MEANING OF AMALGAMATION :

The term “amalgam” means to unite or to combine. Generally, the term ‘amalgamation’ is used when two or more existing companies go into liquidation and a new company is formed to take over their business and the term ‘absorption’ is used when one or more existing companies go into liquidation and one existing company takes over or purchases the businesses of all companies. However, the difference between amalgamation and absorption has been dispensed with by the Accounting Standard (AS-14) – Accounting for Amalgamations issued by the ICAI. Thus the term amalgamation includes absorption.

Therefore, amalgamation means liquidation of two or more companies to form a new company or liquidation of one or more company by takeover by one of the existing company.