Amalgamation and reconstruction a write short notes on. Jun 16, 2017 company merger acquisition amalgamation and restructuring concepts for mpsc upsc duration. Amalgamation and external reconstruction with their relevant solutions. Amalgamation is an agreement deal between two or more companies to consolidate strengthen their business activities by establishing a new company having a separate. Amalgamation absorption and reconstruction of companies. Explained the concept and difference between amalgamation absorption and external reconstruction. Differences between amalgamation and external reconstruction. Here is the video about purchase consideration under amalgamation, absorption and external reconstruction, in that we have seen calculation. Such external reconstruction is essentially covered under the category amalgamation in the nature of merger in as accounting standard 14, accounting for amalgamations. Unit iv amalgamation of companies for corporate accounting bcom sem 4 delhi university. Accounting for amalgamations the accounting issues pertaining to amalgamation as defined under the provision of the companies act1956 are dealt under accounting standard as 14 as evolved by the institute of charted accountant of india. The upcoming discussion will update you about the difference between external reconstruction and amalgamation.
Introduction following the economic reforms in india in the post 1991 period, there is a discernible trends among promoters and. Amalgamation and external reconstruction multiple choice questions. Download cbse notes, neet notes, engineering notes, mba notes and a lot more from our website and app. Company merger acquisition amalgamation and restructuring concepts for mpsc upsc duration. External reconstruction takes place when an existing company goes into liquidation for the express purpose of selling its assets and liabilities to a newly formed company which is generally owned and named alike. Difference between amalgamation absortpion and external reconstruction. Redemption of preference shares and buy back of equity shares.
The following information has been extracted from the balance sheets of p ltd. Difference between amalgamation and absorption with. 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. Amalgamation, absorption and internal and external reconstruction. Reconstruction is a process of the companys reorganization, concerning legal, operational, ownership and other structures, by revaluing assets and reassessing the liabilities. In amalgamation, one company merges with another company and forms a new company. Mar 07, 2014 accounting for amalgamation, absorption and external reconstruction 1. Here is the video about amalgamation, absorption and external reconstruction journal entries in the books of selling company in that we. There are two methods of reconstruction which are internal reconstruction and external reconstruction. There may be amalgamation either transfer of two or more undertakings to an existing company or new company.
Amalgamation, absorption and reconstruction accounting. Amalgamation and external reconstruction multiple choice. In this case, a newly formed company takes over the business of an existing company. Amalgamation is defined as a simple arrangement or reconstruction of business. It is similar to amalgamation though not exactly the same. Question 1 amalgamation and absorption of companiesa comparison. Chapter1 accounts of amalgamation of companies jhbwc.
Is formed to take over the business of an existing co. Differences between absorption and external reconstruction 1. Reconstruction of companies external reconstruction. Corporate accounting manonmaniam sundaranar university. Amalgamation of companies results in combination of companies, but external reconstruction does not result in any such combination. Corporate accounting pdf notes academy of accounts. Basis amalgamation absorption external reconstruction meaning two or more companies are wound up and a new company is formed to take over their business. Difference between internal and external reconstruction with. The term amalgamation is used when two or more existing companies go intoliquidation and a new company is formed to take over the business of liquidated companies. Amalgamation and external reconstruction 8 accounting. In this article we will discuss about the top eight accounting problems on amalgamation and external reconstruction with their relevant solutions. Here is a compilation of top five accounting problems on amalgamation, absorption and reconstruction with its relevant solutions. Introduction to amalgamation amalgamation of companies. Accounting for amalgamations and corporate restructuring 1 z 1 accounting for amalgamations and corporate restructuring topic 1.
Dec 21, 2007 there are no book in india i have seen where difference among the amalgamation, absorption, external reconstruction,marger has been cleared. Amalgamation absorption and reconstruction of companies module 5 amalgamation term amalgamation is used when two or more existing companies into. Know the various meanings of the terms amalgamation, absorption and external reconstruction. Unit i amalgamation absorption and external reconstruction amalgamation when two or more existing companies combine toge. It is the conversion of two companies and two balance sheets into one company and one combined balance sheet. The company that acquires the business is called the purchaser company and the. What are the differences between amalgamation, absorption and.
