IndigoLearn

Forums

All Topics Accountancy Auditing Corporate & Other Laws Direct Taxation Indirect Taxation Financial Management Economics Costing Strategic Management Maths & Stats Exams Others AFM Financial Reporting CFA Level I

Advanced accounting - Statutory reserves treatment in amalgamation

Accountancy

In nature of purchase we create a imaginary ac Amalgamation adj ac for incorporating statutory reserves! But we cant we create it out of free reserves? Becoz if we have to ise those reserves for something we wont have anything in hand and also if we reverse it when not needed it will just go back to free reserves! Why cant we do this?

Saran Vadivel

CA Inter

★ 2K+

21-Jun-20 17:21

314

Answers (1)

Best Answer

The acquiring company may choose to write off the Amalgamation adjustment account against free reserves. Also note that the amount as stated in Stated in Statutory Reserves should be retained.