Accounting Standard (AS) 14 -Accounting for Amalgamations :
AS 14 issued by the ICAI, deals with the procedure of accounting for amalgamations and the treatment of any resultant goodwill or reserves.
This standard does not deal with cases of acquisitions which arise when there is a purchase by one company (referred to as the acquiring company) of the whole or part of the shares, or the whole or part of the assets, of another company (referred to as the acquired company) in consideration for payment in cash or by issue of shares or other securities in the acquiring company or partly in one form and partly in the other. The distinguishing feature of an acquisition is that the acquired company is not dissolved and its separate entity continues to exist. As per AS – 14,
(a) Amalgamation means an amalgamation pursuant to the provisions of the Companies Act, 1956 or any other statute which may be applicable to companies.
(b) Transferor Company means the company which is amalgamated into another company. It is also called Vendor Company.
(c) Transferee Company means the company into which a transferor company is amalgamated. It is also called Vendee Company.
(d) Reserve means the portion of earnings, receipts or other surplus of an enterprise (whether capital or revenue) appropriated by the management for a general or a specific purpose other than a provision for depreciation or diminution in the value of assets or for a known liability.
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