Page 63 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Accounting for Companies – II

notes To Equity Shares in Transferee company
To Preference Shares in Transferee company

(Being payment of preferences shareholders in cash, shares and debentures)
(14) For the final payment of equity shareholders:
Equity shareholders A/c Dr.
To Bank A/c
To Equity Shares in Transferee Company

To Debentures in Transferee Company
(Being payment of equity shareholders)

Notes After passing this entry, not a single account would have any balance. All the
accounts will be closed.

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Caselet

alcutta High Court has held that the difference between amount recorded as
additional share capital issued by transferee company upon amalgamation and
Camount of share capital of transferor company in lieu of which such additional
share capital was to be issued, can be adjusted and reflected in general reserves and / or
other reserves of the transferee company at the discretion of its board of directors. The
High Court of Calcutta held that Accounting Standard 14 issued by ICAI that deals with
treatment of accounts upon amalgamation for amalgamation in the nature of merger does
not require the surplus or deficit to be made part of the capital.
ArevaT and D India Ltd., In re (2008)81 SCL 140 (Cal.)
AS - 14 not applicable to demerger of business Company had filed a petition to sanction a
scheme of demerger. Setting aside the objections raised that the scheme did not provide for
the compliance with respect of AS-14\ issued by ICAI, Allahabad High Court sanctioned
the scheme holding that, AS-14 applies to amalgamation and not to demerger.
Jagran TV P. Ltd. and Others In re. [2009] 150 Comp Case 532 (All)

Source: http://www.wirc-icai.org/material/Merger%20-%20Co.%20law%20and%20accounting%20aspects.pdf
4.2.2 Journal entries in the Books of transferee company

As per the Accounting Standard (AS)-14, there are two methods of accounting for the amalgamation
of companies in the books of Transferee Company. These are given below:
(a) Pooling of Interests Methods
(b) Purchase Method

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