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Unit 2: Amalgamation: Basics and their Concepts

A summary of various examples of Trade liabilities, Liabilities, Provisions, Accumulated Profits notes
and Loss is given in Table 2.1 below:
Table 2.1: Examples of Trade Liabilities, Liabilities, Accumulated Profits and Losses

trade liabilities liabilities provisions & accumulated Accumulated Profits
losses
(i) Trade Creditors or (i) Trade Creditors (i) Provisions for Doubtful (i) Credit Balance of Profit
Creditors Debts. and Loss Account.
(ii) Bills Payable
(ii) Provisions for (ii) General Reserve Fund.
(iii) Bank Overdraft Depreciation.
(iii) General Reserve Account.
(iv) Debentures (iii) Investment Fluctuation
(v) Loans Fund or Provision for (iv) Capital Reserve.
Investment (v) Revenue Reserve
(vi) Workmen’s Sharing
Bank Account (iv) Preliminary Expenses. (vi) Capital Redemption
(vii) Workmen’s Profit- (v) Debit Balance of Profit Reserve A/c.
sharing Fund. and Loss Account. (vii) Shares forfeited A/c
(viii) Pension Fund (vi) Discount on Issue of (viii) Share Premium A/c
Shares and Debentures.
(ix) Superannuation Fund. (ix) Workmen’s Compensation
(vii) Provision for Repairs Fund.
(x) Provident Fund and Renewals.
(x) Workmen’s Accident
(xi) Taxation Provision Fund.
(xii) Unclaimed Dividend (xi) Insurance Fund.
(xiii) Outstanding Expenses (xii) Dividend Equalisation
Fund
(xiii) Development Rebate
Reserve.

self assessment

Choose the correct answer from the following options:
8. Absorption arises when:
(a) An existing company takes over the business of one or more companies.
(b) Two or more companies liquidate themselves to take over another company.
(c) A new company is registered to take over another company.
(d) An existing company holds more than 50% shares in another company.

9. When two or more companies, doing similar nature of business, liquidate themselves to
form a new company, such a combination of companies is known as:
(a) Absorption

(b) Amalgamation
(c) Internal Reconstruction
(d) External Reconstruction.
10. Amalgamation takes place with the objective of:

(a) To eliminate the competition between themselves.
(b) To reduce the expenses.

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