rohith
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Hi I am Rohith. Preparing for CA exam. May I know, What is the treatment of Balance of Profit and Loss Account on Amalgamation?
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veeru
answered
In the case of an ‘amalgamation in the nature of merger’, the balance of the Profit and Loss Account appearing in the financial statements of the transferor company is aggregated with the corresponding balance appearing in the financial statements of the transferee company.
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CA Sandeep Bohra
answered
**In The Pooling of Interests Method**
--In preparing the transferee company’s financial statements, the Profit and Loss Account of the transfer or company should be aggregated with the corresponding balance of the transferee company or transferred to the General Reserve, if any.
**The Purchase Method**
--In preparing the transferee company’s financial statements The reserves (whether capital or revenue or arising on revaluation) of the transfer or company, other than the statutory reserves, should not be included in the financial statements of the the transferee company.
Shubhangi Jain
answered
In the case of an ‘amalgamation in the nature of merger’, the balance of the Profit and Loss Account appearing in the financial statements of the transferor company is aggregated with the corresponding balance appearing in the financial statements of the transferee company. Alternatively, it is transferred to the General Reserve, if any.
In the case of an ‘amalgamation in the nature of purchase’, the balance
of the Profit and Loss Account appearing in the financial statements of the transferor company, whether debit or credit, loses its identity
