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What is the treatment of Balance of Profit and Loss Account on Amalgamation?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 rohith asked almost 3 years ago

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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3 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 veeru answered over 2 years ago

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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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 CA Sandeep Bohra answered almost 3 years ago

**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.

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Open uri20170510 32134 1uwcnoc?1494421631 Shubhangi Jain answered almost 3 years ago

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

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