rohith
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Hi I want to know, What is the treatment of Reserves on Amalgamation?
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veeru
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If the amalgamation is an ‘amalgamation in the nature of merger’, the identity of the reserves is preserved and they appear in the financial statements of the transferee company in the same form in which they appeared in the financial statements of the transferor company.
Shubhangi Jain
answered
If the amalgamation is an ‘amalgamation in the nature of merger’, the identity of the reserves is preserved and they appear in the financial statements of the transferee company in the same form in which they appeared in the financial statements of the transferor company.
If the amalgamation is an ‘amalgamation in the nature of purchase’,
the identity of the reserves, other than the statutory reserves which retain their identity in the financial statements of the transferee company in the same form in which they appeared in the financial statements of the transferor company, so long as their identity is required to be maintained to comply with the relevant statute, is not preserved. The amount of the consideration is deducted
from the value of the net assets of the transferor company acquired by the transferee company. If the result of the computation is negative, the difference is debited to goodwill arising on amalgamation.
