Amalgamation and Reconstruction MCQs

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Topic Notes: Amalgamation and Reconstruction

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Under the purchase method of accounting for business combinations, what items does the transferee company incorporate into its books?

A The assets, liabilities and statutory reserves of the transferor company B The assets and liabilities of the transferor company C The assets, liabilities and reserves of the transferor company D The assets, liabilities and not statutory reserves of the transferor company

Which of the following statements regarding business combinations is incorrect?

A The vendor company transfers preliminary expenses (at the time of absorption) to equity shareholder's account B When there is one liquidation and one formation it is known as external construction C Goodwill or Capital reserve arises only when the amalgamation is in the nature of merger D Under the pooling of interest method, the transferee company incorporates the assets and liabilities of the transferor company at book value

In a business combination, how should mutual indebtedness between the transferor and transferee companies be treated?

A No adjustment is required in the books of the transferee company B No adjustment is required in the books of the transferor company C Adjustment is required in the books of the transferor company D None of the above

In an amalgamation in the nature of merger, what minimum percentage of equity shareholders of the transferor company must become equity shareholders of the transferee company?

How should goodwill arising on the amalgamation of companies be treated?

What is the term for the process where two or more existing companies liquidate to combine into a single new entity?

What is the definition of a horizontal combination in a business context?

A Unification of the consumers of a particular commodity B Combination of concerns producing similar goods C Combination of concerns producing different goods D Combination of the same category of the workers of a concern

X Ltd acquired 70% of Y Ltd for Rs. 1,00,000. Y Ltd has a share capital of Rs. 70,000 and accumulated profits of Rs. 90,000. What is the minority interest in the consolidated balance sheet?

When accounting for an amalgamation in the nature of purchase, at what value should the assets and liabilities acquired from the transferor company be recorded in the transferee company's financial statements?

In which business combination structure do the participating companies maintain their separate legal identities?

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