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CA Inter Accounting for Amalgamations — practice questions — page 2

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 31–50 of 50.

Shares of fair value Rs 5,00,000 plus Rs 1,00,000 cash for net assets Rs 5,40,000. Goodwill?Read the answer and worked solution →Consideration to transferor equity holders is wholly 9% preference shares. How is the deal classed?Read the answer and worked solution →All merger conditions are met except that the transferor's business will be wound up. Which method applies?Read the answer and worked solution →Under the purchase method, transferor reserves other than statutory ones are?Read the answer and worked solution →Besides carrying amounts, how may assets be recorded in a purchase?Read the answer and worked solution →What can influence fair value determination in a purchase-type amalgamation?Read the answer and worked solution →Specific provisions in a purchase deal may cover which expected costs?Read the answer and worked solution →Identifiable assets in a purchase can include which kind of item?Read the answer and worked solution →Pooling accounts for amalgamation as if the separate businesses were intended to do what?Read the answer and worked solution →In which type do transferor shareholders normally not keep a proportionate equity share?Read the answer and worked solution →A genuine pooling in a merger covers assets, liabilities, shareholders' interests and what?Read the answer and worked solution →AS 14 is directed principally at which type of enterprise?Read the answer and worked solution →If a scheme departs from AS 14 on reserves, what must be disclosed?Read the answer and worked solution →In merger accounting, resultant assets, liabilities, capital and reserves roughly equal what?Read the answer and worked solution →In the pooling method, conflicting accounting policies are handled how?Read the answer and worked solution →When can amalgamation goodwill be amortised beyond five years?Read the answer and worked solution →Statutory reserves keep their identity only when the transferee complies with what?Read the answer and worked solution →AS 14 defines fair value as the amount for an asset exchange between whom?Read the answer and worked solution →Consideration for amalgamation is the aggregate of securities issued and what else?Read the answer and worked solution →In a merger, the Profit and Loss balance can alternatively go to which reserve?Read the answer and worked solution →

Worked practice questions

Shares of fair value Rs 5,00,000 plus Rs 1,00,000 cash for net assets Rs 5,40,000. Goodwill?

  1. Rs 1,00,000
  2. Rs 60,000
  3. Rs 40,000
  4. Rs 1,40,000
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Correct answer: B. Rs 60,000

Consideration is 5,00,000 plus 1,00,000 cash, which is 6,00,000; subtracting net assets of 5,40,000 leaves 60,000.

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Consideration to transferor equity holders is wholly 9% preference shares. How is the deal classed?

  1. Nature of purchase
  2. Capital reduction
  3. Nature of merger
  4. Share buyback
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Correct answer: A. Nature of purchase

A merger needs consideration wholly in equity shares, so preference shares breach that condition and make it a purchase.

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All merger conditions are met except that the transferor's business will be wound up. Which method applies?

  1. Purchase method
  2. Cost method
  3. Equity method
  4. Pooling method
Show answer and solution

Correct answer: A. Purchase method

Continuation of the transferor's business is a merger condition, so failing it means the purchase method must be used.

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More Accounting topics

AS 3 Cash Flow StatementSchedule III Division I Financial StatementsAS 19 LeasesValuation of Inventories (AS 2)AS 22 Taxes on IncomeAS 28 Impairment of AssetsProperty, Plant and EquipmentAS 17 Segment Reporting