Page 51 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Accounting for Companies – II

notes Initially, all four partners retain incorporation and control of their own affairs, but have
agreed to work together on particular elements of business (namely sponsorship and
marketing, common registration database and better coordination of events and fixtures).
The SA Soccer Federation retains its status as the member to the national body, but must
consult with the other partners on any decisions to be taken. The arrangement is detailed
in a Memorandum of Understanding signed by all partners in December 2002 for a one-
year period. Following the signing of the MOU, an independent chair was nominated and
endorsed by the partners.

It has taken time to build trust amongst the group, share commercial in confidence
information and put aside the history between many of the partners. Whilst work has
begun on a number of projects (common database, sponsorship) progress has been
hampered by the upheaval in soccer at a national level. At the end of the MOU term, a more
lasting arrangement is envisaged which includes the development of a business plan and
incorporation of Soccer SA. Whilst there are still issues to be resolved, the parties are now
sitting around the table, with a formal agreement outlining how they can work together,
discussing their collective future.
Question
List the various alternatives to amalgamation.

Source: http://fulltext.ausport.gov.au/fulltext/2003/sa/amalgamation_guide_final.pdf
3.2 summary

l z The Accounting Standard should be read in the context of the Preface to the Statements of
Accounting Standards.

l z “Treatment of Reserves Specified in A Scheme of Amalgamation Where the scheme of
amalgamation sanctioned under a statute prescribes the treatment to be given to the
reserves of the transferor company after amalgamation, the same should be followed.”

l z There are two main methods of accounting for amalgamations: the pooling of interests
method; and the purchase method.
l z In some cases, the scheme of amalgamation sanctioned under a statute prescribes a different
treatment to be given to the reserves of the transferor company after amalgamation as
compared to the requirements of AS 14 that would have been followed had no treatment
been prescribed by the scheme.

l z A description of the accounting treatment given to the reserves and the reasons for
following a treatment different from that prescribed in AS 14.
l z Deviations in the accounting treatment given to the reserves as prescribed by the scheme of
amalgamation sanctioned under the statute as compared to the requirements of AS 14 that
would have been followed had no treatment been prescribed by the scheme.

3.3 keywords

Accounting Standards: An accounting standard is a guideline for financial accounting, such as
how a firm prepares and presents its business income and expense, assets and liabilities.
Amalgamation: It means an amalgamation pursuant to the provisions of the Companies Act,
1956, or any other statute which may be applicable to companies.
Consideration: Consideration for the amalgamation means for the aggregate of the shares and
other securities issued and the payment made in the form of cash or other assets by the transferee
company to the shareholders of the transferor company.

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