The amount of purchase consideration can be computed under any of the following four methods:- 1. Lump Sum Method 2. Net Worth or Net Assets Method 3. Net Payment Method 4. Intrinsic Value Method (Shares Exchange Method). Method # 1. Lump Sum Method: The purchasing company may agree to pay a lump-sum to the vendor company on account of the [...]
The below mentioned article provides a study note note on the Meaning and Types of Amalgamation. Meaning of Amalgamation: In order to reap the economies of scale and to reduce or eliminate competition, two or more than two joint stock companies may combine their undertakings and becomes one joint stock company. It may be done either by one of the [...]
The following points highlight the top two methods of accounting for amalgamation. The methods are: 1. Pooling of Interests Method 2. Purchase Method. 1. Pooling of Interests Method: This method is followed in case of an amalgamation in the nature of merger. Under this method, the assets, liabilities and reserves of the transferor company are recorded by the transferee company [...]