Mcq on amalgamation and external reconstruction revised 2020 facebook. Amalgamation of companies preamble t he term amalgam means to unite, to come together as one, or to blend, and, from this. Meaning and features of absorption accountingmanagement. Amalgamation term amalgamation is used when two or more existing companies into liquidation and new co. There are differenent types of rules and provison are there. Internal reconstruction difference between internal and external. Reconstruction and amalgamation legal news law news. Jun 29, 2012 clarity on amalgamation pc intercompany holding. Feb 19, 2018 explained the concept and difference between amalgamation absorption and external reconstruction. The accounting record of absorption is similar to that of amalgamation. Jan 04, 2018 amalgamation is when two or more companies merge.
In this article we will discuss about the top five problems on amalgamation and external reconstruction with their relevant solutions. Amalgamation means the merging of two or more than two companies for eliminating competition among them or for growing in size to achieve the economies of scale. Certain concepts are perceived, assumed and accepted in accounting to provide a unifying structure and internal logic to accounting process. From the point of view of an accountant, external reconstruction is similar to amalgamation in the nature of purchase. In spite of much similarity in amalgamation an absorption, the main differences of. Problems on amalgamation and external reconstruction. External and internal reconstructions amalgamation of. Student will be able to download pdf notes related to the course after subscribing to this course.
Accounting for amalgamation, absorption and external. They are amalgamation, absorption, external reconstruction etc. Problems on amalgamation, absorption and external reconstruction. Basis amalgamation absorption external reconstruction meaning. Features of absorption one or more companies are liquidated. In amalgamation, the identity of both the companies exist and survive. We use your linkedin profile and activity data to personalize ads and to show you more relevant ads. Jun 08, 2017 difference between internal and external reconstruction last updated on june 8, 2017 by surbhi s reconstruction is a process of the companys reorganization, concerning legal, operational, ownership and other structures, by revaluing assets and reassessing the liabilities. Amalgamation, absorption and external reconstruction. The process of two or more companies combining to form a new company is called absorption. Amalgamation of companies involves liquidation of two or more companies, while external reconstruction involves liquidation of only one company, 2. Term is used when one existing company goes into liquidation and a new co. In this case an existing company takes over the business of one or more existing companies.
Internal reconstruction which is carried out without liquidating the company and forming a new one, there may be external reconstruction wherever an undertaking is being carried on by a company and is in substance transferred, not to an outsider, but to another company consisting substantially of the same shareholders with a view to its being continued by the transferee company, there is. Valuation of shareholders journal entries of internal reconstruction what is amalgamation. When the transferee company decides to compensate the transferor company on the basis of fair. In the part 1 click here for part i accounting for amalgamation we learnt about nature of amalgamation and.
Mcq on amalgamation and external reconstruction revised 2020. Unit iv amalgamation of companies for corporate accounting. Merger, amalgamation, acquisition, take over ppt download. When one of the existing companies take over business of another. Sep 18, 2010 however, the respective rights and liabilities are determined under the scheme of amalgamation but the corporate entity of the transferor company ceases to exist with effect from the date, the amalgamation is made effective repatriation, compromise and reconstruction and amalgamation of schemes so that the interest of several members of the. Generally, larger company purchase the business of smaller company. An introduction and sebi guidelines lesson objectives to understand the process of terms mergers and amalgamation.
Meaning of external reconstruction differences between. Amalgamation amalgamation is a process of unification. Aug 15, 2015 amalgamation means the liquidation of one or more companies and transfer of business of liquidated entities to another entity. Understand selection from corporate accounting book. Amalgamation, absorption and external reconstruction 7. Problems on amalgamation, absorption and external reconstruction amalgamation problem no. It is the process in which one existing company takes over the other existing company and merge together as a single unit. Amalgamation absorption and reconstruction of companies module 5. Related topics meaning and features of amalgamation. The nature of business of both companies is similar. It is a process that involves combining of two or more companies as either absorption or as blend. Amalgamation and external reconstruction 8 accounting problems. A new company x is formed to take over the business of an existing company y which is wound up.