1. AMALGAMATIONS ACCOUNTING STANDARD - 14 ACCOUNTING FOR
J.P., KAPUR & UBERAI

2. PURPOSE Accounting for amalgamations,
Treatment of any resultant goodwill or reserves.
It does not deal with acquisition by one company of another company in consideration for payment in cash or by issue of shares.
J.P., KAPUR & UBERAI

3. TYPES OF AMALGAMATIONS
NATURE OF MERGER
NATURE OF PURCHASE
J.P., KAPUR & UBERAI

4. CONDITIONS FOR NATURE OF MERGER
All the assets and liabilities are transferred;
Shareholders holding not less than 90% of the face value of the equity shares of the transferor company become shareholders of transferee company;
The consideration is discharged by the issue of equity shares in the transferee company;
The business of the Transferor Company is intended to be carried on; &
No adjustment to be made to the book values of the assets and liabilities.
J.P., KAPUR & UBERAI

5. METHODS FOLLOWED NATURE OF MERGER -- Pooling of Interests method
NATURE OF PURCHASE -- Purchase method
J.P., KAPUR & UBERAI

6. POOLING OF INTERESTS METHOD
The assets, liabilities and reserves are recorded at their existing carrying amounts.
Uniform set of accounting policies is adopted.
The difference between the share capital issued and the share capital of the transferor company should be adjusted in reserves.
J.P., KAPUR & UBERAI

7. PURCHASE METHOD
The assets & liabilities are recorded either at existing carrying values or by allocating the consideration on the basis of Fair values on the date of amalgamation.
The reserves of the transferor company, other than the statutory reserves, should not be included in the financial statements of the transferee company.
Contd…..
J.P., KAPUR & UBERAI

8. PURCHASE METHOD Securities Cash Other assets CONSIDERATION
In determining the value of the consideration, an assessment is made of the fair value of its elements.
J.P., KAPUR & UBERAI

9. PURCHASE METHOD If Consideration > Net Asset value GOODWILL
Consideration < Net Asset value CAPITAL RESERVE
J.P., KAPUR & UBERAI

10. DISCLOSURES FIRST YEAR - BOTH NATURES OF AMALGAMATION
names and general nature of business of the amalgamating companies;
effective date of amalgamation for accounting purposes;
the method of accounting used to reflect the amalgamation; and
particulars of the scheme sanctioned under a statute.
J.P., KAPUR & UBERAI

11. DISCLOSURES FROM SECOND YEAR Pooling of Interests method
(a) description and number of shares issued,
(b) the amount of any difference between the
consideration and the value of net assets acquired
Purchase method
(a) a description of the consideration paid or payable;
(b) any difference between the consideration and
the value of net assets acquired.
J.P., KAPUR & UBERAI