assets and liabilities of the amalgamating co. taken over at book value...

ye do condition full fil hue toh meger hai...

aur koi condition nahi dekhna parega....

1 Like

PANKAJ (CA Final) (192 Points)
Replied 16 September 2011

I totally agree with Sneha, she is absolutely correct. As in the case of merger, new co. has to record the old co's assets & liabilities at book value.

Siddharth Shah (Student) (21 Points)
Replied 30 December 2011

Is merger method and pooling of interest method same?? Urgent reply required

 

Mayank Mall (CA-Final) (316 Points)
Replied 26 February 2012

Originally posted by : dnkco.ca @ gmail.com

Is merger method and pooling of interest method same?? Urgent reply required

 


No they aren't. Merger methof is a type for amalgamation of business whereas pooling method is a sub-type of methods of accounting in these amalgamations.


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