Amalgamation absorption and reconstruction of companies pdf download

Jan 06, 2017 where a compromise or arrangement is proposed for the purposes of or in connection with scheme for the reconstruction of any company or companies, or for the amalgamation of any two or more companies, the petition shall pray for appropriate orders and directions under section 230 read with section 232 of the act. The two companies may join to form a new company but there may be absorption or blending of one by the other, both amount to amalgamation. Basis amalgamation absorption external reconstruction meaning. Amalgamation and external reconstruction 8 accounting.

Jan 04, 2018 amalgamation is when two or more companies merge. Accounting standard as 14 accounting for amalgamations. For the purpose of this act the terms merger and amalgamation are synonymous. In the process of external reconstruction, a new company is formed to take over the liquidated company and the newly formed company gets a fresh share capital without any reduction in the share capital. Financial, stamp duty and taxation aspects of amalgamation 6. However, one should remember that amalgamation as its name suggests, is nothing but two companies becoming one.

It is the conversion of two companies and two balance sheets into one company and one combined balance sheet. Amalgamation of companies by cacma santosh kumardownload. For amalgamation, there will be no substantial change in the ownership of the respective companies except for the fusion into common ownership of what was previously in separate ownership. Amalgamation, absorption and external reconstruction. Amalgamation is a specific subject in the companies act of 2007. A merger is where two or more business entities combine to create a new entity or company. Jan 11, 2018 amalgamation is defined as the combination of one or more companies into a new entity. In the part 1 click here for part i accounting for amalgamation we learnt about nature of amalgamation and. Amalgamation of companies results in combination of companies, but external reconstruction does not result in any such combination. A scheme of amalgamation normally should also contain. Introduction to amalgamation amalgamation of companies.

In order to reap the economies of scale and to reduce or eliminate competition, two or more than two joint stock companies may combine their undertakings and becomes one joint stock company. Amalgamation, as its name suggests, is nothing but two companies becoming one. These are two business strategies adopted by the companies to expand itself and take a competitive position in the market. Both the transferor and the transferee company shall make an application in the form of petition to the tribunal under section 230232 of the companies act, 20 for the puspose of sanctioning the scheme of amalgamation. Jul 26, 2018 the primary difference between amalgamation and absorption of companies is that in amalgamation, the two companies are liquidated to form a new company, but in absorption only the merged company goes into liquidation, but there is no formation of a new company. Absorption of companies does not involve formation of a new company, however, external reconstruction involves formation of a new company, 2. In amalgamation, the identity of both the companies exist and survive. In this case, a newly formed company takes over the business of an. Upsc mains commerce and accountancy optional syllabus is available for download as pdf. In this case an existing company takes over the business of one or more existing companies. Amalgamation means the liquidation of one or more companies and transfer of business of liquidated entities to another entity. Features of absorption one or more companies are liquidated. Accounting for share capital, final accounts of limited lability companies, accounting for amalgamation and internal reconstruction, final accounts of banking companies, final accounts of insurance company.

Is formed to take over the business of two existing companies, x ltd. Sick industrial companies special provisions act, 1985, would be obtained and the transfer and vesting of the undertaking of amalgamating company with the amalgamated company would take effect. An amalgamation is distinct from a merger because neither of the combining companies survives as a legal entity. The terms merger and amalgamation have not been defined in the companies act, 1956 though this voluminous piece of legislation contains more than 50 definitions in section 2 of the act. The company wished to avoid being wound up and negotiated a scheme in which the existing shareholdings in the company would be transferred to a new company which would take over the company s undertaking and assets as well as its debts. Aug 15, 2015 amalgamation means the liquidation of one or more companies and transfer of business of liquidated entities to another entity. Apr 15, 2019 amalgamation is the combination of one or more companies into a new entity.

Problems on amalgamation, absorption and external reconstruction. Reconstruction of companies module 5 amalgamation term amalgamation is used when two or more existing companies into liquidation and new co. Definitions meaning of merger merger is an absorption of one or more companies by a single existing company. Amalgamation amalgamation is a process of unification.

Difference between amalgamation and absorption with. Generally, larger company purchase the business of smaller company. Understanding common difference between amalgamation and absorption is necessary before moving toward its accounting part. All the propertyliability of the amalgamating companycompanies becomes the propertyliability of amalgamated company. Reconstruction and amalgamation legal service india. External and internal reconstructions amalgamation of. Absorption of companies is also included into amalgamation. Amalgamation term amalgamation is used when two or more existing companies into liquidation and new co. Amalgamation consolidation business debits and credits. Amalgamation of banking and government companies 8. In this case two companies get liquidated and one new company. It is an amalgamation in the nature of purchase because the assets of a co. Revised accounting standard as 14 accounting for amalgamations is applicable for the accounting periods commencing on or after april 1, 2017 after considering companies accounting standards amendment rules, 2016 g. This form is used to amalgamate one or more corporations to form a new alberta corporation under the business corporations act.

