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CA Inter Accounting for Amalgamations — practice questions

Explore 50 free Accounting for Amalgamations questions in CA Inter Accounting. Open each question or exercise to read its content, reference answers and available explanation.

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Accounting for Amalgamations questions and exercises with answers

Showing questions 1–30 of 50.

In AS 14, which company is the one into which another company is amalgamated?Read the answer and worked solution →In AS 14, what is the company that is amalgamated into another called?Read the answer and worked solution →Which method applies to an amalgamation in the nature of purchase?Read the answer and worked solution →What is the usual maximum amortisation period for goodwill on amalgamation?Read the answer and worked solution →Excess of consideration over net assets in a purchase is recorded as?Read the answer and worked solution →A purchase-type deal where consideration is below net assets gives what?Read the answer and worked solution →In a merger, cash may be paid to transferor shareholders only for what?Read the answer and worked solution →In a merger, how may the transferor's Profit and Loss balance be treated?Read the answer and worked solution →Which reserves keep their identity even in an amalgamation in the nature of purchase?Read the answer and worked solution →Corresponding debit for statutory reserves goes to which head?Read the answer and worked solution →A post balance sheet amalgamation is handled how in the accounts?Read the answer and worked solution →In a merger, the General Reserve of the transferor becomes what in the transferee?Read the answer and worked solution →Reserves distributable as dividend before a merger are what afterwards?Read the answer and worked solution →AS 14 excludes which appropriation from the meaning of a reserve?Read the answer and worked solution →In a merger, what is intended for the transferor's business afterwards?Read the answer and worked solution →A merger requires book values of transferor assets to be adjusted only for what?Read the answer and worked solution →Only 85% of transferor equity holders join the transferee. The deal is a what?Read the answer and worked solution →At what value is non-cash consideration included for an amalgamation?Read the answer and worked solution →If market value of assets given cannot be reliably assessed, they are valued at?Read the answer and worked solution →A contingent additional payment joins the consideration when it is what?Read the answer and worked solution →Which factor helps estimate the useful life of goodwill on amalgamation?Read the answer and worked solution →Goodwill arising on amalgamation represents a payment made in anticipation of what?Read the answer and worked solution →If a sanctioned scheme prescribes treatment of reserves, what is followed?Read the answer and worked solution →A purchase-method disclosure must state the amortisation period of what?Read the answer and worked solution →Transferor capital is Rs 5,00,000; transferee issues Rs 4,20,000 shares in a merger. Adjusted in reserves?Read the answer and worked solution →New shares of Rs 6,50,000 replace old capital of Rs 5,00,000 in a merger. Gap adjusted in reserves?Read the answer and worked solution →In a purchase deal, consideration is Rs 12,00,000 and net assets Rs 10,50,000. Goodwill?Read the answer and worked solution →A transferee pays Rs 8,00,000 for net assets of Rs 9,25,000 in a purchase. Capital Reserve?Read the answer and worked solution →Goodwill of Rs 2,50,000 is amortised evenly over five years, the usual ceiling. What is the yearly charge?Read the answer and worked solution →Transferor equity is Rs 1,00,000; transferee holds Rs 20,000. Shares needed to join for 90% test?Read the answer and worked solution →

Worked practice questions

In AS 14, which company is the one into which another company is amalgamated?

  1. Acquired company
  2. Transferee company
  3. Transferor company
  4. Holding company
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Correct answer: B. Transferee company

The company that absorbs the other is the transferee, while the one that disappears is the transferor.

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In AS 14, what is the company that is amalgamated into another called?

  1. Transferee company
  2. Transferor company
  3. Subsidiary company
  4. Acquiring company
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Correct answer: B. Transferor company

The company merged away into another entity is labelled the transferor, since its business is transferred.

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Which method applies to an amalgamation in the nature of purchase?

  1. Purchase method
  2. Proportionate method
  3. Fair value method
  4. Pooling of interests
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Correct answer: A. Purchase method

When any merger condition fails, the deal is treated like buying assets and the purchase method is applied.

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