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Gomathi Vallinayaki

Gomathi Vallinayaki

CA Inter

22K+

27-Aug-20 10:10

25

Amalgamation of companies

Ill 9(ICAI study material) Adjustment 4 Why they do for this journal enry?

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Answers (1)

Lavanya Chitturi

Lavanya Chitturi

Moderator

27-Aug-20 12:57

Mutual owing are cancelled as P Ltd and Q Ltd are amalgamating into 1 company. The liquidation expenses of P Ltd paid by Q Ltd is over and above the consideration payable to Q Ltd. It is treated as Goodwill. As we have capital reserve balance, it is adjusted with Goodwill, to get the net effect of amalgamation.