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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In the case of an โamalgamation in the nature of mergerโ, 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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**In The Pooling of Interests Method**
--In preparing the transferee companyโs 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 companyโs 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.
In the case of an โamalgamation in the nature of mergerโ, 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 โamalgamation in the nature of purchaseโ, the balance
of the Profit and Loss Account appearing in the financial statements of the transferor company, whether debit or credit, loses its identity