Page 49 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Accounting for Companies – II

notes Treatment of Reserve Specified in a Scheme of Amalgamation

42. Where the scheme of amalgamation sanctioned under a statute prescribes the treatment to
be given to the reserve of the transferor company after amalgamation, the same should be
followed.
!

Caution If the amount of the consideration is lower than the value of the net assets acquired,
the difference should be treated as Capital Reserve.
Disclosure

43. For all amalgamations, the following disclosures should be made in the first financial
statements following the amalgamation:
(a) Names and general nature of business of the amalgamating companies;
(b) Effective date of amalgamation for accounting purposes;

(c) The method of accounting used to reflect the amalgamation; and
(d) Particulars of the scheme sanctioned under a statute.
44. For amalgamations accounted for under the pooling of interest method, the following
additional disclosures should be made in the first financial statements following the
amalgamation:
(a) Description and number of shares issued, together with the percentage of each
company’s equity shares exchanged to effect the amalgamation;
(b) The amount of any difference between the consideration and the value of net
identifiable assets acquired, and the treatment thereof.
45. For amalgamations accounted for under the purchase method, the following additional
disclosures should be made in the first financial statements following the amalgamation:
(a) Consideration for the amalgamation and a description of the consideration paid or
contingently payable; and
(b) The amount of any difference between the consideration and the value of net
identifiable assets acquired, and the treatment thereof, including the period of
amortisation of any goodwill arising on amalgamation.

amalgamation after the Balance sheet Date

46. When an amalgamation is effected after the balance sheet date, but before the issuance of
the financial statements of either party to the amalgamation, disclosure should be made in
accordance with AS-4, ‘Contingencies and Events Occurring after the Balance Sheet Date’
but the amalgamation should not be incorporated in the financial statements. In certain
circumstances, the amalgamation may also provide additional information, affecting the
financial statements themselves, for instance, by allowing the going concern assumption to
be maintained.

Notes The consideration for the amalgamation should include any non-cash element at
fair value.

44 lovely professional university