In amalgamation, one company merges with another company and forms a new company. On the other hand, absorption is the process in which the one dominant company takes control over the weaker company. Aug, 2015 accounting for amalgamation partii amalgamation means the liquidation of one or more companies and transfer of business of liquidated entities to another entity. A merger happens when two or more companies who share similar operations or are engaged in the same line of business combine to. What are the differences between amalgamation, absorption. The merger is a combination of two or more entities into one, it is not just the accumulation of assets and liabilities of the distinct entities. Unit iv amalgamation of companies for corporate accounting.

Meaning of external reconstruction differences between. Amalgamation and demerger bombay chartered accountants. There may be amalgamation either transfer of two or more undertakings to an existing company or new company. Understanding inter company holdings and numerical on the intercompany holdings. In spite of much similarity in amalgamation an absorption, the main differences of. Internal reconstruction of companies including reconstruction schemes. Meaning of amalgamation the combination of one or more companies into a new entity. Acquiring company is a single existing company that purchases the majority of equity shares of one or more companies.

For instance, two companies x and y gets liquidated and there. Amalgamation occurs when two or more companies are joined. Amalgamation absorption and reconstruction of companies. Reconstruction and amalgamation legal news law news. In amalgamation, two or more companies are fused into one by merger or by one taking over the other. Amalgamation is the joining of two or more companies to form a single new company. The accounting record of absorption is similar to that of amalgamation.

Know the various meanings of the terms amalgamation, absorption and external reconstruction. But notably, it no where uses the word amalgamation. Amalgamation or merger is also a method of reconstruction. In describing the policy objective, the document uses the words consolidation, absorption, merger either singly or in combination. The process of external reconstruction is governed by the process of amalgamation in the nature of merger under the companies act, 20. Where a compromise or arrangement is proposed for the purposes of or in connection with scheme for the reconstruction of any company or companies, or for the amalgamation of any two or more companies, the petition shall pray for appropriate orders and directions under section 230 read with section 232 of the act. The primary difference between amalgamation and absorption of companies is that in amalgamation, the two companies are liquidated to form a new company, but in absorption only the merged company goes into liquidation, but there is no formation of a new company. Such external reconstruction is essentially covered under the category amalgamation in the nature of merger in as accounting standard 14, accounting for amalgamations. During amalgamation, two or more companies willingly come together to cooperate with each other and diversify expand their business activities.

Numerical on accounting treatment of amalgamation, absorption, internal and external reconstruction. The companies court rules 1959, income tax act, 1961. The popular meaning of amalgamation is the dissolution of one or more companies and transfer. Unit iv amalgamation of companies for corporate accounting bcom sem 4 delhi university. It is a process that involves combining of two or more companies as either absorption or as blend. For reconstruction, the owner retains at least 90% of the assets directly or indirectly after the transfer. Meaning and features of absorption accountingmanagement.

Amalgamation, absorption and reconstruction of companies determining purchase consideration. Section 219 of the companies act, provides that two or more companies, including holding and subsidiary companies, may amalgamate and continue as one company. Chapter1 accounts of amalgamation of companies jhbwc. Understand selection from corporate accounting book. Fixed assets of both the companies are to be revalued at 20% above book value. What are the different types of amalgamation procedures provided for under the companies act. Amalgamation is defined as a simple arrangement or reconstruction of business.

Merger, amalgamation and reconstruction concept of merger. An amalgamation is where one business entity acquires one or more business entities. The nature of business of both companies is similar. Download upsc mains commerce and accountancy optional. Amalgamation is a legal process by which two or more companies are joined together to form a new entity or one or more companies are to be absorbed or blended with another and as a consequence the amalgamating company loses its existence and its shareholders become the. Amalgamation is defined as the combination of one or more companies into a new entity. Today we are providing the complete details of as 14 accounting for amalgamation i. External and internal reconstructions amalgamation of companies, advanced corporate accounting b com notes edurev notes for b com is made by best teachers who have written some of the best books of b com. Amalgamation, absorption and internal and external reconstruction. Differences between absorption and external reconstruction 1. Oct 28, 2016 the process of external reconstruction is governed by the process of amalgamation in the nature of merger under the companies act, 20. Introduction to amalgamation amalgamation of companies, advanced corporate accounting b com notes edurev notes for b com is made by best teachers who have written some of the best books of b com. Amalgamation and external reconstruction 8 accounting problems. As 14 accounting for amalgamation revised summary pdf.

Amalgamation amalgamation is an arrangement or reconstruction. In the previous articles, we have given as 6 depreciation and as 26 intangible assets. Jun 24, 2014 in describing the policy objective, the document uses the words consolidation, absorption, merger either singly or in combination. What are the differences between amalgamation, absorption and. Sep 18, 2010 the two companies may join to form a new company but there may be absorption or blending of one by the other, both amount to amalgamation. When the two companies are merged and are so joined as to form a third company or one is dissolved into one or blended with another. In a number o c absorption a tion existing comp wing does.